The Enforcement Directorate (ED) has submitted to the Bombay High Court that the recovery of assets from businessman Vijay Mallya does not negate the ongoing money laundering charges against him. This statement was made in response to a court directive requiring the ED and a State Bank of India (SBI)-led consortium of lenders to verify whether Mallya’s attached properties had been utilized to clear his outstanding debts.
In an affidavit dated September 8, the ED disclosed that movable and immovable assets valued at ₹14,131.6 crores, as of August 2021, have been transferred to the SBI-led consortium. However, the ED emphasized that this recovery does not invalidate or lead to the dismissal of the money laundering charges against Mallya. The agency contended that the restoration of assets under the Prevention of Money Laundering Act (PMLA) is a statutory mechanism allowing legitimate claimants to recover their losses.
“The criminal prosecution initiated following the investigation under the PMLA is not rendered irrelevant merely because the claimant banks have subsequently recovered substantial amounts from the assets restored to them,” the agency stated.
The court is currently examining a criminal petition filed by Mallya in 2020, which challenges a special court’s decision that allowed the use of his attached properties for debt recovery purposes. Mallya faces accusations of money laundering, allegedly siphoning off at least ₹3,500 crore from a total of ₹9,000 crore in bank loans granted to his now-defunct Kingfisher Airlines. The ED provisionally attached his properties in 2016.
In 2019, a special court authorized SBI and other lender banks to utilize Mallya’s ED-attached movable properties, including shares of United Breweries Holdings Ltd (UBHL), for debt recovery. Mallya contested this decision before the High Court in 2020.
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Mallya’s counsel, Senior Advocate Amit Desai, argued that the application challenging the asset restoration to the banks had become redundant as the civil liabilities had effectively been resolved. Desai also suggested that the ‘commercial dispute’ should be concluded.
However, the ED dismissed this submission as misconceived. “The present proceedings stem from allegations of scheduled offences and the offence of money laundering under the PMLA, which operate in a field distinct from proceedings for the recovery of civil dues by the lending institutions,” the agency noted.
The ED clarified that while the amount recovered by the banks and the liability determined in recovery proceedings could be relevant for calculating the outstanding dues, it does not determine whether the elements of the money laundering offence are established.
