Lenders impound Kingfisher Airlines’ Mumbai headquarters

NEW DELHI, India – The headquarters of Kingfisher Airlines in Mumbai has been taken over by its lenders after the beleaguered airline company failed to pay up its bank dues.

According to a leading business daily, SBICAP Trustee Company Ltd, acting for lenders, has taken control of the property on August 10, after guarantors of the debt-laden airline which has been grounded since October 2012 failed to pay the outstanding amount.

The company’s guarantors- Vijay Mallya, its owner and United Breweries (Holdings) Ltd had to repay about Rs 6,027 crore to the banks.

The news report quoted a senior public sector executive who said that the takeover is a part of the recovery process. The head-quarter is tangible property which when sold could get part of the debt money back.

Banks have also sold shares of United Spirits and Mangalore Chemicals, to partly recover dues, last year.

After giving long rope (for repayments) KFA bankers lead by State Bank of India in February 2013 finally decided to recall all loans, amounting to Rs 7,500 crore, to the company.

Meanwhile, the indirect tax department has also hinted that Mallya, may face prosecution in a service tax evasion case.

“Prosecution is definitely a provision there in the Act. And that decision of taking action on Kingfisher owner for not paying service tax arrears will be taken by the concerned commissioner,” Lipika Majumdar Roy Chowdhury, member of the Central Board of Excise and Customs, told reporters this week.

“The commissioners are trying their best to recover the amount and some amounts have been recovered. But there were several show-cause notices which are in the process of adjudication,” she added.

The grounded airline owes about Rs 190 crore to the service tax department, of which Rs 127 crore is under litigation as of December 2012.