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ED says banks can sell Mallya's assets to recover their money

In a four-page reply, the ED further said, “However, in case the court deems it fit to allow the application, it shall take an undertaking from the applicant to return the said amount with interest in case the court at any point in time deem it fit and appropriate, in the interest of justice to deposit the said amount to the court or the complainant without any delay.” 

Saima Siddiqui

Saima SiddiquiBy Saima Siddiqui

Published on 6 Feb 2019 8:02 AM GMT

ED says banks can sell Mallyas assets to recover their money
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New Delhi: Vijay Mallya is not going to have a sigh of relief for the time being .The Enforcement Directorate (ED) told a special court in Mumbai, on Tuesday, said that it had no objection to dissolution of Vijay Mallya’s forfeited assets by an association of banks, led by State Bank of India, which is aiming to recover more than Rs 9,000 crore from the renegade businessman.

While, leaving the decision of restoration and sale of the assets to the discretion of the court, the central anti-money laundering agency, which had attached Mallya’s assets, asked the court to seek a guarantee from the lenders that they would return the money to the court or the ED if the accused wins the criminal trial.

Replying to an application filed by the lenders in the special Prevention of Money Laundering Act (PMLA) court in Mumbai, the agency said “the complainant (ED) leaves it to the best judgement of this honourable court to grant the prayer”.

In a four-page reply, the ED further said, “However, in case the court deems it fit to allow the application, it shall take an undertaking from the applicant to return the said amount with interest in case the court at any point in time deem it fit and appropriate, in the interest of justice to deposit the said amount to the court or the complainant without any delay.”

The court adjourned the matter till March 13.

Mallya, who left the country in March 2016 and has been living in the UK, is accused in India of conspiracy to defraud banks and money laundering, among other offences.

“The banks want to encash the assets at the earliest so as to bring the money back into the system. Recently, the DRT (Debt Recovery Tribunal) also allowed attachment and sale of the properties,” senior counsel Nitin Pradhan, who represented the banks, told ET. “The court has asked Mallya and other parties staking claim on the confiscated properties to file their say by then (March 13).”

The development came a day after the UK government said that home secretary Sajid Javid had approved Mallya’s extradition, and Mallya subsequently said he would appeal against the decision in the UK High Court.

In its reply, the ED said that “the money sought to be recovered is public money and thus restoration of assets in favour of the applicants lies in public interest” since the lenders, barring one, are state-run banks. It said the banks, except one, “have the backing of the state and thus carry with themselves a sovereign guarantee”.

“Thus, in the unlikely event of the respondents prevailing, the banks would be in a position and capacity to return the proceeds of sale of assets to the respondents. As a safeguard for this possibility, the complainant asks that the court order the applicant to file a guarantee in this respect,” it said.

Following the amendment of the PMLA Act, Section 8 (8) allows restoration of properties even during the trial in certain cases. The lenders want to liquidate the assets to claim Rs 6,203.35 crore along with interest of 11.5% per annum payable since 2013.

In a joint application, the banks contended that the attached assets were “amenable to market fluctuations and any delay in liquidating those assets may reduce their value”. Hence, they said, there was a “need for immediate and speedy disposal of the assets to realise their best value”.

Banks claimed a “legitimate interest” in all the properties belonging to Mallya, Kingfisher Airlines, United Breweries Holdings and Kingfisher Finvest India Ltd, including movable and immovable properties.

While the government was yet to receive a formal communication of the UK order, senior UK based lawyer Sarosh Zaiwalla told media that the extradition could be a long-drawn-out process. If Mallya were to file an appeal against the decision and leave to appeal were to be given by the Court of Appeal, the process could take five-six months, he said.

“Should this also go against him (Mallya), he could apply for the right to appeal to the Supreme Court, which would involve at least another six weeks, and if he won the right to do so, that could take more months, even up to a year,” he said.

Meanwhile, the news of Mallya's extradition has given much hope to Indians who are hoping to recover their money and has also showcased the government's determination to bring back the fugitive businessman.

Saima Siddiqui

Saima Siddiqui

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