Oct. 13 (Bloomberg) -- Vijay Mallya, the billionaire chairman of Kingfisher Airlines Ltd., may face arrest after failing to appear at a court hearing about the cash-strapped carrier bouncing checks.
A court in Hyderabad, in southern India, issued warrants for Mallya and four other executives, GMR Hyderabad International Airport Ltd. said in a statement yesterday. The airport operator initially filed a complaint because of four bad checks totaling 105 million rupees ($2 million), it said.
The order comes as liquor tycoon Mallya seeks investments for Bangalore-based Kingfisher, which has struggled to pay bills and wages for at least a year after posting five straight annual losses. The carrier halted operations on Oct. 1, when engineers and pilots walked out, demanding that seven months of unpaid salaries be settled.
“The warrant doesn’t mean Mallya is going to be arrested immediately,” said D. B. Goswami, a lawyer in private practice, who works on cases before India’s Supreme Court. “Check bounce is a criminal offense, but it isn’t something that’s out of the ordinary.”
Mallya can seek a cancellation of the warrant or request bail, Goswami said. Kingfisher Air hasn’t received any warrants, Prakash Mirpuri, a spokesman at the carrier, said in a statement. Mallya didn’t answer two calls to his mobile phone.
A partial lockout, which Kingfisher had planned to end yesterday, is being extended through Oct. 20, Mirpuri said in a separate statement. The airline is “continuing to work with” employees to resolve the labor dispute, and it called on workers to halt the strike. Kingfisher is “hopeful” of resuming flights on Oct. 21, Mirpuri said.
Kingfisher fell 0.4 percent to 11.40 rupees at the close in Mumbai. Distiller United Spirits Ltd., Mallya’s biggest company by sales, dropped 2 percent. The benchmark BSE India Sensitive Index lost 0.7 percent. Kingfisher, named for Mallya’s flagship beer brand, has dropped 29 percent this month.
India’s aviation regulator has asked the carrier why its permit shouldn’t be canceled or suspended following the shutdown. Kingfisher may be allowed to resume operations if it has staff to operate at least five planes, two officials at the aviation ministry said yesterday, asking not to be identified, citing rules. The carrier’s license can’t be canceled based on the current situation, they said.
Mallya was ranked India’s 45th richest person with a net worth of $1 billion by Forbes magazine in March. The 56-year-old tycoon owns a 95-meter (312-foot) yacht called the Indian Empress, a stake in the country’s only Formula One racing team and a cricket squad named Royal Challengers Bangalore.
Kingfisher defaulted on loans and interest payments on several occasions in the year ended March 31, the company’s auditor said in the airline’s annual report. The carrier had total debt of 86 billion rupees as of March, according to data compiled by Bloomberg. Mallya gave personal guarantees totaling 59 billion rupees for Kingfisher’s loans, according to the company’s annual report.
The airline is in discussions with overseas carriers as it tries to sell a stake, Mallya has said. He is also in talks to sell a stake in United Spirits to Diageo Plc.
Kingfisher has 10 operational planes, comprising seven Airbus SAS A320s and three Avions de Transport Regional turboprop aircraft. It has enough staff for 60 planes, according to Arun Mishra, the director general of civil aviation.
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