The Enforcement Directorate has told the Bombay High Court that recovery of nearly Rs 15,000 crore from assets linked to Vijay Mallya does not automatically end pending money-laundering proceedings. In an affidavit, the agency said civil recovery by lenders is separate from criminal proceedings under the Prevention of Money Laundering Act. The ED said properties worth about Rs 14,131.60 crore were restored to the State Bank of India-led consortium under Section 8(8) of the PMLA. Mallya’s legal challenge remains before the court.
ED Says Rs 15,000 Crore Recovery Does Not End Vijay Mallya PMLA Case, Bombay High Court Told
The Enforcement Directorate has told the Bombay High Court that bank recoveries of Vijay Mallya’s assets do not automatically terminate money-laundering proceedings under the Prevention of Money Laundering Act.
The Enforcement Directorate (ED) said in an affidavit filed before the Bombay High Court recently that the Vijay Mallya PMLA case was still alive, although nearly Rs 15,000 crore had been recovered from attached assets.
While the recovery of funds for lenders may reduce outstanding civil liabilities, it does not determine whether scheduled offences or money laundering under the Prevention of Money Laundering Act had taken place, the agency said.
According to the Enforcement Directorate, properties worth approximately Rs 14,131.60 crore were restored to the State Bank of India-led consortium after directions were issued by a special PMLA court in Mumbai.
The restoration was done under Section 8(8) of the Prevention of Money Laundering Act, under which properties attached can be handed over to legitimate claimants, the agency said.
The affidavit said the return of assets to the banks should not be construed as proof that no offence was committed or that the pending criminal proceedings had become redundant.
The Enforcement Directorate argued in court filings reviewed by Sprouts News that criminal prosecution under the Prevention of Money Laundering Act continues irrespective of debt recovery proceedings.
Enforcement Directorate Draws Clear Line Between Civil Recovery And Criminal Liability
The agency said subsequent restoration or recovery of assets cannot extinguish or render infructuous the pending proceedings under the Prevention of Money Laundering Act.
Officials said criminal investigations focus on how the loans were obtained, used and allegedly misused, not on whether creditors eventually got their money back.
The Enforcement Directorate rejected the suggestion that commercial cases should be closed as soon as the money laundering proceedings connected with the same transactions are over.
The affidavit said proceedings before recovery tribunals and civil forums are distinct from criminal investigations under the Prevention of Money Laundering Act framework.
Lenders have already got back more than what they were owed, said Vijay Mallya, who fled India in March 2016 after Kingfisher Airlines went bust with huge debts.
His legal counsel told the Bombay High Court last month that a consortium of lenders recovered about Rs 15,000 crore against the original Debt Recovery Tribunal claim.
The lawyer moved a plea for disposal of a 2020 petition challenging a special court order of December 2019 allowing banks to use the confiscated assets to recover dues.
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Bombay High Court Reviews Next Steps In Vijay Mallya Petition
The long-drawn commercial dispute should come to an end so that all the parties may move on, Justice Milind N Jadhav said during the course of the proceedings.
But the judge said that the civil dispute could be resolved without affecting criminal proceedings, which must take their appropriate course.
The court then asked the Enforcement Directorate and the State Bank of India-led consortium to respond before passing any further order.
The latest affidavit of the Enforcement Directorate also pointed out that Vijay Mallya is still outside India and has not appeared before the courts conducting the ongoing trial proceedings.
In 2019, Mallya was declared a fugitive economic offender,r and efforts to extradite him from the United Kingdom have not yet brought him back.
Investigators continue to maintain that Vijay Mallya was instrumental in obtaining loans from several financial institutions in his capacity as the chairman of Kingfisher Airlines.
The Enforcement Directorate said its probe found alleged irregularities in loan approvals and said money was diverted from the intended purposes.
The agency says these alleged actions are the basis for the money-laundering case, not subsequent recoveries through attached assets and legal enforcement measures.
After hearing financial figures, legal submissions and responses from lenders and investigators, it is now for the High Court to decide the fate of Vijay Mallya’s 2020 petition.
For the Enforcement Directorate, the difference is clear: Rs 15,000 crore being recovered may resolve questions of debt, but it does not settle allegations that are being investigated under the Prevention of Money Laundering Act.
