Armed with court order, a consortium of lenders led by SBI can now sell certain real estate properties and securities belonging to fugitive Vijay Mallya to recover loans turned bad with failure of Kingfisher Airlines.
A consortium of 11 banks that gave Mallya loans, led by State Bank of India (SBI), had approached a special Prevention of Money Laundering Act (PMLA) court seeking restoration of his properties seized by the Enforcement Directorate.
The special PMLA court in Mumbai on Tuesday allowed the restoration of properties worth Rs 5,646.54 crore to banks.
According to an official of lead bank SBI, symbolic possession of properties mentioned in the order would be taken by lenders after following due legal process.
Recovery process in banks are guided by Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, the official said, adding that auction or sale of those properties would be done as per the guidelines in due course of time.
SBI has the highest exposure of Rs 1,600 crore out of original loan of Rs 6,900 crore to the defunct Kingfisher Airlines.
Other banks that have exposure to the airline include Punjab National Bank (Rs 800 crore) and IDBI Bank (Rs 800 crore), Bank of India (Rs 650 crore), Bank of Baroda (Rs 550 crore), Central Bank of India (Rs 410 crore).
Mallya is accused of fraud and money laundering allegedly amounting to around Rs 9,000 crore, which involved his defunct Kingfisher Airlines.
Last year, Mallya offered to pay back 100 per cent of "public money" to various Indian banks and urged the government to accept his offer, days ahead of a UK court's decision on his plea not to extradite him to India.
The 65-year-old former Kingfisher Airlines boss has been on bail in the UK on an extradition warrant since his arrest in April 2019.
Mallya's extradition was ordered by former Britain Home Secretary Sajid Javid, in February 2019, after a prima facie case of fraud and money laundering was upheld by the UK courts, including on appeals.
He remains on bail in Britain while a confidential legal matter, believed to be related to an asylum application, is resolved.
Noting that banks have suffered losses, the PMLA court on Tuesday said it was impossible to conclude the exact "quantifiable loss" at this stage.
The court, however, said that the banks' claim of losses of over Rs 6,200 crore was not "imaginary".
This was the second such order passed by Special Judge JC Jagadale within 10 days.
On May 24, the court had ordered the release of properties worth Rs 4,234.84 crore, while on Tuesday it ordered release of properties worth Rs 1,411.70 crore.
Mallya's legal team had challenged the jurisdiction of the PMLA court.
The court, however, said, "It is material to note that the claimants are public sector banks and these banks are dealing with the public money.
"There cannot be any personal or private interest of the said claimants to pursue such claim against the present respondents and accused."
Mallya's lawyers had also argued that Mallya has given only a personal guarantee.
They claimed that merely giving of a personal guarantee does not connect Mallya in any way with the offence of money laundering or the proceeds of the crime.
The court noted that at present it is not required to finally decide the criminal liability of the accused person.
Photograph: PTI Photo