Salient Feature of the Fugitive Economic Offenders Ordinance, 2018

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Facts- The fugitive Economic Offenders Bill was first introduced in Lok Sabha on March 12 during the budget Session of the parliament but could not be passed due to lokjam over various issues. The Union cabinet led by prime Minister Narendra Modi on 21st April approved the Finance ministry’s proposal of promulgating the Fugitive Economic Offenders ordinance, 2018 which will empower authorities to attach and confiscate properties and assets of economic offenders like loan defaulters who flee the country.
After the recent financial frauds came to fore in India, especially the Rs. 13000 crore PNB scam where diamantaire Nirav Modi and Mehul Choksi fled the country, it became apparent that the existing civil and criminal provisions are not entirely adequate to deal with the severity of the problem, The absence of offenders during investigations poses problems for the probing agencies apart from undermining the law of the country.
Important Definitions-

  • “Fugitive economic offender” means any individual against whom a warrant for arrest in relation to a scheduled offence has been issued by any court in India, who – i) has left India so as to avoid criminal prosecution; or ii) being abroad, refuses to return to india to face criminal prosecution.
  • “Proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to any such property, or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad;
  • “Scheduled Offence” means an offence specified in the schedule, if the total value involved in such offence or offences is Rs. 100 crore or more;
  • “Special Court” means a Court of Session designated as a Special Court under the Prevention of Money- laundering Act, 2002.
  • “Director” and “Deputy Director” means the Director/Deputy Director appointed under the Prevention of Money-laundering Act, 2002. Procedure for declaration as Fugitive Economic Offender
  •  Director/officer not below rank of deputy director authorized by the director to apply to special court to declare the person as fugitive economic offender.
  •  Special court issues notice to the person
  •  If the person himself appears before the special court, proceedings gets terminated. If a counsel appears on his behalf, the court can give him one-week for filing his reply. If none appears on his behalf, the Court can proceed to hear the application.
  •  If the Special Court is satisfied that an individual is a fugitive economic offender, it may, by an order, declare the individual as a fugitive economic offender for reasons to be recorded in writing.

The benefit gained from the passing of the ordinance The ordinance is expected to re-establish the rule of law as the accused will be forced to return in India and face trial for his offences. This would also help the banks and other financial institutions to achieve higher recovery from financial defaults committed by such fugitive economic offenders, improving the financial health of such institutions.
The impact of the ordinance It is expected that the creation of a special forum for a speedy confiscation of the proceeds of crime, in India or abroad, would force the fugitive to return to India to face the law in respect of scheduled offences.
The expenditure incurred The approved law will utilize the infrastructure of the special courts constituted under the prevention of money laundering act,2002(PMLA) and the threshold of scheduled offence is high at Rs. 100 crore or more, no additional expenditure is expected on the enactment of the ordinance.
Consequences of being declared as Fugitive Economic Offender-

  • The Special Court may order that any of the following properties stand confiscated to the Central Government)
    The proceeds of crime in India or abroad, whether or not such property is owned by the fugitive economic offender.
    b) Any other property or benami property in india or abroad, owned by the fugitive economic offender
  •  Any court or tribunal in India, in any civil proceeding before it, may disallow such individual from putting forward or defending any civil claim;
  • Any court or any tribunal in India in any civil proceeding before it may disallow any company or limited liability partnership from putting forward or defending any civil claim, if an individual filing the claim on behalf of the company or the limited liability partnership, or any promoter or key managerial personnel or majority shareholder of the company or an individual having a controlling interest in the limited liability partnership has been declared as a fugitive economic holder.

BY- SWETA SUBUDHI, STUDENT REPORTER, INBA