india

Updated: Jan 20, 2019 23:48 IST

Can government agencies including the Enforcement Directorate (ED) confiscate former liquor baron Vijay Mallya’s properties, is the question doing rounds ever since the Prevention of Money Laundering Act (PMLA) court declared him a fugitive economic offender.

But legal eagles opine that a lengthy procedure, including another round of court hearings, await before the agencies can confiscate and auction Mallya’s properties.

“The court will be considering the say of all the parties and stakeholders involved in confiscating of the properties,” said an ED official privy to the investigation, adding that these parties are likely to include joint-owners and share- holders.

Read | ‘No intention to return’: Court on declaring Mallya fugitive economic offender

ED sources stated that in the scenario of confiscation of properties, the court is likely to look if the deals are legitimate and that they are not covert transactions to hide the money trail or to hide the real ownership of the property. The unencumbered properties that are free of any debt and financial liabilities are likely to be confiscated first. “People who have interest in Mallya’s properties may cry foul before the court,” added the ED official, who said, “A list of properties and the list of persons who may have interest have already been submitted in the court.”

A host of entities have filed applications to intervene in the proceedings, before any order was passed to confiscate properties worth ₹4,234.84 crore belonging to the beleaguered businessman. The entities include his stepmother Ritu Mallya, Heineken NV and the official liquidator appointed by the Karnataka high court (HC), among others.

Mallya’s stepmother, through her lawyer Annapurna Bordoloi, filed an intervention application, claiming the ED had falsely attached 17% of shares of two companies that belonged to her. She has sought to be heard before the ED confiscates it.

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The official liquidator appointed by the Karnataka HC, too, approached the PMLA court. The liquidator was appointed to take over United Breweries Holdings Limited (UBHL), after a single-judge bench of the Karnataka HC passed the order to wind up UBHL in 2017. This was done to recover the money owed to banks and others.

“There will be banks which will say that there are secured interest and it will not be an easy process,” said advocate Abad Ponda.

Advocate Shamsher Garud said, “As per the provisions of financial laws including The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as the SARFAESI Act), the secured lenders have the first charge not withstanding anything in any other statute. So unless those proceedings are over and if any property is unencumbered free, then perhaps (ED) can attach and auction.”

On January 5, Mallya became the first Indian businessman to be declared a fugitive economic offender by a PMLA court.