Karnataka High Court Quashes 2018 Criminal Case Against Vijay Mallya and Others

In a significant ruling, the Karnataka High Court has dismissed the criminal proceedings initiated in 2018 by the Serious Fraud Investigation Office (SFIO) against Kingfisher Airlines, its former owner Vijay Mallya, and other associated parties. The case concerned the 2007 merger of Kingfisher Airlines Ltd (KFAL) and Deccan Aviation Ltd (DAL), which was alleged to involve manipulation of company assets and evasion of capital gains tax. The court, led by Justice Hemant Chandangoudar, ruled that the proceedings were based on the Companies Act of 2013, despite the events in question occurring under the 1956 Act, thus violating constitutional protections against retrospective criminalization.

The court critiqued the basis of the prosecution’s claims, which included allegations that Kingfisher Airlines had engineered the merger to sidestep regulations requiring airlines to operate for five years and possess 20 aircraft before flying internationally. Additionally, it was alleged that financial misrepresentations were made to enhance the company’s profitability post-merger, influencing share allocation and additional financing obtained by Mallya. However, the court observed that such actions were not punishable under the law applicable at the time.

Finalizing its decision, the Karnataka High Court highlighted the lack of legal authority in the cognizance taken by the special court and emphasized the safeguarding of personal liberty. It noted that since the court had previously approved the merger scheme, revisiting the issue through criminal prosecution was deemed an abuse of the legal process, thereby warranting the quashing of the complaint. This ruling marks a pivotal turn in the legal battles surrounding the once-prominent airline and its beleaguered former owner.

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