Author: Ritika Singh, Sister Nivedita University
HEADLINE OF THE ARTICLE
Vijay Vittal Mallya was born on 18 December, 1955 in karnataka, and he is a well known businessman and once have been a politician. He was also known as a ‘King of Good Times’ became the poster boy of India’s bad loans crisis after his Kingfisher Airlines defaulted on loans worth over ₹9,000 crore borrowed from a consortium of Indian banks.
His business empire collapsed under the weight of unpaid loans. This led to a series of criminal and civil proceedings across India and the UK after he fled the country in 2016.
TO THE POINT
Vijay Vittal Mallya, owner of Kingfisher Airlines and former chairman of U B Group (United Breweries)
Kingfisher Airlines, founded in 2005, and was financed heavily through bank loans. Kingfisher Airlines borrowed over ₹9,000 crore from a consortium of Indian banks. Due to poor financial management and business losses, the airline defaulted on repayments. The airline faced continuous financial losses and grounded operations in 2012.
This case involves allegations of willful default money laundering, and fugitive economic offences, raising critical questions about bank oversight, political nexus, and corporate governance in India. He allegedly diverted and misused funds while also providing personal guarantees for the loans.
The Involved Agencies are Central Bureau of Investigation (CBI), Enforcement Directorate (ED) & Supreme Court of India.
In March 2016, Vijay Mallya fled to the United Kingdom, just as banks moved court to recover loans.
USE OF LEGAL JARGON
● Wilful Defaulter: A person who has the means but intentionally avoids repayment (defined by RBI guidelines).
● Fugitive Economic Offender (FEO): Defined under the Fugitive Economic Offenders Act, 2018 as someone who evades legal processes by staying abroad and an individual against whom a warrant has been issued for an offense.
● Extradition: A legal process to bring back a person accused of crime from another country under a treaty.
● Money Laundering: An offence under Section 3 of the Prevention of Money Laundering Act (PMLA), 2002 involving concealment of illegally obtained money.
● Attachment of Property: Under PMLA, ED can seize movable/immovable properties of the accused suspected to be acquired with tainted money.
● Personal Guarantee: A legal commitment by Mallya to personally repay the company’s loans in case of default.
THE PROOF
● Loan Transactions (2004–2012): Kingfisher Airlines borrowed from Indian banks despite poor financials and continuous losses.
● Red Flags Ignored by Banks: Banks continued lending despite a negative debt-equity ratio and no substantial security.
● Emails and Financial Records: Revealed that funds were transferred to entities in tax havens and used for luxury lifestyle, not business recovery.
● Extradition Proof: UK court admitted prima facie evidence showing Mallya misrepresented Kingfisher’s financials and failed to repay.
● Bank Records & Audit Reports: Loans were around ₹9,000 crore taken from a consortium of 17 Indian banks.
● ED & CBI Charge sheets: ED’s 5,300-page charge sheet alleged fund diversion and over-invoicing. Rupees 900 crore IDBI loan diverted to unrelated business activities .
● Court Judgments & Orders: In 2017 the Debt Recovery Tribunal held Mallya and Kingfisher Airlines liable. Then in 2018 the UK Westminster Magistrates’ Court approved extradition based on fraud and misrepresentation. And in 2021 UK High Court declared Mallya bankrupt.
● Asset Recovery Documents: As per Finance Minister’s 2021 statement, ₹14,000+ crore recovered by banks through ED-led asset seizures.
● Warrants & Legal Declarations: Non-bailable warrants issued by Indian courts and Vijay Mallya was declared a fugitive economic offender under the Fugitive Economic Offenders Act, 2018.
ABSTRACT
The Vijay Mallya–Kingfisher Airlines loan default case is one of the most sensational financial scandals in India, involving the misuse of public funds through high-value loans to his now-defunct airline, the Kingfisher Airlines, which has been secured loans from 17 Indian banks, accumulating a debt of over ₹9,000 crore. Despite personal and corporate guarantees, the airline defaulted on payments, leading to the accounts being classified as NPAs by 2012.
Investigations by the Enforcement Directorate (ED) and Central Bureau of Investigation (CBI) revealed that a substantial portion of the funds was misused and laundered to foreign accounts and personal assets. Charges were filed under the Prevention of Money Laundering Act, 2002, and Indian Penal Code, 1860, for cheating and criminal breach of trust. Mallya fled to the United Kingdom in 2016, avoiding legal proceedings in India.
The UK courts approved his extradition in 2018, though the process faced delays due to diplomatic issues. Meanwhile, Indian authorities, under various court and enforcement orders, recovered over ₹14,000 crore through the attachment and sale of his assets. Mallya has been declared a fugitive economic offender, and as of 2025, he lost his final bankruptcy appeal in the UK, reinforcing his liability for the massive default.
CASE LAWS
STATE BANK OF INDIA & ORS. Vs VIJAY MALLYA & ORS (2017)
• Court: Debt Recovery Tribunal (DRT), Bengaluru
• Outcome: The DRT ruled in favor of a consortium of 13 banks led by SBI, holding Mallya, Kingfisher Airlines, and United Breweries (Holding) Ltd.
ENFORCEMENT DIRECTORATE VS VIJAY MALLYA FORM 2016 ONWARDS
• Law Applied: Prevention of Money Laundering Act, 2002 (PMLA)
• Outcome: ED attached assets worth over ₹9,000 crore; later declared Mallya a fugitive economic offender under FEO Act, 2018.
• Significance: First high-profile FEO declaration under the Act, enabling seizure of overseas and domestic properties.
CONSORTIUM OF BANKS VS VIJAY MALLYA Extradition Proceedings (2018)
• Court: Westminster Magistrates’ Court, UK
• Outcome: Approved Vijay Mallya’s extradition to India, citing a “prima facie case of fraud and money laundering.”
• Significance: One of the first major extradition orders. from the UK in a white-collar economic offence case involving an Indian businessman.
UNITED BREWERIES HOLDINGS LTD. VS. UNION OF INDIA (2019–2022)
• Court: Karnataka High Court / Supreme Court
• Issue: UBHL challenged the ED’s property attachment.
• Outcome: Courts upheld the ED’s actions and the government’s powers under the PMLA and FEO Act.
CONCLUSION
The Vijay Mallya & Kingfisher Airlines case has become emblematic of India’s ‘corporate banking crisis’ and a weak financial oversight . It reflects the challenges of recovering large-scale loans from influential individuals and enforcing accountability.
It also exposed serious flaws in India’s banking and regulatory systems, including poor risk assessment, political interference, and lack of accountability.
However, the government’s aggressive approach through legal and diplomatic channels has led to notable progress in asset recovery and legal reforms. The extradition and recovery process continues, the case continues to evolve and remains a landmark in Indian legal and financial history.
FAQS
Q1) What is the loan amount Vijay Vittal Mallya defaulted on?
The amount was over ₹9,000 crore borrowed from 17 banks. State Bank of India (SBI), Punjab National Bank (PNB), IDBI Bank, Bank of India, UCO Bank, Axis Bank , and many more. The major amount of loans has been taken from SBI and IDBI banks.
Q2) Is Vijay Mallya a convicted criminal?
Not yet convicted in India; declared a Fugitive Economic Offender and found guilty of contempt.
Q3) What is a Fugitive Economic Offender?
A person against whom an arrest warrant is issued for economic offences worth over ₹100 crore and who has left India to avoid prosecution.
Q4) Where is Vijay Vittal Mallya now?
As of 2025, Vijay Mallya is still in the UK; his extradition is pending due to confidential legal issues.
