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Fugitive Economic Offenders Act 2018

Fugitive Economic Offenders Act 2018

Why in news?

  • Recently, assets worth Rs. 329.66 crore of the Punjab National Bank (PNB) fraud Nirav Modi have been confiscated under Section 12(2) and (8) of the Fugitive Economic Offenders Act, 2018.
  • In this money laundering case, the Enforcement Directorate (ED) has so far attached properties valued at Rs. 2,348 crore.
  • The properties were earlier attached under the Prevention of Money Laundering Act, (PMLA) 2002.
  • To proactively detect such frauds, the Reserve Bank of India (RBI) is in the process of putting together an exclusive wing for banking fraud oversight.

About Fugitive Economic Offenders Act, 2018

  • The Fugitive Economic Offenders Act was passed by the Lok Sabha and the Rajya Sabha in 2018 and it received presidential assent the same year.
  • The chief intent behind the enactment of this law is to bring fugitive economic offenders to book.
  • Many such offenders evade facing the judicial process in India by leaving the country and staying outside the jurisdiction of the courts in India.
  • Since most such crimes deal with the non-payment of loans, this has weakened the Indian economy and the authorities felt the need to enforce this law so that such offenders staying overseas are not able to circumvent the Indian judicial system.
  • Some of the offences listed in the act are:
    • Counterfeiting government stamps or currency.
    • Cheque dishonour.
    • Money laundering.
    • Transactions defrauding creditors.

Who is a Fugitive Economic Offender?

  • Under the FEO Act, a person can be declared a fugitive economic offender (FEO) upon the satisfaction of two conditions:
  • An arrest warrant has been issued against the person for any Scheduled Offences where the value involved is over Rs 100 crore, and
  • He/she has left the country and refuses to return to face prosecution.

Declaration of a Fugitive Economic Offender

  • After hearing the application, a special court (designated under the PMLA, 2002) may declare an individual as a fugitive economic offender.
  • It may confiscate properties which are proceeds of crime, Benami properties and any other property, in India or abroad.
  • Upon confiscation, all rights and titles of the property will vest in the central government, free from encumbrances (such as any charges on the property).
  • The central government may appoint an administrator to manage and dispose of these properties.

Economic Offence

  • Economic offences relate to counterfeiting, fraud, money laundering, tax evasion and others. The other laws in the country which handled such offences include:
  • Prevention of Money-Laundering Act – prohibits money laundering.
  • Benami Properties Transactions Act, 1988 – bans benami transactions.
  • Companies Act, 2013 – punishes fraud and unlawful acceptance of deposits.
  • Indian Penal Code, 1860 – covers various crimes such as cheating, forgery, counterfeiting, etc.
  • Code of Criminal Procedure, 1973

Bar on Filing or Defending Civil Claims

  • The Act allows any civil court or tribunal to prohibit a declared fugitive economic offender, from filing or defending any civil claim.
  • Further, any company or limited liability partnership where such a person is a majority shareholder, promoter, or a key managerial person, may also be barred from filing or defending civil claims.
  • The authorities may provisionally attach properties of an accused, while the application is pending before the Special Court.

Concerns

  • The Act allows a court or tribunal to bar the FEO or any company associated with him from filing or defending civil claims. This might go against the Right to Life under the Constitution’s Article 21 which also encompasses the right to access justice as per some interpretations.
  • The Act allows the central government to confiscate the properties of an FEO. There are also exemptions allowed to certain properties wherein there are persons with an interest in such properties like secured creditors. But, the Act does not specify if the central government will share the sale proceeds of properties with other claimants who do not have such an interest like unsecured creditors.
  • The Act empowers the authorities to conduct a search without a warrant and without the presence of a witness. These safeguards are present in the other laws to prevent harassment and abuse of power like planting of evidence, etc. Such safeguards should ideally be present in a law.
  • Upon a person being declared an FEO, his/her property can be confiscated. This is different from the other laws like the Criminal Procedure Code, 1973 where confiscation is final two years after the person is proclaimed absconder.

 

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