PNB’s victory in UK court could set precedent for Mallya’s loan recovery


In a judgment that may have implications for the case against fugitive tycoon Vijay Mallya, the High Court of the United Kingdom ruled in favor of the international branch of the Punjab National Bank in a $ 22 million loan recovery case.

The judgment could set a precedent in the UK debt collection case against Mallya by a consortium of Indian banks. Many Indian businessmen have questioned the rationale for UK courts to try them in loan recovery cases, citing opinions issued in India.

The case was brought against prominent Indian businessman Pradeep Agrawal, chairman of Superior Drinks Pvt Ltd, which manufactures Coca-Cola drinks in India, and Superior Industries Ltd. (SIL), which manufactures packaging materials, and others. The court dismissed the claims of two of the defendants, challenging the jurisdiction of the English court to hear claims for PNB, which relate to the non-payment of a series of loans and associated guarantees relating to the purchase and operation. a cruise liner, the MV Delphin.

After borrowers defaulted on their loans, the bank initiated proceedings and served them with notices in India.

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The defendants admitted to taking collateral but challenged the jurisdiction of the English court to hear the bank’s claim and also raised questions regarding the notices served in India. After a two-day hearing, Judge Sara Cockerill rejected all of the defendants’ arguments and ordered them to make an interim payment to cover the bank’s costs of 70,000 pounds (approximately $ 91,000).

The judgment may set a precedent for cases brought by Indian banks in the UK against promoters or guarantors, in particular the judge’s dismissal of the argument that the guarantees were invalid due to a lack of regulatory approval by the Reserve Bank of India.

Paul Gair, Partner at TLT, said: “This is a significant victory for PNBIL as it means that it can now pursue its enforcement action against the defendants in English courts. It is also a landmark decision for similar cases, as the defendants’ arguments are usually lifted by sureties based in India. ”

“This follows a series of similar cases in which Indian banks have successfully prosecuted willful violators who reside or have assets in the UK in English courts, or where financing arrangements are subject to the law. and to English jurisdiction. This shows that it can be a successful avenue of application when pursued correctly and under the right circumstances, ”he added.

On July 14, Agrawal and SIL filed applications for court of Appeal, requesting leave to challenge Judge Cockerill’s decision.


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