Vijay Mallya assets: Rs 100-cr shares transferred to central govt

An email sent to the spokesperson of Mallya, seeking comment on the confiscation, did not elicit any response.(File)

THE ENFORCEMENT Directorate (ED) has started the process of confiscating the assets of Vijay Mallya, chairman of the now-defunct Kingfisher Airlines Ltd, which were attached by the agency under the Prevention of Money Laundering Act (PMLA), according to sources familiar with the development.

Sources said that the Stock Holding Corporation of India Ltd (SHCIL) has transferred the title and rights of shares worth Rs 100 crore of United Breweries Ltd (UBL), held directly and indirectly by Mallya, to the central government.

The process got underway after the ED wrote to SHCIL two months ago, directing the depository to transfer the title and rights of un-pledged shares of UBL, United Spirits Ltd (USL) and McDowell Holdings Ltd worth close to Rs 4,000 crore, held by Mallya and his associate firms, under section 9 of the PMLA.

The ED had provisionally attached these shares in September 2016 in connection with the loan default of over Rs 6,000 crore by Kingfisher Airlines. Subsequently, the provisional attachment was confirmed by the adjudicating authority of the agency.

The agency has attached 4 crore unpledged shares of UBL, 25.14 lakh shares of USL and 22 lakh shares of McDowell Holdings of Mallya, and some private companies allegedly linked to him. These firms include Devi Investment Pvt Ltd, Kingfisher Finvest India Ltd, Mallya Private Ltd, Pharma Trading Company, Vittal Investment Pvt Ltd, United Breweries Holdings Ltd, Kamsco Industries and The Gem Investment and Trading, said sources.

Under PMLA norms, when a trial cannot be conducted due to the death of an accused or if the accused has been declared a proclaimed offender, the special court can pass orders for confiscation of the property attached by ED.

According to section 9 of PMLA, after an order of confiscation, all the rights and title in such property “shall vest absolutely in the Central Government free from all encumbrances”.

An email sent to the spokesperson of Mallya, seeking comment on the confiscation, did not elicit any response.

In February, a special court had confirmed the ED order to attach Rs 4,200-crore assets of Mallya and others, paving the way for their confiscation by the agency.

On June 14, the ED submitting a 5,000-page prosecution complaint in a Mumbai court on an alleged loan default of Rs 900 crore by Kingfisher. The complaint accused the airline and Mallya of having allegedly routed overseas over Rs 417 crore of the Rs 900 crore it secured as loan from IDBI Bank for aircraft rental leasing and operational expenses.

According to the ED complaint, Kingfisher Airlines allegedly “participated in criminal activities”, which led to the “generation and acquisition” of Rs 900 crore, and was “involved with the concealment, possession, acquisition and use of the proceeds of (the) crime”. It claimed that Mallya was allegedly an “active participant in the generation of proceeds of crime and the activity of money laundering” under the PMLA.

The agency, in its complaint, also claimed that Mallya allegedly hid assets of about Rs 1,760 crore through a dozen shell companies abroad.

The ED has also submitted the complaint with the Crown Prosecution Service in the UK, which is representing the Indian government in the extradition case of Mallya.

The judge has set December 4 as the start date for a final hearing in the extradition case. If the Chief Magistrate rules in the government’s favour, the British Home Secretary will have to order Mallya’s extradition within two months since the day of the judgment.

However, the case can go through a series of appeals before reaching its final conclusion. India and the UK signed an Extradition Treaty in 1992, which has been in force since November 1993.

In April, Mallya was arrested in Scotland Yard, and released after a few hours on conditional bail after paying 650,000 pounds.

Kingfisher owes over Rs 9,000 crore to 17 lenders, including the SBI, IDBI Bank, Punjab National Bank, Bank of India, Bank of Baroda, United Bank of India, Central Bank, UCO Bank, Corporation Bank, Indian Overseas Bank, Federal Bank, Punjab and Sind Bank, and Axis Bank, among others.