SC, ED tighten noose on Vijay Mallya; court asks him to appear on July 10

Enforcement Directorate to file chargesheet under PMLA

In a double blow to beleaguered businessman Vijay Mallya, the Enforcement Directorate (ED) is all set to file its first chargesheet in the money laundering case, while the Supreme Court (SC), on the other hand, found Mallya guilty of contempt of court and asked him to be present in the court on July 10 when it would decide the sentence.
 
According to sources, the probe agency would file its chargesheet, also called “prosecution complaint” by the end of this month. The ED will include the evidence of how Mallya diverted funds from the Rs 900-crore loan received from IDBI Bank for his personal expenses, including leasing aircraft, and to group entities Watson and Force India.
 
The prosecution filing which is expected to be voluminous would reveal the allocation of loan amount to the said entities. Sources said that the ED’s money trail analysis talked about 40 per cent of loan amount, which is over Rs 400 crore, has been remitted abroad.            
 
The ED is in the process of finalising the prosecution filing so that it could submit it before the Westminster Magistrates’ Court, where the Indian government’s case for Mallya’s extradition will be heard.  The probe agency believes that the prosecution filing would make the case more strong and tight.
 
“The prosecution will add greater value to our case. The focus of first filing will be entirely on IDBI Bank loan case and the related fund diversion,” said a senior ED official.
 
The first hearing on May 17 in the UK court is likely to be preliminary and submission oriented, added the official. Mallya was arrested last month by Scotland Yard on India’s request for his extradition on fraud charges. A joint team of Central Bureau of Investigation and the ED is representing the case on behalf of the Indian government.
 
The chargesheet would also contain supportive documents such as the EY report on United Spirits, which had showed fund diversion of Rs 1,200 crore to at least eight entities directly or indirectly owned by Mallya. Also, the statements of Kingfisher Airlines (KFA) executives will be included.
 
The ED had registered a money laundering case last year against Mallya, KFA and few other under the Prevention of Money Laundering Act (PMLA). The probe agency has so far seized assets of Rs 9,661 crore in the case.
 
On the contempt of court issue, the SC judgment was delivered on a petition by a consortium of banks led by State Bank of India which demands Rs 9,000 crore as debt from KFA and other business units owned by Mallya. 
 
The Bench consisting of Justice A K Goel and Justice U U Lalith found that his responses to the banks’ contempt plea are not trustworthy. Attorney General Mukul Rohtagi, representing the consortium, had asserted that his reply, especially on the $40 million received from Diageo on the share transfer was not transparent. Mallya is alleged to have transferred these funds to his three children residing abroad.
 
The apex court had issued the initial notice in March last year but the hearing dragged on because the Mallya’s replies were challenged by the banks as devious. A person found guilty of contempt of court can be sentenced to jail up to six months and liable to pay a fine. Earlier in the day, a seven-judge constitution Bench of the SC exercised this rule to sentence Justice Karnan of the Calcutta High Court for contempt of court.      

Mallya is on bail in London where the extradition proceedings initiated by the Indian government is pending. He left India soon after several cases were filed against him in various courts, some of them leading to appeal in the Supreme Court.