Mallya Promised to Use ‘Switzerland Funds’ to Save London Home, UBS Tells UK Court

His London property, which overlooks the city’s Regent Park, was used to secure a mortgage loan in March 2012.

London: In a desperate bid to save his swanky Cromwell Terrace home, beleaguered liquor baron Vijay Mallya has offered to pay UBS bank “from his funds in Switzerland”, the high court in London heard on Thursday.

His London property, which overlooks the city’s Regent Park, was used to secure a mortgage loan in March 2012. UBS claims that the five-year mortgage term came to an end in 2017 and the bank has called in the loan, an amount that clocks in at a staggering £20.4 million.

Mallya, however, insists that an oral agreement was reached to extend the term to another five years. UBS has initiated proceedings against Rose Capital Ventures, the owner of the property under land registry records, Vijay Mallya (62), his son Siddharth (31) and his mother Lalitha (92).

On Thursday, the court was listening to the final pre-trial arguments to establish the structure and direction of the trial that is slated to begin from May 7.

Attorney Thomas Grant, representing the UBS bank, told the court that while the defendants had made written submissions to pay against the loan from their “funds in Switzerland”, there was a “substantial difference” between the two amounts. However, Grant did not elaborate on what the amount was slated to be.

“The claimants (UBS bank) have tried to find ways to get repayment,” Grant insisted. “It is a protracted relationship on many levels between 2012 to now and there is a history of communication and conduct to consider.”

Also read: Is Vijay Mallya Going the Lalit Modi Way?

Grant wants two full days to question the defence witnesses due to the “substantial quantum” of the loan and a wide back story” considering the relationship between the parties have been going on for many years with a lot of documentation to consider.

Allegations or evidence?

This worries Mallya’s lawyers who have referred to Grant as “self-indulgent” in their objections. Grant hit back, alleging that the motive of the defendants is to prevent the court from scrutinising the allegations further. “The more sunshine is cast on the defendant’s case, the more weaknesses will be revealed”, he told the court.

However, Mallya’s lawyer, Jonathan Gavaghan rubbished Grant’s ‘sunshine’ as “an awful lot that is not evidence in this case”. He told the court that the extra time would only be used to deviate from the main issues and discuss “not convictions but just allegations,” referring to the many cases against Mallya in the UK and India which have been fueled by “negative news coverage”.

“Evidence of dishonesty unrelated to the case will be of little significance to the case,” he argued, stressing that cross-examination into allegations should not be allowed.

“I can see how it would be unfair if things are thrown at your defendant,” said David Halpern QC, who was sitting as the Judge of the Chancery Division, but agreed to give Grant his desired two days of cross-examination at the trial. However, he put a caveat that should Grant tread away from the main issue, Gavaghan could raise it with the trial judge and the judge would be able to limit the cross-examination time.

The previously ten-day trial is now expected to conclude in 7-8 days, with the first day dedicated to pre-trial reading. The second day will see opening remarks in the morning, the defence will cross-examine witnesses in the afternoon, and follow it into the next day. The claimants have four witnesses, while the defendants have two. The claimant barrister will question witnesses over day four and five followed by closing arguments on day 6-7.

Grant wanted to alert the court to two issues that are likely to be of some consequence to this case in the future, though not at this particular moment: one, if Mallya agrees to pay interest on the loan and two, if bankruptcy proceedings are brought against Mallya who is the guarantor for his loan.

Indian banks have filed a case against Mallya in the UK to initiate bankruptcy proceedings. No decision has been made by the county court in that case yet.

Extradition appeal

Meanwhile, the Royal Courts of Justice has also confirmed that all necessary documentation has been received in Mallya’s extradition appeal case and are in the processes of allocating a judge to review the documentation and decide if a full hearing is required. This could take anywhere from a few weeks to a few months.

Chief Magistrate of the Westminster Magistrate Court, Emma Arbuthnot had agreed in December that there was enough prima facie evidence against Mallya in the Rs 9,000 crore Kingfisher Airlines fraud case and has cleared his extradition. After the Home Secretary Sajid Javid signed his extradition order on February 4, Mallya approached the high court to appeal against the Westminster Magistrate’s decision.

‘Damned if you do and Damned if you don’t…’

On Wednesday, a frustrated Mallya tweeted: “So much so for branding me a thief who stole PSU Bank money and ran away. Banks have made a substantial recovery in the past and also today. All included in my settlement proposal too. Damned if you do and Damned if you don’t is how I am treated.”

This came after 74,04,932 shares held by Mallya in United Breweries were sold off by the Bengaluru-based Debt Recovery Tribunal fetching Rs 1,008 crore. The Enforcement Directorate had attached those shares as part of its money laundering probe against Mallya.

Mallya has on several occasions raised his displeasure with the treatment meted to him by the Indian government and the Indian media. He has also maintained that he defaulted on his loans due to the downturn in the aviation industry, was always willing to repay his loan and had offered substantial assets to the Karnataka high court.  

But as the Indian investigating agencies and the UK courts seem to close in on him, Mallya is running out of options to safeguard his assets and secure his freedom.

Ruhi Khan is a journalist and social scientist based in London. She tweets @khanruhi.