By Shivangi Khanna
Kingfisher Airlines Limited was an airline group based in India founded and owned by Vijay Mallya , son of Vittal Mallya. Vijay Mallya continued to procure the list of 100 richest persons from the year 2003 to 2009. He founded the kingfisher airlines in the year 2003 and commenced its operations from 9 may 2005.
The kingfisher airlines gave premium services to passengers but it was not profitable. The company was facing losses in the domestic market. In the year 2008 Vijay Mallya decided to acquire the international airline “Air Deccan” and on the other hand the Kingfisher Airlines started off with its international flights due to which he suffered huge losses. Also, the cost of aviation fuel rose & the value of the rupee declined against the dollar.
Kingfisher Airlines took decision to see substantial loans from Indian banks. Between April & November 2009, five banks extended loans namely- SBI, the bank of India, the bank of Baroda, united bank of India & united commercial bank. In the late 2009, they approached an additional bank, the IDBI. The company’s debts reached to such extend that to meet their earlier debts they took fresh loans from the banks.
In the year 2010, the debts reached upto 9000 crore, the largest share in the debts were of SBI & IDBI. . The Kingfisher Airlines even refused to pay their employees salary. Within few months the employees started joining other companies. In the year 2012, SBI declared Kingfisher Airline as non performing asset. And finally by October 2012, kingfisher Airline had to shut down its operations when DGCA suspended its flying license. The share value of Kingfisher Airlines becomes zero.
- In March 2016, when Mallya escaped from india to UK India, issued a red corner notice.
- Mallya was arrested in April 2017 & brought to Westminster Magistrates Court, London, where he was given bail.
- On December 2018, the Westminster Magistrates Court also ordered in favour of Indian authoroties that Vijay Mallya should be extradited to India as he has a case to answer. The home secretary gave assent to this order.
- The following are some of the key conclusions in the judgment:
- Mallya is not being prosecuted in India for his political opinions.
- The court found a prima facie case of conspiracy to defraud, involving executives of Mallya’s Kingfisher Airlines and IDBI officials.
- Mallya had misrepresented how loans received from banks would be used. It appeared that the banks were deliberately misled about the fortunes of Kingfisher Airlines.
- There is clear evidence of dispersal and misapplication of the loan funds and the judge found a prima facie case that Mallya was involved in a conspiracy to launder money.
- It appeared as if KFA was funding Mallya’s Formula 1 team, Force India. Funds were transferred to the racing team in the name of operating expenses for flights.
- The judge did not “accept that the courts in India are there to do what the politicians tell them to do, judge said “I do not find any international consensus which would enable me to find that the judges in India are corrupt”.
- The UK court faulted the banks, saying if norms were followed, the loans would not have been granted.
- The judge expressed satisfaction with the portrayal and arrangements of the cell in the Arthur Road jail earmarked for Mallya.
- Vijay Mallya then appealed to UK High Court which was accepted last year July 2019 & in February 2020 the appeal was heard.
- In July 2018- The enforcement directorate filed an application before the special court in Mumbai requesting Mallya to be declared as fugitive offender under the Fugitive Economic Offences Act, 2018. Under the provisions of the Act, once a person is declared a fugitive economic offender, then the prosecuting agency has the powers to confiscate the accused person’s properties.
- Mallya had sought a stay on the hearing on ED’s plea to declare him a fugitive economic offender, but was turned down by special PMLA court and subsequently by the Bombay high court.
- On 5 January 2019, special prevention of money laundering (PMLA) judge M.S. Azmi in his oral order declared Mallya, a fugitive economic offender under section 12 of the act, on a plea of enforcement directorate. He become the first businessman to be charged under the new anti fugitive law. This means that the government can initiate to confiscate his properties after in alleged Rs. 9,000 crore loan default case.
-According to the new law, a fugitive economic offender is a person against whom an arrest warrant has been issued for his or her involvement in economic offences involving at least Rs. 100 crore or more and has left India to avoid prosecution.
Case- VIJAY MALLYA – V – GOVERNMENT OF INDIA- HIGH COURT OF JUSTICE QB- 20/04/2020
- The government of India seeks extradition of the appellant in respect of these loans. It is said that the loans were obtained by means of a conspiracy to defraud and by means of fraudulent misrepresentations; it is further said that the Appellant engaged in money-laundering some of the proceeds of the loans.
- The Grounds before this Court
- As will be seen from the reasons of the court granting permission, Ground 1 includes legal and evidential points, as well as the substantive argument that the SDJ was wrong to find that the evidence amounted to a prima facie case. Ground 1 is now formulated as follows-
1. The lower court was wrong to find a prima facie case which is not being prosecuted in India.
2. The lower court erred in law in its approach to the prima facie case test.
3. The lower court was wrong to conclude that a prima facie case of conspiracy to defraud was made out.
4. The lower court was wrong to conclude that a prima facie case of fraud by false representation was made out.
5. The lower court was wrong to conclude that a prima facie case of money laundering was made out.
6. The lower court erred in its approach to the admissibility of the Respondent’s evidence.
- Rejecting the grounds cited by mallay’s attorney, Claire Montgomery, the court upheld special district judge Arbuthnot’s judgement, the court observed “we consider that while the scope of the prime facie case found by the SDJ is in some respects wider than that alleged by the respondent in india, there is a prime facie case which, in seven important respects, coincides with the allegations in india.”
- Vijay Mallya, filed plea before UK high court to seek permission to move Supreme Court which was rejected by the UK high court.