Auction of Vijay Mallya’s airbus to be recalled

The Bombay high court on Monday permitted the Service Tax Department to recall the e-auction of businessman Vijay Mallya’s luxury Airbus A319.

A bench of Justices SC Dharmadhikari and BP Colabawalla have now directed the US-based private aircraft sales company CJ Leasings (Cayman) Ltd. to identify a “new buyer,” or a “competent authority” to facilitate the re-sale of the aircraft within a week, and to apprise the court of the same.

The aircraft, owned by C J Leasing, was given to Mallya’s Kingfisher on lease.

The directions came while the bench was hearing a plea filed by the department seeking that the high court’s August 22 order approving the sale of the aircraft be stayed.

At the last hearing, the bench refused to grant the stay and instead, directed additional solicitor general Anil Singh to consult the department commissioner and the Board of Customs and Excise once more. The bench had said it could not allow the aircraft to remain stationed at the domestic airport indefinitely. It added that the government must decide whether it is to be sold.

However, on Monday, Singh informed the bench that the department and the board had unanimously decided against accepting the proceeds of the auction, which was conducted on August 18.

He said the highest bidder had bid just Rs27.39 crore and this amount was “81.8 percent less than the reserve price of the aircraft.”

Singh said according to the terms and conditions of the auction, the sale was to be “confirmed and the full payment was to be made within a month” and since that deadline was already over, the bid stood “forfeited.”

The bidder and CJ Leasings opposed Singh’s argument saying that at the time of the bid, the department had not announced a base reserve price and the bidders had to rely upon their own estimates.

“After the sale was completed, the department had a sudden change of heart and came to court saying that the amount was less than its ‘secret’ reserve price. We are the owners of the aircraft and are suffering because of the department’s indecision,” said senior advocate Darius Khambata, who appeared for CJ Leasings.

The bidder too told the court he wished to withdraw his bid.

The bench has scheduled the matter for further hearing on October 6 and warned all parties to come up with a final decision on disposing of the aircraft.

The department is set to auction Mallya’s luxury Airbus A319 to recover part of dues amounting to more than Rs800 crore. The department hopes to raise Rs 150 crore from the auction.

The department had seized the Airbus A319 in December 2013.On June 30, the department had conducted an e-auction of the Airbus to recover its dues from Mallya’s now-defunct Kingfisher Airlines. However, it recalled the sale after the highest bidder at the time offered just Rs.1 crore. On August 22, it conducted a second auction but changed its mind once again and approached the court seeking permission to recall it.