Kingfisher employees are yet to be paid wages
Flamboyant businessman and industrialist Vijay Mallya, once labelled as the King of Good Times, is going through king-sized bad times now.
Ever since his flagship carrier, Kingfisher Airlines, was grounded in October 2012 because of mounting debt, it's been nothing less than a Houdini act for Mallya, to stay out of the loop of the law. But it all seems to be closing in on him, leaving little room for escape.
A consortium of 17 banks led by the State Bank of India, moved heaven and earth, rather belatedly, to prevent Mallya from leaving the country. But today, Attorney General Mukul Rohatgi who is appearing for the consortium, said that Mallya has indeed managed to leave India.
If he has actually fled, then this is without repaying about Rs 7,500 crore that he owes the banks. Meanwhile, the 2,500-odd distraught employees of the defunct airlines are discovering that he had been short-changing them for a long time without their knowledge.
Mallya not only owes them back wages to the tune of over Rs 300 crore, but shockingly has not deposited the Provident Fund deducted from their salaries for a number of years. Nor has he made a matching employers' contribution, which is mandatory under the Employees Provident Fund Act, 1952.
While the penalty is 5% for a delay of two months or less, it is 25% a year for a delay of six months and above. The Act provides for "not less than one year imprisonment" in case of default of employer contribution.
Any employee can activate the law by simply filing a complaint with the local police. "The law is so stringent that the police can arrest an employer even if the contribution is delayed by a few days," said a source in the labour department.
Some employees have come forward to say that it is not just Provident Fund, but Mallya has also not deposited the employees' tax deducted at source (TDS) for a number of years.
A woman pilot who worked for Kingfisher till 2012 and currently employed by another private airline, told Catch that she has been getting notices from the Income Tax department for tax dues since 2009. "I have personally gone to the IT offices and explained the position several times, but the issue is not yet resolved," she said.
The Income Tax Act provides for a penalty of 100% of the amount of TDS not paid. It says, in addition, "rigorous imprisonment of up to seven years can be imposed on wilful defaulters."
There is no clear data on this massive TDS fraud that Vijay Mallya has indulged in, but the fact that the IncomeTax department has not even bothered to question him so far shows the amount of 'clout' that he enjoys at the political level, whether it was the UPA earlier or the NDA government now.
But not everyone is ready to put the entire blame for the Kingfisher fiasco at Mallya's door, saying, he was one of the many beneficiaries of crony capitalism that India has encouraged and like many other big industrialists, Mallya also "stretched the rules as much as he could."
Captain Gopinath, who sold Air Deccan to Mallya in 2008, said the acquisition gave a big boost to Kingfisher. Overnight, its market share jumped to 36% as compared to Indian Airlines' 18% ,and the flying destinations went up from 20 to 70 cities.
"But he (Mallya) was involved in too many things. The cardinal mistake he did was to run it himself when he neither had the time nor experience. When the debts mounted, he thought he will ride out the storm, but by the time he realised, it was too late."
Gopinath says the banks and the government were equally responsible for Mallya's downfall. "The banks could have got together earlier to save the company and save jobs by forcing Vijay Mallya to step down from the board...If the then government had allowed foreign airlines to hold 51% shares, Kingfisher would have survived. But the government succumbed to lobbies by rival airlines and the policy was changed only much later."
Having contributed to the growth of bad debts and also Kingfisher's demise, the Congress is now playing a different tune. Party spokesperson Manish Tewari said, "There has to be zero tolerance towards wilful defaulters like Vijay Mallya. Why don't they (government) put Mallya behind bars just the way the Sahara chief was sent? Such people shouldn't be allowed to escape the rigours of law."
But it will not be easy to target Mallya alone for defaulting on repayment of loans. Recent reports suggest that there are about 30 top companies in the country which owe nationalised banks about Rs 1.21 lakh crore, which is almost 40% of the NPAs.
The Supreme Court also recently took RBI to task over reports that the banks had written off around Rs 40,000 crore corporate loans in 2015 alone. It sought detailed information from RBI (by mid-April) regarding cases where loans of Rs 500 crore and above had been written off by public sector banks.
So, if tough action indeed follows, Mallya will have lots of company in jail.
Edited by Anna Verghese
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