India’s Supreme Court has sentenced Vijay Mallya to four months in prison for disobeying a 2017 court judgment linked to the collapse of Kingfisher Airlines, a blow to the flamboyant tycoon who is seeking to stay in London.
The Supreme Court judges handed down the sentence on Monday, five years after Mallya was found guilty of contempt of court for allegedly transferring $40mn to his children even as bank loans to Kingfisher Airlines remained unpaid.
Known as the “king of good times” for his opulent lifestyle, Mallya has been fighting extradition from the UK to India to stand trial over allegations of fraud and money laundering linked to the demise of Kingfisher Airlines in 2012.
The Indian government alleges that Mallya was the central figure in a “dishonest plot” along with bankers at India’s IDBI Bank to obtain large loans for Kingfisher Airlines in 2009. When the airline failed, it owed $1.1bn in unpaid debts, largely to state-owned banks.
Lawyers for Mallya argue that he has been scapegoated by a government eager to make an example of the tycoon as a deluge of corporate loans from state-backed lenders sour. The entrepreneur’s lawyers say that Kingfisher collapsed because of genuine economic difficulties.
Monday’s ruling was the first time the courts have given Mallya, who turned United Breweries (UB) into India’s biggest alcoholic drinks company and also served two terms in parliament, a custodial sentence in absentia. Lawyers for Mallya declined to comment on the sentencing.
His legal attempts to fend off extradition to India ended in 2020 when he lost his final appeal at the High Court in London. Although India’s Enforcement Directorate, the country’s financial police, said in June last year that Mallya’s “extradition to India has become final”, he remains in London.
“I don’t think that he (Mallya) would very tamely come back to India,” said Sanjay Hegde, a senior lawyer and legal analyst not involved in the case. “He has so far avoided it, he has fought very hard.”
Mallya is one of many defaulting tycoons being pursued by Prime Minister Narendra Modi’s government, which has pledged tough measures against corruption. Jeweller Nirav Modi is also fighting extradition from London to India, where he is wanted over charges of an alleged $2bn fraud which rocked state-owned Punjab National Bank. Modi has denied wrongdoing.
The Enforcement Directorate last year said public sector banks had recouped Rs90.4bn ($1.1bn) tied to Mallya, partly through sales of seized UB shares. Heineken purchased enough UB shares to give it a 61.5 per cent controlling stake in the company, one of India’s biggest beer sellers.
The Supreme Court had instructed Mallya to deposit $40mn, plus 8 per cent interest, within four weeks to avoid further property seizures, Indian legal media reported on Monday.