Bengaluru: The Karnataka high court has upheld the Enforcement Directorate (ED) Mumbai unit’s attachment of a premium apartment in Kingfisher Towers, Bengaluru, in connection with the long-running money laundering case involving defunct Kingfisher Airlines promoter Vijay Mallya. The ruling is a setback to businessman Rajendrakumar Jain, who claimed ownership of the flat based on an agreement to sell executed more than a decade ago.
ED attachment stands despite buyer’s claim
The dispute centres around an 8,321 sq ft apartment in Kingfisher Towers, developed jointly by United Breweries (Holdings) Ltd (UBHL) and Prestige Estate Projects. Jain stated that he paid ₹18.4 crore in 2011 for the property and that UBHL had agreed to sell the flat to him.
However, after the Central Bureau of Investigation (CBI) registered a bank fraud case against Mallya, Kingfisher Airlines and others in 2015, the ED followed with a money laundering probe. In 2016, the ED attached the Bengaluru property, asserting that the flat belonged to UBHL, which was under Mallya’s control.
The adjudicating authority confirmed the attachment, observing that no registered sale deed existed between Jain and UBHL. Jain successfully challenged the attachment before the appellate tribunal in 2019, prompting the ED to file an appeal before the Karnataka high court.
Court: Agreement to sell does not confer title
The high court’s latest order sided with the ED, reiterating that no transfer of ownership occurs without a registered sale deed.
It stated: “A mere agreement to sell, that too unregistered in respect of immovable property, does not pass title or ownership to the agreement holder. It only creates a right to seek specific performance of the contract, while the title remains with the seller until a registered sale deed is executed and registered.”
The court also noted that during ongoing restoration proceedings under the Prevention of Money Laundering Act (PMLA), Jain had moved a company application seeking direction to the official liquidator to execute the sale deed — without revealing that the property was attached under the PMLA case. The official liquidator issued a no-objection certificate, and Jain registered the sale deed in February 2021.
Parallel proceedings with creditor banks
The judgment also revisited the legal battles involving the SBI-led consortium of banks. In 2019, the consortium sought restoration of multiple attached properties before the special PMLA court in Mumbai. The official liquidator of UBHL opposed restoring properties to the banks and instead sought custody of the assets as representative of UBHL’s secured and unsecured creditors.
The special court eventually ruled in favour of the bank consortium, rejecting the liquidator’s request.
Meanwhile, two separate applications were filed by the banks before the Debts Recovery Tribunal (DRT), Bengaluru.
• In 2017, the DRT ordered UBHL, its subsidiaries and sister companies to pay ₹6,203 crore with 11.50% annual interest.
• In 2018, UBHL and Kingfisher Airlines were directed to pay ₹644.92 crore with 12% interest.
Massive dues still pending
The Karnataka high court recorded that dues owed by the Mallya group to creditor banks stood at a staggering ₹17,471 crore as of 16 May 2024. Of this, banks have temporarily secured ₹10,814 crore, leaving an outstanding amount of ₹6,657 crore.
Legal experts say the high court’s ruling further strengthens the ED’s case and consolidates the position of creditor banks seeking recovery of defaulted amounts.
Conclusion
The high court’s decision reinforces the principle that agreements to sell — without valid registration — do not create ownership rights, particularly in cases involving attached properties under financial crime investigations. With enormous dues still pending and multiple legal proceedings running concurrently, the judgment is expected to significantly influence ongoing recovery actions against the Mallya group.