The Enforcement Directorate (ED) has told the Bombay High Court that recovery of assets for banks from businessman Vijay Mallya does not absolve him of the pending money laundering charges [Vijay Vittal Mallya v. State Bank of India & Ors].
The submission was made in response to a Court order directing the ED and the State Bank of India-led consortium of lenders
to ascertain whether Mallya’s attached properties had cleared his debts.
In an affidavit filed on September 8, the ED said that movable and immovable properties worth ₹14,131.6 crores (as in August 2021) stand handed over to the SBI-led consortium.
However, the ED said that the recovery by itself does not cancel or lead to the dropping of the money laundering charges against Mallya.
The agency argued that restoring assets under the Prevention of Money Laundering Act (PMLA) is a statutory mechanism for legitimate claimants to recover their losses.
“The criminal prosecution launched pursuant to the investigation under the PMLA is therefore not rendered infructuous merely because the claimant banks have subsequently recovered substantial amounts from the assets restored to them,” the agency said.
The Court is hearing a criminal petition filed by Mallya in 2020 challenging a special court order allowing utilization of his attached properties for debt recovery.
Mallya is accused of money laundering and siphoning off at least ₹3,500 crore out of the total ₹9,000 crore bank loans granted to his defunct Kingfisher Airlines.
ED had provisionally attached his properties in 2016.
In 2019, a special court permitted SBI and other lender banks to utilise Mallya's ED-attached movable properties for debt recovery. Assets included United Breweries Holdings Ltd (UBHL) shares.
Mallya challenged this before the High Court in 2020.
Mallya’s counsel, Senior Advocate Amit Desai, argued that the application challenging the asset restoration to the banks had become redundant since civil liabilities were effectively settled. Desai also said that the 'commercial dispute' in the issue needed a closure.
However, the agency has called this submission misconceived.
“The present proceedings arise from allegations of scheduled offences and the offence of money-laundering under the PMLA, which operate in a field distinct from proceedings for recovery of civil dues by the lending institutions,” it said.
It explained that the amount of bank recovery and the liability determined in recovery proceedings could be relevant for quantifying the outstanding dues of the banks.
However, the same would not determine whether the ingredients of the offence of money laundering are made out, the ED contended.
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