[Vijay Mallya]: The HC (Queen's Bench) while dismissing the appeal against Extradition, has found prima facie case of - conspiracy, false representation, dishonest intention & negative net worth at time of availing loans

The Queen's Bench Division of High Court, Divisional Court, Royal Courts of Justice, United Kingdom, comprising of LORD JUSTICE IRWIN & MRS JUSTICE ELISABETH LAING DBE, on April 20, 2020 {Vijay Mallya v. Government of India}, has dismissed an appeal of Indian Businessman, Vijay Mallya against a decision of Senior District Judge Arbuthnot (“the SDJ”), sitting at Westminster Magistrates’ Court, to send the Appellant's case to the Secretary of State for Extradition. The detailed judgment was given by the High Court finding prima facie case against the appellant. While deciding the appeal, the High Court of United Kingdom answered the ground raised by the appellant in the following manner:

Was the prima facie case found by the SDJ at the extradition hearing different from the case being prosecuted in India?

It was held that there is a prima facie case which, in seven important respects, coincides with the allegations in India. The findings of the High Court against the appellant was as follows:

a) The three loans were disbursed as the result of a conspiracy between the named conspirators.

b) The loans were made despite KFA’s weak financials, negative net worth and low credit rating.

c) The loans were made despite the fact that KFA, as a new customer, did not meet the norms of IDBI’s Corporate Loans Policy.

d) The Appellant was party to false representations to induce the loans that funds would be inducted by way of unsecured loans, global depository receipts and equity.

e) The Appellant was party to false representations about inward investment, an exaggerated brand value, misleading growth forecasts, inconsistent business plans (including the January 2009 business plan).

f) The Appellant was party to the offer of “symbolic” and “grossly inadequate security” in the form of a negative lien on 12 hire purchase aircraft, despite knowing that KFA would not get title to them during the period of the loan.

g) The Appellant’s dishonest intention not to repay the loans is shown by his later conduct in trying to avoid the personal and corporate guarantees.

It was held therefore this ground is not made out.

Error in law in the approach to the prima facie case?

It was held that the High Court sees no evidence that SDJ failed to consider relevant evidence, and no such concrete or particularized submission has been advanced. It was held that second submission represents a seizing upon a phrase in the judgment, and is barren of merit.

The law on inferences

It was held that regrettably, the appellant submission too misstates the law. It was held that there was no obligation on the court below to “exclude all realistic possibilities consistent with the defendant’s innocence”.  It was observed that would be to truncate the test. It was held that the test for a prima facie case is whether a reasonable jury, properly directed and considering the evidence, could exclude all realistic possibilities consistent with the defendant’s innocence. It was held by the High Court, Queen's Bench, in its judgment, it is clear that the SDJ understood the law perfectly well.

Further held that it would be open to a reasonable jury to find, on the evidence, at least to some extent, that the loan had not been used for paying the creditors described in the appraisal note, or for paying pressing creditors; and that it had been used contrary to the undertaking imposed by condition (f).

It was held that in its judgment, the SDJ was entitled to find that there was a prima facie case of fraud by false representation.

Was there a prima facie case of conspiracy to defraud?

It was held that the fact that many hours were spent working on the applications and that many emails were sent does not undermine the thrust of the evidence, which was that many of IDBI’s rules about lending to new customers were broken.

It was held that the submission that the SDJ was wrong to find a prima facie case of conspiracy to defraud stands rejected.

Was there a prima facie case of money laundering?

It was held that neither side made any substantive oral submissions about this part of the case. It was held that the Appellant submitted in writing that the SDJ’s approach was wrong. It was held that the parties had agreed at the extradition hearing that this allegation depended on showing that there was a prima facie case of either fraudulent misrepresentation, or of conspiracy to defraud. It was held that if either was established, it was conceded there was a prima facie case that the Appellant’s use of the money amounted to money laundering. It was held that there is a prima facie case both of misrepresentation and of conspiracy, and thus there is also a prima facie case of money laundering.

 Admissibility of Evidence

It was held that the evidence of the Appellant’s conduct when the guarantees were called in, which was, in short, to do all he could to shirk any responsibility (as the witness statement of Mr Joseph describes) was material from which a reasonable jury could draw a secure inference that the Appellant never intended to pay the money, should his guarantee be called on.  It was held that the material subject to the challenge represented admissible evidence on which the SDJ was entitled to rely.

It was observed that it is not enough for Ms Montgomery to cast doubt on some of the SDJ’s findings, or for her to submit that the evidence should be interpreted in a different way from the way in which it was interpreted. It was held that the question  is not whether there might be material on which the Appellant might be acquitted after a trial (he having given no evidence at the extradition hearing).

It was held that paragraph 99 of the SDJ judgment shows the close interest of the Appellant in getting the loan of 950 Crores, and to the September emails, and to paragraph 94, in which the SDJ found that the Appellant got Mr Raghunathan to send the letter of 1 October 2009. It was held that there was material from which a properly instructed jury could draw a secure inference that the Appellant was knowingly behind all the steps that led to the applications for the loans being made in the forms in which they were.

 Grounds Raised

The following grounds were raised by the appellant and considered by the High Court, while deciding the appeal of the appellant, that is: (a) The lower court was wrong to find a prima facie case which is not being prosecuted in India; (b) The lower court erred in law in its approach to the prima facie case test;  (c) The lower court was wrong to conclude that a prima facie case of conspiracy to defraud was made out; (d) The lower court was wrong to conclude that a prima facie case of fraud by false representation was made out; (e) The lower court was wrong to conclude that a prima facie case of money laundering was made out; (f) The lower court erred in its approach to the admissibility of the Respondent’s evidence. All the said grounds of the appellant stand rejected by the High Court and none of them found favour with the British High Court. 

It was held that the role of an extradition court considering this question is to consider whether a tribunal of fact, properly directed, could reasonably and properly convict on the basis of the evidence. It was held that the extradition court is, emphatically, not required itself to be sure of guilt in order to send the case to the Home Secretary. It was held that the extradition court must conclude that a tribunal of fact, properly directed and considering all the relevant evidence, could reasonably be sure of guilt. It was concluded by the High Court that there is no basis upon which it could be said the SDJ misunderstood this, or that she misdirected herself.

Three broad allegations were considered by the High Court in the appeal, that is, conspiracy to defraud, making false representations, and diversion and dispersal of the proceeds of lending. All were held to be made out against the appellant.

In the present case, the Govt. of India made an extradition request under Sec 84 of the Extradition Act 2003, in respect of the Appellant, submitted on 9 February 2017, which was certified by the Secretary of State on 16 February 2017. A warrant for the Appellant’s arrest was issued on 28 March 2017, and he was arrested and granted bail on conditions on 18 April 2017. However, additional charges were received from the GoI, and the extradition request re-certified on 25 September 2017. A fresh warrant was executed on 3 October 2017, and the Appellant re-arrested and once again bailed.

Other than the ground answered in this judgment, the appellant raised other grounds in appeal too, but the permission to appeal was refused on all other grounds save one  by Leggatt LJ and Popplewell J (as he then was) on 2 July 2019: R (Mallya) v Government of India and Another (1) [2019] EWHC 1849 (Admin). The other grounds in respect of which permission was already refused to appeal were, in summary, that the prosecution was politically motivated rather than based on fact; that the Appellant would not receive a fair trial in India, because of his political opinions or otherwise; and that his extradition would be incompatible with ECHR Article 3 by reason of prison conditions in India. 

And now one ground on which the permission to appeal was granted on 2 July 2019 by High Court, also has been dealt-in threadbare by this judgment & thereafter that was also not found to be sustainable, and the appeal stands dismissed by the High Court, Royal Courts of Justice, UK.