INDIAN businessman Vijay Mallya last Saturday (27) sought the dismissal of an investigating agency’s plea to make him appear in court over a breach of the country’s Foreign Exchange Regulation Act (FERA).
Delhi’s chief metropolitan magistrate Sumit Dass fixed the case for further hearing on Mallya’s reply to the Enforcement Department’s (ED) plea, which was filed through his counsel.
The court had, in December 2000, allowed Mallya’s plea seeking permanent exemption from personal appearance.
Mallya flew to London two months ago, under pressure from bankers seeking to recover about $1.4 billion (£958 million) owed by his collapsed Kingfisher Airlines. He has since said he is living in “forced exile”.
India’s ED, a government agency set up to fight financial crime, has accused Mallya’s UB Group of using `4.3bn (£44m) of bank loans to Kingfisher to buy property overseas.
Creditors, led by the State Bank of India, have rejected an offer of partial repayment by Mallya, who had given a personal guarantee for the Kingfisher loan. They have demanded that the former billionaire attend a hearing in India’s supreme court.
Mallya has denied wrongdoing, calling the charges against him “preposterous”. He has also offered a settlement to his creditors that they have so far refused to consider.
Prosecutor NK Matta argued the court should recall its December 2000 order in which Mallya was granted permanent exemption from personal appearance. It came as a PMLA (Prevention of Money Laundering Act) court in Mumbai recently issued an open-ended warrant against Mallya in connection with a money-laundering case.
The ED alleged that Mallya had violated the provisions of FERA in arranging funds to advertise his company’s liquor products abroad. The agency claimed Mallya was summoned on four occasions for questioning in connection with a contract signed in December 1995 with London-based firm Benetton Formula Ltd for promotion of the Kingfisher brand abroad.
When Mallya failed to appear before the ED in response to the summons, a complaint was filed on March 8, 2000, before a court in Mumbai and later on charges were framed against him under FERA.
According to the ED, Mallya had allegedly paid $200,000 (£136,836) to the British firm to display the Kingfisher logo in Formula One World Championships in London and some European countries in 1996, 1997 and 1998.
The agency claimed that the money was allegedly paid without prior approval from the Reserve Bank of India (RBI), in violation of FERA regulations.