India has recently seen huge frauds and willful loan defaults by big corporates, with the offenders fleeing from the country like Vijay Mallya, Nirav Modi, Mehul Choksi etc. However, it has been very difficult to bring them back for trial due to issues of extradition and others. This has caused a huge public outcry, demanding justice to the people. In answer to this, the Union Cabinet approved the Fugitive Economic Offenders Bill that allows the State to take possession of the properties of the economic offenders even if they are not available for the trial.
Salient Features of the Bill
The key features of this bill are as follows:
Definition of economic offences
- The Bill includes those ‘economic offences’ as defined under the Prevention of Corruption Act, the SEBI Act, the Customs Act, the Companies Act, the Insolvency and Bankruptcy Code, Limited Liability Partnership Act and Indian Penal Code.
- The pecuniary value of such offences should be 100 crore or more.
Definition of economic offender
Section 4 of the Bill defines a fugitive economic offender as an individual against whom a warrant for arrest has been issued by a court in India with respect to a scheduled offence. Additionally, the person must have left India in order to avoid criminal prosecution or should refuse to return to India to face the charges.
Declaration of offender
Section 6 of the Bill requires the Director who is appointed by the Central Government to file an application before a Special Court for declaring a person as a ‘fugitive economic offender’. The particulars of the application are as follows:
- Reason for believing a person to be an offender
- Information as to the whereabouts of the offender, if known to the Director
- List of the properties with their values that are believed to be the proceeds of the crime, including those that are situated outside India that have to be confiscated. Properties to be confiscated in India are also to be listed. The persons having an interest in these properties must also be stated.
Compliance by the offender
- The offender is required to present himself within six weeks from the date on which the person receives the notice for presence by the Court. The specific time and place will also have to be stated in the notice.
- If the offender does not comply, he will be declared as ‘fugitive economic offender’ and his properties will be confiscated after attachment by the Director.
Right to remedy closed
- Once a person is declared as ‘fugitive economic offender’, he is barred from filing or defending a civil claim in the Court by virtue of Section 11.
Status of Confiscated property
- An administrator is appointed by the Special Court to take care of the confiscated property. The person overlooks the disposal of the property and then satisfaction of the creditors’ claims from the proceeds of the disposal.
Significance of the Bill
In the light of the present situation, any law that will aim at making the billionaire fraudsters liable for their acts will be seen as a welcome move. But other than this too, there is some technical significance of this Bill.
Addressing the shortcomings
India already has many laws that aim to confiscate assets of the offenders but they are quite inadequate. They do not take into consideration economic offenders who escape prosecution by fleeing from the country. The Code of Criminal Procedure calls for attachment of proclaimed offenders who include traffickers in narcotics, smugglers, foreign exchange offenders, which do not include corporate big shots. The practical implementation involves several procedural delays, which will be remedied in the new Bill.
Act as deterrent
The Bill is expected to act as a serious deterrent for such bug crimes due to the punishment involved. It leads to confiscation of not only the properties that are proceeds of the crime but even more of properties (even benami property). So, there is no escape from prosecution.
At par with international standards
The Bill has been drafted in consonance with the provisions of the UN Convention Against Corruption, that provides for creation of domestic laws that punish offenders without criminal conviction when prosecution is not possible due to death, flight or absence.
Non-violative of natural justice
While many may raise concern over the provision for no remedy, it is not totally sans remedy. The property remains attached upto a period of 180 days when the person can appear for trial or file an appeal against the order of confiscation. Rather, by making the activities time-bound, the chance of procedural delays is rectified.
Way Forward
The success of this Bill is dependent on the timely implementation by keeping in mind that the procedure followed is fair and reasonable. There is also a need to make it applicable retrospectively to cover the acts done before passing of this Bill.