Vijay Mallya arrives at Westminster magistrates' court on Tuesday © AP
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There is “no evidence” to support claims of fraud against Vijay Mallya, a lawyer for the flamboyant Indian tycoon told a London court on Tuesday.

Mr Mallya, 61, who has been living in London since early last year, is fighting the Indian government’s request that he be extradited to stand trial in India, where he faces allegations of financial misconduct relating to the 2012 collapse of his former company, Kingfisher Airlines.

His case is the subject of a two-week extradition hearing at Westminster magistrates’ court in London. The hearing is not a trial to determine Mr Mallya’s innocence or guilt. Instead, Emma Arbuthnot, the chief magistrate, must decide whether there is enough prima facie evidence to have him extradited.

India’s Central Bureau of Investigation has brought criminal charges against Mr Mallya and nine others, claiming Mr Mallya was the central figure in a “dishonest plot” to obtain large loans for Kingfisher Airlines, which owed $1.3bn to banks owned by the Indian government.

The Indian government claims Mr Mallya never intended to repay the loans, and wanted to “palm” the losses on to the banks.

Mr Mallya — who made his fortune by building up United Spirits into India’s biggest beer and spirits business and was known as the “King of Good Times” for his hard-partying, opulent lifestyle — denies any wrongdoing.

He has claimed that his charges are politically motivated, and has said he has been presented as the “embodiment of all the ills of capitalism in contemporary India”.

In written arguments submitted to the court, Mr Mallya said he is the victim of a high-profile “witch hunt” orchestrated by Indian prime minister Narendra Modi’s government.

Mr Mallya alleged in the documents that the prosecution is motivated by a “populist and misguided sentiment” that the collapse of Kingfisher “must be indicative of some criminality somewhere”. He said the perception had been “stoked in India by politicians of every stripe”.

Clare Montgomery QC, the barrister representing Mr Mallya, told the court on Tuesday that the Indian government had put forward “no evidence” to support its case, even though it had made a “number of very serious allegations”, which were “unsustainable”.

“There are competing narratives, fraud versus business failure,” she said. “What there has been is interference with the prosecution process in a way that is improper.”

Ms Montgomery told the court that India’s Central Bureau of Investigation has a “long and inglorious history” of “politically motivated” prosecutions. She said the Indian government had “made political capital on the assumption that there was a fraud”.

She said claims that Mr Mallya wanted to “palm” losses off on to the banks were “financially incoherent”, given rules surrounding company incorporation in India.

Ms Montgomery told the court that Indian government claims that Mr Mallya “falsely” told IDBI Bank in 2009 that Kingfisher would be profitable by 2011 “simply ignore” the nature of the airline business, which is heavily tied to the macroeconomy.

On Monday, Mark Summers QC, the barrister for the Indian government, told the court that the loan money advanced by IDBI was used by Mr Mallya and his company to play “round robins” and pay off loans at other banks.

Mr Summers said some of the money advanced by IDBI was used to pay off loans owed to the state-owned Bank of Baroda. This in turn freed up more credit at the Bank of Baroda, which “ended up in the defendant’s motor racing team”.

Loan money from IDBI was also used to rent a corporate jet that was mostly used by Mr Mallya and his family and friends, the court heard.

When the loans went sour, Mr Mallya set about “squirrelling away what money he could to keep it away from the bank,” Mr Summers told the court, pointing to $40m that Mr Mallya received from Diageo, the drinks company, and put into trusts for his children.

The hearing continues.

Copyright The Financial Times Limited 2017. All rights reserved.
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