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The embattled liquor tycoon gave away the rare sword in 2016 because his family told him it was bringing him “bad luck”, the London high court heard on Tuesday from the lawyer representing 13 Indian banks who Mallya owes about Rs 9,000 crore. The sword is worth £188,000 (about Rs 1.8 crore today).
The banks are attempting to convince the court that the freeze order on Mallya’s global assets should not be discharged. The lawyer cited the sword as one example of how the banks are at risk of Mallya “dissipating his assets”.
In Bengaluru, one of Mallya’s former colleagues claimed the liquor baron did try to give it to a reputed museum for safekeeping after it was purchased by him at auction in London. “However, the museum refused to take it as it was not clear as to how it could be preserved,” the ex-colleague said, adding that it was unclear what Mallya did with the sword after that.
Meanwhile, speaking to TOI, a seventh-generation descendant of Tipu, Sahebzada Mansoor Ali Tipu, said the family has been persistently trying to get in touch with Mallya and even went to the extent of trying to purchase it from Mallya, but to no avail. “As far as our understanding goes, the sword is nowhere to be seen. Neither the small museum of Tipu Sultan in Srirangapatna nor any of the family members have it. Mallya never disclosed the location of the sword to anyone,” he said. Mansoor Ali said the family was ready to initiate legal action to bring it back to the country due to its historical and archaeological importance.
Mallya had picked up the sword for Rs 1.5 crore at a private auction in 2004 and brought it to be brandished in the 2004 assembly elections when he was Janata Party president. Mallya lost all the seats in the election.
Mallya’s lawyer, however, set the value of the sword against the millions owed to the banks to argue that it was insufficient to justify the allegation that Mallya would hide or dispose of his assets.
Nigel Tozzi QC, representing the 13 Indian banks pursuing Mallya for defaulting on loans worth Rs 6,203 crore plus interest, also told the court that the 62-year-old was not able to obtain credit to buy a £500,000 (about Rs 4.7 crore) Ferrari “because of negative media coverage about him in India” so he had to buy it on hire purchase.
Mallya had declared the sword he bought for £188,400 (about Rs 1.8 crore) as part of his Indian assets when he declared them to the Supreme Court of India in April 2016, Tozzi told the court. “We are now told the regalia Sultan sword has been disposed of and Mallya has no right to reclaim it,” Tozzi said.
Tozzi added that in Mallya’s affidavit to them the businessman had written, “I gave it away in 2016 as my family said it was bringing me bad luck.”
“So we know he had a valuable item and he gave it away in 2016,” Tozzi said. “He does not tell us to whom and his affidavit explanation is flimsy. It is a breach of the Indian constraint orders made against him and a good example of him being willing to dissipate his assets,” the lawyer said.
The court also heard that Mallya had bought a Ferrari 246 GTS for £485,000 (about Rs 4.6 crore) on hire purchase (HP) with a deposit of £135,000 (about Rs 1.3 crore). He declared this as one of his regular hire purchase payments in order to convince the court that he should have a £18,000 (Rs 17 lakh) weekly allowance. But it had not been declared in his assets disclosure. Tozzi said documents showed that the car was registered in the name of “Alexander Powell in Oxford” and the monthly repayments of £10,966 (a little over Rs 10 lakh) were from Powell’s bank account. Mallya claims he paid the £135,000 deposit, Tozzi said. But Mallya’s counsel said they had no documents to prove it. “Maybe it was made from an account in Dubai that has since been closed. But a Dubai account was never disclosed to the Supreme Court in 2016,” Tozzi said.
“It is not clear where he disclosed the Dubai bank account. It is not referenced in his overseas assets. The problem is the way in which Mallya has chosen to disclose his assets, there is no traceability,” Tozzi said.
He said when the banks probed why the HP agreement was not in Mallya’s name they were told “Dr Mallya was not able to obtain credit as a result of negative media coverage about him in India”.
“That is not itself an explanation that reflects well on his probity so must mean Powell and he agreed to make an application for finance that involved a deception,” Tozzi said. “From this we can infer the HPA is in Powell’s name in order to hide his ownership from creditors. The reason it came to light is because he needed consent for weekly living expenses. That is not the conduct of someone honest and transparent.”
Tozzi said Mallya stated he had no “beneficial interests” in his UK properties of Cornwall Terrace and his Tewin mansion, once owned by the father of F1 champion Lewis Hamilton.
“The opaque holding of the structure of these properties have frustrated our attempts to identify the true beneficial owners of the properties and whether the assets of Mallya can be traced into those properties,” Tozzi said.
“Although he has given disclosure of his assets today we don’t accept it is complete or accurate and we submit that combined with other matters, the fact his assets are held in offshore entities and trusts adds to the risk of dissipation,” Tozzi added.
Referring to the Sultan sword, Nicholas Peacock QC, representing Mallya, said: “Insofar as you are looking for actual dissipation of assets, this (the sword) is it. He disposed of it at a time that he had put forward a settlement offer in excess of what claimants (the banks) wanted. So it was not a dissipation. His explanation is he was told by his family that they thought it was bringing him bad luck and I think it would be fair to say something was bringing him bad luck. We should not question superstition in other cultures.”
“The sword is worth £188,000 (about Rs 1.8 crore) in the context of a claim for millions so a sword worth that much cannot be said to be the tip of the iceberg because there is nothing the claimants can point to other than the tip,” Peacock said. “Why do claimants make so much of sword and Ferrari? That is all they have got — it is not sufficient to justify the allegation Mallya will hide or dispose of his assets.”
Peacock said Mallya was not a beneficiary of any of his properties in the UK, neither of Cornwall Terrace in London, nor of Ladywalk, his Tewin home. He said they were all held in trusts for the benefit of his children but that Mallya had asserted a “right to occupy” them as he had spent money on them. Mallya’s mother is “part of” one of the trusts, Rose Capital Ventures Ltd, that holds these properties, Peacock said. “He has never referred to Cornwall Terrace as his. He asserts his right to occupy but has no expectation of ownership.”
The case finished and judge Andrew Henshaw QC reserved judgment.