Diageo wins legal case against former United Spirits boss Vijay Mallya

Diageo has won a summary High Court order against Vijay Mallya, the fugitive former head of India’s United Spirits, to pay $135 million to the global drinks giant after it had to meet a guarantee on a loan to Mallya and his companies.

(Photo: Wiki)

Diageo Plc, Diageo Holdings Netherlands BV and Diageo Finance Plc, claimed that Mallya, his son Siddharth, their company Watson Limited and a company held in a family trust called the Continental Administration Services Limited, owed them $175million after defaulting on a loan from Standard Chartered Bank, “We are suing Dr Mallya for repayment and damages amounting to approximately $175 million.

This is money Dr Mallya and some of his affiliate companies owe Diageo and we have always been clear that we are entitled to exercise our right to recover the sum in full,” said Diageo.

Last Friday, the UK court ordered Mallya to repay $135 million dollars within 28 days as part of its summary judgement. He has also been instructed to pay £200,000 towards the costs of litigation so far. A further court hearing later this year will determine whether Mallya will be required to repay the outstanding $40 million.

Mallya was refused a right to appeal against the summary judgement.

“We are pleased to have won in a clear vindication of our position”, Diageo said in a statement.

“The court was clear in rejecting Dr Mallya’s claim that there was a deal other than the one we signed. Diageo has consistently rejected those assertions. At all times through the protracted acquisition of USL, Diageo acted appropriately and in accordance with all legal obligations. All arrangements with Dr Mallya have been fully disclosed and accounted for.”

Mallya faces having to pay the $135 million at almost the same time as his final appeal against extradition to India to face charges of fraud and money laundering will be heard in early July.

Whether he will be able to do so is a moot point. India has enforced a global freeze on his assets which has been upheld in London and he is having to maintain his former playboy lifestyle on an allowance of £18,000 a week.

Earlier this month, Mallya was granted a one-year reprieve to repay Swiss bank UBS £20m against a loan secured on his luxury mansion in London. He is also facing the consortium of Indian banks who have initiated bankruptcy proceedings against him in a bid to recoup more than £1.1 billion in loans made to Mallya’s collapsed airline, Kingfisher Airways.

A further blow is that the re-election f Narendra Modi’s government in India dashes Mallya’s hopes of lenient treatment should he be extradited and found guilty. Modi has taken a strong stance against several financial fugitives, including Mallya, who has always claimed that the charges against him in India are part of a political witch-hunt.