Due to his opulent lifestyle, Vijay Mallya was formerly referred to as the “King of Good Times” but has been engulfed in financial scandals and controversies since 2012. Nevertheless, he departed with a debt to a consortium of seventeen Indian banks totaling around ₹90 billion (US$1.1 billion). Mallya faces allegations that he utilized the loans to acquire full or partial ownership in over 40 businesses across the world. Several organizations, including the Central Bureau of Investigation and the Department of Income Tax, are conducting investigations into him for possible financial fraud and money laundering.
Additionally, in March 2016, the Enforcement Directorate of India launched a money laundering complaint against him for allegedly sending $9 billion (US$110 million) to his airline overseas. The Court has already declared Mallya a “proclaimed offender” on a request by the Enforcement Directorate (ED) concerning its money laundering probe against him.
What is Money Laundering?
Money laundering is a grave offense that involves hiding the source of illegally obtained funds and transforming them into legitimate funds, to evade prosecution, conviction, and seizure of the criminal money. This illegal activity is designed to convert “black” money into “white” money, which can be used without arousing suspicion. However, money laundering has far-reaching negative consequences that can harm individuals, organizations, and entire economies. Effective measures must be taken to prevent and combat this illegal practice to ensure a fair and just society for all.
What is the Prevention of Money Laundering Act, 2002 (PMLA)?
Money laundering is quite a severe offense. Consequently, by the PMLA Act, of 2002, any individual or organization found guilty of this offense or accused of participating in it may be arrested and subject to legal action.
Every person in the nation, company owners, partnerships, associations of people, businesses, and any offices, agencies, or branches owned or operated by any of the aforementioned people are covered by the prevention of money laundering legislation. Under this Act, the Government may confiscate any assets or properties obtained by money laundering or other illicit means, according to the Prevention of Money Laundering Act. The PMLA states that the burden of proof is on the accused to show that the assets or property that was obtained illegally did not result from criminal activity. Indian government can under Section 17(1A) of the Prevention of Money Laundering Act. 2002 can confiscate the properties of Vijay Mallya. An authorized officer can freeze a property under Section 17(1A) if it is not practically possible for them to search or seize the record or property.
Newly Enacted Law – Fugitive Economic Offenders Act, 2018 Also Permits the Government to Confiscate the Property of Fugitives
The Fugitive Economic Offenders Act, of 2018 is an Act that empowers special courts, set up under the Prevention of Money Laundering Act, of 2002, to confiscate all the assets and properties of economic offenders who have been charged with offenses worth over INR 100 Crores and are evading prosecution by staying outside the reach of Indian courts.
Section 12 of the Fugitive Economic Offenders Act, 2018 states that:
12 (1) After hearing the application under section 4, if the Special Court is satisfied that an individual is a fugitive economic offender, it may, by an order, declare the individual as a fugitive economic offender for reasons to be recorded in writing.
(2) On a declaration under sub-section (1), the Special Court may order that any of the following properties stand confiscated by the Central Government—
(a) the proceeds of crime in India or abroad, whether or not the fugitive economic offender owns such property; and
(b) any other property or benami property in India or abroad, owned by the fugitive economic offender.
This Act serves as a strong deterrent to those who think they can get away with economic crimes and sends a clear message that everyone, regardless of their status or position, will be held accountable for their actions. By making it easier for law enforcement to confiscate assets and properties, the Fugitive Economic Offenders Act, of 2018 helps ensure that economic offenders face the consequences of their actions and that justice is served.
Given the above discussion, it is very clear that the Government of India can confiscate the properties of Vijay Mallya as per the law. The Fugitive Economic Offenders Act, 2018 and Fugitive Economic Offenders Act, 2018 are effective and constitutional ways to hold these offenders accountable and they will also serve as a strong deterrent to others who will be committing similar offenses in the future.
Aditya Pratap is a lawyer and founder of Aditya Pratap Law Offices. He practices in the realm of real estate, corporate and criminal law. His website is adityapratap.in and his media interviews can be accessed at http://www.youtube.com/@AdityaPratap/featured .Views expressed are personal.
This article has been assisted by Rohan Mohanto, Intern, Aditya Pratap Law Office, Lucknow.