The Debt Recovery Tribunal has freezed Rs 500 crore payment from British company Diageo plc to Mallya.
Mr Mllya is facing multiple enquiries and proceedings for the nearly Rs 7000 crore default of his grounded airliner Kingfisher.
In its direction, Presiding Officer of the DRT, CR Benakanahalli has instructed Mallya not to receive the amount temporarily as the sum would stand attached till further orders on the proceedings initiated by banks.
The tribunal has also directed the Diageo plc and Mallya to disclose the details of the agreement.
Mallya was inducted as a board member of Diageo when the company acquired his United Spirits. The agreement between the two parties seems to be an evading one as Mallya may face penal actions as a wilful defaulter.
When a person is declared as wilful defaulter, he can’t join any director board of a company. Similarly he should be expelled from any such existing position as well.
The verdict of the DRT is significant on many respects when there is heightened voice against wilful defaulters. Increasing NPAs with the banking system especially consistent defaults by many corporate has attracted public attention.
Wilful defaulter proceedings instruct various institutions including the RBI and SEBI to initiate penal and criminal actions.
Diageo was avoiding such a penal action against Mallya while settling it by pushing out him from the Director board.
But criminal proceedings can be made when the enforcing authorities comes to know that the defaulter has illicitly used the money acquired from lenders. In one such proceeding, the enforcement department has registered a case of money laundering against Mallya.