In a major setback to the Enforcement Directorate (ED), the Karnataka High Court (HC) has issued a stay on the proceeding to seize assets worth Rs 1,411 crore as part of the central agency’s probe into the Vijay Mallya money laundering case. The HC has asked ED to file a reply by September 27.
With this, the investigation has hit one more legal hurdle. ED’s attempt to bring Mallya back to the country has faced several other legal issues, with the India-UK Mutual Legal Assistance Treaty (MLAT) and “extradition” treaties. The next hearing in the case is scheduled for September 28. The order came after United Breweries (UB) filed a writ petition against the enforcement agency on September 19, and urged the court to grant an interim stay in the adjudicating proceedings. The ED in June had attached nine assets of Mallya and UB, worth Rs 1,411 crore, under anti-money laundering laws, in connection with the Rs 950-crore IDBI Bank loan fraud case.
The nine assets and properties were in Chennai, Bengaluru, Kodagu and Mumbai. The properties included UB City in Bengaluru, one residential apartment in south Mumbai, 4.5 acres of factory plot in Chennai and 27 acres of coffee plantation in Kodagu. Apart from this, Rs 34 crore in banks, indirectly held by Mallya, was also attached. Mallya owns 52.3 per cent stake in UB — personally as well as through firms such as Watson and McDowell Holdings. Confirming the development, an ED official said, “The proceeding in the case is put on hold till the matter concludes.”
UB, in the appeal, contended the cause of action and demanded several details of the case including Kingfisher Airlines balance sheet, the IDBI Bank loan documents and other files that the agency has possession of. “We are not bound to provide details to the company. This is ridiculous that the company has asked for those details which it already has,” said the official. Typically, the assets can be provisionally attached for a period not exceeding 180 days from the date of the order. The adjudicating authority then gets a go-ahead from the court for final attachment.
The ED, in this case, had invoked Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA), where it has discretionary power to provisionally attach the property of a person believed to be in possession of the proceeds of a crime. Such proceeds are likely to be concealed or transferred to another party, but the ED has the power to attach such proceeds as well, the officer said. After the provisional attachment of the property, the officer concerned has to forward the complaint to the adjudicating authority, he explained.
The Ministry of External Affairs has not been able to initiate the extradition process with the British authorities, as that can be done only after a chargesheet is filed in the case. The UK-India MLAT, which provides provisions of transfer of person on the basis of non-bailable warrant, is yet to get an approval from the Home ministry.
Meanwhile, the Interpol is believed to have denied the ED’s request for a red corner notice against Mallya. The international agency has claimed that there was not enough evidence against the liquor baron.
Credit Business Standard