. Vijay Mallya spent the entire night at the police station

One of the biggest corporate battles of India is also one of the most unknown stories.

On June 5th 1985, in the police station at Infantry Road Bangalore, there was a man arrested on charges of violation of Foreign Exchange Rules (FERA). Vijay Mallya spent the entire night at the police station before he was released on bail the next morning.

Do you want to know why he went to jail? Read on:-

Vijay Mallya was successful in creating the Kingfisher (beer) craze in the whole country, now he wanted to create the same magic in hard liquor segment.

He had his eyes on a foreign company called ‘Shaw Wallace’ which owned hard liquor brands like Royal Challenge, DSP (Director’s Special), Officer's Choice and Antiquity.

But, during those times, Indian Corporate Laws didn’t allow an Indian businessman to acquire a foreign company unless the businessman was an NRI. So, Vijay Mallya desperately tried to achieve the NRI status but with no fruitful results.

Then he thought of another idea to acquire ‘Shaw Wallace’. He thought of forming a joint venture called ‘Carrasco’ through one of his holding companies with an NRI businessman Manu Chhabria and ‘Carrasco’ would be registered in Hong Kong.

It had to be a 50–50 joint venture. The deal was that Vijay Mallya would pay the entire amount of Rs 55 crores to buy ‘Shaw Wallace’ and Manu Chhabria’s NRI status would be used so that there would not be a problem with Indian authorities.

But, Indian Tax Authorities got a tip from someone about this plan of Vijay Mallya’s. So on June 5th, 1985, Vijay Mallya was arrested from Bangalore Airport and Manu Chhabria was arrested from Delhi Airport. However, both were released on bail.

Vijay Mallya had to let go of Carrasco because his intentions were now known to Indian Authorities. However, Mallya had already paid the half the amount required to buy the company. Mallya then waited to get his NRI status so that he could complete the Carrasco deal.

But he was shocked to know that Manu Chhabria raised the rest of the money to acquire Shaw Wallace. Then, he realized that all this drama (his arrest and tip to authorities) was created by Manu Chhabria.

Then Vijay Mallya confronted Manu Chhabria but he refused to hand over the company to Mallya. He also refused to return the money that Mallya paid to buy the company. Vijay Mallya could not prove to the court that he had paid money to buy Shaw Wallace.

Manu Chhabria received a title of ‘Corporate Raider’ by Indian Media when the story was out in the public. He would go on to acquire many companies and strip them of their assets and then abandon them.

In 2002, Manu Chhabria was admitted to the hospital because of ill health. A week before he died, Vijay Mallya paid him a visit to the hospital. (Don’t draw conclusions here)

Mallya once again tried to acquire Shaw Wallace after Manu Chhabria’s death. Now, Vijay Mallya proved to the court that he was an equal partner in Carrasco and thus put pressure on Manu Chhabria’s wife to part with Shaw Wallace and hand over the company to him.

Mallya once again bought Shaw Wallace from Manu Chhabria’s wife but this time he had to shell out Rs 1,500 crores and thus ending the 20 year long corporate battle.

But this amount was worth it because all the brands of Shaw Wallace (which Mallya acquired) went on to become super-hits.

(Well, there are a lot of facts to this story but I didn’t write them because that would make it lengthy to read.)

Sources: The Vijay Mallya Story by K Giriprakash and another book called Great Indian Business Stories