Bombay HC asks Vijay Mallya, SBI to ‘move on’ as 2020 asset seizure plea loses relevance

The Bombay High Court on Wednesday (12 August) indicated that a long-running commercial dispute involving fugitive businessman Vijay Mallya and a consortium of banks led by the State Bank of India (SBI) should now be brought to a close, after Mallya’s lawyer said a petition filed six years ago over the seizure of his assets had effectively become redundant.

A division bench of the Bombay High Court made the observation on Wednesday while hearing Mallya’s 2020 petition challenging an order that had permitted the SBI-led consortium to use assets confiscated by the Enforcement Directorate (ED) to recover outstanding dues linked to Kingfisher Airlines.

Bombay HC says Vijay Mallya dispute needs to end

Senior advocate Amit Desai, representing Mallya, told the court that the petition had been filed in 2020 when discussions over a possible settlement were still underway. The plea had sought protection for certain assets.

According to Hindustan Times, Desai said circumstances had changed substantially since then and that the petition no longer survived because most of the assets identified in the original proceedings had already been attached and dealt with.

The court appeared inclined to bring the commercial dispute to a conclusion.

“Actually, this issue needs to be put to an end. The idea is to move on… otherwise the relations and the economy of the country suffer,” Justice Jadhav said, according to Hindustan Times.

The court asked the ED to file an affidavit stating whether the settlement process had been completed and whether “everything is done and dusted”. It clarified that any closure of the civil or commercial dispute would not affect the criminal proceedings against Vijay Mallya.

The criminal case, the court said, must still be “taken to its logical end”, Hindustan Times reported.

The high court will decide the next course of action after hearing the concerned ED deputy director.

Mallya's lawyer says banks recovered ₹15,000 crore

Desai also argued that Mallya's civil liabilities had effectively been settled, pointing to the amount recovered by public sector banks.

“Public sector banks keeping this matter pending is unfortunate,” Desai said, according to Hindustan Times.

He claimed that banks had recovered approximately ₹15,000 crore from Mallya, compared with the original claimed dues of ₹6,203.35 crore, excluding interest.

“The RBI audit itself says it’s an airline’s business failure and nothing else. Banks have taken away ₹15,000 crore and now they say sorry. That’s not good enough,” Desai said, as reported by Hindustan Times.

The comments were made in the context of the recovery proceedings and did not bring an end to the separate criminal cases pending against Mallya.

Why SBI and ED seized Vijay Mallya's assets

The dispute before the Bombay High Court dates back to proceedings under the Prevention of Money Laundering Act (PMLA).

In February 2019, the ED told the special PMLA court that it had no objection to the SBI-led consortium liquidating confiscated assets belonging to Mallya to recover outstanding loans.

Mallya had been declared a fugitive economic offender in January 2019 under India's Fugitive Economic Offenders law.

His 2020 Bombay High Court petition challenged the special PMLA court's order that allowed the lender consortium to utilise the confiscated assets for debt recovery.

The petition was filed at a time when settlement discussions were still underway. The latest hearing focused on whether there was any longer a live dispute for the high court to adjudicate, given the subsequent recovery and disposal of assets.

Vijay Mallya extradition case and criminal proceedings

Mallya has faced multiple proceedings in India concerning alleged loan defaults, fraud, money laundering and financial irregularities associated with Kingfisher Airlines.

The Central Bureau of Investigation registered an FIR against him in July 2015 over alleged irregularities in loans obtained by Kingfisher Airlines from a consortium of banks led by IDBI Bank. The case included allegations involving criminal conspiracy, criminal breach of trust and criminal misconduct.

Mallya left India in March 2016 as legal proceedings intensified and has remained in the UK since then. Indian authorities have sought his extradition to face the criminal cases.

UK courts have approved his extradition, but his departure has been delayed by further legal proceedings in Britain. A “confidential legal matter” has also been cited in connection with his continued stay in the UK.

The Bombay High Court's latest proceedings concern the separate commercial dispute over asset recovery. Any decision to close or dispose of that petition will not bring the criminal proceedings against Mallya to an end, the court made clear, according to Hindustan Times.