In a huge relief to banks struggling to get their money back from Vijay Mallya, a Prevention of Money Laundering Act court in Mumbai has restored to the lenders the properties the Enforcement Directorate had seized from the fugitive liquor baron.
A State Bank of India-led consortium of 17 banks, which is owed more than Rs 9,000 crore by Mallya, is now in charge of the properties that find a mention in debt resolution tribunal’s 2017 decree and can auction them to recover their dues. The order was pronounced on May 24.
The Enforcement Directorate, which launched a probe against Mallya, attached around Rs 12,000-crore worth of movable and immovable properties of the 65-year-old businessman. Most of these properties were used as collateral by Mallya. The ED, which had earlier resisted the transfer, has now agreed in the handover.
SBI, PNB and IDBI were yet to respond to Moneycontrol’s request for comments.
The court, however, has added a caveat. It has asked the banks to individually submit an undertaking in keeping with the PMLA act, that the properties would be restored to Mallya if he is not found guilty.
Seven companies—Devi Investments, Gem Investment and Trading Private Limited, Kamsco Industries Pvt limited, Mallya Pvt limited, Pharma Trading Co Pvt Ltd, Vittal Investments and Mandwa Farms Pvt limited—had challenged the banks’ appeal for the transfer of properties.
These companies are believed to be associated with Mallya. The court rejected their request to stay the order.
The ED, which investigates financial crimes, may even give the nod to transferring Rs 5,000-crore worth of attached assets of diamantaire Nirav Modi, who is fighting extradition in London, and his uncle, Mehul Choksi, to Punjab National Bank to recover its losses, a source said.
This the second win for the banks in the last few days. Mallya on May 26 lost an appeal to gain further access to court-held funds to cover his costs for legal proceedings in India. A High Court judge in London concluded that the 65-year-old businessman had failed to provide sufficient evidence in support of the over 750,000 pounds being sought.
During a remote hearing of the Chancery Division, Justice Robert Miles handed judgment in favour of the SBI-led consortium of banks.
He also directed Mallya to cover 95 percent of the costs of the appeal as the banks had been "very substantially successful" and the "overall winners" in fighting the case to prevent further sanctions from the court-held funds."The amount being sought was substantial, being over 550,000 pounds in respect of incurred costs and well over 200,000 pounds in respect of the future," Justice Miles said.