British liquor giant Diageo Plc has confirmed that it paid $40 million to trouble-ridden Indian businessman Vijay Mallya. Diageo's spokesperson has confirmed the payment to Mallya. This assumes significance as Debt Recovery Tribunal (DRT) has ordered not to pay Mallya any amount. Diageo's Indian subsidiary is United Spirits Ltd (USL).

Diageo Plc and Vijay Mallya made a $75-million agreement on 25 February. As part of this agreement, Diagio has paid $40 million (INR 275 crore). Debt Recovery Tribunal (DRT) on 7 March passed an order restricting all the payments to Vijay Mallya. DRT has barred any payment as part of the severance package until next hearing on 28 March. 

FirstPost reports that Diageo Plc is yet receive such an order. Diageo's spokesperson Kirsty King is of the view that DRT is in the process of issuing an interim order. Diageo will review the order once it receives from DRT. DRT Presiding Officer R Benkanahalli on 7 March directed Diago and United Spirits not to pay Mallya.

Kirsty King told IANS from London on telephone and said: "We paid Mallya $40 million immediately as part of the $75-million agreement he signed with our company on February 25, with the balance ($35 million) being payable in equal installments over five years."

The bar on payments to Mallya is effective until the disposal of application by State Bank of India (SBI). DRT has ordered for a temporary attachment of the deal amount till 28 March. Mallya has already resigned as Chairman and Director of USL. He has also agreed not to compete with Diageo in spirits business anywhere in the world for next five years. Mallya is not supposed to get involved in Indian subsidiary USL.

Indian liquor baron Vijay Mallya, 60, owes about INR 9,000 crore (1crore=10millions). A consortium of 17 banks requested Supreme Court to prevent Vijay Mallya from moving out of the country. However, the Centre told Supreme Court that Mallya left the country on 2 March. Later, the confirmation of $40 million payment from Diageo came up. Subsequently, court had ruled that entire settlement should be put on hold, as reported by NDTV.

State Bank of India approached the tribunal a day after the agreement on 26 February requesting it to advance hearing on application filed in June 2013 for recovery of loans from Mallya. SBI counsel said: "We were not aware that Diageo had paid Mallya $40 million and even Mallya's counsel (Uday Holla) did not tell the tribunal during arguments on March 4 about the payment. We will seek action against him (Mallya) for suppressing the fact."

Diageo had agreed to pay $75 million (Inr515crore) to Vijay Mallya over five years for stepping down from Chairman position. Of this, Diageo says it paid $40 million to Mallya. The consortium of 17 banks on 2 March moved DRT, Bengaluru, with four applications against Vijay Mallya. Banks on 3-4 March moved Karnataka High Court against delay before DRT. High Court on 4 March issued notices to Mallya and others. High Court has also allowed DRT to go ahead with proceedings. DRT on 7 March passed interim orders restraining any payment to Mallya, according to The Hindu.

Along with SBI, 16 other state-run and private banks had lent huge amounts to Mallya's King Fisher Airlines during 2004-12. Now, Kingfisher Airlines is defunct.