Legal Provision for Fugitive Economic Offenders in India
In the recent times India had witnessed a number of scams and economic offenders which
h has left a severe impact on the Indian economy and baking sector as well. Some of the prominent of these have been the IPL scam by Lalit Modi but the most prominent case is of liquor baron Vijay Vittal Mallaya, who have been out of India for quite a long time by invading the legal process. These instances of people running away and invading the legal process by staying outside the jurisdiction of India was increasing and needed to be stopped.
In 2017, the Ministry of Finance had drafted a bill to address the high-value frauds and the offenders fleeing the country in order escape from legal action. To grab the neck of these economic offenders, the Indian Parliament enacted the Fugitive Economic Offenders Act, 2018 which was assented by President and came into force on 21st April, 2018. The preamble of the said Act states that the act provides measures to deter fugitive economic offender from invading the process of law in India by staying outside the jurisdiction of Indian courts, to preserve the sanctity of rule of law in India.
The Act heavily relies on the Prevention of Money Laundering Act,2002. Some of the definition in the provision is same as in PMLA, but both the statues aim to achieve different goals. There are 36 businessmen who fled away from the country in the last few years as said by CBI. After Vijay Mallaya, PMLA judge in Mumbai declared jeweler Nirav Modi, a key accused in Punjab National Bank(PNB) fraud, a fugitive economic offender(FEO) on filing an application by Enforcement Directorate(ED). This statute has a considerable impact and has deterrent effect
MAJOR FEATURES
Who is fugitive economic offender?
A Fugitive economic offender (FEO) is a person declared so by a special court set up under Prevention of Money Laundering Act(PML), 2002 against whom arrest warrant has been issued for committing any specified offence(s) listed in schedule the act and the value of the offence is at least Rs.100 Crore. Further, the person who has left India and refuses to return to India, so as to avoid criminal prosecution.
Process for declaring an individual FEO
Authorities : To declare a person Fugitive economic offender(FEO) as under section 4 of FEO Act, the authorities appointed under the Prevention of Money Laundering Act, 2002 (PMLA) has to file an application in Special Court (designed under PMLA) This list in application shall contain:
- Reason to believe that the person is a fugitive economic offender
- Information about his whereabouts;
- List of his benami properties in India and aboard;
- Lists of persons having interest in his properties
The authorities with the permission of special court can attach any property mentioned in the application. The attached property will continue for 180 days which may extend by the special court.
Issue of notice: The Special court will issue a notice to the individual who is alleged a fugitive economic offender: (I) requiring him to appear at specified place on a date of which is at least 6 weeks after the issue of notice, and (ii) stating that a failure to appear will result to declared an FEO. Notice may also be served at the individual`s email address recorded in the PAN or Aadhaar databases.
Proceedings: If the person doesn`t appear in the court proceeding, but is represented by his counsel, the special court may allow the counsel a week to file a reply. And if at the conclusion of proceedings, the person is found not be an FEO and his attached properties will be released. If the person appears, the special court will terminate proceedings.
Declaration: If the person does not appear in person or through his counsel at the specified time, the special court will proceed with the hearing the application. After hearing, the special court will declare the person a Fugitive Economic Offender.
Power of Investigating officer/ Director
The principal responsibility of such authorized officer is to prevent any suspected individual from avoiding criminal prosecution by leaving the jurisdiction of Indian courts. They have extraordinary power of ordering, in writing, for the provincial attachment of any property for a period of 180 days, and which may extend by the order of Special court. This measure is for preservation of properties, pending the process further to the Application.
For exercising such a power, the concerned officer must have reason to believe that (a) the property is derived or obtained, directly or indirectly, from any scheduled offence carried out by a fugitive economic offender; and
(B) is being or is likely to dealt with in a manner which will result in the property being unavailable for confiscation.
The act provides that, the concerned officer shall have same powers as of civil courts under the Code of Civil Procedure, 1908 in respect of the discovery and inspection, entity and examining him an oath, receiving evidence on affidavits, issuing commission for examination of witness and documents or any other matter which may be prescribed.
Besides, the authorized officer has a duty to search the person and may even detain such individual, provided that the alleged offender shall be produced before Gazette Officer or Magistrate`s court within 24 hours of such detainment. These powers are resemblances to the powers of a police officer while executing the order of arrest warrant under Criminal Procedure Code, 1973. The Director conducting the investigation has also power to survey the activities of the alleged for fugitive economic offender and of search and seizure even before that individual is declared a fugitive economic offender.
Seizure of property
Under section 12, the special court upon being satisfied and for reasons to be recorded in writing may declare that individual as a fugitive economic offender. The act provides that if individual is declared an FEO, the following properties stands confiscated and vested in the central government.
- The proceeds of crimes, in India or abroad whether or not such property is owned by the FEO;
- Any other property or benami property in India or aboard owned by the FEO.
Upon confiscation, all the rights and the title in the confiscated property shall, from the date of the confiscation order with the central government, free from all the encumbrance. The central Government shall dispose the properties after 90 days.
Disallowing all civil claim
Upon the declaration of an individual as a fugitive economic offender, the section 14 of the said act bars a fugitive economic offender from initiating/ continuing/ defending any civil claims. Also, even it disallows limited liability partnership or company or any promoter or key managerial personnel or major shareholder of the company or an individual who holds controlling interest has been declared a FEO.
Rule of Evidence
As far as burden of proof is concerned, it shall be the Director (as defined in PMLA) or the person authorized to file the application has to prove the that individual is Fugitive economic offender. And if it is a case of any person claiming bonafide interest, then the burden of proof is on the said person having any interest in properties that are deemed proceeds of crimes.
CRITICISMS OF FEO ACT, 2018
- Under the Act, any court or tribunal may bar FEO from filing or defending civil claims before it. Barring these people from filing or defending civil claim is likely to infringe the Article 21 of the Constitution i.e. right to life. Article 21 has been interpreted to include the right to access justice, which cannot be taken away. This involves the availability of forum for aggrieved party to seek legal remedy.
- The Act provides for confiscation of property of person upon being declared an FEO and vested in the central government, free of encumbrances. In other laws such as Cr.P.C. where confiscation is final after 2 years of proclamation of absconder. The time duration provides for due process without harming the legal interest of person.
- The Act provides for confiscation of property of person and vested in the central government, free of encumbrances. The central government may dispose the properties of such FEO after 90 days. But the act is silent about how the central government will use the sale proceeds.
- The amount of Rs.100 Crore threshold may ease and allow many other offenders to go Scot-free.
Author: Akriti Mishra,
Veer Narmad South Gujarat University, Surat, 2nd Year Law student