Vijay Mallya fails to delay USD 40mn Diageo claim, legal costs mount in UK
London, Apr 12: Even as he renewed an appeal against his extradition to India, embattled liquor tycoon Vijay Mallya suffered another legal setback on Friday in a separate USD 40-million claims case brought by British liquor giant Diageo plc in the UK High Court.
Justice Clare Moulder ruled against the 63-year-old former Kingfisher Airlines boss' application to seek a delay in the full hearing in the case scheduled for May 23 and additionally ordered him to pay legal costs of 34,000 pounds. She was extremely critical of the "unexplained" delays by Mallya in clearing the unpaid invoices of his previous solicitors Greenwoods, which resulted in his new solicitors Joseph Hage Aaronson (JHA) finding themselves in “difficulty” and wanting to seek an unfair adjournment.
“The delay is at best unexplained and arguably of the defendant’s [Mallya] own making. In my view, the claimants [Diageo] are entitled to have their claim progressed expeditiously,” Justice Moulder said, concluding that Mallya was the “author" of his "own misfortune". “The claimants say that if the May hearing is adjourned they will suffer prejudice…there would be a race in relation to Mallya’s assets which are subject to a number of competing claims; Mallya may be extradited and this will affect the ability to enforce the judgment against him,” the judge noted, in reference to the extradition order and worldwide freezing order already in place against Mallya.
While the judge agreed to a short extension until April 23 for Mallya’s new lawyers to submit their evidence to the court, having missed an April 5 deadline, she ordered that meanwhile the businessman must pay additional legal costs of 34,000 pounds for Diageo’s lawyers within 28 days. Diageo, which had acquired Mallya’s United Spirits nearly six years ago, is claiming USD 40 million paid to the liquor tycoon as part of an alleged breach of agreement.
The UK-based drinks giant is also claiming USD 141 million from Mallya, his son Sidhartha, and two companies linked to them for alleged questionable payments. The case, dating back to November 2017, is being contested by Mallya and will now go ahead for a full hearing at the Business and Property Courts of the UK High Court on May 23.
The three claimants in the case -- Diageo Plc, Diageo Holdings Netherlands BV and Diageo Finance Plc -- are seeking a total of USD 181 million from four defendants – Vijay Mallya, his son Sidhartha, Watson Limited and Continental Administrative Services Limited (CASL). Mallya’s counsel Barrister Daniel Margolin argued for more time to prepare for the full hearing because his firm JHA had received all the documents in the case, including nearly 1,750 electronic files, only towards the end of March.
He raised the worldwide freezing order against Mallya, confirmed by a UK High Court order in May 2018, as the reason for some delays in clearing overdue legal invoices. However, Diageo’s counsel instructed by law firm Slaughter and May, Barrister Saul Lemer, argued that Mallya had “historically procrastinated” in the case and used the “same strategy time and again" of changing solicitors and seeking more time from the court. Margolin assured the judge of no further delays and that Mallya was “acutely aware of the position” he was in.
In his brief arguments on Friday, he also sought to highlight that Mallya himself would be liable for less than 1 per cent of the USD 141 million being sought by Diageo from the collective claimants, amounting to a "value of roughly USD 1 million", and that CASL is not an asset belonging to the businessman, as claimed by the drinks giant. At the end of an hour-long hearing, the judge agreed that it would be “disproportionate” for her to deny the new lawyers any extra time at all and therefore allowed for a few extra days for the preparation and submission of evidence. However, she refused to change the May 23 date of the hearing because it risked a potential delay in the case until October due to the court’s listings and holiday period time pressures.
The latest case marks a flurry of legal wrangles being tackled by Mallya in the UK courts at various stages of hearing. His extradition to India to face fraud and money laundering charges amounting to an alleged Rs 9,000 crores in unpaid loans by his now-defunct Kingfisher Airlines, was ordered by Westminster Magistrates' Court in London last December and signed off by UK home secretary Sajid Javid in February this year.
Mallya is contesting that order and made a second attempt at appealing against his extradition this week. As per legal procedure in the UK, Mallya's first written “leave to appeal” application had been passed on Justice Davis, who was to make a decision on the basis of papers submitted and rejected that application "on papers". A judge must now decide following an “oral consideration” in the coming weeks if his appeal can proceed to a full hearing.
Meanwhile, in a separate case, a SBI led consortium of Indian banks are seeking to enforce a worldwide freezing order upheld by the UK High Court last year through a number of follow up court orders to try and recoup some of the 1.145 billion pounds owed to them.
Mallya also faces bankruptcy proceedings in the UK High Court in relation to that case, involving SBI, Bank of Baroda, Corporation bank, Federal Bank Ltd, IDBI Bank, Indian Overseas Bank, Jammu & Kashmir Bank, Punjab & Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank, United Bank of India and JM Financial Asset Reconstruction Co. Pvt Ltd.