ED opposes Mallya’s plea to close criminal proceedings

Mallya claims the proceedings related to commercial disputes that had come to a close after his lender banks recovered all their dues – around ₹15,000 crore against dues of ₹6,200 crore plus interest

MUMBAI: The Enforcement Directorate (ED) has opposed fugitive businessman Vijay Mallya’s plea before the Bombay High Court seeking closure of criminal proceedings against him.

Vijay Mallya claims the proceedings related to commercial disputes that had come to a close after his lender banks recovered all their dues – around ₹15,000 crore against dues of ₹6,200 crore plus interest. (Hindustan Times)

Mallya claims the proceedings related to commercial disputes that had come to a close after his lender banks recovered all their dues – around ₹15,000 crore against dues of ₹6,200 crore plus interest.

However, the ED in its affidavit before the court pointed out that criminal proceedings under the Prevention of Money Laundering Act (PMLA) are distinct from proceedings for the recovery of civil dues. “The present proceedings arise from allegations of scheduled offences and the offence of money laundering under PMLA, which operate in a field distinct from proceedings for recovery of civil dues by the lending institutions,” said the ED’s deputy director Amitabh Mishra in an affidavit filed in the high court on Tuesday.

“The amount of bank recovery and the liability determined in recovery proceedings may have relevance for the purpose of quantifying the outstanding dues of the banks. However, the same does not determine whether the ingredients of the scheduled offences or the offence of money laundering are made out,” Mishra’s affidavit added.

The affidavit was filed after orders passed by the high court on August 12, while hearing Mallya’s plea challenging a December 19, 2019 order of a special PMLA court allowing a consortium of banks - lenders of Mallya’s Kingfisher Airlines Ltd - seeking to dispose of assets attached by the ED in two money laundering cases against the defunct airline.

On August 12, when the plea came up for hearing before a single-judge bench of justice Milind Jadhav, senior advocate Amit Desai representing Mallya pointed out that the plea had become infructuous over the passage of time due to subsequent orders passed by the special PMLA court allowing disposal of his seized assets worth around ₹14,131.60 crore.

Desai said that most of the seized assets had been dealt with and therefore “the commercial dispute” needs closure.

Against this backdrop, Justice Jadhav had issued notices to the ED and sought its views on the submissions. Accordingly, Mishra filed the affidavit on Tuesday opposing the plea.

“The restoration of assets under Section 8(8) of the PMLA is a statutory mechanism for restitution to a claimant having a legitimate interest in the property and does not, by itself, determine the existence of the scheduled offence or the offence of money-laundering,” Mishra said in the affidavit.

“The subsequent restoration or recovery of assets, therefore, cannot be construed as extinguishing or rendering infructuous the pending proceedings under PMLA,” the ED officer said in the affidavit.

The affidavit added that Mallya, then Kingfisher Airlines chairperson, was “instrumental in taking material decisions relating to the affairs of the company and obtaining loans from various banks”, while its investigation revealed serious irregularities in sanction and utilisation of the loan funds and diversion of funds contrary to the declared purpose of the loans.

The ED’s affidavit filed on September 8, through advocate Ashish Mehta, pointed out that the Debt Recovery Tribunal (DRT) in January 2017 determined Mallya’s liability at approximately ₹6,203 crore, with further interest at 11.5% per annum until complete realisation. Subsequently, Mallya left India on March 2, 2016, the PMLA court on December 11, 2016, declared him a “proclaimed offender”.

The ED said that pursuant to an order by the PMLA court, properties attached during the investigation were subsequently restored to the SBI-led bank consortium. Movable and immovable properties’ value at approximately ₹14,131.60 crore as on August 2, 2021, were handed over to the consortium through the Bengaluru DRT officer.