In a new twist, Indigo, GoAir made parties in Mallya case

The objections were filed after Airbus failed to repay Rs 196 crore, availed by the aircraft-making company on behalf of Mallya-controlled Kingfisher Airlines

Indigo and GoAir airline, on Friday, filed objections to interim applications of the consortium of banks led by Oriental Bank of Commerce, which pleaded before the Debt Recovery Tribunal under garnishee proceedings to direct the budget carriers to deposit the money to be paid to Airbus with it instead of paying to the aircraft maker in the Vijay Mallya case.

A garnishment is a means of collecting a monetary judgment against a defendant by ordering a third party (the garnishee) to pay money, otherwise owed to the defendant, directly to the plaintiff.

The objections were filed after Airbus failed to repay Rs 196 crore, availed by the aircraft-making company on behalf of Mallya-controlled Kingfisher Airlines Limited.

The Oriental Bank of Commerce, Corporation Bank and United Bank of India, had made pre-delivery payment of Rs 196 crore to Airbus on behalf of Kingfisher after both the parties had signed a purchase agreement.

Though Airbus is in receipt of the money, it failed to deliver the planes to the now-grounded Kingfisher Airlines promoted by Mallya, Mohammad Ibrahim, the counsel for bankers, said in his submissions.

"The banks had made a pre-delivery payment of Rs 196 crore to Airbus on behalf of Kingfisher Airlines. Airbus admitted that it has received the money, but did not deliver the aircraft. Airbus should rightfully return the money to the company," he said.

Earlier, Airbus had stated that it has withdrawn orders for planes by grounded Kingfisher Airlines saying the company may not need the planes, Ibrahim submitted. It was around this time the airline had stopped flying, he added.

Earlier, lenders to Kingfisher Airlines had written to the ministries of civil aviation and defence to restrain payments due to Airbus, commercial arm of aerospace firm Airbus Group NV, after the company failed to deliver aircraft as promised to the defunct airline and held back funds.

A detailed questionnaire also was sent to Airbus seeking their stand on the issue, but was unanswered.

The DRT presiding officer K Srinivasan posted the matter to September 26 for next hearing.

The now-defunct Kingfisher Airlines owes over Rs 9,000 crore to a consortium of 17 banks led by SBI. Mallya, who left the country on March 2 and is now in UK, has been declared a proclaimed offender by a special PMLA court in Mumbai on a plea by Enforcement Directorate in connection with its money laundering probe against him in the alleged bank loan default case.

Photograph: Parivartan Sharma/Reuters