Go AWOL and Lose Your As­sets

The Economic Times - - Front Page - Saloni.Shukla@ times­group.com

In­dia may at­tach lo­cal prop­er­ties of loan de­fault­ers such as liquor baron Vi­jay Mallya and Win­some Di­a­monds’ Jatin Me­hta, in­dus­tri­al­ists who left the coun­try in the midst of ju­di­cial pro­ceed­ings, sig­nalling a tougher stance against fu­ture debtors seek­ing to es­cape the law of the land. The gov­ern­ment move could help re­duce fu­ture wil­ful de­faults as many high-pro­file bor­row­ers, while ow­ing thou­sands of crores of ru­pees to In­dian banks, lead lives of lux­ury, en­gag­ing a battery of at­tor­neys to fight pro­tracted court­room bat­tles on their be­half. In­dia’s stodgy le­gal sys­tem is of­ten blamed for giving un­scrupu­lous bor­row­ers the lat­i­tude they would oth­er­wise be de­nied.

“In the re­cent past, there have been in­stances of big-time of­fend­ers, in­clud­ing eco­nomic of­fend­ers, f lee­ing the coun­try to es­cape the reach of the law,” fi­nance min­is­ter Arun Jait­ley said in his Bud­get speech on Wed­nes­day. “We have to en­sure that the law is al­lowed to take its own course. The gov­ern­ment is, there­fore, con­sid­er­ing in­tro­duc­tion of leg­isla­tive changes, or even a new law, to con­fis­cate the as­sets of such per­sons, lo­cated within the coun­try, un­til they sub­mit to the ju­ris­dic­tion of the ap­pro­pri­ate le­gal fo­rum.” Jait­ley’s an­nounce­ment comes amid ef­forts to bring back bil­lion­aire Mallya, who has been re­sid­ing in the United King­dom. Mallya is al­leged to owe more than ₹ 9,000 crore, in­clud­ing over­due in­ter­est, to banks in In­dia af­ter his King­fisher Air­lines de­faulted on the bor­row­ings.

Mallya’s as­sets in In­dia in­clude his stake in United Brew­eries, the maker of King­fisher and Heineken beer and a div­i­dend-pay­ing com­pany of which he is still the chair­man.

To be sure, Jait­ley also as­sured t hat con­stit utiona l sa feg uards will be fol­lowed in such cases as there could be con­cerns about the pro­posed leg­is­la­tion vi­o­lat­ing ba­sic prin­ci­ples of the Con­sti­tu­tion, such as those per­tain­ing to in­di­vid­ual rights and liber ty. “Need­less to say, all nec­es­sary con­sti­tu­tional safe­guards will be fol­lowed in such cases,” he said.

At present, the process to seize as­sets is pro­longed. Var­i­ous pro­ce­dures need to be fol­lowed to at­tach the prop­erty of an of­fender and auc­tion it.

The an­nounce­ment will bring re­lief to in­ves­ti­ga­tion agen­cies, such as the En­force­ment Direc­torate, the Cen­tral Bureau of In­ves­ti­ga­tion, the Fi­nan­cial In­tel­li­gence Unit and the In­come Tax de­part­ment. In ma­jor cases of loan fraud, these agen­cies will find it eas­ier to con­fis­cate prop­er­ties af­ter the pro­posed law is in place.

Fi­nance min­is­ter Arun Jait­ley’s an­nounce­ment comes amid ef­forts to bring back Vi­jay Mallya, who has been re­sid­ing in the United King­dom

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