Even as Reserve Bank of India (RBI) governor Raghuram Rajan recently upped the tempo in the war against loan defaulters, Vijay Mallya and his grounded Kingfisher Airlines have won a major victory in the legal fight against United Bank of India, with the Kolkata high court rejecting the bank's decision to declare it as wilful defaulter.
While the Kolkata-based bank can still pursue to declare Mallya and several Kingfisher directors wilful defaulters, the court, in a ruling with wide-ranging implications for Corporate India, has turned down the proclamation of the grievance redressal committee of the bank taken in September.
"The decisions of the identification committee and the grievance redressal committee are quashed," judge Debangsu Basak pronounced in a ruling on Wednesday.
The court ruling to turn down the decision of the bank's committees was more technical. The identification committee, formed to identify wilful defaulters, held a meeting on May 22. It consisted of four members – an executive chairman, a chief general manager and two general managers. The court said this violated an RBI rule, which prescribes only three members.
27/12/14 Sumit Moitra/Daily News & Analysis
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While the Kolkata-based bank can still pursue to declare Mallya and several Kingfisher directors wilful defaulters, the court, in a ruling with wide-ranging implications for Corporate India, has turned down the proclamation of the grievance redressal committee of the bank taken in September.
"The decisions of the identification committee and the grievance redressal committee are quashed," judge Debangsu Basak pronounced in a ruling on Wednesday.
The court ruling to turn down the decision of the bank's committees was more technical. The identification committee, formed to identify wilful defaulters, held a meeting on May 22. It consisted of four members – an executive chairman, a chief general manager and two general managers. The court said this violated an RBI rule, which prescribes only three members.
27/12/14 Sumit Moitra/Daily News & Analysis
