Mallya, who built his fortune with Kingfisher Beer and is a guarantor to the debt, left the country last week, a lawyer for the lenders told the Indian Supreme Court on Wednesday. The banks have asked the court to demand his return and to impound his passport.

The latest twist in Mallya's fortunes come as authorities are looking to make good on a pledge to clean up bank balance sheets, with the industry saddled by an estimated $120 billion in bad and troubled loans.

Finance Minister Arun Jaitley told parliament on Thursday that the lenders will take every possible action to recover the debt from Mallya and other defaulters.

"As far as the government is concerned, the clear instructions are that the banks must go all out to take every possible action," he said, adding that there were some cases of "wilful default even bordering (on) fraud".

Kingfisher stopped flying in October 2012, leaving creditors, suppliers and employees unpaid. It owed banks 90.91 billion rupees ($1.4 billion) at the end of November, Jaitley said.

Indian media believe that Mallya is in Britain and have reported that he could be staying in a luxury residence in Hertfordshire, north of London.

A spokesman for UB Group, Mallya's conglomerate, declined to comment on his whereabouts and the trademark seizure.

CREDITORS' ACTION

Separately, State Bank of India (SBI) (>> State Bank of India), the leader of Kingfisher's creditor banks, said in a statement that it had moved "very promptly on taking the appropriate legal steps required to protect banks' interest and public money".

SBI denied accusations in media reports that laxity on the part of the banks had helped Mallya to leave the country.

Mallya, who had billed himself as the "King of Good Times" living an extravagant life, has been called a wilful defaulter by some banks. He said over the weekend that the he had no intention of running away from Kingfisher's creditors and was in talks with them over a one-time settlement.

The trademarks seized include the "Kingfisher" label, "Flying Models" and "Fly the Good Times", according to a notice in newspapers by the banks' trustee, SBICAP Trustee Co.

Harish Bijoor, a brand consultant, described the banks' move as a knee-jerk reaction and said there might not be many takers for the trademarks.

"Who would ever want to run with a label called Kingfisher Airlines?" Bijoor said, adding that he does not expect the move to affect India's best-selling beer, Kingfisher.

Kingfisher beer is made by United Breweries (>> United Breweries Limited), which is part of Mallya's UB Group but now counts Heineken (>> HEINEKEN) as its biggest shareholder.

($1 = 67.0900 Indian rupees)

(Additional reporting by Rajesh Kumar Singh in New Delhi; Editing by Douglas Busvine, Edwina Gibbs and David Goodman)

By Devidutta Tripathy