The Fugitive Economic Offenders Bill, 2018

Background:

There have been several instances of economic offenders fleeing the jurisdiction of Indian courts, anticipating the commencement, or during the pendency, of criminal proceedings.

The absence of such offenders from Indian courts has several deleterious consequences

  • It hampers investigation in criminal cases.
  • It wastes precious time of courts of law.
  • It undermines the rule of law in India.

Further, most such cases of economic offences involve non-repayment of bank loans thereby worsening the financial health of the banking sector in India. The existing civil and criminal provisions in law are not entirely adequate to deal with the severity of the problem. It is, therefore, felt necessary to provide an effective, expeditious and constitutionally permissible deterrent to ensure that such actions are curbed.

The Bill allows for a person to be declared as a fugitive economic offender (FEO) if:

  • an arrest warrant has been issued against him for any specified offences where the value involved is over Rs 100 crore.
  • He has left the country and refuses to return to face prosecution.

 

To declare a person an FEO, an application will be filed in a Special Court (designated under the Prevention of Money-Laundering Act, 2002) containing details of the properties to be confiscated, and any information about the person’s whereabouts.  The Special Court will require the person to appear at a specified place at least six weeks from issue of notice.  Proceedings will be terminated if the person appears.

  • The Bill allows authorities to provisionally attach properties of an accused, while the application is pending before the Special Court.
  • Upon declaration as an FEO, properties of a person may be confiscated and vested in the central government, free of encumbrances (rights and claims in the property). Further, the FEO or any company associated with him may be barred from filing or defending civil claims.

Impact of the bill:

The Bill is expected to re-establish the rule of law with respect to the fugitive economic offenders as they would be forced to return to India to face trial for scheduled 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.

NOTE: It may be mentioned that the non-conviction-based asset confiscation for corruption-related cases is enabled under provisions of United Nations Convention against Corruption (ratified by India in 2011). The Bill adopts this principle.

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