Industrialist Vijay Mallya Arrested In London; Granted Bail

Liquor baron Vijay Mallya, a prominent defaulter to Indian banks, was arrested in London, according to a statement issued by the U.K. Metropolitan Police. He was later granted bail by the Westminister Magistrates' Court. The police had arrested him on behalf of the Indian authorities, said the agency in a news release.

India's Minister of State for Finance Santosh Gangwar told reporters in New Delhi that the government is assessing options to bring Mallya back.

Immediately after being granted bail, the liquor baron tweeted to say that the proceedings were as expected.

Usual Indian media hype. Extradition hearing in Court started today as expected.

India had submitted a formal extradition request for Mallya on February 8. The U.K. Secretary of State had certified the request and the same had been communicated back to India, according to India's External Affairs Ministry on March 24.

"The U.K. Home department on February 21 conveyed that the request of India for extradition of Mallya has been certified by the secretary of state and sent to the Westminster Magistrates' Court for a district judge to consider the issue of releasing of warrant," the then External Affairs Ministry Spokesperson Vikas Swarup had said.

A senior finance ministry official said, on the condition of anonymity, that India needs to set precendents and the myth of crossing the boundary and being out of bounds should be broken.

He added that in Mallya's case, there is a hunger in people's opinion that people such as Mallya should be taught a lesson.

The official explained that

• The Indian government had raised the issue of extradition with the U.K. Chancellor.
• To extradite, there must be offence done mutually in both countries.
• The process for pushing for extradition will start now.

Mallya has been overseas for more than a year now in an attempt to allegedly escape various cases filed against him in India by lenders, who are trying to recover nearly Rs 9000 crore in dues from the now defunct Kingfisher Airlines promoted by him.

Mallya has been declared a wilful defaulter by most lenders including State Bank of India which was the largest lender to Kingfisher Airlines. A wilful defaulter is one who has the ability to repay but chooses not to. Mallya's arrest, however, is linked to an accusation of fraud, according to the statement by the U.K. Metropolitan Police.

There is a distinction between default, wilful default, and fraud, VG Kannan, former managing director at State Bank of India told BloombergQuint. A wilful defaulter is a person who has the funds but is unwilling to pay, while a fraud includes an action such as siphoning off funds, Kannan explained.

Having said that, it does send a message to corporate India, that no one is above the law. If one is a wilful defaulter, finally the law will catch him. He (Mallya) is one of the early birds on whom action was being contemplated. There are many that have cropped up after him. This could be a precursor to more action on wilful defaulters. 

VG Kannan, Former Managing Director, State Bank of India

There were 9,130 wilful defaulters in the country who had taken loans amounting Rs 91,155 crore from various public sector banks, Minister of State for Finance Santosh Gangwar said in Lok Sabha on March 17.

Jitendra Balakrishnan, former deputy managing director at IDBI Bank said that wilful default and fraud typically tend to go together.

“The message in my opinion is that you can't get away without paying your dues. The message is very clear. You can't run away. Yes, people will default. But then you sit down and find the best solution to the problem,” said Balakrishnan.

Also Read: Vijay Mallya Is A Victim Of Circumstance, Says Lawyer Satish Maneshinde

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