The Kingfisher Airlines Ltd, a holding company of Vijay Mallya on Monday said it is not liable to repay over ₹6,000 crore debt to the consortium of banks as the lenders have breached terms and conditions of the "Master Debt Restructuring Agreement" between both parties, which caused needless damages to the firm's business.
Resuming the hearing on the original application filed by bankers, seeking recovery of over ₹6,000 crore from Mallya and his companies, KFA Counsel pleaded that the Debt Recovery Tribunal (DRT) should reject the plea as the lenders have breached the master agreement's terms and conditions.
Making submissions before DRT Presiding Officer C R Benakanahalli, KFA Counsel submitted that since section 54 of the master debt restructuring agreement was breached by lenders, the company is not liable to pay the loans for damages caused by them.
According to those terms and conditions, Kingfisher Airlines was to receive additional money from the lenders to continue their airline business, which the lenders violated and eventually the company faced further financial problems.
"In this situation, how can one expect the company to make repayment, when the lenders failed to provide the promises funds to carry business," he said.
Further quoting from a letter by State Bank of India (SBI) to Reserve Bank of India (RBI), he also submitted that master debt agreement was arrived at not only to recover the loans provided to the airline, but also to mainly continue the airline business in the interest of the country's economy. Hence, the tribunal should consider this submission before giving its verdict.
The counsel also submitted that the lenders have unfairly treated Kingfisher Airlines by giving unnecessary press statements which damaged its business prospects by breaching the terms of confidentiality under the master agreement.
"The statements of Pratip Chaudhary, the then Chairman of the SBI, that Kingfisher Airlines has turned an Non-Performing Asset, hit the company hard in the share market with the scrip value tanking to 11 per cent in morning hours of the trade. This was a breach terms of confidentiality under the [master debt restructuring agreement]," he said.
"This statement also caused not only emotional distress, but also economic distress, and hence I plead before the honourable tribunal to dismiss the lenders' plea and uphold KFA's submissions," he said.