Not easy to seize Mallya's properties in UK, but Indian banks are trying their best
India's efforts to bring back Vijay Mallya are in their final stage and chances are high he will be successfully extradited, but winning the rights to his foreign assets is a different challenge altogether. The ownership patterns of his UK assets are complex, with many of the possessions running through a web of companies.
Moreover, half a dozen civil and bankruptcy proceedings clubbed with the invocation of various international laws by Mallya's legal team, have made it all the more difficult for Indian banks making claims to his assets.
According to senior Lawyer Anirudh Sharma, the deportation case and the legal fight to win rights to Mallya's assets are very different. "While extradition may prove a prima facie case, recovery of assets requires full-proof evidence and a complete trial as per the procedure established by law," Sharma said.
He added: "Success in extradition process results only in custody of the accused and not the recovery of his assets; recovery of assets is a standalone process having distinct contours and ingredients."
However, a flurry of developments in UK courts has given a ray of hope to the lending banks.
UK Court Proceedings
In one of the judgements, the court dismissed an appeal filed by Mallya to prevent Indian banks from getting access to nearly 260,000 pounds lying in one of his London bank accounts.
The court ruled that the order in favour of SBI and other banks seeking access to funds in Mallya's ICICI UK bank account "should remain in force". The banks, however, will have to wait until the hearing of Mallya's pending bankruptcy petition in the UK which is currently ongoing in a different court. Indian Banks were represented by law firm TLT LLP.
The UK case is based on proceedings in the Bangalore Debt Recovery Tribunal (DRT) against Kingfisher Airlines. The DRT case is registered in the UK under the Foreign Judgments (Reciprocal Enforcement) Act 1933.
Last year a UK High Court judge issued an enforcement order in favour of a consortium of 13 Indian banks granting permission to the Enforcement Officer to enter Mallya's properties. According to order by Justice Byran, dated June 26, the officers could enter Mallya's properties "using reasonable force to search for and take control of goods" belonging to Mallya.
But, Mallya came up with a legal manoeuvre and sought a stay on all enforcement proceedings which commenced after the bankruptcy petition by the Indian banks. The hearing on the bankruptcy petition is scheduled to take place later this month in the UK. Indian lenders currently part of the proceedings in UK are SBI, Bank of Baroda, Corporation Bank, Federal Bank Ltd, IDBI Bank, Indian Overseas Bank, Jammu & Kashmir Bank, Punjab & Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank, United Bank of India and JM Financial Asset Reconstruction Co. Pvt Ltd.
Last month, Mallya agreed to pay off a mortgage loan for his Cornwall Terrace apartment in central London, settling with Swiss bank UBS. According to court documents, Mallya has time until April 2020 to pay off a mortgage loan worth 20.4 million pounds for the apartment.
In another case, the UK High Court directed the liquor tycoon to pay British beverage giant Diageo over $135 million in relation to a collateral arrangement. Diageo had sought a total of $175 million, which was opposed by Mallya.
Indian banks have also consistently pointed out attempts by Mallya to hide assets before UK courts. The banks had contended that Mallya had secretly disposed of several assets, including the sword of Tipu Sultan and two Maybach cars. The court was told that Mallya had disposed of the sword of Tipu Sultan which he had bought at an auction in London 2003. Reports later speculated that the Mallya family got rid of the sword because they considered it bad luck. The sword is a relic. It was seized by a British commander named George Harris following Lord Cornwallis' attack on Srirangapatnam in 1799.
Indian authorities and banks have alleged that Mallya and his family own assets across multiple continents through a web of offshore companies and trusts.
Banks have argued before the UK court that there are numerous assets linked to Mallya which he denies he owns. Banks claim "these comprise three yachts, numerous cars and the Mabula game reserve in South Africa. The registered/asserted owners are offshore companies and/or trusts." However, the UK court did not take account of these claims pertaining to non-UK properties as "these matters were unverified".
Only last month, Mallya exited from Caribbean Premier League (CPL) where he owned a cricket franchise team named Barbados Tridents. Mallya was replaced by a US-based consortium of companies. These transactions are still missing from the UK court proceedings. Mallya has already exited from the Indian Premier League (IPL) franchise Royal Challengers Bangalore (RC