Rs 15,000 crore recovery doesn’t end Mallya PMLA case: ED to Bombay HC

The Enforcement Directorate (ED) told the Bombay High Court that recovering about Rs 15,000 crore from assets linked to Vijay Mallya does not end the money-laundering case against him. The agency explained in an affidavit that while bank recoveries may affect the amount of civil claims, they do not determine whether scheduled offences or money laundering under the Prevention of Money Laundering Act (PMLA) have occurred.

This response followed the court’s request for the ED and the State Bank of India-led consortium to clarify if the attached properties had cleared Mallya’s debts. The ED said that properties worth about Rs 14,131.60 crore were returned to the consortium by order of a special PMLA court in Mumbai. The agency explained that this process is a legal requirement under Section 8(8) of the PMLA to return property to those with a legitimate claim. It does not confirm or deny whether a scheduled offence or money laundering took place.

The affidavit stated, “The subsequent restoration or recovery of assets, therefore, cannot be construed as extinguishing or rendering infructuous the pending proceedings under PMLA.” The agency explained that criminal prosecution after a PMLA investigation does not end just because banks later recover large sums from returned assets. The ED rejected the idea that the commercial dispute is finished and that the criminal case should end as well. It said that PMLA proceedings are separate from recovery suits and tribunal decisions.

The recovered amount may help show what banks are still owed, but it does not address whether the loan funds were obtained, used, or diverted in a way that breaks the law. Mallya, who left India in March 2016 after Kingfisher Airlines collapsed under heavy debt, has argued that lenders have already been fully repaid. His lawyer told the High Court last month that a consortium recovered about Rs 15,000 crore, compared to the original Debt Recovery Tribunal claim of about `crore, including interest. He asked to close a 2020 petition that challenged a December 2019 special-court order allowing banks to use confiscated assets for recovery.

Justice Milind N Jadhav noted that the long-running commercial dispute should end so the parties can “move on.” However, he made it clear that closing the civil case would not affect the criminal case, which still needs to be resolved. The court asked the ED and SBI for responses before deciding next steps.

The ED’s latest filing maintains this distinction. It also noted that Mallya remains absent from India. The agency said his failure to appear for trial is part of the case’s background. Mallya was declared a fugitive economic offender in 2019, and extradition efforts from the United Kingdom have not brought him back. The ED continues to argue that, as chairman of Kingfisher Airlines, Mallya played a key role in the company’s decisions and in getting loans from several banks.

The ED said its investigation found serious problems in how the loans were approved and used, including funds being diverted from their intended purpose. The money-laundering case is based on these alleged offences, not on whether banks later recovered money from attached properties.

The dispute has two separate parts that public discussions often mix up. The civil part deals with how much the airline and its guarantors owed, the interest, and what was recovered from assets like shares and real estate. The criminal part is about whether the loans and how the money was moved amount to fraud and money laundering.

The ED believes that the civil side of the case can be settled, adjusted, or even over-recovered without affecting the criminal side. For public-sector banks, recovering assets has been rare in a major default. For the ED, returning money does not clear someone of criminal charges.

The High Court must now decide what remains of Mallya’s 2020 petition after the banks and the ED have shared their figures and legal arguments. The ED says the criminal case will continue, whether or not the civil accounts are considered settled. Recovering Rs 15,000 crore answers the debt issue, but it does not resolve the money-laundering charge.