Contempt of court: SC orders Vijay Mallya to appear before it on October 5

In a setback for Vijay Mallya, the Supreme Court on Monday ordered him to be present before it on October 5 in a case related to contempt of court for transferring a $40-million payment from Diageo Plc to his three children.
It also directed the government (the ministry of home affairs) ‘to facilitate and ensure’ Mallya’s presence before it on October 5, the next date of hearing.

A Bench led by Justice UU Lalit, while rejecting the UB Group chairman’s petition seeking review of its 2017 order that held him guilty of contempt of court for transferring $40 million to his children, did not find any “error apparent on record” to justify interference.

While banks had sought recovery of Rs 6203.35 crore from Mallya and his firms, the latter had orally undertaken before DRT, Bengaluru, on July 26, 2013, against alienating or disposing of their properties. Even the Karnataka High Court, in its two orders of September and November 2013, had restrained Mallya and others from alienating or creating third-party rights in respect of their movable as well as immovable properties.

“Admittedly, the amount of $40 million which was part of the sum of $75 million was received in the account of respondent No.3 (Mallya) on February 25, 2016, and within few days, that is, on February 26 and 29, 2016, said amount of $40 million was transferred” by Mallya, the SC said in its order.

Despite repeated orders, no clear disclosure of his assets was made by Mallya, nor any details of inflow and outflow of the said amount of $ 40 million were disclosed by him, the apex court stated, adding that “as a matter of fact, the existence of the concerned bank account itself was not disclosed”.

While the SC had directed Mallya twice — in April and October 2016 — to disclose all assets held by him and his family, Mallya had then claimed that banks had already recovered Rs 2,494 crore from the defunct Kingfisher Airlines since 2013. The SC had questioned Mallya why he transferred the payout.

Through his firm United Breweries (UBHL), Mallya had last week offered to settle Rs 14,518-crore liabilities with a consortium of 14 banks and others, saying the bankruptcy and winding up laws are aimed at “keeping alive the viable companies while ensuring that creditors are paid back”.

“This bona fide offer of Rs 14,518.02 crore (as on January 17, 2020) is required to be viewed in the context of the banks having already recovered Rs 12,877.55 crore till date leaving a balance due, at the highest of Rs 5,958.97 crore, given that all the assets of UBHL stood attached” by the ED in June and September 2016, UBHL said in another petition.

The apex court had on May 10, 2017, held Mallya guilty of contempt of court, and asked him to appear before the court on July 10 that year. “We give him an opportunity to be present in court personally while deciding on quantum of punishment,” the order stated.

The order was then passed on a plea by the SBI-led consortium of banks seeking to recover Rs 9,000 crore owed by Mallya’s defunct carrier, which was grounded in 2012 amid mounting debt and losses. The lenders alleged that the industrialist had disobeyed court orders by making “vague and unclear disclosure of his assets” by transferring a $40-million payment from Diageo Plc to his children who are US citizens and sole beneficiaries of three trusts and also ignoring summonses to appear in court.

Mallya has been based in the UK since March 2016 and remains on bail on an extradition warrant executed three years ago by Scotland Yard on April 18, 2017. The businessman in May this year lost his plea seeking leave to appeal against his extradition to India in the UK Supreme Court. He had earlier lost his high court appeal against an extradition order to India on charges of alleged fraud and money laundering related to unrecovered loans to his now-defunct Kingfisher Airlines.