Who is Vijay Mallya? - All his controversies.

Vijay Mallya

Vijaya Mallya has been constant in news for being a wilful defaulter and running away to the United Kingdom without paying 9000 Crore of Indian Rupees to Indian Banks.

The Enforcement Directorate which looks after economic crimes done in India declared Vijaya Mallya as Fugitive Economic Offender as, since 2016, Vijay Mallya refused any meeting with ED, denied coming to India, and wanted to be only available on the video call.

The government diplomatically strived and eventually, the UK home secretary Sajid Javid allowed Mallya’s extradition to India.

However, Mallya did not surrender with that much ease. He made a written application on February 14, 2019, to appeal against his extradition.  The application was rejected by the UK high court on April 5^th, 2019. On April 11, 2019, Mallya applied for an oral hearing.

The UK high court on 2^nd July 2019, approved him to appeal at least on one of the five grounds against his extradition order.

Who is Vijay Mallya?

Vijay Mallya is a businessman from India. He is also known as Vijay Vittal Mallya is an Indian businessman and a former member of the Upper House of the Parliament of India. 

Enforcement Directorate Vs Vijay Mallya Conflict

Enforcement Directorate had to go through the written procedure in the past. The agency issued three summons and waited for weeks in 2016. 

Later on, a court order was issued, and Mallya's diplomatic passport was held. After a series of events which put pressure on Vijay Mallya, he eventually tweeted for repayment of 100 percent principal amount but the deal remained the same. He wanted to pay only the ‘principal amount’ without interest. 

Again and again, even in his tweets, he intended to pay the only principal amount citing that he has to pay other investors, employee, as well. 

The Constant Rejection

Vijay Mallya has approached in November 2018 to a Special Prevention Money Laundering Act (PMLA) Court against the Enforcement Directorate’s application to declare him as a fugitive. The application was rejected by PMLA court. 

Later on, he went to the Apex court, which once rejected Mallya’s plea. On 5th January 2019, a special court in Mumbai declared Vijay Mallya a fugitive economic offender or FEO on a plea of Enforcement Directorate. 

Therefore, he became the first businessman to be declared as FEO under the provisions of the new Fugitive Economic Offender Act. 

Did Mallya really intend to pay?

At the end of the year 2018, there were tweets from Mallya’s twitter account that he wanted to pay 100 percent Principal amount since 2016 but Indian authorities did not intend to make any settlement.

In 2016, Mallya had submitted the offer in Supreme Court for settlement in 6 Months. There is a consortium of Banks, and not a single bank involved which had lent money to Mallya, and State Bank of India was the biggest lender.

Why did not banks accept the deal of Mallya?

Before addressing or agreeing to any proposal bank needed to consider few factors like- the timeline of payment and the mode of repayment. The Union Bank of India was the first to speak against Vijay Mallya. However, there remains a curiosity, that if he was intending to pay the principal amount, why was not it accepted?

Accepting the offer will signal other wilful offenders to negotiate according to their preferences, which will give more strain to already struggling banks. The Indian banking sector has huge NPA’s burden. 

Banks have to be very cautious about it. It's not a 50 percent discount offer, banks have to recover a cost. Banks have to pay the money to the depositors- who are often common people of India. Who is going to pay the other part of the money and the loss which was created by the borrower?

Commercial decisions of banks have to be taken in commercial manners.

Part of lender of consortium can agree with the offer but criminal and other aspects are also involved against Mallya. The case has to be seen in the way of totality, not in the willingness of payment.

The middle-class population who gets EMI does not get such a deal. Ordinary citizens have to pay what has been asked to pay, therefore, accepting the proposal of Mallya is going to bring political chaos.

Banks don't have a choice?

Do banks need to cut their losses? How about social impact? For sure, society is not going to take this 'acceptance of the offer' in a very positive manner. That's why the bank did not agree with the offer of a wilful defaulter.