By Elton Gomes
Controversial Indian businessman Vijay Mallya, who has been hiding in the UK to evade cases of alleged money laundering and tax fraud, likely now finds himself in between the proverbial rock and the hard place. A British high court ruled that an Indian judgment against him can be legally enforced over his assets in England and Wales.
The ruling by Karnataka’s Debt Recovery Tribunal froze Mallya’s global assets, and the UK court upheld the tribunal’s ruling. In other words, Mallya is now restricted from “removing – or diminishing – his assets in England and Wales,” according to a report by the Indian Express.
The British court’s ruling is good news to the consortium of 13 Indian banks looking to recover a total debt of 1.55 billion Euros from Mallya.
The Times of India reported that officials from the UK high court could take legal steps to enforce the Indian judgment. These legal steps could include seizing, and selling Mallya’s assets in England and Wales. In a setback to Mallya, Judge Andrew Henshaw refused permission to appeal the ruling, which means that Mallya’s lawyers will now have to directly petition the UK’s Court of Appeals, the Indian Express reported.
Judge Henshaw stated that Mallya should be regarded as a “fugitive from justice.” News agency PTI reported that “the high court remained unconvinced by Mallya’s claim that he has been a non-resident Indian (NRI) since 1988 and has lived in England since 1992, a country where he has indefinite leave to remain (ILR).”
However, this does not mean that Mallya can be forcibly brought to India and tried in an Indian court. Although the UK court’s ruling might come as a positive development to Indian banks, Mallya’s ownership of the assets must be decoded first.
Here’s what happened
In 2003, Mallya started Kingfisher Airlines, which eventually went on to become the harbinger of all his troubles. A number of loans were taken to revive the air carrier, which took a nosedive into losses.
In August 2014, the State Bank of India (SBI) claimed that on many instances, funds were diverted from Kingfisher Airlines to various companies within Mallya’s United Breweries (UB) group. The SBI alleged that the UB group had been “deliberately avoiding payment to lenders”. A consortium of Indian banks, including the SBI, named Vijay Mallya, Kingfisher Airlines, and the UB group as wilful defaulters.
In October 2015, Mallya’s offices were searched by the CBI, and the investigative body questioned him in December. Mallya fled to England in March 2016, to evade trial. Since then, the Indian government and the banking community have been demanding his extradition.
India’s Ministry of External Affairs, in February 2017, submitted an extradition request against Mallya. By then, it was found that Kingfisher Airlines owed over Rs 9,000 crore to a consortium of 17 Indian banks. The case by the Enforcement Directorate (ED) alleged that the Rs 417-crore loan, meant for Kingfisher Airlines, was diverted to shell companies abroad. The ED alleged that Mallya was involved in money laundering of up to Rs 1,300 crore, through 13 shell companies, MoneyControl reported.
Why is this important?
Vijay Mallya’s extradition is not unlike the extradition cases against businessmen such as Lalit Modi and Nirav Modi. However, Mallya’s extradition still seems to be debatable. Although experts claim that the extradition can take anywhere between 6 to 24 months, Mallya’s case has been draggin on upwards of four years. Mallya seems to have considerable political and legal backing, enough to possibly escape extradition altogether.
After signing the extradition treaty with UK in 1992, India was successful in bringing back only one accused individual. More importantly, Indian banks are finding it extremely difficult to establish whether some of Mallya’s assets actually belong to him. This is due to the “opaque and complex” ownership structure of Mallya’s assets, the Times of India reported.
Taking into consideration the increasing number of scams that recently occurred in India, the government introduced the Fugitive Economic Offenders Bill in 2018. The bill is expected to force economic offenders to return to India to face subsequent trial. However, will Mallya be tried under the Fugitive Economic Offenders bill, or was the bill passed to allay the public’s anger?
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