Vijay Mallya's Rs 15,000 crore recovery won't end money laundering case: ED

The financial probe agency said bank recoveries affect civil dues but cannot determine whether alleged scheduled offences or money laundering against Mallya were established.

In Short

• ED stresses Vijay Mallya’s continued absence and failure to face court
• Agency says civil recovery differs from criminal money laundering proceedings
• Properties worth Rs 14,131.60 crore were restored to bank consortium

The Enforcement Directorate (ED) has told the Bombay High Court that the subsequent recovery of bank dues from fugitive businessman Vijay Mallya cannot, by itself, make the pending proceedings under the Prevention of Money Laundering Act (PMLA) or the criminal prosecution complaints against him redundant or infructuous.

In its reply, filed through advocate Ashish Mehta, the agency said the recovery of substantial amounts by the consortium of banks was distinct from the criminal proceedings arising out of alleged scheduled offences and money laundering.

It maintained that the amount recovered by the lenders may have a bearing on the calculation of outstanding civil dues, but cannot determine whether the offences alleged against Mallya have been established.

The ED also highlighted Mallya’s continued absence from India and his failure to submit himself to the jurisdiction of the competent criminal court. The agency said this remained a relevant factor while considering the relief sought by him.

"His continued absence and conduct, therefore, remain relevant to the overall factual background of the present proceedings," the ED stated.

The agency was responding in the backdrop of Mallya seeking closure of a long-pending matter before the High Court on the ground that his civil liabilities had effectively been settled. His lawyers have claimed that the SBI-led consortium has recovered around Rs 15,000 crore, compared with an original claim of about Rs 6,203 crore, including interest.

The ED, however, rejected the characterisation of the dispute as essentially commercial. It said Mallya’s attempt to link the recovery of bank dues with the continuation of criminal proceedings was misconceived because the PMLA case concerned alleged scheduled offences and money laundering, which operate separately from recovery proceedings initiated by lenders.

"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".

The agency further said the subsequent recovery of assets did not wipe out the criminal proceedings. It pointed out that properties worth approximately Rs 14,131.60 crore had been restored or handed over to the SBI-led consortium pursuant to orders passed during the restoration process by a special PMLA court in Mumbai.

"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. The subsequent restoration/recovery of assets, therefore, cannot be construed as extinguishing or rendering infructuous the pending proceedings under the PMLA," said ED in its reply.

Mallya, who has been in the UK since leaving India in 2016, was declared a fugitive economic offender in 2019. His broader legal battle also includes a challenge to the constitutional validity of the Fugitive Economic Offenders Act and the proceedings declaring him a fugitive economic offender.

The High Court has recently given Mallya one final opportunity to clarify whether he intends to return to India and submit to its jurisdiction. The matter is expected to be considered further after the court examines the ED’s stand and the status of the proceedings against him.

- Ends