2 min read.Updated: 07 Mar 2016, 04:46 PM ISTP.R. Sanjai
The enforcement directorate will question Mallya based on the evidence and supporting details, according to a source
Mumbai: The Directorate of Enforcement under finance ministry’s revenue department has filed a case against liquor baron Vijay Mallya under the Prevention of Money Laundering Act, two persons close to the development said.
The Directorate of Enforcement is a multi-disciplinary organization mandated with the task of enforcing the provisions of two special fiscal laws—Foreign Exchange Management Act 1999 (Fema) and Prevention of Money Laundering Act 2002 (PMLA).
“We have filed a case against Mallya under money laundering. We have started investigation on the transactions made by Mallya," said one of the two persons quoted above. Both declined to be identified.
He said the directorate will question Mallya based on the evidence and supporting details. This person declined to divulge further details.
The development comes a day after Mallya said he was making all efforts to reach a one-time settlement with banks while payments from Diageo Plc agreed last month are to himself towards his personal, non-compete obligations.
“Personally, I am not a borrower or a judgement defaulter," Mallya said in a statement on Sunday.
“I have been most pained as being painted as an absconder—I have neither the intention nor any reason to abscond," Mallya had said.
On Friday, after waiting for three years, India’s largest lender State Bank of India (SBI) moved the Karnataka high court seeking Mallya’s arrest, seizure of his passport and a full disclosure of his assets and liabilities.
The plea by SBI came two days after it moved the debt recovery tribunal (DRT) in Bengaluru seeking the same directives against Mallya, a Rajya Sabha member.
The bank also staked a claim at DRT for the $75 million Mallya is set to receive from Diageo in return for his resignation as chairman of United Spirits Ltd, which is controlled by the London-based company. The resignation and the deal were announced on 25 February.
However, Mallya’s legal team has filed objections against the SBI’s DRT applications.
“The payments from Diageo Plc to myself are towards my personal non-compete obligations globally, except in the UK. In effect, I have given up my interests in the spirits business globally at considerable cost," Mallya said.
Last month, Mallya’s legal counsel argued that Diageo was paying Mallya $75 million because of a five-year non-compete clause he had accepted.
DRT is expected to pass orders on SBI’s application seeking lenders’ first right on the $75 million payout from Diageo on Monday evening.