19/04/2017 10:40 AM IST | Updated 19/04/2017 10:51 AM IST

Vijay Mallya Extradition: What Comes Next For The Liquor Baron

Could be a long haul.

Danish Ishmail / Reuters

Vijay Mallya's arrest in London on Tuesday by the Scotland Yard and his subsequent appearance in front of a local court, where he was granted bail, is only the first among several steps involved in an uncertain and long-drawn process of extradition to India.

Under the provisions of the conditional bail granted to Mallya, he won't be allowed to leave the UK or apply for any international visas, the Times of India reported citing CBI sources. Mallya is also been asked to remain confined at his house at Hertfordshire near London, and stay available for any communication by keeping his mobile phone switched on at all time.

Mallya's lawyer, Amit Desai, has said the proceedings against him may take six months to a year before the UK makes a decision to extradite Mallya, who is accused of money laundering, as well as misleading banks in connection to thousands of crores in loans borrowed from a consortium of banks for his now defunct Kingfisher Airlines. The banks are seeking over Rs 9,000 crores in outstanding loans in connection to the case. Mallya has consistently denied wrongdoing and accused the media for declaring him guilty disregarding due legal processes.

Extradition treaty

Mallya's extradition will be governed by the extradition treaty signed between India and the UK in 1992, under which only one person -- the fugitive Samirbhai Vinubhai Patel -- has so far been extradited.

Following the preliminary hearing on Tuesday, Mallya will now have to appear for an extradition hearing in the next few weeks, where a magistrate will decide if the accusations against Mallya merit an extradition so Mallya can stand trial in India. If granted, the UK home secretary has the final say in the matter.

However, there are a number of provisions in the UK laws that don't make extradition easy. For example, the UK laws prohibit extradition where the accused could potentially face a death penalty or human rights violations, or tried for charges other than the ones for which the extradition request has been granted. Mallya also has the right to contest the verdict in higher courts in the UK.

Many high profile cases where India has sought extradition are stuck in limbo or denied including that of former IPL chairman Lalit Modi. In addition to Mallya, at least nine extradition requests are pending with the UK, the Indian Express reported.

What's next for banks?

While it's uncertain to what extent banks stand to recover all they are owed, they are looking at Mallya's arrest as a positive next step, especially the signal it gives out to the larger business community.

So far, banks have been able to recover a portion of dues by auctioning Mallya's properties in India, but have rejected a settlement offer by Mallya. Recently, the banks sold his Kingfisher Villa in Goa for Rs 73 crores. Many of his properties on the auction block have also faced difficulty in funding buyers, according to media reports. For example, his Kingfisher House in Mumbai remains unsold.

The Mallya case also highlights that public sector banks in India are becoming increasingly more vocal taking tough stands against big loan defaulters. A public sector banker involved in the recovery of loans from Mallya told Mint, "If a borrower wants to drag legitimate repayment to banks or plans to escape the country, he will think twice due to this case."

To be sure, Mallya's loan default alone isn't enough for extradition as it is a civil wrong. Accusations of money laundering and cheating are more serious offenses, for which the UK authorities could find merit in extraditing him, Ramesh Loganathan, Managing Partner, Advaya Legal, points out.