United Bank Of India First Bank To Declare KFA And Vijay Mallya As Wilful Defaulter

United Bank of India has become the first bank to declare Kingfisher Airlines, it's promoter Vijay Mallya as well as three directors on the board of KFA as wilful defaulters.

According to a source close to the development, " the action comes after KFA officials did not show up for the meeting with United Bank's grievance redressal cell this morning at 10:30 AM." The grievance redressal committee of United bank of India is headed by the bank's executive director D Narang. The bank is also in the process of sending formal notices to the company. Sources say the bank will also inform the Reserve Bank of India about its decision.

"Yes, we have declared Vijay Mallya and three directors as wilful defaulters," UBI executive directors Deepak Narang told ET.

Wilful defaulters are prohibited to borrow money from banks and cannot continue as a director in any company.

"We had requested them to appear before our panel at 10.30 am on Monday. They did not come. So, we have declared them as wilful defaulters on the basis of a letter furnished by them on July 4th," Narang said.
Sources in the know indicate that the three directors along with Vijay Mallya include, AK Ganguly, Subhash R Gupte and R Nedungadi.

This follows the Calcutta High Court dismissing KFA's plea against United Bank of India last week. KFA and United Bank of India have been entangled in a legal tussle for a few months now after UBI moved to declare the grounded airline as a wilful defaulter.

However, sources also indicate that KFA has approached the Supreme Court in this case, in an attempt to challenge the Calcutta High Court order. KFA has been insisting to be represented by an external lawyer in front of the GRC of United Bank of India which was refused by Calcutta High court.

There are serious repercussions of a company being declared a wilful defaulter which include restricting any future access to bank finance for the company as well as all directors of the company who are associated with other companies.

Other lenders like SBI and PNB are also in the process of declaring KFA and management as wilful defaulters.

(With inputs from ET Bureau)