Kingfisher Airlines Ex-Employees to Get over ₹300 Cr Pending Dues after 10 Years of Bankruptcy

The Enforcement Directorate (ED) on December 18 announced that it has facilitated the restitution of over ₹300 crore towards long-pending dues owed to former employees of the now-defunct Kingfisher Airlines, which was promoted by fugitive liquor baron Vijay Mallya.

In a statement, the federal probe agency's senior official said the restitution followed an order dated December 12 by the Debts Recovery Tribunal (DRT), Chennai, directing the release of funds realised from the sale of shares that had earlier been restituted to the State Bank of India (SBI) under the Prevention of Money Laundering Act (PMLA), according to multiple reports.

The amount, totalling ₹311.67 crore, has been transferred to the official liquidator for disbursement to the airline’s former workers.

The action stems from a money laundering case registered by ED against Kingfisher Airlines, Mallya and others in connection with an alleged bank loan fraud. Meanwhile, Mallya had fled to London in 2016 after the Central Bureau of Investigation registered a loan fraud case against him.

He was eventually declared a fugitive economic offender by a special court in Mumbai in January 2019 under the Fugitive Economic Offenders Act, 2018. The ED subsequently initiated proceedings under the PMLA in connection with the Kingfisher Airlines case.

According to the agency, the present disbursement has been made from an asset pool created after the ED restituted properties worth ₹14,132 crore to SBI and other consortium banks a few years ago, the reports added. These restitutions were carried out under Section 8(8) of the PMLA, which allows assets attached during money laundering investigations to be restored to victims of financial crimes, including banks.

The ED had attached assets belonging to Mallya, Kingfisher Airlines and associated entities worth ₹5,042 crore under the PMLA, in addition to properties valued at ₹1,695 crore. Subsequently, a special PMLA court permitted the restitution of all attached assets through the DRT to the SBI-led consortium of banks. The sale of these assets eventually yielded ₹14,132 crore.

The agency reportedly said it “proactively coordinated” with all stakeholders to ensure settlement of the long-pending dues of Kingfisher Airlines employees. “The ED engaged with senior officials of SBI and facilitated utilisation of PMLA-restituted assets for payment of employee claims,” it added.

After the ED’s help, SBI approached the DRT by filing an application, offering the returned assets to pay workers’ dues and agreeing that these dues should be paid before the claims of secured creditors, the agency said.

A senior official reportedly said the DRT, Chennai, approved the proposal and directed the release of funds from the sale of shares earlier restituted by the ED to SBI, following which the amount was transferred to the official liquidator for distribution to former employees.