Fugitive Economic Offenders Act, 2017

March 2, 2018

 

With a rise in economic offences in the country {Vijay Mallya (2017); Nirav Modi (2018) cases}, the need for a law regulating fugitives was more than ever before. Therefore, the cabinet approved Fugitive Economic Offenders Act, 2017. It was to strengthen the regulatory framework in the wake of the Rs 12,600-crore fraud at Punjab National Bank. There are several smaller players, such as Karol Baghbased Dwarka Das Seth International whose promoters have allegedly fled the country and loans have remained unpaid. The CBI registered a case against the Delhi-based jeweller related to a Rs 390-crore loan taken from Oriental Bank of Commerce. To know more about Banking frauds, refer: (click here)

 

The Bill provides for confiscating assets without conviction in cases where economic offenders flee the country. The bill is aimed at deterring economic offenders like celebrity jeweller Nirav Modi from fleeing the country or not returning to face trial. It provides for confiscating assets even without conviction and paying off lenders by selling off the fugitive's properties. The move will allow quicker recovery of dues through a special court from absconding corporate defaulters.

Aim:

  • A way to confiscate assets of those without conviction who flee the country.

  • To preserve the sanctity of Rule of Law in India, the cabinet on March 1, 2018, approved the Fugitives Economic Offenders Act, 2017.​

The Act defines a "fugitive economic offender" as:

  • Fugitive economic offender” means any individual against whom a warrant for arrest in relation to a scheduled offence has been issued by any court in India, who:

(i)  leaves or has left India so as to avoid criminal prosecution; or

(ii)  refuses to return to India to face criminal prosecution. 

 

  • Contracting state” means any country or place outside India in respect of which arrangements have been made by the Central Government with the Government of such country or place through a treaty or otherwise.

 

Application of the Act:

The Act applies to any individual who is, or becomes, a fugitive economic offender on or after the date of coming into force of this Act. 

Procedure for making application:

 

Preservation of property:

 

 

  • The Director or any officer authorised by the Director not below the rank of the Deputy Director may attach any property mentioned in the application under Section 6 by an order in writing.

  • Any property can be attached if:

    • there is reason to believe is proceeds of crime or is property owned by an individual who is a fugitive economic offender; and

    • is being or is likely to be dealt with in a manner which will result in the property being unavailable for confiscation.

    • the attachment of any property under this section will continue for a period of 180 days from the date of the order of attachment.

 

Procedure for hearing application:

 

 

Declaration of Fugitive Economic Offender:

 

After hearing the application under Section 6, if the Special Court concludes that an individual is a fugitive economic offender, it may declare the individual a fugitive economic offender for reasons recorded in writing. 

And later the confiscation of property by the central government will follow.

National Financing Reporting Authority: (refer to the picture below)

 

  • This act provides for constituting a national financial reporting authority (NAFRA). This authority will have it specified on which cases it can act under the rules.

 

Miscellaneous:

  • The offenses will include cases above Rs. 100 crore. Being declared a fugitive offender will have many consequences - confiscation of all assets in India.

  • Assets overseas will also be liable for confiscation but it will depend on cooperation of those countries

  • The person will not be able to pursue any civil claim in the country

  • Under first instance, all listed companies and unlisted large companies will be covered under NFRA. Any companies below will still be under institute of chartered accountants.

 

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