Updated 12 February 2026 at 14:53 IST
Kingfisher Loan Default: Bombay HC Warns Mallya May Lose Right to Relief
The Bombay High Court granted Vijay Mallya one final opportunity to return to India while hearing his challenge to fugitive offender proceedings. The Centre opposed relief, stating that extradition proceedings in the UK are nearing completion and highlighting asset recoveries worth thousands of crores. The court warned that continued absence could lead to a formal finding that Mallya is evading justice, which would bar him from seeking relief.
The Bombay High Court on Thursday granted fugitive businessman Vijay Mallya one final opportunity to return to India while hearing his challenge to proceedings initiated under the Fugitive Economic Offenders Act (FEOA), 2018, warning that continued absence could lead to a formal finding that he is evading the judicial process. Such a finding would bar Mallya from seeking relief from Indian courts while remaining overseas.
Centre Opposes Relief, Says UK Extradition At Advanced Stage
The Central government, represented by Solicitor General Tushar Mehta, strongly opposed granting any relief, informing the court that extradition proceedings in the United Kingdom are at a near-conclusion stage.
The Centre argued that Mallya’s decision to revive proceedings in India at this point is legally untenable, submitting that he cannot avoid submitting to Indian jurisdiction while simultaneously invoking constitutional remedies.
The government also told the court that recovery and attachment proceedings have already been executed, with assets worth thousands of crores of rupees linked to Mallya having been seized under enforcement actions.
The High Court observed that it may have to formally record that Mallya is avoiding the process of the court, which would prevent him from taking advantage of legal proceedings in India. However, the bench said it would not dismiss the plea outright at this stage and granted one final opportunity before taking a call on maintainability.
What Mallya is Challenging:
- His declaration as a fugitive economic offender
- The constitutional validity of the Fugitive Economic Offenders Act, 2018
- Orders allowing the confiscation of properties under the law
The FEOA applies to individuals accused of economic offences involving ₹100 crore or more who leave India to avoid prosecution.
Kingfisher Default
Mallya, the former promoter of Kingfisher Airlines, left India in March 2016 after the airline collapsed under severe financial stress.
According to investigative agencies and court records:
- Kingfisher Airlines defaulted on loans of over ₹9,000 crore owed to a consortium of Indian banks
- Mallya faces charges of fraud, wilful default, and money laundering
- Enforcement agencies have so far attached and recovered assets exceeding ₹14,000 crore, an amount cited by the government in multiple proceedings
Authorities argue that permitting constitutional challenges without physical presence would weaken the enforcement framework for large-value banking fraud cases.
Court records show that the lending to Kingfisher Airlines was backed by corporate and personal guarantees, including guarantees executed by Vijay Mallya. Banking filings indicate that total claims against the borrower group increased significantly after defaults due to accrued interest and penal charges, which were part of recovery proceedings initiated by lenders.
The loans to Kingfisher Airlines were extended through a consortium lending arrangement, with exposure spread across multiple public sector banks. Such consortium structures are governed by inter-creditor agreements that allow collective recovery action. The framework was later strengthened through insolvency and enforcement reforms.
The Kingfisher Airlines case was cited in official banking reviews during the period when lenders undertook large-scale recognition of stressed assets. The default formed part of the broader stock of high-value NPAs identified during the asset quality review phase. This led to increased provisioning across the banking system.
Kingfisher Airlines has remained non-operational since 2012, with no resolution plan or revival proceedings undertaken under insolvency laws, as aviation assets and licences had lapsed by the time enforcement actions intensified. Remaining proceedings have focused on recovery from promoter-linked assets rather than operational restructuring.
Finding that Mallya is avoiding Indian courts would:
- Strengthen the government’s position under the FEOA
- Reduce procedural challenges to asset confiscation
- Reinforce recovery mechanisms in high-value banking fraud cases
Published By : Shourya Jha
Published On: 12 February 2026 at 14:07 IST