Introduction:

In Vijay Mallya v. Recovery Officer-II & Others, WP 3357/2025, fugitive businessman Vijay Mallya has approached the Karnataka High Court seeking a statement of accounts from banks regarding the amounts recovered in connection with debts owed by him, United Breweries Holdings Limited (UBHL), and other certificate debtors. Mallya’s plea argues that since the debt has been fully recovered, continued recovery actions are unwarranted and a formal acknowledgement of the repayment must be made. The matter was heard by Justice R. Devdas, who issued a notice to the banks, directing them to respond by February 13. Senior Advocate Sajan Poovayya, appearing for Mallya, contended that recovery proceedings had exceeded the due amount, resulting in multiple recoveries beyond the Rs. 6,200 crore ordered in the debt recovery proceedings. He emphasized that statements from the official liquidator and even a parliamentary declaration by the Finance Minister confirm that the recovered amount has surpassed Rs. 14,000 crore. Despite this, Mallya claims that additional recoveries are ongoing without a conclusive statement from the banks or the recovery officer confirming that the debt has been settled. His petition seeks transparency in the recovery process, a stay on further asset sales, and a potential revival of UBHL if liabilities are cleared. The Karnataka High Court, taking note of these arguments, has issued a notice to the banks to clarify their stance on the matter.

Arguments of Both Sides:

Mallya’s counsel, Senior Advocate Sajan Poovayya, argued that the recovery process had gone beyond its legal limits. He pointed out that the Rs. 6,200 crore debt assigned to Kingfisher Airlines and UBHL had already been recovered several times over. Referencing multiple official statements, he claimed that banks had collected far more than what was owed. Poovayya emphasized that under the Companies Act, once a guarantor company’s liability is discharged, it should be eligible for revival, but the lack of a recovery completion certificate prevented this. He further asserted that banks had failed to transparently disclose the original owners of the assets used for recoveries and the exact amounts realized. The petition, therefore, sought a court directive to banks to issue a complete statement of recovered amounts and remaining liabilities, if any. Additionally, Mallya requested a stay on further sales of his assets held by the banks until the court determines whether any debt remains outstanding.

On the other hand, the banks and recovery officers are likely to argue that Mallya, being a fugitive economic offender, lacks standing to make such claims. They might contend that multiple legal proceedings, including those under the Fugitive Economic Offenders Act, have confirmed Mallya’s financial liabilities and the right of banks to continue recoveries. Furthermore, they could argue that any excess recovery is a matter for financial institutions and regulatory bodies to assess, not the judiciary. The banks may also insist that additional amounts recovered could be attributed to interest accumulation, penalties, and legal costs incurred over the years. Their response to the Karnataka High Court will clarify their position on whether Mallya’s claims of excess recovery hold merit.

Court’s Judgment:

While the court has not yet passed a final ruling, Justice R. Devdas has taken note of Mallya’s claims and found them substantial enough to warrant a response from the banks. The Karnataka High Court, recognizing the importance of transparency in recovery proceedings, has issued a notice to the concerned banks, asking them to furnish a detailed statement of recovered amounts and clarify whether further recovery actions are justified. The court has scheduled the next hearing for February 13, when the banks are expected to present their responses. Depending on their submissions, the court may consider ordering a stay on additional recovery actions or directing the issuance of a certificate confirming the full repayment of debts. The judgment in this case could have broader implications for recovery proceedings involving corporate guarantors, particularly in high-profile cases like that of Vijay Mallya.