Mumbai/New Delhi, June 22 (IANS) The Enforcement Directorate (ED) on Friday moved a special court to declare the now defunct Kingfisher Airlines' chief Vijay Mallya a "fugitive economic offender" and confiscate all his properties.
The financial probe agency said that it has filed an application before a court in Mumbai to declare Mallya, a fugitive economic offender under the newly-promulgated Fugitive Economic Offenders Ordinance.
The agency also sought court orders for confiscating all the properties of Mallya worth Rs 12,500 crore, which includes immovable properties as well as movable properties in form of shares.
Mallya is the first person under which action is proposed under the Fugitive Economic Offenders Ordinance. The agency officials said that the fugitive diamond jeweller Nirav Modi, who is wanted by the investigating agencies in India in the Rs 13,500 crore Punjab National Bank (PNB) fraud case would be the second person to be declared as a fugitive economic offender under the new law.
The government has approved the Fugitive Economic Offenders Ordinance, 2018 on April 21 in a bid to bring back defaulters of huge bank loans who escape abroad, and also provide for attachment and confiscation of the properties of the economic offenders.
The Ordinance makes provisions for a 'Special Court' under the PML to declare a person as a Fugitive Economic Offender, or a a person against whom an arrest warrant has been issued in respect of a scheduled offence and who has left India so as to avoid criminal prosecution, or being abroad, refuses to return to India to face criminal prosecution.
Last week, the agency has filed two chargesheets against Mallya, Kingfisher Airlines Ltd (KAL), UBHL and others under Prevention of Money Laundering Act.
Following the chargesheets, the court issued fresh non-bailable warrant Mallya in both the cases.
According to the ED chargesheet, the investigation revealed a criminal conspiracy since inception for obtaining or sanctioning of bank loan to KAL in gross violations of established or prescribed procedures with no intention for repayment of loan.
The agency alleged that instances were noticed wherein, Mallya was alienating his assets by disposing of the properties held in the name of the companies which were indirectly controlled by him and also was getting funds outside India by way of having a deal with Diageo Plc.
"These details were intentionally withheld from the banks and later on, alienated some of the assets and tried to obfuscate the banks from enforcement of guarantees submitted by them. All these fraudulent activities were undertaken beginning with availment of loan," it said.
The agency alleged: "There was a conspiracy amongst Mallya and the officials of KAL and others to project and get accepted the brand value as a collateral security in spite of the same being a hypothetical asset and suffering from deficiencies and also deliberately avoided in submitting the valuation report of another brand valuer."
"KAL had offered as a collateral towards security, negative lien on fleet of hire purchase or finance lease aircraft against the loans availed from the banks despite being well aware that the said security was only a symbolic security in nature and was grossly inadequate to cover the exposure of the banks," it said.
The agency also said that efforts were made to locate and make Mallya to join the investigation, but he "deliberately and intentionally avoided to appear on the stipulated dates by giving one pretext or the other".
In its chargesheet the agency also alleged that several instances of siphoning and diversion of funds by KAL at the behest and for the benefit of Mallya.
"The loan amounts were siphoned off and diverted overseas in the guise of lease rental payments for aircrafts, payments towards his sister companies by mis-representing the banks for making payments towards ground handling of the airlines, excess invoicing of the lease rentals, utilizing of loan amounts towards payments for personal benefits such as corporate jet, diversion of funds to IPL franchise owned by Mallya etc." it said.
On ED's request, Mallya's passport was revoked in April 2016 and the agency so far has attached his properties worth Rs 9,890 crore.