A PLMA special court on Tuesday allowed the sale of shares pledged with Yes Bank, said the Enforcement Directorate

The Enforcement Directorate on Wednesday said a consortium of banks led by the State Bank of India (SBI) recovered ₹1,008 crore by disposing of the United Breweries shares, owing to its proactive action in the money laundering case against fugitive Vijay Mallya.

“Based on the submissions made and proactive steps taken by the ED, and in view of the large outstanding debts of the SBI consortium against Kingfisher Airlines and Vijay Mallya, the Prevention of Money Laundering Act (PLMA) special court allowed the sale of shares on Tuesday. Subsequently, shares were sold by the Recovery Officer today and an amount of ₹1,008 crore has been realised,” said the agency.

The ED probe had earlier revealed that substantial assets in the form of shares belonging to United Breweries Limited were pledged with Yes Bank. The amount of loan had already been repaid by the airlines and only a small sum remained pending.

“Thus, these pledged shares were now more or less free from encumbrances and only nominally under the pledge of Yes Bank. Therefore, to secure these shares from alienation by Mr. Mallya and to compel him to return, the ED had requested the court to freeze the shares,” said an official.

On the Directorate’s request, Mr. Mallya was later declared a proclaimed offender in November 2016 and consequently, some pledged and un-pledged shares were attached under the PMLA, which included more than 74 lakh shares of United Breweries, which were held by United Breweries Holding Limited (UBHL). These shares were with Yes Bank as security in lieu of a loan taken by the Kingfisher Airlines.

Subsequently, Yes Bank received a notice from Recovery Officer of the Bengaluru’s Debt Recovery Tribunal, on behalf of the SBI-led consortium. The bank was directed to transfer the shares. On non-compliance, the ED said, the Tribunal passed an order dated August 13, 2018, for attachment of the assets of Yes Bank.

The bank filed a writ petition in the Karnataka High Court for quashing of the order. As ED was also a party, the agency filed a detailed reply placing the entire sequence of events and steps taken to secure the assets in question from alienation. On February 27, the High Court directed the bank to surrender the shares to the Recovery Officer within three weeks.

The Recovery Officer then published a notice on March 11 offering over the 74 lakh shares for sale. UBHL moved the court for a stay. However, after hearing both the sides, the court allowed it.