ED to file its first charge sheet case against Vijay Mallya and others in IDBI bank loan default case

The Enforcement Directorate (ED) is set to file its first charge sheet against Vijay Mallya and others in the IDBI bank loan default case.

Officials said the agency has been preparing the charge sheet for quite sometime now and it will be filed in a court in Mumbai in the next few days.

The charge sheet, which is expected to be voluminous, will include statements from numerous executives and investigation of assets and transactions of the accused from both the Kingfisher Airlines (KFA) and the IDBI bank.

The agency is probing this alleged loan fraud case under the Prevention of Money Laundering Act (PMLA).

A similar dossier has been filed by the CBI in a court in Mumbai in January.

The charge sheet, called prosecution complaint in the ED's parlance, will detail the proceeds of crime generated by the accused as investigated under the provisions of PMLA, the officials said, adding the same will also be furnished to the competent court in the UK which will hear the extradition proceedings against him.

The liquor baron was arrested on Tuesday in London by Scotland Yard on India's request for his extradition on fraud charges.

The agency has attached assets worth Rs 9,661 crore in this case till now and has also obtained a court-issued proclamation declaring Mallya an absconder in this PMLA case.

In its probe report prepared in this case, the agency had said the "money trail analysis revealed that out of the loan of Rs 860.92 crore, sanctioned and disbursed by IDBI, Rs 423 crore has been remitted out of India. The said payments were shown to be made towards aircraft rental leasing and maintenance, servicing and spare parts."

The investigations conducted so far, it had said, found KFA along with IDBI bank officials "criminally conspired to obtain funds to the tune of Rs 860.92 crore despite weak financials, negative net-worth, non-compliance of corporate credit policy of new client, non-quality collateral security and low credit rating of the borrower, out of which Rs 807.82 crore of principal amount remains unpaid".

ED had registered a criminal case in this deal last year under the PMLA.

The agency's probe also found that the considered brand valuation of the KFA, taken as a collateral by the bank for loan security in the said case, was not a sound decision.

"Investigation revealed that KFA brand was accepted as collateral security and the valuation for Kingfisher brand as accepted by the bank as Rs 3,400 crore without independent verification," it said, adding the firm that did the brand valuation had submitted three different amounts of this estimate between 2008-12.

"Thus, it indicates how volatile is this (brand value) intangible fictitious asset and needs to be evaluated frequently, particularly in aviation sector which itself is very unpredictable and was going through a very rough phase and brand valuation was wholly based on projections provided by Ms KFA.

"Hence, it would not be prudent to accept brand value of 2008, while considering loan sanction in 2009," it said.