Mallya loses significant court battle in India

The former head of United Spirits, Vijay Mallya, has lost a significant court battle in India and was declared a ‘fugitive’ under the Fugitive Economic Offenders Act (2018) by a Special Court in Mumbai on Saturday.

This was the first case of its kind under the new law, which can be applied retrospectively. It enables the authorities to confiscate all of Mallya’s assets, estimated to be worth more than £1.5 billion.

Last month, magistrates in London ruled that Mallya should be extradited to India to face charges of money laundering and fraud involving £1.15 billion of loans made to his Kingfisher Airlines before it collapsed in 2012. He is on bail awaiting the Home Secretary’s confirmation of the order. He has already indicated that he will appeal.

Mallya’s lawyers told the court on Saturday (5 January) that he had not fled India to avoid arrest in March 2016, but left in the ordinary course of business to attend a meeting in Switzerland at the World Motor Sport Council. The arrest warrant against him was issued much later, they said.

Next month the court will start to hear legal arguments on confiscation of Mallya’s properties.

Under the law enacted last August, any person against whom an arrest warrant has been issued in respect of a scheduled offence and who has left India to avoid criminal prosecution or is abroad or refuses to return to India can face prosecution.

If the person is declared a ‘fugitive economic offender’, the prosecuting agency automatically has powers to confiscate all his assets and properties to recover outstanding debts.

Mallya, 63, flew out of the country in March 2016 even as a consortium of 13 banks – led by the State Bank of India – was preparing to launch loan recovery proceedings against him for more than £1.15 billion.

In a separate development the banks are now reported to be willing to accept a full financial settlement from Mallya, who claims he has more than sufficient assets to meet all his liabilities.

However, the sums involved are disputed and a financial deal would not necessarily mean the criminal charges Mallya faces would be dropped. He has already been found in contempt of India’s Supreme Court for failure to make full financial disclosures and will be sentenced if he returns to India.