New Delhi: Embattled liquor baron Vijay Mallya has expressed his willingness to return to India although he is contesting his extradition in a UK court. Under the Fugitive Economic Offenders Ordinance, 2018, the Enforcement Directorate has sought an order from a special Prevention of Money Laundering Act (PMLA) court to seize Mallya’s properties worth about ₹ 12,500 crore.
A consortium of 13 banks, led by SBI, is claiming about ₹ 9,000 crore as dues from Mallya’s now-defunct Kingfisher Airlines. The consortium has already recovered ₹ 963 crore from auction of Mallya’s Indian assets.
1. What the government can do with assets of Vijay Mallya?
The Fugitive Economic Offenders Bill, 2018, allows a special PMLA court to confiscate properties of a person, declared as fugitive economic offender, which may be proceeds of crime, benami properties or any other properties in India or outside. Upon confiscation, it becomes a property of the central government which can dispose it after 90 days. The Bill even allows authorities to provisionally attach properties of those accused, like Mallya, even as the application is pending before the special court.
According to the Insolvency and Bankruptcy Code, 2016, sale proceeds from the property of the defaulter will be distributed among all claimants according to an order of priority.
2. Who is a fugitive economic offender?
A person is declared a fugitive economic offender (FEO) only when an arrest warrant has been issued against him for specified offences over ₹ 100 crore and when he has left the country and refuses to return to face prosecution. There are 55 economic offences covered which include tax evasion, money laundering, transactions defrauding creditors, benami transactions, counterfeiting government stamps or currency and dishonouring cheques.
3. Does Vijay Mallya have a chance to save himself from Fugitive Economic Offenders Ordinance?
The special court under PMLA gives a chance to the fugitive to have the proceedings terminated by appearing before it within six weeks of the issue of notice. If the person does not appear in person or through his counsel, the court will hear the case and may declare the person a fugitive economic offender.
In Mallya’s case, the court has asked him to appear before it on August 27. He risks action if he fails to appear before the court.
4. Why action can be taken against Vijay Mallya even though the Fugitive Economic Offenders Bill is not passed?
The Fugitive Economic Offenders Bill, 2018, was introduced in Lok Sabha in March but since it could not be cleared immediately, the government promulgated the Fugitive Economic Offenders Ordinance on April 21, 2018. The Bill has now been cleared by the Lok Sabha and is awaiting passage in the Rajya Sabha. The ED has full powers even before the bill becomes an Act.
5. Once declared a fugitive economic offender, Mallya loses the right to make civil claims
A fugitive economic offender loses the right to defend any civil claim under the Bill and Ordinance. It allows any court or tribunal to bar a fugitive economic offender from filing or defending any civil claim before it. The court may even restrict a company from filing or defending any civil claim if the promoter, manager, managing director, CEO or majority shareholder has been declared a fugitive economic offender.