Author: Dibya Lipsa Maharana, KIIT School of Law, Bhubaneswar, Odisha
To the Point
The chairman of United Breweries Group and the ex-chairman of United Spirits, Vijay Mallya is a famous business tycoon and former Member of Parliament (Rajya Sabha). He has also been elected as the Member of Parliament two times from Karnataka. At the age of 28, he was appointed as the chairman of the company and extended his business in several foreign countries. He is also the previous owner of a famous IPL team, Royal Challenger Bangalore and Berger paints. In order to collect funds for his airline business, he sold one of his companies. He exploited the United Breweries company to buy another company in order to carry on with international flights, where he suffered a huge loss. He took loans from several banks but became bankrupt. His airline did not give any wages to their employees and also failed to pay taxes to the government.
Abstract
White collar crime is a crime committed by people of high socio-economic status. These types of crime include scams, frauds, trademarks, copyright, money-laundering, patents violation, etc. The aim of white-collar crime is to gain advantage by using unethical practices. These have also affected the social, political and economic growth of a nation at a large-scale. One of the famous scams of white-collar crime is the Vijay Mallya scam of rupees 9000 crores. He fled to United Kingdom after the scam in 2016 and has not yet returned. In 2017, Supreme Court ordered the Indian Government to seek his extradition after his failure to appear before the court. But due to his influential position he managed to get bail every time when he was arrested.
Use of Legal Jargon
Mallya was charged under section 3 (Money Laundering) and 4 (Punishment for money laundering) of Prevention of Money Laundering Act, 2002. He was also charged under section 13 (Criminal Misconduct by a public servant) of Prevention of Corruption Act, 1988. He was held liable under section 420 (Cheating), 120A (Criminal Conspiracy) and 120B (Punishment for Criminal Conspiracy). Despite repeated extradition requests from the Indian government, Mallya did not returned to India.
The Proof
Mallya took loans from several banks and did not repay them despite having the scope to do so. He was declared a willful defaulter by multiple banks. Following its 2012 suspension of operations, Kingfisher Airlines left behind unpaid debts to a large number of creditors, including tax obligations, crew salaries, and airport fees. According to the banks, the money was taken for purposes unrelated to the company, which was against the terms of the loans.
Case Laws
Central Bureau of Investigation (CBI) v. Nirav Modi and Merul Choksi (PNB Scam): It originates from the huge ₹13,000 crore Punjab National Bank (PNB) scam, which was discovered in 2018 and turned into one of the most well-known financial scandals in India. The Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) looked into PNB’s unlawful issuance of Letters of Undertaking (LoUs) in the Mumbai branch. Nirav Modi and Mehul Choksi were able to fraudulently get foreign credit from Indian banks without proper evidence or permission thanks to these LoUs. Numerous asset seizures and significant financial changes in India have also resulted from the case. India’s efforts to tackle high-value economic offenses and arrest fleeing economic offenders under new legal frameworks such as the Fugitive Economic Offenders Act, 2018 are reflected in the proceedings.
Enforcement Directorate v. Nawab Malik (Dawood Ibrahim Link Case): The main focus of the investigation is Nawab Malik’s suspected connections to the criminal underworld, particularly Dawood Ibrahim and Haseena Parkar, his close associate. According to the ED, Malik used a company owned by Parkar, which was thought to be a part of the money laundering scheme connected to Dawood Ibrahim’s D-business, to purchase a valuable piece of real estate in Mumbai at a significantly lower price. The ED argued that the property sale was intended to legitimize assets that had been obtained unlawfully and involved profits of crime. The case illustrates the ED’s wider operation against financial networks, especially those linked to Dawood Ibrahim, that are allegedly linked to organized crime and terrorism. Additionally, it caused political turmoil in Maharashtra, where opposition politicians were accused of abusing central agencies.
Enforcement Directorate v. Sanjay Raut (Patra Chawl Scam): This lawsuit focuses on suspected money laundering and financial irregularities connected to the Mumbai Patra Chawl redevelopment scheme. Senior Shiv Sena politician and Rajya Sabha MP, Sanjay Raut was charged with participating in a scam that reportedly involved the transferring off of nearly ₹1,000 crore through illegal transactions. According to the Prevention of Money Laundering Act (PMLA), 2002, the ED detained Raut in July 2022 on suspicion of receiving profits of fraud through his family and close colleagues, especially Pravin Raut, who had ties to HDIL, the corporation in charge of the reconstruction. According to the ED, some of the funds were transferred to Raut’s family through real estate transactions and other financial dealings.
Conclusion
This case highlights the amount of effect white-collar crimes have on the political, social and economic growth of a country. White-collar crimes are more dangerous and severe than the other crimes as they are generally committed by people of influential background. High-profile offenders like Vijay Mallya generally escape punishment due their powerful background and connections.
FAQS
What was the scam involving Vijay Mallya?
The chairman of United Breweries Group and the ex-chairman of United Spirits, Vijay Mallya, a famous businessman and former Member of Parliament (Rajya Sabha) took ₹9,000 crore in loans from many Indian banks to expand his company i.e., Kingfisher Airlines.
What are the key sections under which Vijay Mallya was charged?
Mallya was charged under section 3 (Money Laundering), section 4 (Punishment for money laundering) of Prevention of Money Laundering Act, 2002, section 13 (Criminal Misconduct by a public servant) of Prevention of Corruption Act, 1988, section 420 (Cheating), 120A (Criminal Conspiracy) and 120B (Punishment for Criminal Conspiracy) of Indian Penal Code, 1860.
