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Indian Businessman and former Chairman of Kingfisher Airlines, Vijay Mallya, is facing charges of financial crimes such as money laundering and allegedly cheating a consortium of nationalized banks for defaulting on loan repayments amounting to Rs 9,000 Crore.

The Directorate of Enforcement is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It is part of the Department of Revenue, Ministry of Finance, Government of India, renamed as Enforcement Directorate (ED). The prime objective of the Enforcement Directorate is the enforcement of two key Acts of the Government of India namely, the Foreign Exchange Management Act 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA).

The ED filed a plea before a special PMLA Court on 27th August 2018, seeking the ‘fugitive’ tag for Vijay Mallya under the Fugitive Economic Offenders Act, 2018 (“FEOA”) so that confiscation of Mallya’s properties worth Rs 12,500 Crore could be carried out once he is declared a fugitive economic offender under FEOA. Under the provisions of the FEOA, Section 8 allows and gives power to an authorized officer to seize and confiscate the property of the person declared a fugitive economic offender.

Vijay Mallya had filed an application in the Lower Court in Mumbai seeking a stay on hearing a plea filed by ED, to declare him a fugitive economic offender and confiscate his properties, till the Appellate Tribunal functioning under the PMLA would hear matters filed by a consortium of banks on 26th November 2018 seeking their dues back.

On 30th October, 2018 the Lower Court rejected Vijay Mallya’s application, therefore, he approached the Bombay High Court.

Vijay Mallya’s Advocate argued in the Bombay High Court that the plea filed by his Client, Vijay Mallya should not be misunderstood as an act of running away from proceedings of the Court. He further argued that “We are also anxious to clear the dues and to see to it that the creditors get their dues back. We only do not want the properties to be seized by the ED which would then hamper the process of clearance of dues.”

However, the Division Bench comprising of Justices R.M. Savant and V.K. Jadhav held that, “The application has been filed at the threshold and at a very premature stage when the lower court is still hearing the prosecuting agency’s request to declare him a fugitive economic offender,”.

The Division Bench on 22nd November, 2018 dismissed the plea filed by Vijay Mallya pleading stay on proceedings under the Fugitive Economic Offenders Act.

The Bombay High Court also said that the Lower Court shall hear the application filed by the ED on merits.

Taruna Verma

Senior Associate

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