The Union Cabinet on Saturday approved a proposal to promulgate the Fugitive Economic Offenders Ordinance 2018 that provides for confiscating properties and assets of economic offenders like loan defaulters who flee the country, officials said.
The Fugitive Economic Offenders Bill was introduced in Lok Sabha on March 12 but could not be passed due to the logjam in Parliament. It seeks to confiscate properties of economic offenders, like Vijay Mallya and Nirav Modi, who have left the country to avoid facing criminal prosecution. While the ordinance will come into effect after the President’s assent, it will have to be approved by Parliament within six weeks of its reassembly, or else it will cease to exist.
The provisions of the ordinance will apply to economic offenders who have left the country to avoid facing prosecution, or refuse to return to face prosecution, persons against whom an arrest warrant has been issued for a scheduled offence, as well as wilful bank loan defaulters with outstanding of over Rs 100 crore. It provides for confiscating assets even without conviction and paying off lenders by selling the fugitive’s properties. Such economic offenders will be tried under the Prevention of Money Laundering Act (PMLA).
The ordinance defines a fugitive economic offender as a person against whom an arrest warrant has been issued for committing offences like counterfeiting government stamps or currency, dishonouring cheque due to insufficiency of funds, money laundering, and transactions defrauding creditors.
Earlier in the day, addressing a gathering in Dadra Nagar Haveli, Home Minister Rajnath Singh was quoted as saying, “The Opposition levels allegations that some Nirav (Modi) and (Mehul) Choksi fled abroad. We will present a Fugitive Economic Offenders Bill before Parliament. Earlier, offenders used to flee abroad and their properties were not seized. Now their properties will be seized under the Bill.”
According to the ordinance, a director or deputy director (appointed under the PMLA) may file an application before a special court to declare a person as a fugitive economic offender.
The application must cite the reasons for believing that an individual is a fugitive economic offender. It must have information about his whereabouts, a list of properties believed to be proceeds of a crime for which confiscation is sought, a list of benami properties or foreign properties for which confiscation is sought, and a list of persons having an interest in these properties.
On receiving the application, the special court can issue a notice to the individual, asking him to appear at a specified place within six weeks. If the person appears as required, the special court will terminate its proceedings under the provisions of the Bill.
Any property belonging to the fugitive economic offender may provisionally be attached without prior permission of the special court, provided that an application is filed before the court within 30 days. Appeals against the orders of the special court will lie before the High Court. The ordinance further provides for disentitlement of the fugitive economic offender from defending any civil claim.
As the approved law would utilise the existing infrastructure of special courts constituted under the PMLA and the threshold of scheduled offence is high at Rs 100 crore or more, no additional expenditure is expected on enactment of the ordinance, according to the Cabinet.
It was observed when an economic offender flees the jurisdiction of Indian courts — anticipating the commencement, or during the pendency, of criminal proceedings — it has several deleterious consequences. First, it hampers investigation in criminal cases; second, it wastes precious time of courts of law, third, it undermines the rule of law.