Vijaya Mallya has been constant in news for being a wilful
defaulter and running away without paying 9000 Crore of Indian Rupees. The
Enforcement Directorate which looks after economic crimes done in India has
declared Vijaya Mallya as Fugitive Economic Offender. Since 2016, Vijay Mallya refuged meeting with ED. He denied coming to India and wanted to be only
available to video call.
Enforcement Directorate had to go through the written procedure in the past. The agency
issued three summons and waited for weeks in 2016. Later on, a court order was issued, and Mallya's diplomatic passport was held. After a series of events which put pressure on Vijay Mallya, he eventually tweeted for repayment of 100 percent principal amount but the deal remained the same. He wanted to pay only the ‘principal amount’ without interest.
The Constant Rejection
Vijay Mallya has approached in November 2018 to a Special
Prevention Money Laundering Act (PMLA) Court against the Enforcement Directorate’s
application to declare him as a fugitive. The application was rejected by PMLA
court. Later on, he went to the Apex court, which once rejected Mallya’s plea. On 5th January 2019, a special court in Mumbai declared Vijay Mallya a fugitive economic offender or FEO on a plea of Enforcement Directorate. Therefore, he became the first businessman to be declared as FEO under the provisions of new Fugitive Economic Offender Act.
Did Mallya really intend to pay?
At the end of the year 2018, there were tweets from Mallya’s
twitter account that he wanted to pay 100 per cent Principal amount since 2016
but Indian authorities did not intend to make any settlement.
In 2016, Mallya had submitted the offer in Supreme Court for
settlement in 6 Months. There is a consortium of Banks, and not a single bank
involved which had lent money to Mallya, and State Bank of India was the
biggest lender.
Why did not banks accept the deal of Mallya?
Before addressing or agreeing to any proposal bank needed to
consider few factors like- the timeline
of payment and the mode of repayment. The Union Bank of India was the first to
speak against Vijay Mallya. However, there remains a curiosity, that if he was
intending to pay the principal amount, why was not it accepted?
Accepting the offer will signal other willful offenders to
negotiate according to their preferences, which will give more strain to already
struggling banks. The Indian banking sector has huge NPA’s burden.
Banks have to be very cautious about it. It's not a 50
per cent discount offer, banks have to recover a cost. Banks have to pay the money to the depositors- who are
often common people of India. Who is going to pay the other part of the money
and the loss which was created by the borrower?
Commercial decisions of banks have to be taken
in commercial manners.
Part of lender of consortium can agree with the offer but criminal and other aspects are
also involved against Mallya. The case has to be seen in the way of totality,
not in the willingness of payment.
The middle class population who gets EMI, does not get such deal. Ordinary citizens have to pay what has been asked to pay, therefore, accepting the proposal of
Mallya is going to bring political chaos.
Banks don't have a choice?
Do banks need to cut their losses? How about social impact? For sure, the society is not going to take this 'acceptance of the offer' in a very positive manner. That's why bank did not agree with the offer of a willful defaulter.
