Summary of decision given on April 9, 2025 by a UK bankruptcy judge rejecting Mallya's appeal

On September 11, 2018, a consortium of 13 Indian banks (led by the State Bank of India) filed a original bankruptcy petition against Vijay Mallya in the Insolvency and Companies Court (ICC), part of the Business and Property Courts within the Chancery Division of the High Court of Justice of England and Wales (High Court (Chancery Division) in London). On December 10, 2018, Westminster Magistrates' Court ruled the Mallya can be extradited to India on fraud and laundering charges, provided UK Home Secretary approved the order within two months. On February 4, 2019, UK Home Secretary Sajid Javid signed off on the extradition order. Mallya was given 14 days to appeal. In July 2019, Mallya was granted permission to appeal the extradition to London's High Court, citing prison conditions and human rights concerns. On April 20, 2020, London's High Court dismissed Mallya's appeal against the 2018 extradition order. In May 2020, Mallya appealed to the UK Supreme Court. This appeal is still pending. In July 2020, Mallya offered Indian banks a ₹13,960 crore settlement (against ₹9,000 crore principal), which banks rejected as insufficient. In October 2020, the UK Home Office states Mallya cannot be extradited due to an unspecified "confidential legal matter," halting proceedings.

In April 2021, Chief Insolvency and Companies Court Judge Michael Briggs allowed amendment of the bankruptcy petition to waive reliance on Indian security interests, finding estoppel from the DRT judgment but permitting the waiver as it does not violate public policy. On July 26, 2021, Chief ICC Judge Michael Briggs issued a bankruptcy order against Vijay Mallya in an ex tempore judgment following the amended petition.

The extradition order from 2020 (upholding fraud charges related to the same loans) remains unenforced, with the court noting Mallya continues to resist on unresolved grounds.

On April 9, 2025, the UK High Court rejected Mallya's appeal and upheld the 2021 bankruptcy order (State Bank of India & Ors v Mallya [2025] EWHC 858 (Ch)). The 2020 extradition order remains unenforced.

Issues

The consolidated appeals raised three main grounds under the Insolvency Act 1986:

1. Whether the banks held undisclosed security over Mallya's assets under English law (e.g., equitable charges via guarantees and negative pledges), and if the DRT judgment created estoppel preventing the banks from petitioning as unsecured creditors.
2. Whether the amendment to the bankruptcy petition—to waive security—was procedurally improper, contrary to public policy, or an abuse of process (e.g., approbation/reprobation doctrine).
3. Whether the bankruptcy order was flawed due to "conditional" receipt of funds (non-dischargeable payments with clawback risk) and overstatement of interest in the debt quantum.

Key Statutory Provisions Invoked or Applied

• Insolvency Act 1986, section 269: Requirements for secured creditors presenting a bankruptcy petition (valuation of security or willingness to give it up); central to the estoppel and security characterization issues, including the 2021 amendment waiving security.  
• Insolvency Act 1986, section 267: Grounds for a creditor's bankruptcy petition, including the power to make a bankruptcy order (implicitly applied in upholding the 2021 order).  
• Foreign Judgments (Reciprocal Enforcement) Act 1933: Basis for registering and enforcing the 2017 Indian Debt Recovery Tribunal (DRT) judgment as the petition debt in the UK.  

 Decision

Sir Anthony Mann, sitting in the High Court (Chancery Division), delivered his judgment on April 9, 2025:

• Allowed the banks' appeal on security characterization, overturning the lower court's finding of undisclosed security and estoppel, as the DRT did not conclusively determine English-law security issues.
• Dismissed Mallya's appeal against the petition amendment, refusing permission and upholding the waiver as valid and not barred by public policy.
• Dismissed Mallya's appeal against the bankruptcy order, refusing permission on both conditional receipt and interest grounds, confirming the debt's existence and quantum. The bankruptcy order stands, enabling the trustee to pursue asset realization. The court observed that the 2020 extradition order "has still not been enforced" due to Mallya's ongoing resistance on other unresolved bases.

Sir Anthony Mann clarified that Indian guarantees and negative pledges do not create English equitable security per Bristol Airport Plc v Powdrill—they are mere contractual restraints—thus no estoppel arose from the DRT's silence on foreign law. On amendment, the court rejected approbation/reprobation claims (Express Newspapers Plc v News (UK) Ltd, LA Micro Group (UK) Ltd v Brady), finding no unfair inconsistency, as waiving security aligns with petitioning as unsecured creditors without prejudice. Public policy concerns (per All India Power Engineer Federation v Sasan Power Ltd) were dismissed, as the waiver promotes creditor recovery without fraud. For conditional receipts, analogizing to Smith v Ian Simpson & Co, the court held clawback risks do not discharge debts in bankruptcy petitions. Interest challenges were deemed meritless and tardy. Overall, the decision prioritizes substantive justice for international creditors, streamlines cross-border enforcement, and underscores the UK's role as a jurisdiction for recovering Indian debts, while noting the parallel (unenforced) extradition saga as contextual delay.

Citation: [2025] EWHC 858 (Ch).