Have Vijay Mallya's debts been cleared using his assets? Bombay High Court asks ED, banks

The Bombay High Court on August 12 asked the State Bank of India (SBI) and the Enforcement Directorate (ED) to ascertain and confirm whether fugitive businessman Vijay Mallya's debts and liabilities have been cleared using his movable properties which were attached by ED [Vijay Vittal Mallya v. State Bank of India & Ors]

Justice Milind Jadhav passed the direction after Mallya's counsel claimed that the debts have been cleared using the money recovered from his assets attached by ED.

The Court was hearing a criminal petition filed by Mallya in 2020 challenging an order of a special court of 2019.

Mallya is accused of money laundering and siphoning off at least ₹3,500 crore out of the total ₹9,000 crore bank loans granted to his defunct Kingfisher Airlines.

ED initiated proceedings under the Prevention of Money Laundering Act (PMLA) and provisionally attached his properties in 2016.

In 2019, a special court permitted SBI and other lender banks to utilise Mallya's ED-attached movable properties for debt recovery. Assets included United Breweries Holdings Ltd (UBHL) shares.

Mallya challenged this before the High Court in 2020.

Though the petition was filed in January 2020, it was heard by the High Court for the first time on August 12 this year.

Senior Advocate Amit Desai, appearing for Mallya, submitted that the 2020 petition has effectively become redundant following subsequent developments. He argued that ED has since recovered money from said assets for settling the loans.

“He has emphatically submitted that Mallya’s civil liabilities have effectively been settled by mentioning that the consortium of banks have recovered approximately ₹15,000 crores from the applicant when compared with the original claim of ₹6,203 odd crores including interest,” the order recorded.

However, Justice Milind Jadhav emphasised that it must first verify these claims directly with the statutory enforcement authorities before determining any further course of action.. 

“It would be appropriate at this juncture to issue notice only to SBI (lead bank) and Deputy Director, Directorate of Enforcement in order to apprise the Court about the aforesaid submissions made by Desai and further development in the case,” the Court held. 

The Court explicitly clarified its approach.

"Only after hearing Respondent No. 13, this Court will decide the further course of action in the present Application and consider issuing notices to the other Respondents," it said.

Justice Jadhav also granted Mallya liberty to file an additional affidavit detailing the developments that have transpired since the application was first filed in 2020. 

The plea is likely to be heard next on September 9. 

Desai with advocate Rashmin Jain appeared for Mallya.

Additional public prosecutor Rajeshree V Newton appeared for State.

[Read order]