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Tuesday, June 02, 2020

Vijay Mallya loses extradition appeal — what are his options?

Vijay Mallya and his firm, Kingfisher Airlines Ltd, have come under the scanner of the Enforcement Directorate, CBI, Serious Fraud Investigation Office and Sebi for loan defaults of over Rs 10,000 crore to a consortium of Indian banks. What next for the liquor baron?

Written by Khushboo Narayan , Edited by Explained Desk | Mumbai | Updated: April 21, 2020 9:13:03 pm
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A UK High Court Monday, dismissed fugitive liquor baron Vijay Mallya’s appeal against extradition to India. In the order against the Mallya, the judges said, “We consider that while the scope of the prima facie case found by the SDJ [Senior District Judge] is in some respects wider than that alleged by the Respondent in India [Central Bureau of Investigation (CBI) and Enforcement Directorate (ED)], there is a prima facie case which, in seven important respects, coincides with the allegations in India”.

What are the options for Vijay Mallya now?

According to experts, Mallya now has 14 days to apply to the UK High Court for permission for an application to certify that a point of law of general public importance has been overlooked by both the magistrate court and the high court. If the High Court gives such a permission, he can then appeal against the extradition order in the UK Supreme Court. In case the High Court refuses the permission, Mallya will not be able to appeal in the Supreme Court. In such a situation, his case will go to Priti Patel, the UK secretary of state, Home Department for a final decision on extradition. If Patel gives her consent, Mallya can be extradited to India.

What are the charges against Vijay Mallya and his firms?

Mallya and his firm – Kingfisher Airlines Ltd, have come under the scanner of the Enforcement Directorate (ED), Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO) and the Securities and Exchange Board of India (Sebi) for loan defaults of over Rs 10,000 crore to a consortium of Indian banks led by the State Bank of India (SBI).

While Mallya is facing charges of cheating, criminal conspiracy, money laundering and diversion of loan funds, a few of his companies including Kingfisher Airlines are facing charges of violations of the Companies Act 2013 and Sebi norms. Mallya, has denied any wrongdoing.

Also in Explained: The cases against Vijay Mallya

While the ED has charged Mallya under sections 3 and 4 of the Prevention of Money Laundering Act (PMLA), the CBI has charged Mallya under section 120B (criminal conspiracy), 420 (cheating) and under sections 13 (1) (d) and 13 (2) of the Prevention of Corruption Act.

The ED has alleged that the now defunct Kingfisher Airlines has “diverted” at least Rs 3,547 crore of the loan granted to the airlines. The ED complaint has listed five instances of diversion of loan funds granted to Kingfisher Airlines by lenders. These include an alleged diversion of Rs 3,432.40 crore by “over invoicing” of lease rentals of aircraft between April 2008 and March 2012; diversion of Rs 45.42 crore “for making payment towards the rental lease” of a corporate jet which was used “exclusively” by Mallya; alleged diversion of Rs 50.90 crore from Kingfisher Airlines to Mallya controlled Force Indian Formula One Team; another diversion of Rs 15.90 crore from the airlines to Mallya’s firm that owned IPL team Royal Challengers Bangalore; and payment of Rs 2.80 crore to ICICI Bank as repayment of an earlier loan to Kingfisher Airlines.

Vijay Mallya loses extradition appeal — what are his options? Since the beginning of the extradition case hearing, Vijay Mallya has claimed that he is prepared to repay the loans. (AP Photo/File)

The agency has accused Kingfisher Airlines and Mallya of “concealment, possession, acquisition and use of proceeds of crime”. It has also accused United Breweries Holding Ltd of assisting Mallya in money laundering by not honoring a corporate guarantee that the company gave to the banks, which was to be invoked in case of a loan default by the airlines.

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Both, ED and the CBI, have alleged Mallya did not fully disclose his assets while executing a personal guarantee agreement with the lenders when the loans of Kingfisher Airlines were restructured in December 2010. The agencies have also found that Mallya has “amassed huge properties outside India, especially in United Kingdom, USA, France and Africa” and “has got interest in various companies which are created/incorporated outside India”.

What has been Mallya’s response to these charges?

Mallya has denied any wrongdoing. However, since the beginning of the extradition case hearing, Mallya has claimed that he is prepared to repay the loans. On March 31, in a tweet, Mallya wrote, “I have made repeated offers to pay 100% of the amount borrowed by KFA to the Banks… Neither are Banks willing to take money and neither is the ED willing to release their attachments which they did at the behest of the Banks. I wish the FM would listen in this time of crisis”.

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