High Court orders Vijay Mallya to pay Diageo $135m

28th May, 2019 by Owen Bellwood

The High Court in London has ordered former United Spirits chairman Vijay Mallya to pay US$135 million to Johnnie Walker owner Diageo.

Former United Spirits chairman Vijay Mallya has been ordered to pay Diageo US$135 million

The UK-based spirits producer is suing Mallya for a total of US$175m in a protracted legal battle. The majority of the funds relate to what Diageo claimed it was owed by Watson Limited, a company affiliated with Mallya.

Dominic Redfearn, spokesman for Diageo, said: “We are suing Dr Mallya for repayment and damages amounting to approximately US$175 million. This is money Dr Mallya and some of his affiliate companies owe Diageo and we have always been clear that we are entitled to exercise our right to recover the sum in full.

“We are pleased to have won in a clear vindication of our position. The court was clear in rejecting Dr Mallya’s claim that there was a deal other than the one we signed. Diageo has consistently rejected those assertions.

“At all times through the protracted acquisition of USL, Diageo acted appropriately and in accordance with all legal obligations. All arrangements with Dr Mallya have been fully disclosed and accounted for.”

In addition to the US$135m Mallya has been ordered to pay Diageo, he is also liable to pay £200,000 (US$253,000) towards the cost of litigation so far.

Diageo announced it was suing the Indian spirits tycoon in 2017, three years after it had completed its acquisition of a majority stake in Indian drinks firm United Spirits Limited (USL), previously owned by Mallya.

Initially, the UK-based spirits producer agreed to pay Mallya a severance of US$75m in total to “bring to an end the uncertainty relating to the governance” of USL.

Under the terms, Mallya immediately received US$40m, and was due to pocket the remaining balance in equal instalments of US$7m over five years, which Diageo withheld. The group is also demanding that Mallya repay the US$40m he received three years ago.

The group argued that Mallya breached the agreement, and therefore sought compensation for alleged “losses”.

Mallya, who is also the former chairman of Kingfisher Airlines and ex-owner of the Force India Formula One team, is fighting extradition from the UK to India where he faces allegations of £1 billion (US$1.3bn) fraud.

Earlier this year home secretary Sajid Javid signed the order for Mallya’s return to India to face these allegations. Mallya said on Twitter that he planned to appeal the extradition order.

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