Govt agencies, Supreme Court demand Vijay Mallya’s return to India

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Mumbai: The noose is tightening around billionaire Vijay Mallya, who is reportedly in the UK, amid attempts by Indian creditors to recover over Rs.9,000 crore owed by Kingfisher Airlines Ltd, which stopped flying in 2012.

Demanding his return to India are at least five law enforcement and judicial bodies in India—the Supreme Court, the Enforcement Directorate (ED), the service tax department, the Serious Fraud Investigation Office (SFIO) and the income-tax department.

Mallya, 60, who presided over a liquor empire until a few years ago and ranked the 45th richest Indian by Forbes in March 2012, with a net worth of $1 billion, was summoned by the ED on 9 April.

The indebted billionaire, who has sparred with the local media for portraying him as a poster boy for soured loans, did not appear before the investigative agency on Saturday even after three summons.

Mallya, who left India on 2 March as creditors closed in, has sought an extension till May to appear personally before the ED. The agency now will approach the Prevention of Money Laundering Act (PMLA) court early next week to try and speed up matters, according to two people familiar with the development who did not want to be named.

“Then PMLA court will issue a non-bailable arrest warrant to Mallya through the external affairs ministry,” said one of the people.

The second person said Mallya, through his counsel, had sought a further extension for appearing in person; however, the ED would need to follow its own procedures on the matter.

He added that Mallya cited the ongoing hearing at the Supreme Court as the reason for not making a personal appearance at this point of time.

As per the provisions of the PMLA, the ED can issue a maximum of three summons, after which it has to approach the special PMLA court for a warrant.

The income-tax department, too, wants Mallya to appear personally in India. However, last week, a special court for economic offences in Bengaluru denied a request by the department to issue a non-bailable warrant against the UB Group chairman in a case relating to non-remittance of TDS (tax deducted at source).

The income-tax department had moved the court in 2013 seeking dues amounting to Rs.325 crore owed by Mallya’s Kingfisher Airlines relating to the fiscal years 2009-10, 2010-11 and 2011-12.

The SFIO has also written to Mallya’s counsel requesting his personal presence to settle the issues and has sought the view of the ministry of corporate affairs on the matter. “For reaching a conclusion in our investigations, Mallya’s deposition is needed,” said a ministry official, on condition of anonymity.

Meanwhile, a Supreme Court bench comprising justices Kurian Joseph and Rohinton F. Nariman on 7 April sought clarity on Mallya’s return to India.

“Mallya’s presence in court will accelerate the process (of court hearings),” said advocate Shyam Divan, who appeared on behalf of a consortium of 17 banks seeking to recover dues of Rs.9,091 crore.

The Supreme Court also directed Mallya to disclose all assets held by him and his family, after the consortium of creditors rejected his offer to repay Rs.4,000 crore to settle the debts of his defunct airline.

The consortium, led by State Bank of India, informed the court that they had unanimously rejected Mallya’s offer but were willing to join negotiations for a settlement.

Mathew Antony, managing partner at Aditya Consulting, a boutique legal and business advisory firm, said the demand for Mallya’s return was an emotional call, fuelled by the public perception of Mallya as an irresponsible businessman with a larger-than life image.

“All borrowing contracts give sweeping and unconditional rights to the lenders to recover their money by various modes of recoveries ranging from enforced possession, auction, distress sales and privately negotiated sales on the pledged property, brand, copyrights and intellectual rights as well as on shares of the company,” Antony said.

“The court can enforce the same for the lenders without the personal presence of the borrower, if he is properly represented in the court. The call for Mallya’s personal appearance is more to do with a political leverage for vested interest and is insignificant to its impact on any proceedings of recovery as per the legal process,” he added.