Vijay Mallya (owner of kingfisher) is an Indian businessman and politician. The son of businessman Vital Mallya. He is the ex-chairman of United Spirits LTD. United spirits LTD is the largest spirit company an Indian conglomerate with interests in beverage alcohol, aviation infrastructure, real estate and fertiliser among others. He was chairman of Sanofi India(previously Hoechst AG and Aventis), and also the chairman of CROP Science.
What was the case?
Kingfisher Airlines for operation founded in the year 2003, it commenced its operation on 9 may 2005. Kingfisher launched all ECONOMY SINGLE CLASS AIRCRAFT with food and entertainment systems.
After some time the Airlines shifted its focus to Luxury. Vijay Mallya the RICH BRANSON never stopped of thinking of expansion of business. If an airline wants to start its International Flight Routes one have to complete 5 years of service. In the year December 2007 Kingfisher Airlines merged with DECCAN AIRLINES (owned by Retired. Gopinath).
These two airlines were working with a different separate name from April to November but in December the airlines decided to merge both the airline with a single entity. Deccan Airlines was wholly covered up by KINGFISHER AIRLINES. Deccan Air was bought for 550 crores in which Deccan airlines incurred a loss of additional 550 crores (Huge numbers!). In the year 2008 Kingfisher started its Internationa Routes , it was the time when the
In the year 2008, Kingfisher started its International Routes. It was the time when the FUEL PRICES were touching the sky. Vijay Mallya gifted Kingfisher Airlines to his SON Siddharth Mallya on his big day. Siddharth Mallya is the son of the rich Branson who has no control over the expenses and management of the funds.
Kingfisher Airlines had never paid tax from the starting of its business. The unwanted throwing of parties and spending too much on Kingfisher Calander. Also, the funds of Kingfisher Airlines were diverted to IPL(ROYAL CHALLENGERS BANGLORE). These expenses and diverting of the funds, result in not paying off the bank loans, taxes and employees were not given salary for nearly 15 months.
Mr.Mallya had sold 49% of SHARES ( F1 car) to Mr Subrato Roya in order to keep Kingfisher going. But it failed to save Kingfisher Airlines. Due to the huge amount of LOAN particularly 9000 crore (tax included), Vijay Mallya on 2nd March 2016 flew away from DELHI TO LONDON on Jet Airways. Indian govt. made him a wilful defaulter(the person who intentionally do run away without clearing his debts). Govt. Of India cancelled passport of Vijay Mallya on the next day he flew away. Now Indian government is trying to deport Vijay Mally through Extradition Route.
Reasons for the FALL OF KINGFISHER AIRLINES.
- Frequent changes on the focus(Economic to Luxury).
- Merger for EXPANSION of business(MERGER with Deccan Air).
- Lack of Management(FUNDS).
- High OPERATION COST (airlines charges, airport charges etc).
Property lent as guarantee to banks
- Kingfisher House, Mumbai (150crore)
- 2 Helicopters
- Moveable Assets of Kingfisher Airlines
- All the CURRENT ASSETS of Airlines
Amount of Loans taken from different banks
Vijay Mallya Assets
1) Kingfisher house, Mumbai
2) Personal Jet
3) Kingfisher Villa, Goa
4) Various Brands & Trademarks
Assets overseas are not disclosed by Vijay Mallya. In a 17 pages affidavit submitted to Supreme Court stating that as an NRI he is not obliged to disclose the overseas assets not even to TAX OFFICERS. Vijay Mallya’s wife and children are the U.K Citizens, so they are not bound to disclose the assets.
Questions that arise in this case:
Q1. Why Vijay Mallya cannot be prosecuted?
A Company is a SEPARATE ENTITY (Section 124(1) Company Law 2013) from the promoter just like a real person. All the contracts are made in the name of the Company, so Company is liable to pay off. In this case, the Company is not able to pay the debts. Government declared the Company insolvent. So the assets of the company has to be seized to pay off the liabilities.
Q2. Why Vijay Mallya cannot be brought back?
- Deportation is not possible when a person enters with a valid passport.
- Cancellation of the passport doesn’t mean that BRITAIN will deport Vijay Mallya.
- India has to charge EXTRADITION ROUTE to deport Vijay Mallya.
This is not that first time that this thing happened in India, there are so many people who flew away with Indian WEALTH to another COUNTRY. They are
- Vijay Mallya
- Lalit Modi
- Nadeem Saifi (murderer of music director GULSHAN KUMAR)
- Corporate Affairs ministry referred this case to SFIO (SERIOUS FRAUD INVESTIGATION OFFICE).
- SFIO is in India. It is the organisation which is composed of Experts from Capital Market, Financial Sector, Accountancy, Forensic Audit, Taxation, Law taken from Banks, SEBI(SECURITY EXCHANGE BOARD OF INDIA) and from many diferent department of the country. This agency investigates serious FRAUD cases.
- SFIO is investigating about the LOANs given to KINGFISHER AIRLINES. Lending huge amount of money, SFIO is investigating that the lending institution has followed all the steps of lending and fulfilled all formalities or not or there is negligence done.
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