This article has been written by Prachi Singh pursuing the Certificate Course in Advanced Criminal Litigation & Trial Advocacy from LawSikho. This article has been edited by Zigishu Singh (Associate, Lawsikho) and Smriti Katiyar (Associate, Lawsikho). 

Introduction

Vijay Vittal Mallya is one of the most prominent personalities in any discussion on living life king size. Former owner of Royal Challengers Bangalore cricket team, Ex-chairman of United Spirits, Chairman of United Breweries group, founder of Kingfisher Airlines, former owner of Force India formula one team and a former Member of Parliament (Rajya Sabha), who was known for his lavish lifestyle and was given the title of ‘King of Good times’ has now acquired his position in the list of people who went from riches to rags. A person who was once famous for his extravagant lifestyle is now embroiled in a financial scandal of 9000 crores. Currently, efforts are being made to extradite him from the UK to India.

Brief history

He belonged to a well to do family, his father Mr. Vitthal Mallya was an accomplished investor who invested in ‘United Breweries Limited’ and purchased stakes in this company and later on he became the director of this company and continued to become the chairman. Mr. Vitthal Mallya died in 1983, after which Vijay Mallya became the chairman of ‘United Breweries Limited’ (hereinafter UB Group).

Vijay Mallya took charge of UB Group when the turnover was 350 crores. Under his chairmanship, the valuation of the company went from 40 crores to 6000 crores. He was a successful businessman who invested in various fields such as chemicals, engineering business, liquor, newspaper etc. In 2015, UB Group was the 2nd largest liquor maker in the world. He was given a Doctorate in Business Administration by the Southern California University because he was administering such a huge business which was growing at an unexplainable rate.

In 2005, Vijay Mallya launched ‘Kingfisher Airlines’ which was known for its luxury travels. Soon it became the 2nd largest airline in the domestic market having 1/4th of India’s share of domestic travellers. He wanted to expand Internationally and hence he acquired ‘Air Deccan’. His company was running in negative and he only focussed on expansion rather than profitability, that’s the reason when he acquired ‘Air Deccan’ his debt started increasing. Market stake of Kingfisher started decreasing eventually and it acquired more debt. He opted for Foreign Direct Investment (FDI) to cover his debt and negotiated with the Etihad Company, but FDI was not allowed at that time in the civil aviation Industry in India. Kingfisher Airlines entered a bad phase and employees started leaving, eventually Kingfisher Airlines shut down. In December, 2012 the government also cancelled the license of Kingfisher Airlines. Burden of loans acquired from banks started increasing after that, Vijay Mallya started taking maximum loans from PSU Banks (Public Sector Banks). State Bank of India alone issued a whopping 1600 crore loan to Kingfisher Airlines. Vijay Mallya took loans from 17 different banks out of which the majority were PSUs.

Banks finally applied for debt restructuring whereas the debt was converted into equity shares of 1400 crores loan by valuing shares of Kingfisher Airlines at Rupees 64.49/- which were trading at only Rupees 39.90/-, this was all possible due to good political connections as he was a Rajya Sabha member at that time. Later on, even IDBI bank provided around 800 crore loans to Kingfisher Airlines when it was already in huge losses. 

In March 2016, when the loan became outstanding around 9000 crores along with interest, Vijay Mallya agreed to pay approximately 6000 crores which was the principal amount along with the condition that all the other loans should be waived. Banks did not agree to this condition and therefore, Vijay Mallya could not repay the loan and went to Britain. Now he is in the ‘Wanted List’ for wilful default. 

Kingfisher Airlines has to pay around 9000 crores rupees along with interest to 17 different banks:

BANKAMOUNT
SBI1,600
PNB800
IDBI800
Bank of India650
Bank of Baroda550
United Bank of India430
Central Bank410
UCO Bank320
Corporation Bank310
State Bank of Mysore150
Indian Overseas Bank140
Federal Bank90
Punjab and Sind Bank60
Axis Bank50
Total of 14 Banks6,360
Other 3 Banks603
Total of 17 Banks6,963

In January 2017, DRT (Debt Recovery tribunal) made Kingfisher Airlines, UB Group and Vijay Mallya jointly and severally liable for an amount which was 6,963 crores and interest of 11.50% was charged on it. In May 2018, SBI calculated the total amount which turned out to be around 9000 crores. 

Royal Court of justice’s verdict

In the Case between Vijay Mallya and Government of India and National Crime Agency, the Royal Court of Justice, London, gave its decision. In this case Vijay Mallya (hereinafter the Appellant) appealed against a decision of Senior District Judge Arbuthnot (SDJ), sitting at Westminster Magistrates Court, on 10th December 2018 to send the Appellant’s case to the Secretary of State.

In this case the Government of India contended that the various loans obtained by Vijay Mallya were acquired by means of conspiracy so as to defraud, and it was also alleged that the Appellant was engaged in money laundering. Government of India therefore, sought for the extradition of Vijay Mallya with respect to these loans.

The Government of India already made an extradition request which was submitted on 9 February, 2017. A warrant was issued for the Appellant’s arrest on 28th March 2017 and he was thereafter arrested and granted bail on certain conditions on 18th April, 2017. Additional charges were later on submitted by the Indian Government and the extradition request was re-certified on 25th September 2017. A fresh warrant was executed on 3 October, 2017 and the Appellant was re-arrested but he was once again bailed.

The relevant offences which were submitted by the Indian Government were Section 120B read with Section 420 of the Indian Penal Code, 1860 and Sections 13(2)/ r.w 13(1)(d) of Prevention of Corruption Act, 1988.

Three allegations were put out against Vijay Mallya: Conspiracy to Defraud, making false representation, and diversion and dispersal of the proceeds of lending.

In this case, Vijay Mallya appealed against the decision given by SDJ on 10 December, 2018, wherein it was concluded that Government had established a prima facie case for the purpose of extradition. This appeal was accepted as the court felt that the Appellant would not receive a fair trial in India because of his political opinions, and that prosecution was politically motivated rather than on facts. Moreover, the court was of the view that his extradition would be incompatible with ECHR (European Convention on Human Rights) Article 3 due to the prison conditions in India.

The grounds before this court were that:

  1. That the lower court (SDJ) was wrong to find a prima facie case which is not being prosecuted in India.
  2. That the lower court erred in law in its approach to the prima facie case test.
  3. That the lower court was wrong to conclude that a prima facie case of conspiracy to defraud was made out.
  4. That the lower court was wrong to conclude that a prima facie case of fraud by false representation was made out.
  5. The lower court was wrong to conclude that a prima facie case of money laundering was made out.
  6. The lower court erred in its approach to the admissibility of the Respondent’s evidence.

The court handled all the issues, after referring to the ruling of SDJ and analysing the contentions made by both the sides, and stated that it was clear beyond any doubt that the SDJ directed itself properly. The court later on stated that the role of an extradition court is to consider whether a tribunal of fact, properly directed, could reasonably and properly convict on the basis of evidence. The extradition court must conclude that a tribunal of fact, properly directed and considering all the relevant evidence, could reasonably be sure of guilt.

The court proceeded on to stating that the evidence were properly evaluated from both the sides and SDJ considered all the relevant evidence properly and there was no failure from her side.

Hence the appeal of Vijay Mallya was dismissed.

Extradition laws in India with respect to UK

Extradition is a systematic process wherein one country surrenders the fugitive offender to another country. This delivery of criminals or accused is primarily based on treaties or bilateral arrangements between the nations. 

According to Black’s Law Dictionary, extradition means “The surrender of one state to another of an individual accused or convicted of an offence outside its territory and within territorial jurisdiction of the other, which, being competent to try and punish him, demands the surrender.”

The principle of extradition basically revolves around three principles in India:

  1. Principle of Double Criminality
  2. Principle of Speciality
  3. Political exception 

Laws related to extradition are governed by the Extradition Act, 1962. Treaties and bilateral agreements between India and other countries govern the extradition norms between the said countries.

The extradition treaty between the Indian government and the government of U.K was signed and enforced in December 1993. So far, only one fugitive named Samirbhai Vinubhai has been extradited from U.K to India on the charges of murder and criminal conspiracy. 

Article 1 of that extradition treaty provides that, the extradition treaty shall deal with the accused retrospectively if he commits an offence that is recognised within the purview of this treaty. Article 2 of the treaty provides that an offence that is punishable in both the contracting States with imprisonment of at least one year shall amount to an extradition offence under the treaty. This holds even when the offence is purely monetary in nature.

Legal provisions used in the present case

Vijay Mallya was charged under Section 120B read with Section 420 of the Indian Penal Code (IPC), 1860 along with Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act (PCA), 1988.

Section 120B of the IPC states about the punishment of criminal conspiracy. Criminal conspiracy is defined under Section 120A of IPC, as per the section whenever two or more persons agree to do (themselves) or cause to be done (by some other person) any act which is illegal, or a legal act by illegal means, an agreement to do such act amounts to an offence of criminal conspiracy. Therefore, to constitute criminal conspiracy, there has to be an agreement between two or more persons and such agreement has to be for commission of an unlawful act or a lawful act by unlawful means.

Section 420 of IPC states about punishment for cheating and dishonestly inducing delivery of property. The punishment for the same may extend to 7 years of imprisonment along with fine. The ingredients that are essential to establish the offence of cheating are; that the accused made a false representation and he knew about the same, and that accused made such false representation with dishonest intention of deceiving the other person, and thereby the accused induced the other person to deliver any property or to do or to omit to do something which he would otherwise not have done or omitted.

Section 13 of PCA states about the offence of criminal misconduct by a public servant. Clause (1)(d) of Section 13 under the act has now been completely omitted by the amendment act 16 of 2018. It stated that a public servant is said to commit the offence of criminal misconduct when such person obtains any pecuniary advantage or any valuable thing for any other person or himself, when such public servant abuses his position to obtain any pecuniary advantage or valuable thing for any other person or himself, or such public servant obtains any pecuniary advantage or a valuable thing with no public interest for himself or any other person.

Section 13(2) of PCA states that such a public servant who commits criminal misconduct shall be liable to fine along with imprisonment which may extend to 7 years but should not be less than 1 year. 

Offences committed under Section 13 of PCA are also scheduled offences under Prevention of Money-Laundering Act, 2002 (PMLA). Section 3 of PMLA states about offence of money-laundering and Section 4 states about punishment for money laundering. Punishment for the same is rigorous imprisonment which may extend to 7 years but which shall not be less than 3 years, and shall also be liable to fine. The object of Section 3 and 4 under PMLA is to confiscate such property that has been obtained through illegal means. 

Current position

Harsh Vardhan Shringla, the Foreign Secretary of India, during his visit to the U.K held meetings with officials to enhance the ties between the two nations and stated that the Indian government has “best assurance” from the U.K authorities of Vijay Mallya’s extradition. He stated that British authorities are working on the extradition process at present. Gaitri Issar Kumar, the Indian High Commissioner stated that the extradition has been decided, the only thing remaining is the legal process.   

Conclusion

The UK court concluded long ago that there is sufficient evidence for a prima facie case against Vijay Mallya but still so much delay only points towards the misuse of legal machinery. Laws are made to protect people and punish the ones who violate them but these laws are also misused by high profile people which is often accompanied by ill-advised political commentary. It has been years and the Indian government is still making efforts to extradite Mallya while he roams free. The delay would only lead to injustice and further degradation, this should act as a benchmark and strict action needs to be taken so as the offenders think twice before committing such crimes. 

References

  1. https://economictimes.indiatimes.com/industry/banking/finance/this-is-how-much-vijay-mallya-owes-to-different-banks-in-india/central-bank-of-india/slideshow/58360003.cms
  2. https://www.ndtv.com/india-news/best-assurance-from-uk-on-vijay-mallya-extradition-foreign-secretary-2493892
  3. https://www.business-standard.com/about/who-is-vijay-mallya.

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