Mumbai: Lenders to the defunct Kingfisher Airlines Ltd have decided to reject promoter Vijay Mallya’s offer for a settlement, two bankers in the know confirmed. In a meeting on Saturday, the lending consortium decided to reject Mallya’s offer of paying ₹ 6,000 crore as a settlement package to dues worth more than ₹ 9,000 crore.

While the message has not been conveyed to Mallya and his attorneys yet, bankers will be rejecting this offer on Thursday during the Supreme Court hearing on the matter.

“The offer is badly structured and the possibility of actually receiving the money seems like a distant dream," said one of the bankers, who is directly involved with the proceedings, seeking anonymity as the case is sub-judice.

On Monday, The Economic Times first reported that lenders are not interested in the settlement offer.

“Parts of the settlement offer are dependent on the outcome in court cases which are still pending in courts in India and London. We are not sure how or when they will be resolved. How do we accept an offer without that clarity?" asked another public sector banker directly involved in the case, also seeking anonymity.

In his offer, Mallya has stated that banks will be paid up to ₹ 4,000 crore by September 2016.

In a 13 March statement, Mallya claimed that banks had already recovered ₹ 2,494 crore from Kingfisher Airlines since 2013.

The additional ₹ 2,000 crore payment that Mallya promised to the banks relates to a lawsuit filed by Kingfisher Airlines in 2013 or 2014 before a civil court in Bangalore against a company for allegedly supplying defective engines for its aircraft, said S.S. Naganand, one of the lawyers appearing for the lenders’ consortium.

“KFA (Kingfisher Airlines) could have claimed in court those defective aircraft engines caused their airline business to decline and they have asked for compensation," he said.

A bench comprising justices Kurian Joseph and Rohinton F. Nariman asked Mallya’s lawyers if the businessman was back in the country as the court had issued a notice to him earlier. To this, Vaidyanathan replied that Mallya was yet to return.

On 9 March, the Supreme Court issued a notice to Mallya on the plea by a consortium of banks seeking to stop him from leaving the country.

“The court should ask him to appear here and bring his passport. We also want a disclosure of his assets," attorney general Mukul Rohatgi had told the court. Rohatgi was representing the creditor banks.

State Bank of India, which has the biggest loan exposure to Kingfisher Airlines at ₹ 1,600 crore, and 12 other banks moved the top court a day after a tribunal blocked Mallya from accessing a $75 million (about ₹ 515 crore) payout promised to him by Diageo Plc. SBI declared Mallya a wilful defaulter in November last year.

On 25 February, Diageo agreed to pay Mallya $75 million over five years and drop all charges of financial impropriety against him in return for stepping down as chairman of United Spirits Ltd, a company now controlled by the UK liquor maker.

The other creditor banks include Axis Bank Ltd, Bank of Baroda, Corporation Bank, Federal Bank Ltd, IDBI Bank Ltd, Indian Overseas Bank, Jammu and Kashmir Bank Ltd, Punjab and Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank and United Bank of India.

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