India’s Debt Recovery Tribunal on Tuesday (Oct 18)directed European aircraft manufacturer Airbus to deposit with it Rs 19.2 billion toward pre-delivery payment made by a consortium of banks for purchase of planes by now defunct Kingfisher Airlines controlled by Vijay Mallya.
Passing orders on an amended plea filed by the consortium led by the Oriental Bank of Commerce for recovery of the payment, DRT Presiding Officer K Srinivasan directed Airbus to deposit Rs 192.51 crore from any source within eight weeks.
The Oriental Bank of Commerce, Corporation Bank and United Bank of India, had submitted that they made a pre-delivery payment of Rs 192.51 crore to Airbus on behalf of Kingfisher Airlines after both parties had signed a purchase agreement in 2005. But the planes were not delivered.
Since the Airbus had failed to repay the pre-delivery payment, the consortium made GoAir and Indigo as parties in the case by filing applications under garnishee proceedings to recover the money.
It had sought a direction to the budget carriers to deposit the money to be paid by them to Airbus with it, under garnishee proceedings.
A garnishment is a means of getting a monetary judgement against a defendant by ordering a third party (the garnishee) to pay the money, otherwise owed to the defendant, directly to the plaintiff.
However, during the hearing of the prayer, the budget carriers had opposed it saying it would affect the interest of their business and economy.
Airbus too had objected to the proceedings saying the company was needlessly being dragged into the matter as it was neither a borrower nor a defaulter and questioned the DRT's jurisdiction.
Countering this, the banks' counsel Mohammad Ibrahim had contended that the tribunal had jurisdictional power to adjudicate the matter since the contract was signed in India between banks, Kingfisher Airlines and Airbus, and the aircraft were to be delivered in India and the money was paid in India.
The DRT, on September 27, had ordered the bankers to amend its plea in the garnishee proceedings seek a direction to the Airbus to deposit money received in the future from any deal any air carrier from India strikes with it, instead of seeking the money from budget air carriers.
Kingfisher Airlines owes over Rs 90 billion to SBI-led consortium of 17 banks.
Mallya, who left the country on March 2 and is now in UK, has been declared a proclaimed offender by a special PMLA court in Mumbai on a plea by Enforcement Directorate in connection with its money laundering probe against him in the alleged bank loan default case.
