Go AWOL and Lose Your Assets
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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