The Fugitive Economic Offender Bill, 2018 that was enacted by the Union
Cabinet on March 1, 2018 is a step toward making efforts for stopping dead in
tracks the fugitive economic offenders, the likes of Vijay Mallya and Nirav Modi,
who tend to abscond with large sums of money embezzled by using fraudulent
means. The absconders remain outside the reach of the jurisdiction of the Indian
Authorities, and this Bill is an attempt to curb any such activities.
This article is supposed to breakdown the several of the provisions that have
been given in the Bill, which aim at dealing effectively with the absconders who
have taken refuge in the protection of other countries.
The recent revival of this Bill back in the Cabinet all the more signifies at
the fact that the urgency of the need of this Bill is recognized, since the
heavy time offenders such as Vijay Mallya and Nirav Modi continue to refuse to
return to the Country and face trial for their acts. Despite certain drawbacks,
this Bill is sure to stir up trouble for the offenders, and will act as an
effective deterrent. This article assesses the several aspects of the Bill, and
then describes the drawbacks that were noticeable in the Bill, and need to
rectified in order to be a better remedy.
In a recent change of events, the Fugitive Economic Offenders Bill, 2018
(hereinafter, the Bill), which was introduced by the Government of India while
the Budget Session of 2017-18 was still in progress, and also once again
introduced in the Lok Sabha in March, 2018, has been approved by the Union
Cabinet. Without doubt, the gigantic blow to Indian economy in the form of scam
brought about by Nirav Modi acts as a catalyst to this change. However, the
Parliament of India is yet to pass the bill.
A plethora of powers have been added for the authorities for dealing with the
Fugitive Economic Offenders
. Under the various powers that have been granted
under the Bill, is also the power to confiscate the properties of one who has
been declared by the Special Courts as fugitive economic offender
In addition to the properties situated within the territory, the act also
empowers the authorities to impound the properties of the offenders that are
situated overseas. These powers are well suited to stop the likes of Nirav Modi
and Vijay Mallya in their tracks, and prevent them from absconding. After all,
the main aim behind the seeking for enactment of this legislation is to deter
the fugitive economic absconders, while simultaneously seeking quick recovery of
the debts that are owed by such defaulters in the corporate sectors.
Some Highlights of the Bill:
The Bill defines the fugitive economic offender, as a person who has an
arrest warrant issued in respect of a scheduled offence, and who leaves or has
left India so as to avoid criminal prosecution or refuses to return to India to
face criminal prosecution
The offences that have been brought within the ambit of this act range from
default on loans by wilful actions, cheating, forgery, etc. The Bill includes
offences that are an accumulation of all the other related offences, be it under
the Prevention of Corruption Act, 1988, or some certain economic offences that
are also included under the Securities and Exchange Board of India Act, 1992,
Customs Act, 1962 and the Companies Act, 2013.
However, the Bill only includes those acts to be registered as an offence under
it, who value at a total of more than 100 Crores. Unless this condition is met,
any such act shall not be classified as on offence under this bill. Also, the
burden of proof for an individual to be branded as a fugitive economic offender
under the bill has been completely shifted on the investigating authorities, and
the guilt of the accused depends on the proof, the standard of which has been
set to be dependent upon the probabilities peculiar to the circumstances at
Special Courts have been decided for dealing with offences under the Bill. As
was the case under the Prevention of Money Laundering Act, 2002, those very
sessions court will be set up, designated as Special Courts who will be
responsible for the declaration of an individual as a fugitive economic
offender, and also for the orders related to the confiscations of the
property of such offenders.
Confiscation of Assets
It is the duty of the aforementioned courts to declare any defaulter as a
fugitive economic offender, which is done upon an application that is
filed by the agencies tasked with the investigation process.
The agencies under the act have been termed as the Directors under the
bill. The application that is filed under the Section 6 of the bill needs to
include the reasons that the directors have for the declaration of any
individual as a fugitive economic offender, where the offender is as of that
time, and the list of the assets that the offender has, which also includes the
proceeds of this crimes.
There also is a separately prepared list of the interested persons - those who
tend to have any sort of stakes in the assets that are held by the offender.
Section 8 of the Bill provides for an issue of notice to the offender, once the
application under Section 6 has been filed in the due manner. Once the notice
has been served to the offender, he is given a period of 6 weeks to appear as
the notice describes.
Though, if the offender is somewhere remote, the notice may also be served to
the offender by way of electronic means. Several other means have also been
provided for the offender in the Bill, such that he may chose the appropriate
way to respond to the notice, such as when the defaulter choses to appear with a
counsel, he is provided with a week of time, to properly respond to the
application filed against him.
However, in the situation when the defaulter is unable to reply to the
application within the allotted time period, or fails to appear in the
designated manner, the Special Courts shall continue with hearing the
application following the procedure that has been mentioned in the Section 9(3)
of the Bill, make use of the evidence that has been submitted before it, and
then continue to declare the defaulter as a fugitive economic offender
and then proceed with dealing with the issue as suited, while complying with
what has been mentioned in the Section 10 of the Bill.
The Court may order the confiscation of the property of the offender, however,
may exempt any such property in which someone bonafide has an attached interest.
On being satisfied that the interest of the person is genuine, and was obtained
bonafide, without the knowledge that the property concerned was a proceeds of
crime, the Special Court can order such property to be exempted from
There are several other provisions that have been included in the Bill, which
clearly set out the procedure for the dealings with the fugitive economic
offenders, such as the provision for disentitlement from putting forward or
defending any claim, the procedure for disposal of any confiscated property.
The Bill also includes the procedure for the appointment of the administrators,
who are tasked with the dealing of the confiscated property.
The Existing Laws: Why Are They Insufficient?
The major reason why this the enactment of this Bill is so sought after is that
the existing civil and criminal legislations do not have a sufficient deterrent
effect on the offenders, because the power of the courts or the concerned
authorities has been severely confined to the attachment of the properties of
the offender, or the properties that were the proceeds of the crime of the
offender. However, this will not be the case after this Bill has been enacted,
because the Bill now empowers the Authorities and the Courts to explicitly
confiscate the properties that are related to the offender, be it his own
properties or the proceeds of his crimes.
Under the Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (SARFAESI), the provisions enable any lender to
recover his money from the borrower by selling of the properties of the borrower
that are in possession of the lender, in the case that the borrower is unable to
repay the loan. Similarly, under the Insolvency and Bankruptcy Code, 2016 (IBC),
the defaulters, be it the directors or the promoters of the company, all are
replaced by an insolvency professional and then the appropriate path for the
company is devised, whether to wind up or revive the company.
These laws, however, do not allow for the inclusion of the properties that are
not directly related to the offence that has been committed by the offender. In
contrast, the enactment of this bill will help the authorities create a
deterrent effect on the offenders, since their own properties will also be able
to be dragged into the scenario on them committing a default, such that under
the powers conferred by the bill, the authorities are now empowered to
confiscate the properties of the offender, whether related or not.
Although the Bill has received a plethora of positive feedback, and is in high
demand to be enacted, however, it is undeniable that there are several
shortcomings that the Bill still overlooks and fails to cover.
The Bill absolutely fails to cover the time period in which the Special Courts
are to proceed with the hearing, nor the time in which the hearings need to be
concluded, and there is a rather dire need for such a provision, so that there
is no more delay than affordable in the confiscation of the properties of the
offender, in order to deprive the offender, the opportunity to dispose-off the
assets that the authorities can confiscate.
In addition, in the Section 10(5) of the Bill, the Court has granted an
exemption to the properties from being confiscated if there happens to be a
stake by a bonafide person who happens to have no knowledge of the property
being a proceed of crime. This provision needs a little correction, and should
be altered to suit other possible remedies, since this could be considered a
loophole and potentially exploited by the offender.
The Fugitive Economic Offender Bill, 2018 has already received a nod from the
Union Cabinet, and also has loads of support from the other entities. It is a
promising legislation that can have a serious deterrent effect on the offenders
who abscond from their crimes, and attempt to evade prosecution, but there are
is still a little room for correction in the Bill, to make the small
shortcomings of this Bill entirely fool-proof from any potential exploitations
by the hands of these offenders.
The main intention of the act is to restrain the entities like Vijay Mallya and
Nirav modi, whose acts have been crimes of severe nature. In addition to the
existing legislations, the enactment of this Bill by the Parliament would cause
a severe detriment in the number of such offenders, and will work to achieve
considerably positive results.
- Available at - http://pib.nic.in/newsite/PrintRelease.aspx?relid=176920.
- Court of Sessions, designated as a Special Court under the Section
43(1), Prevention of Money Laundering Act, 2002.
- Section 10(2), Fugitive Economic Offenders Bill, 2018.
- Id., Section 4(1)(e)
- Supra nt. 2.
- Supra nt. 3, Section 10.
- Id., Section 6.
- Id., Section 4(1)(c).
- Id., Section 11.
- Id., Section 13.
- Id., Section 12.
- Explained: Fugitive Economic Offenders Bill Spells Trouble for the likes
of Vijay Mallya, Nirav Modi, Mehul Choksi. The Financial Express. Available
at - https://www.financialexpress.com/economy/explained-fugitive-economic-offenders-bill-spells-trouble-for-likes-of-vijay-mallya-nirav-modi-mehul-choksi/1259073/.