“Fugitives and economic offenders will be actively pursued; their properties attached and dues recovered,” finance minister Nirmala Sitharaman tweeted on Wednesday. “PSBs have already recovered Rs 1,357 crore by selling such shares. A total of Rs 9,041.50 crore shall be realised by banks through sale of such attached assets.”
This amount represents 40% of total loss state-run banks suffered on account of the three businessmen, ED said. “Vijay Mallya, Nirav Modi and Mehul Choksi have defrauded public sector banks by siphoning off funds through their companies, which resulted in total loss of Rs 22,585.83 crore to banks,” it said.
The agency has so far attached or seized assets worth Rs 18,170.02 crore from them under provisions of the Prevention of Money Laundering Act (PMLA) and assets worth Rs 329.67 crore have been confiscated, the ED note said. This includes assets worth of Rs 969 crore located abroad. The quantum of attached and seized assets represents 80.45% of total bank loss, it said.
Choksi’s counsel Vijay Aggarwal claimed that in his case, “ED has attached assets much more than the money due to banks. Further, if one looks at the principal amount and the kind of haircut banks are taking in NCLT or otherwise in one-time settlement, in this case, banks will recover more than 100% of principal as well as interest.”
“However, for people who have been declared fugitive, I have my doubts as to how banks will get the money, as in the Fugitive Economic Offenders Act, there is no provision to give money to victims, and money is confiscated by the central government,” Aggarwal said.
Modi and Mallya have been declared fugitive economic offenders (FEOs) by the PMLA court in Mumbai while it is yet to decide on a plea to declare Choksi an FEO.
Legal experts said that while money recovered by banks under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Sarfaesi) shall remain with them, monies recovered under PMLA will have to be restored to the accused in case they are acquitted by the court.
“Given the offences committed by the accused, the question of their acquittal does not arise,” former additional solicitor general Mohan Jain told ET. “However, if, due to any reason, they are (acquitted), the assets recovered under PMLA by the central government will have to be restored to the accused.”
ED, in its statement on Wednesday, said its investigation has proved that a substantial part of the attached assets of the three offenders were held in names of dummy entities, trusts, third persons or relatives of these accused, and these entities were proxy of these accused to hold these assets.
“Investigation has also proved these three accused persons used dummy entities controlled by them for rotation and siphoning off funds provided by the banks,” it said.
Prosecution complaints have been filed against all the three accused after completion of PMLA investigation, the statement said, adding that extradition requests have been sent for the three to the UK and Antigua and Barbuda. Extradition of Mallya has been ordered and confirmed by the UK High Court.