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SANSAD TV: 75 YEARS: LAWS THAT SHAPED INDIA- THE FUGITIVE ECONOMIC OFFENDERS ACT, 2018

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Highlights of the Bill:

  • The Bill allows for a person to be declared as a fugitive economic offender (FEO) if: (i) an arrest warrant has been issued against him for any specified offences where the value involved is over Rs 100 crore, and (ii) 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.

Key Issues and Analysis

  • Under the Bill, any court or tribunal may bar an FEO or an associated company from filing or defending civil claims before it.  Barring these persons from filing or defending civil claims may violate Article 21 of the Constitution i.e. the right to life.  Article 21 has been interpreted to include the right to access justice.
  • Under the Bill, an FEO’s property may be confiscated and vested in the central government.  The Bill allows the Special Court to exempt properties where certain persons may have an interest in such property (e.g., secured creditors).  However, it does not specify whether the central government will share sale proceeds with any other claimants who do not have such an interest (e.g., unsecured creditors).
  • The Bill does not require the authorities to obtain a search warrant or ensure the presence of witnesses before a search.  This differs from other laws, such as the Code of Criminal Procedure (CrPC), 1973, which contain such safeguards.   These safeguards protect against harassment and planting of evidence.
  • The Bill provides for confiscation of property upon a person being declared an FEO.  This differs from other laws, such as CrPC, 1973, where confiscation is final two years after proclamation as absconder.

Way Forward:

  • To avoid failed attempts at sale the bill should provide for time limits for disposal and encashment of property, separate limits for movable-immovable property and running business. Any property which would be subject to valuation loss over a period of time must be disposed of quickly.
  • To further strengthen it, the bill should separately provide for dealing with siphoning off of funds, round-tripping, and employing any scheme or edifice to cause loss.
  • India has presented a nine-point programme to take action against fugitive economic offenders at the ongoing G20 Summit in Argentina.