Liquor baron Vijay Mallya will be the first to be tried under India’s new Fugitive Economic Offenders Ordinance

• The Fugitive Economic Offenders Ordinance applies to individuals who have defaulted on payments over ₹1 billion.
• The Enforcement Directorate (ED) plans to seize around ₹124 billion of his assets under the law.
  
• Mallya owes a group of 17 banks — most of which are state-owned — nearly ₹100 billion.

Liquor baron Vijay Mallya will soon become the first person to be tried under India’s recently implemented Fugitive Economic Offenders Ordinance. The Enforcement Directorate (ED), the agency responsible for economic crimes in the country, plans to seize around ₹124 billion of his assets under the law, which was approved in April 2018. It will file a case in a special court for the same.

Mallya, who is currently contesting extradition proceedings from the UK, owes a group of 17 banks - most of which are state-owned - nearly ₹100 billion. He and two of his companies, the now-defunct Kingfisher Airlines and United Breweries, were declared ‘wilful defaulters’ in November 2015 by the State Bank of India and were accused of misappropriation of funds and of defaulting on payments to creditors.

Mallya left India and moved to the UK in early 2016 after the banks filed a case against him with the Debt Recovery Tribunal.

The Fugitive Economic Offenders Ordinance applies to individuals who have defaulted on payments over ₹1 billion. The ordinance defines a ‘fugitive economic offender’ as a person against whom an arrest warrant has been issued for a money-related crime, and has left the country so as to avoid a criminal trial or refuses to return to face the music.

Once the ED files the case against Mallya in court, he has six weeks to present himself at a trial in a pre-specified location, where he will be tried under the Prevention of Money Laundering Act.

If he does not show up, he will be declared a “fugitive economic offender”, which in turn will allow the ED to seize his domestic and international assets, even without being convicted in a trial, in order to pay back his creditors. These assets include Mallya’s shares in United Breweries as well as real estate properties in Alibaug and Bengaluru.

If the case leads to successful resolution of Mallya’s unpaid dues, it will establish an important precedent in India’s legal landscape. The next case filed under the Fugitive Economic Offenders Ordinance could very well be against a famous diamond merchant.