In March 2018, the union cabinet, chaired by Prime Minister Narendra Modi, approved the proposal of the Ministry of Finance to introduce the Fugitive Economic Offenders Bill, 2018 in Parliament.
The aim of the bill is to deter economic offenders who leave the country to avoid the process of Indian law by remaining outside the jurisdiction of Indian courts.
The fleeing of such offenders from India hampers investigation in criminal cases, undermines the rule of law in India and worsens the financial health of banks as most such cases of economic offences involve non-repayment of bank loans. The idea is to overcome shortcomings in existing laws and provide a fresh legal framework that would make it possible to confiscate the property of those who flee the country or refuse to come back to evade prosecution.
The law covers offences which have a value of Rs 100 crore or more.
A ‘fugitive economic offender’, according to the proposed law, is “any individual against whom a warrant for arrest in relation to a scheduled offence has been issued by any court in India, who (i) leaves or has left India so as to avoid criminal prosecution; or (ii) refuses to return to India to face criminal prosecution.”
For a person to be declared a fugitive economic offender, a director, appointed by the central government, will have to file an application to a special court (set up under the Prevention of Money-laundering Act, 2002) to that effect. As per the proposed law, the application must state the reason/s for the belief that an individual is a fugitive economic offender; give any information available as to the whereabouts of the fugitive economic offender; list the properties or the value of such properties believed to be the proceeds of crime, including any such property outside India for which confiscation is sought; list the properties owned by the person in India (which includes benami) for which confiscation is sought; give a list of persons who may have an interest in any of the properties listed under the previous two sub-clauses.
A notice will then be issued by the court to the person named a ‘fugitive economic offender’. The person is required to present himself/herself, within six weeks from the date of the notice, at “a specified place at a specified time”. If the offender fails to do so, he/she will be declared a ‘fugitive economic offender’; in that event, their properties as listed in the application by the director can be confiscated.
If, in the course of the proceedings before the declaration of the person as fugitive economic offender, however, the person concerned returns to India and submits to the appropriate jurisdictional court, proceedings under the proposed Act would cease by law. There are provisions of necessary constitutional safeguards in terms of providing a hearing to the person through counsel, allowing him/her time to file a reply, serving notice of summons to him/her, whether in India or abroad and appeal to the High Court.
The director will have the power to attach any property the accused holds.
An administrator will be appointed by the special court to oversee the confiscated property; the administrator will also be responsible for disposing the property. The property will be used to satisfy the claims of the creditors.
The property will remain attached for 180 days. There is a provision for appeal against an order of confiscation.
The proposed law does not allow those declared as offenders from either filing or defending a civil claim in court.
(Economic offences have been defined under various laws: the Indian Penal Code, the Prevention of Corruption Act, the SEBI Act, the Customs Act, the Companies Act, Limited Liability Partnership Act, and the Insolvency and Bankruptcy Code.)
Comments
In recent times there have been glaring instances of the very rich defaulters/fraudsters enjoying themselves in foreign lands after having managed to dupe Indian banks and innocent clients besides the judiciary. In this context, especially when the ordinary citizen feels a growing resentment against a system that apparently allows the rich to ‘escape’ the consequences of their actions with impunity, the proposed law seems welcome; it tries to overcome some of the shortcomings of existing laws on confiscating offenders’ assets. At present, the Prevention of Money Laundering Act allows the Enforcement Directorate to provisionally attach property acquired from the proceeds of crime, but the ED gets full right only after conviction. The process usually takes a long time.
The bill is expected to impel fugitive economic offenders to return to India to face trial for scheduled offences. The bill would enable the banks and other financial institutions to achieve higher recovery from financial defaults committed by such fugitive economic offenders. However, doubts have been raised over the efficacy of the law: will the threat of confiscation of property be enough to prevent the offenders from fleeing or to make them return? How easy will it be easy to dispose of the confiscated property and at prices that would meet the dues of creditors? Furthermore, as the proposed law is not limited to confiscation of the proceeds of crime and goes beyond to include any asset that the offender has – including benami property – there may be issues of actual ownership, and litigation would arise.
There is also a question as to whether the confiscated property will be bought by anybody so that the amount can be realised.
Questions of legal rights may also be raised in the matter of confiscation of property. Of course, the UN Convention against Corruption that India ratified in 2011 allows domestic laws for confiscation of property of offenders without criminal conviction, and the government cites this convention for delinking the forfeiture provision from criminal conviction. In the Budget 2017-18 it was announced that the government was considering legislative changes or even a new law to confiscate the assets of such absconders till they submit to the jurisdiction of the appropriate legal forum.
Analysts have also pointed out that the blanket ban on pursuing or defending any civil claim under the law goes against the basic tenets of justice and fair play, and violates principles of the Indian Constitution.
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