The Enforcement Directorate (ED) on Friday filed first case under the Fugitive Economic Offender ordinance to declare Vijay Mallya a fugitive offender. Accordingly, the agency also wants to confiscate all the properties, indirectly controlled by Mallya with a total indicative value of approximately Rs 12,500 crore.

Mallya fled to London without repaying over Rs 9,000 crore of loans to consortium of banks. Effort to extradite Mally is undergong in UK courts.

The new law

The Fugitive Economic Offenders Ordinance, 2018 was promulgated on April 21, 2018.  It seeks to confiscate properties of economic offenders who have left the country to avoid facing criminal prosecution under existing legally system.

This ordinance aims to help the ED, which is a specialised financial investigation agency under Finance Ministry responsible for enforcing laws such as Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA). FEMA is a civil law while PMLA is criminal law.

According to ED, investigations carried under PMLA proved that Mallya had no intention to repay the loans from start. Though he and United Breweries Holdings Limited (popularly known as UB group) had substantial assets sufficient to repay the loans, they intentionally withheld the details from the banks, it added.

Later, they alienated some of the assets and tried to obfuscate the banks from enforcement of guarantees.

The ED has furnished evidences in its two charge sheets, filed under the PMLA in the past,  to make a case for seeking a fugitive offender tag for Mallya from the court. Mallya is contesting these charges in London as part of India’s efforts to extradite him from there and face the legal system.

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. Now, with this ordinance, confiscation will be more easy and very less time taking. Not only this, earlier, only proceed of crime would have to be confiscated, now all movable or immovable properties, controlled directly or indirectly by the proclaimed offenders, can be confiscated by the order of the court.

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