Wilful defaulter case: HC allows Kingfisher Airlines to argue its case before PNB

New Delhi: The Delhi High Court Thursday uphold its single judge's decision allowing Kingfisher Airlines lawyers to appear before lending bank Punjab National Bank (PNB) in the process to declare the ailing carrier and its guarantors, Vijay Mallya and UBHL, as wilful defaulters.

A bench of Chief Justice G Rohini and Justice Rajiv Sahai Endlaw dismissed the appeal filed by PNB against the August 28 order of the single judge who had also stayed the bank's notice to the extent that the airline and its guarantors would be held as wilful defaulters for not replying within seven days from August 21.

"The appeal (filed by PNB) is dismissed... The respondents (Kingfisher) shall appear through their counsel," the bench said.

PNB, in its plea, had challenged the high court order which had allowed lawyers to represent the airline in the proceedings to decide whether the carrier and its guarantors, Mallya and United Breweries (Holdings) Ltd (UBHL) are to be held wilful defaulters for non-payment of dues of over Rs 770 crore.

PNB had contended that it had issued a notice on August 21 to the airline asking why it and its guarantors be not declared wilful defaulters for non-payment of dues as per RBI guidelines.

The single-judge bench of the High Court had in its order held as "unacceptable" the bank's reasons for not allowing the airline to be represented by lawyers in the proceedings initiated to decide whether the grounded carrier is a wilful defaulter for non-payment of dues and directed that two advocates be allowed to represent Kingfisher.

It had also said that the operation of the default notice would not come into effect as PNB will have to give to the airline, within a week from August 28, the documents relied upon by it and Kingfisher was given two weeks time thereafter to respond.

In its appeal, PNB had said the airline had not disclosed that a similar plea of the carrier, against United Bank of India, was dismissed by a division bench of the Calcutta High Court on July 16.

It had also submitted that the airline's appeal against the Calcutta High Court's decision was dismissed by the Supreme Court on September 2.

Kingfisher had moved the court seeking directions to the bank to rescind its August 21 notice and those issued earlier as well as to restrain it from taking any action against the airlines in pursuance of the same.

The sigle judge had also said that the hearing before the bank's committee will be held on September 22 and would be concluded the same day within six hours in order to prevent any delay.

According to PNB, the airline has wilfully defaulted in payment of outstanding dues of over Rs 774 crore.

It had submitted that Kingfisher Airlines has already been held as a wilful defaulter by United Bank of India for non-payment of dues.