The Supreme Court has finally sentenced fugitive businessman Vijay Mallya to a four months jail period for a 2017 contempt of court case. He was found guilty of the violation of the Court’s orders and even imposed a fine of 2000₹ which needs to be deposited within four weeks, otherwise, a sentence of two months will be added. He will undergo punishment when he is brought back to India.
Besides paying the fine, the court has also ordered him to deposit the $40 million with 8% interest to recovery officers, which are in dues with multiple banks within 4 weeks.
He was convicted in contempt of court in May 2017 for violating the court’s orders for transferring $40 million to the trust of his three children in the United States of America (USA)- Siddarth, Leena, and Tanya after only days of getting it from Diageo Plc.
Mallya resigned as Chairman of United Spirits Limited in 2016 which is a subsidiary of British liquor major Diageo Plc. When the court asked about the connection with the companies and exclusion of details, Mallya being proud said that he gets to deal with millions of dollars all the time and it is trivial for him to remember the details. When this did not work in front of the court, he changed it to be already distributed among his children.
The only wise way to deal with fugitives and get Justice is by disgorgement orders. In many bankruptcy cases, fraudulent preferences are used as a bypass. The Supreme Court by awarding him imprisonment hit him hard but the extradition to India is vague. The fine imposed is a ridiculously small amount for someone who is a white-collar fugitive.
Vijay Mallya fled India in 2016 for not repaying the loans of Kingfisher Airlines which are calculated to be approximately 9000 crores to Indian banks. He found loopholes and played the Financial system into giving him loans repeatedly even though no bank gives loans out of thin air. This all happened due to the crafty scheming of deals and showcasing his prowess.
Prime Minister Narendra Modi in 2018, implemented the Fugitives Economic Offences Act which issues arrest warrants to those who commit an offence of value of Rs.100 crore. Currently, Vijay Mallya, Nirav Modi and Mehul Choksi are declared “Fugitive Economic Offenders” by the Prevention of Money Laundering Act (PMLA) and extradition requests to London, Antigua and Barbuda are filed. Nirav Modi along with his uncle Mehul Choksi had defrauded Punjab National Bank (PNB) of Rs 13,700 crore. The Law allows the seizure of the assets of fugitives in India and foreign countries to clear the dues to Indian Banks.
Mallya was the first to be called a Fugitive under the special Mumbai Court in 2019. The Enforcement agency and tax officials have seized Rs 14000 crore assets from Mallya. After this, he was reluctant to be extradited as the assets are meant to be paid by themselves for the loans. Disgorgement is the ultimate punishment in white-collar crime but he needs to be brought to justice for Money laundering and other crimes.
The Queen’s Bench Division of London court upheld the extradition order of Vijay Mallya in 2020 and he changed the approach by seeking mercy petitions like death row convicts to the President of India. Another line of argument that is moving the UK government is that – the Human Rights angle i.e Arthur Road jail is unsanitary. But prisons are not meant to be luxury resorts and hope that the British government may not be persuaded by these self-serving arguments. But the extradition track record between India-UK since 1992 is very low as is the Switzerland banking secrecy law. In 2020, the British government did not consider the request for political asylum and was resistant to it.
His trial in India can only bring light to the case and there is a thought of line there is fear that he might spill the tea in the Indian trail. Mallya’s case is just a precedent, but if the Indian government fails, it will favour the rise of another fugitive. Currently, Nirav Modi, who is trying to obstruct his extradition and other offshore property owners are next in line.
The author is an avid blogger and likes to write on subject matters related to Law, Politics and matters of Constitutional importance.