SC clears ED proceedings against Vijay Mallya over forex law violations

New Delhi: The Enforcement Directorate (ED) will now be free to pursue criminal proceedings against liquor tycoon Vijay Mallya over the violation of foreign exchange laws as the Supreme Court on Monday dismissed his appeal.

A bench of justices J. Chelameswar and A.K. Goel imposed a fine of ₹ 10 lakh on Mallya for “sheer abuse of process of law”. The court further said that “unscrupulous elements” could not be exonerated for evading a process of law (not responding to summons, which would constitute an offence) merely because such a person was found to not have committed the offence for which he was being summoned.

“Such an exposition of law would only encourage unscrupulous elements in the society to defy the authority conferred upon the public servants to enforce the law with impunity,” the verdict said.

United Breweries declined to comment on the matter.

The apex court had earlier stayed these proceedings during the pendency of the case.

Mallya had approached the apex court in 2007 after the Delhi high court on 21 May 2007 refused to quash the ED proceedings. The Supreme Court had issued a notice in the case in 2007 and thereafter admitted the appeal in 2009 after the ED refused to withdraw the case.

The ED was seeking to question Mallya over a transaction which, as chairman of United Breweries Ltd, he entered into with London-based Benetton Formula Ltd to promote the brand Kingfisher abroad on 1 December 1995.

It was alleged that Mallya had paid $200,000 to Benetton to display the Kingfisher logo in the Formula One World Championships in the UK and certain other European nations in 1996, 1997 and 1998.

This was done without seeking the Reserve Bank of India’s prior approval, which was in violation of the Foreign Exchange Regulation Act (Fera) 1973. Although United Breweries later sought approval from the finance ministry on 19 June 1996, the same was rejected on 4 February 1999.

The ED then issued summons to Mallya.

Mallya failed to appear before the ED more than once, which led to criminal proceedings being filed against him in 2000. Once the trial court framed charges against Mallya and issued summons to him, he moved the high court in 2001.

However, the adjudicating authority had dropped the charges against him in the main case in 2002.

He claimed that he had not wilfully failed to appear before the ED, and that the trial court had not applied its mind while framing charges against him. Mallya had failed to respond to four summons issued by the ED. He had argued before the court that he had requested the ED to accommodate a suitable date owing to his busy schedule.

However, the apex court, in its 16-page verdict, says, rather scathingly, “From the tenor of the letter, it appears that it was not a case of mere seeking accommodation by the appellant but requiring date to be fixed by his convenience. Such stand by a person facing allegation of serious nature could hardly be appreciated. Obviously, the enormous money power makes him believe that the state should adjust its affairs to suit his commercial convenience.”

The court held that the dropping of charges by the adjudicating authority didn’t affect the trial court’s proceedings, because they were independent of each other.

P.R. Sanjai in Mumbai contributed to this story.