Vijay Mallya ordered to pay USD 135 million to Diageo

United Kingdom | Embattled Indian drinks tycoon Vijay Mallya has lost a court case against Diageo. He was ordered to pay USD 135 million within 28 days by the High Court on 24 May 2019. 

Diageo claimed that Mr Mallya, his son, their company Watson Limited and a company held in a family trust owed them USD 175 million to be repaid to Standard Chartered Bank.

Originally, Mr Mallya had taken a loan from ICICI bank, which he then refinanced through Standard Chartered Bank, for which Diageo stepped in as a backstop in August 2015. The following year, Diageo acquired a controlling stake in Mr Mallya’s United Spirits company and Mr Mallya stepped down after taking financial compensation.

In exchange, Diageo would receive a certain number of shares from Mr Mallya, which Diageo has not been able to access. Therefore, it went to court to seek repayment from Mr Mallya.

Of the USD 175 million compensation that Diageo is demanding, the UK court has given order for Mr Mallya to repay USD 135 million within 28 days. He was also ordered to pay USD 250,000 towards the cost of litigation so far.

The fate of the remaining USD 40 million will be decided during the long trial which will take place later this year, media report. 

Mr Mallya is also fighting for his freedom. In December 2018,

the Westminster Magistrates Court had sanctioned India’s request for his extradition. The UK’s Home Secretary has meanwhile signed the order, thus paving the way for Mr Mallya’s return to India. His appeal against the extradition order will be heard in court in July.