The Kingfisher Airlines Outrage
Dr Vijay Mallya was one of the most successful Indian businessmen of the 90s and 2000s. He had inherited a massive business empire from Dr Vitthal Mallya. However, his skill and expertise at growing the business was legendary.
Critics expected Vijay Mallya to flounder away his wealth thanks to this flamboyant lifestyle. However, Mallya managed to grow it many times over. The liquor business was flourishing under Vijay Mallyas command and his business had also diversified to become a formidable conglomerate. One of the many laurels in his cap was the fact that Forbes estimated his net worth at being over a billion dollars and placed him on the list of being one of the richest people in India as well as the world.
However, this illusion of success was soon to fall apart. Today, the Kingfisher and United Spirits corporations owned by Vijay Mallya are in ruins. Creditors are lining up on the doors to recover their dues but are unable to do so. Employees have not been paid salaries for several months. Some of them have committed suicide because of the financial duress caused by Vijay Mallya. Vijay Mallya is currently a fugitive, who is staying in London trying to evade the arm of the Indian law.
The media trial conducted in India has already blamed Vijay Mallya for everything that went wrong. His flamboyant image added fuel to the fire as his name became synonymous with recklessness. Today banks are petitioning the Supreme Court to impound Vijay Mallyas passport.
But the question that arises is whether all these banks are mere victims of the Kingfisher saga. If so, arent there checks and balances in the system that stop people like Mr Vijay Mallya from exploiting it.
In this article, we will try and figure out the banks fault in the entire conundrum.
Concept of Limited Liability
First of all, there is enormous outrage over the fact that Vijay Mallya continues to have lavish parties and owns yachts while he still owes money to creditors. Recently when he donated 3 kgs of gold to a temple, the outrage became all the more evident.
However, this outrage is merely of moral nature. It has no legal implications. This is because the law in India and elsewhere provides corporations with limited liability. This means that Vijay Mallya and Kingfisher are two separate people in the eyes of the law. Therefore, if Kingfisher owes money to people, Vijay Mallya cannot be held liable for it. His liability is limited to the extent of capital that he has contributed in the company.
It seems strange that the common man wants Mallya to share the profits with all the other shareholders but take losses all by himself! Dr Mallya is just a shareholder of the firm as well as an employee. His liability is just limited to the value of his shares and his salary. His personal wealth obtained by pursuing other businesses cannot be legally attached to pay the dues outstanding to Kingfisher employees.
Bankers Fault
Personal Guarantee
Vijay Mallyas personal assets therefore cannot be attached to pay off Kingfishers dues. The selling of his mansion in Goa and his office in Mumbai could take place because he had pledged the assets to the banks as personal guarantees. Had not provided such guarantees, no bank would have had the right to even lay a hand on his property let alone seize it.

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