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MUMBAI: The Karnataka High Court has affirmed the Enforcement Directorate (ED) Mumbai unit’s seizure of a flat in Kingfisher Towers, Bengaluru, associated with Vijay Mallya, the promoter of the now-defunct Kingfisher Airlines, in relation to a money laundering investigation. This property was part of a project developed by United Breweries (Holdings) Ltd (UBHL) and Prestige Estate Projects.
Rajendrakumar Jain, a businessman, reported that he paid Rs 18.4 crore in 2011 for an 8,321 square foot apartment, stating that UBHL had consented to sell it. In 2015, the CBI charged Mallya and Kingfisher Airlines Ltd with bank fraud, leading the ED to initiate a money laundering case.
In 2016, the ED attached the flat, claiming it was under Mallya’s control through UBHL. The adjudicating authority upheld the attachment due to the lack of a registered sale deed. Jain’s challenge to this decision was initially successful at the appellate tribunal in 2019, prompting the ED to appeal in the High Court.
That same year, a consortium led by SBI requested that attached properties be returned before a special PMLA court in Mumbai. The official liquidator of UBHL opposed this, aiming to reclaim the properties for the benefit of secured and unsecured creditors of UBHL. The special court ruled that the bank consortium was entitled to regain the assets and dismissed the liquidator’s request.
While the restoration proceedings continued, Jain filed a company application seeking a directive for the official liquidator to complete the sale deed, omitting mention of the ongoing PMLA case. The liquidator provided an NOC, allowing Jain to register the sale deed in February 2021.
The High Court emphasized that “an unregistered agreement to sell, concerning immovable property, does not transfer title or ownership to the agreement holder. It merely grants the right to seek specific performance of the contract, while the title remains with the seller until a registered sale deed is executed and recorded.”
The court also noted that the consortium of banks had filed two applications with the Debts Recovery Tribunal in Bengaluru. In 2017, the DRT directed UBHL and its affiliated companies to repay Rs 6,203 crore plus an interest rate of 11.50% per annum, and in 2018, it mandated UBHL and Kingfisher Airlines to pay Rs 644.92 crore at a rate of 12% per annum.
The court further recorded that as of May 16, 2024, the Mallya group’s outstanding dues amounted to Rs 17,471 crore, with banks temporarily securing Rs 10,814 crore, leaving Rs 6,657 crore yet to be paid.
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