Denying all charges made by prosecution lawyer Mark Summers on behalf of India on Monday over the collapse of Mallya’s Kingfisher Airlines, she said there was no evidence, only competing narratives of fraud versus business failure. No reasonable jury would be able to reach a safe conclusion that there had been a deliberate intent to defraud, she said.
The Indian government has requested Mallya’s extradition from Britain, accusing him of fraudulently palming off the airline’s losses onto banks by taking out loans he did not intend to repay. The case against him centres on a series of loans Kingfisher obtained from Indian banks, especially state-owned lender IDBI. The banks want to recover a total of about Rs 9,000 crore that the state says the defunct airline owes.
India’s charges against Mallya are financially incoherent and without evidence, Montgomery told the Westminster magistrates court, and termed some of the charges as”nonsensical”.
It is impossible to palm off losses onto banks as alleged by India, she said, adding that the charge of Mallya giving false representations to get a loan from IDBI in 2009 is extraordinary. Montgomery also rejected the allegation that senior managers at state-owned lender IDBI were involved in Mallya’s plan.
According to Montgomery, whatever Mallya did was not deliberately dishonest but arose out of a desire to fight his corner. All disbursements by Mallya and Kingfisher from bank loans were made for benefit of the company, she said, denying India’s claim that loans were used to meet expenses other than for what they were meant for.
Montgomery claimed that the Indian government’s case revealed a “shocking” lack of appreciation of how companies function and basic realities such as the effects of incorporation and the rights of shareholders.
According to her, India’s allegation that Mallya had deliberately misled banks by overstating Kingfisher’s projected profits was “a false premise”, because airlines were subject to many unpredictable factors beyond their control, such as fuel cost fluctuations and the global economic climate. Montgomery also challenged India’s argument that lies were told regarding Mallya’s net worth in April 2009 while giving personal guarantees for seeking loans.
Mallya, the focus of intense media interest, arrived wearing a dark suit and yellow tie and was mobbed by cameramen as he walked into the building.
Inside the courtroom, he spoke only to confirm his name and age before sitting quietly in the glass-walled dock.
The extradition hearing is expected to last two weeks. The judge, England’s Chief Magistrate Emma Arbuthnot, will have to decide if there is a prima facie case against Mallya and whether the alleged crimes would amount as offences in Britain as well as India.
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