AUTHOR: – ANSHIKA KUMARI, a student SHRI RAMSWROOP MEMORIAL UNIVERSITY
TO THE POINT
- Kingfisher Airlines (launched 2005) never made a profit and shut down in 2012.
- Loan Default: ₹9,000+ crore borrowed from 17 Indian banks (SBI, PNB, IDBI, etc.).
- Defaults began in 2009–2010; banks declared the accounts as NPAs.
- Personal Guarantees by Vijay Mallya were part of the loans.
- Funds allegedly diverted for non-business purposes.
- Enforcement Directorate & CBI filed cases for money laundering and fraud.
- Mallya fled India in March 2016, just before being summoned by authorities
- UK court cleared extradition in 2019, but it’s still delayed.
- So far, ₹7,000+ crore recovered via seized assets and shares.
USE OF LEGAL JARGON
1. Non-Performing Asset (NPA) – Unpaid loans for over 90 days (Kingfisher loans became NPAs).
2. Wilful Defaulter – Borrower who can pay but doesn’t (Mallya was declared one).
3. Fugitive Economic Offender (FEO) – Person accused of major financial crime who fled India (Mallya in 2019).
4. Personal Guarantee – Mallya personally backed Kingfisher loans.
5. Money Laundering – Hiding illegal funds (alleged diversion of ₹1,300+ crore abroad).
6. Extradition – Legal process to return a fugitive (India seeks Mallya from UK).
7. Provisional Attachment – ED temporarily seized his assets.
8. Charge Sheet – CBI’s formal accusations of fraud.
9. Non-Bailable Warrant – Arrest order without immediate bail (issued in 2016).
THE PROOF
1. CBI Charge Sheet (2017)
• Filed in Special CBI Court, Mumbai, naming:
• Vijay Mallya
• Kingfisher Airlines
• Senior executives
• IDBI Bank officials
• Allegations:
• Criminal conspiracy, cheating, and corruption.
• IDBI sanctioned ₹900 crore despite poor financials.
• ₹263 crore was diverted to overseas accounts soon after disbursal.
• Charges under IPC Sections: 120B (conspiracy), 420 (cheating), and Prevention of Corruption Act.
2. Enforcement Directorate (ED) Investigations
• ED attached properties worth over ₹11,000 crore under the Prevention of Money Laundering Act (PMLA).
• Multiple properties in India and abroad were seized.
3. Bank Records & SBI-led Consortium
• 17 banks provided loan records and guarantees signed by Mallya.
• SBI alone lent over ₹1,600 crore.
• Forensic audits revealed:
• Willful default patterns
• Violation of RBI’s fair lending practices
• Use of loans for unrelated expenses like Formula One racing and luxury jets
4. UK Court Extradition Documents
• The UK Westminster Court upheld India’s evidence:
• Recognized that there were strong grounds for extradition.
• Noted Mallya’s departure from India after banks moved to recover loans.
ABSTRACT
V ijay Mallya, once a prominent Indian businessman and founder of Kingfisher Airlines, became the face of one of India’s most high-profile financial scandals. His airline, launched in 2005, rapidly accumulated debts exceeding ₹9,000 crore borrowed from a consortium of 17 Indian banks. Despite persistent losses, loans continued to be sanctioned, allegedly due to influential backing and inadequate due diligence. Mallya provided personal guarantees but defaulted, and investigations later revealed diversion of funds and potential fraud.
He was subsequently declared a willful defaulter and later a Fugitive Economic Offender under Indian law. The Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) filed charges of conspiracy, money laundering, and cheating, citing evidence of fund diversion to foreign shell companies. UK courts approved his extradition in 2018 based on prima facie evidence, though he remains in the UK due to procedural delays.
This case highlighted systemic lapses in India’s banking sector, catalyzed legal reforms such as the Fugitive Economic Offenders Act (2018), and triggered asset recovery measures that have reclaimed over ₹7,000 crore to date. It serves as a cautionary tale about regulatory oversight, ethical lending, and cross-border enforcement of financial crimes.
CASE LAWS
CBI v. Vijay Mallya & Ors. – Special CBI Court (Mumbai)
• Court: Special Judge for CBI Cases, Mumbai
• Year: Charges filed in 2017
• Core Allegation: Fraud and criminal conspiracy in obtaining a ₹900 crore loan from IDBI Bank.
• Sections Invoked:
• IPC Section 120B (Criminal Conspiracy)
• IPC Section 420 (Cheating)
• Prevention of Corruption Act Sections 7, 13(1)(d)
2. ED v. Vijay Mallya – PMLA Case
• Court: Special PMLA Court, Mumbai
• Status: Vijay Mallya was declared a Fugitive Economic Offender under the Fugitive Economic Offenders Act, 2018.
• Judgment Date: January 5, 2019
3. India v. Vijay Mallya – Extradition Case (UK)
• Court: Westminster Magistrates’ Court, London
• Date: December 10, 2018
• Outcome: Judge Emma Arbuthnot ruled that there exists a prima facie case of fraud, money laundering, and conspiracy.
• Significance: First major financial offender India successfully proved fit for extradition under its treaty with the UK.
4. Enforcement Directorate v. Kingfisher Airlines (ED Case Nos. 3/2016, 5/2017)
• Court: PMLA Appellate Tribunal
• Purpose: ED sought and was granted attachment of properties under Sections 5 and 8 of PMLA.
• Assets Involved: Mallya’s properties in India and abroad, including F1 team shares, Goa villa, and UB Group holdings.
Union of India v. Vijay Mallya – Supreme Court (Contempt Proceedings)
• Bench: Justice UU Lalit and Justice Ashok Bhushan
• Judgment Date: August 2020.
Notable Legal Impacts:
• First use of FEO Act 2018 in India on such a scale.
• Strengthened judicial cooperation between India and UK.
• Case cited in Indian courts to set precedents on willful defaulters and economic fugitive proceedings.
CONCLUSION
The case of Vijay Mallya and Kingfisher Airlines epitomizes one of India’s most prominent financial scandals involving willful default, systemic banking lapses, and international legal challenges. What began as a high-profile business venture backed by aggressive borrowing ended in massive loan defaults exceeding ₹9,000 crore, misuse of public funds, and evasion of legal accountability.
Investigations by the CBI and Enforcement Directorate revealed strong evidence of fraud, money laundering, and criminal conspiracy. Mallya’s flight from India in 2016 triggered the use of new legal frameworks such as the Fugitive Economic Offenders Act, under which he was the first person officially declared as a fugitive for financial crimes.
Despite delays in extradition from the UK, Indian authorities successfully recovered over ₹7,000 crore through asset seizures and court-directed proceedings. The case also led to stronger enforcement and compliance mechanisms in India’s banking system.
In sum, the Vijay Mallya case stands as a landmark example of financial crime, highlighting the need for accountability in corporate lending, robust legal reforms, and global cooperation to combat economic offences.
FAQ
1. Who is Vijay Mallya?
Vijay Mallya is an Indian businessman and former Member of Parliament. He became infamous for defaulting on massive loans taken by Kingfisher Airlines.
2. What was Kingfisher Airlines?
Kingfisher Airlines was a luxury airline launched in 2005. It ceased operations in 2012 due to mounting losses, unpaid salaries, and a debt burden of over ₹9,000 crore to Indian banks.
3. How much did Vijay Mallya default on?
He defaulted on loans totalling over ₹9,000 crore (approx. USD $1.2 billion) borrowed from a consortium of 17 Indian banks, led by the State Bank of India.
4. What are the main allegations against Mallya?
• Fraudulent loans
• Money laundering
• Criminal breach of trust
• Diversion of loan funds to foreign accounts
• Non-repayment despite having the means
5. What action was taken by Indian authorities?
• CBI filed criminal conspiracy and fraud charges.
• ED filed money laundering cases and attached assets.
• He was declared a Willful Defaulter and later a Fugitive Economic Offender.
• India initiated extradition proceedings from the UK
6. Where is Vijay Mallya now?
He has been in the United Kingdom since March 2016. Although a UK court approved his extradition in 2018, it has been delayed due to pending legal and procedural issues.
7. Has any money been recovered?
Yes. Indian agencies have recovered over ₹7,000 crore through the seizure of assets, sale of shares, and loan settlements facilitated by the ED and banks.
8. What is the status of the extradition case?
The UK Westminster Court approved extradition in 2018, which was upheld by higher courts. However, the final step is pending due to “confidential legal proceedings” within the UK government.
9. What laws were applied in this case?
• Indian Penal Code (Sections 120B, 420)
• Prevention of Corruption Act
• Prevention of Money Laundering Act (PMLA)
• Fugitive Economic Offenders Act, 2018
• Extradition Treaty (India–UK)
10. Why is this case important?
It exposed critical lapses in India’s public banking system, prompted the creation of stronger financial crime laws like the FEO Act, and became a benchmark case for cross-border recovery of economic offenders.
