Rationale behind the Fugitive Offender’s Bill –
After the recent financial frauds came to fore in India, especially the Rs 13,000 crore PNB scam where diamantaire Nirav Modi and Mehul Choksi fled the country, it became apparent that the existing civil and criminal provisions are not entirely adequate to deal with the severity of the problem. The absence of offenders during investigations poses problems for the probing agencies apart from undermining the law of the country.
The benefit of the ordinance:
The Bill is expected to re-establish the rule of law as the accused will be forced to return to India and face trial for his 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. Fugitive Offenders Bill would strengthen the powers of Investigating Agencies investigating the Fugitives.
The impact of the ordinance:
It is expected that the creation of a special forum for a speedy confiscation of the proceeds of crime, in India or abroad, would force the fugitive to return to India to submit to the jurisdiction of courts in India to face the law in respect of scheduled offences. A scheduled offence refers to a list of economic offences contained in the Schedule to this Ordinance.
Other provisions under the ordinance:
(i) making an application before the special court for a declaration that an individual is a fugitive economic offender;
(ii) attachment of the property of a fugitive economic offender and proceeds of crime;
(iii) issue of a notice by the special court to the individual alleged to be a fugitive economic offender;
(iv) confiscation of the property of an individual declared as a fugitive economic offender or even the proceeds of crime;
(v) disentitlement of the fugitive economic offender from defending any civil claim; and
(vi) appointment of an administrator to manage and dispose of the confiscated property under the act.
If at any point of time in the course of the proceeding prior to the declaration, however, the alleged Fugitive Economic Offender returns to India and submits to the appropriate jurisdictional court, proceedings under the proposed Act would cease by law. All necessary constitutional safeguards in terms of providing hearing to the person through counsel, allowing him time to file a reply, serving notice of summons to him, whether in India or abroad and appeal to the high court have been provided for.
Highlights of the Bill and Ordinance
- 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.
Souce: Indian Express, Economic Times & PRS Legislative Research – (prsindia.org)