The prosecution had accused Mallya of “mala fide” intentions in KFA seeking the loan of Rs 750 crore from IDBI Bank and misusing the money. Montgomery responded: “It is evidentially unsupported that he palmed off losses on to bankers.”
“It reflected,” she said, “a lack of appreciation of the rights of shareholders. It is economically and legally impossible”.
She contended the promoters’ losses stood at Rs 1,652 crore before KFA sought a loan of Rs 2,000 from a consortium of Indian public sector banks, including State Bank of India and UCO Bank. By taking the facility and not being able to repay, their liabilities increased by thousands of crores, she maintained. Thus, the Indian government’s was “not a credible case to advance”.
Montgomery explained the airline business was dependent on currency fluctuations, price of aviation fuel, competition, over capacity and the global economic climate. In India, she stated airlines “cannot hedge their fuel costs” because there’s a “monopoly on domestic supply”.