Where did the debtors go?

The banks are crumbling, non-performing assets (NPAs) are on the rise, and people are running away, quite literally. The cases of eminent businessmen such as Vijay Mallya and Subrata Roy have proved not only that business models are vulnerable but also the need for early action on mounting debts. Without leveling any kind of allegations, the basic problem with people going to another country during the pendency of proceedings is that the trial gets extended and no reasonable negotiation can take place with oceans separating the parties, as was realized and even pointed out by the Supreme Court recently, when it asked Vijay Mallya to return to India and only then would any of his offers regarding the settlement of the 9,000 crore debt be negotiated.

The case of Lalit Modi, erstwhile Commissioner of the Indian Premier League (IPL) proves this point. He went to the UK, even as investigations into the handling of bids and management of the glamorous cricket league were on, and India’s attempts to extradite him have not borne fruit yet. The point is: once the person goes to another country, enforcing the law on him becomes an uphill task.

Whatever might have been the reasons behind Vijay Mallya’s trip to the UK and his remaining there, even as the court is hearing cases against the Kingfisher group, it may be seen that a lot of precious time is being wasted in figuring out how to bring him back to India, so that the settlement of the humungous debt can be done. A couple of days after he had flown out to London, there were reports that airport authorities had been asked to be on the lookout for Mr. Mallya. But it seems that the instructions were not comprehensive, in that who should be approached or what should be done once Mr. Mallya was spotted trying to leave the country. The result is in front of us.

Another interesting attempt emerged this past week when the lawyer of the Securities and Exchange Board of India (SEBI) in the high-profile Sahara case, Arvind Datar, said that a few weeks before being sent to prison by the Supreme Court, the Sahara group chief Subrata Roy had filed an application to go abroad for ‘business’ discussions with former US President Bill Clinton and ex-UK Prime Minister Tony Blair. However, the Supreme Court asked him not to leave the country and instead appear before it when the hearing regarding a Mumbai property came up. It is no secret that even when Mr. Roy did not leave India, it was no cakewalk to make him appear in Court.

In such a scenario, what are the chances that hearings will be any easier in the other cases, where the defendants are not even present in India at the moment? However, unlike the Modi case, it seems that the Enforcement Directorate (ED) has been quick to act in the case of Vijay Mallya, whose diplomatic passport has been suspended by the Ministry of External Affairs (MEA) at the request of the ED. Mr. Mallya’s response has been sought on it within one week, failing which his passport will be revoked and then a request may be submitted asking for his deportation from the UK. A non-bailable warrant has been issued against Mr. Mallya at the time of writing this.

As is evident, the biggest losers in this are the taxpaying masses and the banks who are in dire straits with NPAs rising. Further, there is resentment among the public when banks are trying to recover smaller amounts from them, when the perception is that the ‘big fish’ have been easily let off the hook.

When will those responsible appear? Or will we be left wondering: Where did the debtors go?