Biz & Economy

The King Of Good Times And A Case Of Bad Debt

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Mr. King of Good Times, Vijay Mallya, was the Chairman of United Spirits, home of India’s famous Kingfisher beer, and is currently the Chairman of the United Breweries (UB) Group. He is also the Founder and Managing Director of Kingfisher Airlines. Sometimes referred to as the Richard Branson of India, Mallya has put himself right in the middle of a Central Bureau of Investigation (CBI) probe and is even being pulled up by Enforcement Directorate (ED). Here’s why:

 Vijay Mallya’s Kingfisher Airlines was in huge debt, owing to which, it shut in 2012

SBI declared Mallya’s Kingfisher Airlines a Non-Performing Asset in 2012. Launched in 2005, the company had to use money from Mallya’s liquor business to stay afloat. It had taken loans worth Rs. 7,200crores from various Indian banks but was unable to repay them. Finally, in 2012, the airline ceased operations and Mallya sold majority shares of United Spirits to the British liquor giant Diageo for $2.1 billion.

 But his lifestyle did not seem to change

He continued to live lavishly and came to be known as ‘The King of Good Times’. He was often spotted hosting grand birthday parties and celebrating with his IPL team ‘Royal Challengers Bangalore’ during their matches. This irked his airlines’ employees who hadn’t been paid salary for months, and the banks that lent him money as their payments were still due.

 CBI and the ED started probing Mallya for money laundering

On July 2015, the CBI registered an FIR against Kingfisher Airlines after the Debts Recovery Tribunal found that it owed Rs. 7,000crore to at least 17 different banks. In a separate case, the Enforcement Directorate (ED) charged him for money laundering and started a probe to find if any of the money was stashed in tax havens abroad.

 17 banks filed petitions in the SC to prevent him from fleeing the country 

His deal to completely bow out of United Spirits was stalled as authorities passed restraining orders on Diageo, preventing them from transacting with Mallya, so that SEBI could scrutinize his misadventures. Meanwhile, 17 banks filed a petition with the Supreme Court to stop Mallya from leaving the country.

 But, it was a bit too late…

The SC was informed later that Mallya had already left India for the UK on 2nd March 2016.

This angered the ED, which started piling on the pressure from many different angles

After Mallya repeatedly failed to heed summons to appear in court, the ED lost patience. On April 2016, the Ministry of External Affairs (MEA) suspended his passport on the ED’s request. Shortly thereafter it also secured a non-bailable warrant against Mallya from a special court under the Prevention of Money Laundering Act.

The British government rejected India’s request to deport Mallya

The Indian Government wanted to bring Mallya back to the country to prosecute him. However, India’s request to the UK to deport him was rejected in May 2016. The British government instead, requested that India file an application for extradition as per the treaty signed by the two countries.

Mallya arrested by the authorities in the UK 

On 9th February 2017, India submitted an application to the British government for Mallya’s extradition, as per the treaty between the two countries. The request was then forwarded to a district judge to decide on further action. Finally, on 18th April, Scotland Yard arrested the businessman and informed Indian authorities.

But he was soon released on bail

After the arrest, Mallya was taken to the Westminster Magistrates’ Court in London but was soon released on a bail bond worth 650,000 pounds. His extradition hearing was postponed to June, then July and finally to 4th December 2017. Mallya had been on conditional bail until the hearing.

Finally, London court rules in favour of Indian banks

Recently, a total of 14 banks won the case against Kingfisher Airlines in UK’s court. The latter stated, “Liquor baron Vijay Mallya, wanted in India to face charges of fraud and money laundering amounting to around Rs 9,000 crore, can be regarded as a fugitive from justice.” Despite the fact that Mallya has been a non-resident Indian (NRI) since 1988, the court gave orders to process his extradition. Mallya, of course, has challenged this order, but since he is a ‘non-tax paying resident’ in the UK, the latter isn’t keen on protecting him anymore.

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