Vijay Mallya's Woes Worsen As ED Seeks To Confiscate Assets Worth Rs 12,500 Crore

Vijay Mallya earned the dubious distinction of being the first person who is likely to be declared a fugitive offender at the behest of Enforcement Directorate (ED) pending court approval. This is expected to happen under a new Fugitive Economic Offenders Ordinance that was passed in April this year. The ED recently moved a court against Vijay Mallya seeking to declare him a 'fugitive offender' and to confiscate assets worth Rs 12,500 crore. ED filed an application before a Mumbai court under the recently promulgated Fugitive Economic Offenders Ordinance that empowers it to confiscate all assets of an absconding loan defaulter.

The application seeks to immediately confiscate about Rs 12,500 crore assets of Mallya and his companies, both movable and immovable.

The ED has furnished evidences in its two charge sheets, filed under the Prevention of Money Laundering Act (PMLA) in the past, to make a case for seeking a fugitive offender tag for Mallya from the court. Mallya is contesting these money laundering charges in London as part of India's efforts to extradite him from there and face the legal system here in connection with an overall alleged loan default of over Rs 9,000 crore of various banks.

As per the existing process of law under the PMLA, the ED can confiscate the assets only after the trial in a case finishes which usually takes many years.

About the Fugitive Economic Offenders Ordinance

On April 21, the Union cabinet approved the proposal of promulgating the Fugitive Economic Offenders Ordinance, 2018, which will empower authorities to attach and confiscate assets of economic offenders including loans defaulters such as Nirav Modi and Vijay Mallya. At the outset, the Fugitive Economic Offenders Bill was introduced in Lok Sabha in March during the Budget Session. However, it but could not be passed due to logjam over various issues.

The law would utilise the infrastructure existing in form of special courts constituted under the Prevention of Money-laundering Act, 2002 (PMLA). The threshold of scheduled offence is Rs 100 crore or more.

Cases of frauds, cheque dishonour or loan default of over Rs 100 crore would come under the ambit of this ordinance. The ordinance offers necessary constitutional safeguards in terms of providing hearing to the person through counsel, allowing him time to file a reply, serving notice of summons to him, whether in India or abroad and appeal before the high court.

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