Vijay Mallya’s been called a “wilful defaulter” by United Bank of India. This means he intentionally defaulted on loans, and they can say that because he had a personal guarantee for the loans taken by Kingfisher Airlines and if he doesn’t pay up while owning assets, he can be given that label.

The label isn’t just one in name, it has repurcussions. A wilful defaulter cannot be on the board of companies that borrow money from other banks, because those banks can call back loans or refuse to lend.

Mallya is on the board of United Spirits, UB Holdings and MCF, it seems. But this is not a major situation as he can step down and nominate his son instead, who is not tainted with the label.

Mallya will fight this in court, and it is likely to be a long case. He didn’t directly borrow the money, but he did stand guarantee. This ‘personal guarantee’ means that he is liable to repay if the company does not. It does seem that he has personal assets, and banks will want to chase those assets and recover whatever they can.

India doesn’t have a personal bankruptcy law, and bankers can take everything that Mallya owns, and demand money from him in the future too, until the amount is fully recovered with interest. This effectively makes it impossible for Mallya to do anything – who will bother even trying if the bank has a lien on your future? Everything he does now will be through family members – and it’s quite likely he has transferred what he owns to others so that the banks can’t get at them.

But the premise on which he’s been labelled a wilful defaulter is flimsy. The Grievance Redressal Committee refused to let KFA be represented by its lawyers, and therefore gave Mallya the label because he didn’t attend a meeting. It’s not apparent that this is enough to prove a wilful default; it can only be proved if the said lawyers stall too much or present frivolous arguments to delay the case.

In many such cases, lawyers use delaying tactics to put cases off forever. Judges in courts can push things onward fast if they want, but even that process can be “managed”. Hopefully, with India taking stronger action against corruption and crony capitalism, cases like this will be quick to deliver justice. If Mallya has the ability to pay and does not, then he will have to bear the consequences.

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