Vijay Mallya Contempt Case: Supreme Court’s Verdict on Asset Disclosure

The case involving Dr. Vijay Mallya and the State Bank of India & Others has been one of the most significant legal battles concerning financial fraud and contempt of court in India. This case primarily revolved around Mallya’s failure to disclose his assets and violation of court orders, leading to a contempt ruling against him.

Background of the Case

The controversy began when a consortium of banks, led by the State Bank of India, filed a recovery suit against Dr. Vijay Mallya before the Debt Recovery Tribunal (DRT), Bengaluru, seeking to recover an outstanding debt of Rs. 6203 crores. On 26.07.2013, Mallya and his associated respondents gave an oral undertaking not to alienate or dispose of their properties. However, when the case reached the Karnataka High Court, it was further reinforced with specific restraint orders passed on 03.09.2013 and 13.11.2013, preventing Mallya from transferring any movable or immovable assets.

Violation of Court Orders

Despite these orders, Mallya allegedly transferred USD 40 million out of an account on 25.02.2016. This move, which was in direct violation of the High Court’s orders, became a central issue in the contempt proceedings against him. The Supreme Court found that Mallya had failed to disclose details of the inflow and outflow of these funds, thereby violating both the Karnataka High Court’s and the Supreme Court’s orders.

Arguments by the Petitioner (Dr. Vijay Mallya)

• Mallya’s defense was that he was required to disclose his assets only as of 31.03.2016 and thus had not violated any Supreme Court directive.
• His counsel argued that any violation was related to the Karnataka High Court’s orders, and therefore, the Supreme Court should not proceed under its contempt jurisdiction.
• They also contended that the Supreme Court erroneously recorded that Mallya had not filed a reply to the banks’ response, whereas a reply had been submitted on 30.01.2017.

Arguments by the Respondent (State Bank of India & Others)

• The respondents pointed out that Mallya had given an oral undertaking before the DRT and had violated this commitment by transferring USD 40 million out of his accounts.
• They argued that despite the Karnataka High Court’s clear restraint orders, Mallya had failed to comply and had concealed details about his overseas assets.
• The banks asserted that Mallya’s non-disclosure of his assets and his failure to abide by court directives amounted to willful disobedience, warranting contempt action.

Supreme Court’s Verdict

After a thorough review of the case, the Supreme Court upheld its contempt ruling against Mallya. The key observations made by the court were:

• Mallya was guilty of disobeying the Supreme Court’s orders by failing to fully disclose his assets.
• He was also guilty of violating the Karnataka High Court’s express orders restricting asset transfers.
• The claim that Mallya’s reply was not considered was found to be an error, but the review of his response did not change the court’s finding that he was guilty of contempt.

Final Order and Implications

The Supreme Court dismissed the review petition, stating that there was no ‘error apparent on record’ to justify interference under its review jurisdiction. Consequently, Mallya was directed to appear before the court on 05.10.2020 for further hearings on the proposed punishment. Additionally, the Ministry of Home Affairs was instructed to ensure his presence.

This judgment reinforces the importance of compliance with court orders and full disclosure of financial assets, particularly in high-profile cases involving financial fraud.

Petitioner Name: Dr. Vijay Mallya.
Respondent Name: State Bank of India & Others.
Judgment By: Justice Uday Umesh Lalit, Justice Ashok Bhushan.
Place Of Incident: Bengaluru.
Judgment Date: 31-08-2020.

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