These are the charges Vijay Mallya may face when he is brought back

With the leash tightening around embattled liquor baron Vijay Mallya and the ground getting ready for his extradition to India, the dirt surrounding his operations in India, where he is accused of cheating banks to the tune of over Rs 7,000 crore, seems to be coming out.

Investigations by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), 2002, have now revealed that Mallya cheated banks by securing loan for his defunct Kingfisher Airlines by offering KAL brand valued at Rs 3,400 crore as collateral even though the valuation was not independently verified and had no consent for such use by valuer Grant Thornton.

The ED investigation has said that KAL secured Rs 2,000 crore working capital loan from a consortium of banks based on reports of its financial advisor SBI Capital Markets (SBI Cap). The airline used corporate guarantee from United Breweries and personal guarantee from Vijay Mallya as collateral but the banks got a comfort of Rs 3,400 crore as the accessed brand value of KAL.

But as it comes out now, this brand valuation done by Grant Thornton was only for internal purpose of the airline and not for any other purpose without the consent of the valuer. But this consent was never taken while banks also accepted this collateral without independent verification.

Moreover, in yet another lapse, banks also failed to recognise that brand valuation conducted by Grant Thornton also varied much in the three reports submitted by them at different points of time to KAL.

Also, as part of one-time loan restructuring exercise cleared by the Reserve Bank of India in 2010 for the aviation sector, KAL got its debt to the tune of Rs 6,000 crore restructured. However, this restructuring was done strictly on the basis of corporate guarantee of the promoter company United Breweries Holdings Ltd (UBHL) as well as personal guarantee of Vijay Mallya who was one of the main promoters of the companies.

But when banks decided to invoke these guarantees after KAL accounts turned NPA even post restructuring, ED investigations reveals that UHBL and Mallya not only `deliberately and dishonestly' did not repay the amount but filed a suit in Bombay High Court seeking relief as those were executed under "duress, coercion and therefore, should be declared as invalid and unenforceable".
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