In the recent years, a number of financial scandals have come into the limelight wherein the rich businessmen have successfully been able to avoid judicial proceedings by escaping the country. These are what the government has referred to as ‘loot and scoot crimes’² with those responsible for multi-crore scams leaving India to evade penalty.

Despite various laws protecting the economic well being of the masses against the capitalists, the legislature had failed to develop a statute that would help in dealing with the absconders.

In the light of growing economic offences and lack of proper machinery to deal with such situations, the Fugitive Economic Offenders Bill, 2018 was presented in the Parliament on 5^thMarch 2018 in the latter half of the Budgetary Session 2018. The government has also promulgated an ordinance³ on that behalf.

Even before this Bill was formulated, there have been many Acts that aimed at preventing money laundering and corruption. These include:

However, these regulations and Acts have clearly failed to prevent the rich businessmen from escaping responsibility. In the light of recent scandal involving Nirav Modi in Punjab National Bank scam, the Centre decided to bring in the Fugitive Economic Offenders Bill, 2018 for preventing financial scammers from decamping the country to avoid judicial reprimand.

The Bill aims “to provide for measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts, thereby preserving the sanctity of the rule of law in India."¹¹ It targets offences involving more than 100 crores.

The accused who run away from the country cause many issues. They hinder the process of investigation of criminal cases and delays the course of law. It is entirely against the rule of law.¹²In 2011, India also ratified the United Nations Convention against Corruption. The convention stressed upon confiscation of properties in instances of corruption and related malpractices.¹³

In view of these developments, the Government expressed their intention to introduce a new law in the Budget 2017-18. The Bill has framed a system for successful seizure of assets and quick disposal of cases that involve large sums of money.

The Bill defines a fugitive economic offenderas an individual against whom an arrest warrant has been issued by a court for any of the Scheduled Offences mentioned. Such a person either:

The Act would apply to all persons stated as fugitive economic offenders.¹⁵

However, it is humbly submitted that this definition is incomplete. Whether a person is a fugitive economic offender or not is contingent on the fact that an arrest warrant is issued in regard to certain offences, mentioned in the Schedule, by an order of the Court. This restricts the application of this Act and many criminals may escape from any liability.

The Director¹⁶ or any other person authorised by him can apply to a Special Court¹⁷ to declare someone a fugitive economic offender. Such a submission must consist of the following materials:

Though the procedure is thorough and does not allow any space for loopholes and misuse, the legislation should have included a minimum time limit on the Special Court to issue order of declaration. This would ensure that the whole process is speedier and more efficient.

Section 7 states that the Director or the authorised person (not under the rank of a Deputy Director) can assign any possessions mentioned in Section 6 by a written order. Notwithstanding this, s/he may, prior to filing of application under Section 6, also ascribe such property which:

Such an attachment shall continue for 180 days from date of order.

The Bill here can be questioned on the basis of the issue that it provides for pre-trial seizure of property. It confers anunrestricted discretionary supremacy in the hands of a government appointed officer to confiscate property of the accused without providing an opportunity to be heard. This appears to be against the rudimentary tenets of rule of law and natural j ustice. It may also be contended that this Section is against the constitutional right of protection of property.²⁰ This section could potentially allow properties to be seized from innocent people as well.

Where an application is filed under Section 6, Section 8 requires the Special Court to send a notice to the alleged fugitive economic offender as well any person who has interest in properties as mentioned in Section 6. Such notice must require the individual to meet at a required place at specified time within two weeks from date of notice. It must also state that if the individual fails to appear, s/he shall be declared as fugitive economic offender.

Such a notice should also be forwarded to authority as notified by the Central Government for carrying out service to the contracting state²¹. The authority must make effort to serve notice in two weeks including means of electronic services.

The notice to the suspectedoffender can also be served through electronic means in way of:

This section is applaudable, as the same is in pursuance of the principle of natural justice, audi alteram partem. It ensures that the person against whom application is filed by the Director under Section 6 gets an opportunity to represent his/her case; before the Court can pass an ex-parte order.

The Bill lays down three different circumstances under which the Special Court can proceed with the hearing.²²

Apart from this, the said Court may also provide any other person, to whom notice is delivered, a week to file ananswer to the application.

If the Special Court is contented, it can pronounce the suspectedperson as a fugitive economic offender, with reasons noted in writing.²³

After such declaration, an order may also be issued for confiscation of any of the following assets by the Centre:

From date of such order, all rights and titles of such seized property would vest in the Government unrestricted from any obligations and charges.

The Bill has also provided a special protection for persons, other than the offender, who are owners of property that constitute the proceeds of crime. The interest of such a person would not be affected by the confiscation order, in case s/he can prove that same was acquired without the knowledge that the asset was a proceed of crime.

An administrator shall be appointed, in a manner as prescribed, to handle and process the seized property. S/he must be an insolvency professional²⁵as per the Insolvency and Bankruptcy Code, 2016.²⁶

The administrator shall be responsible for disposal of the property.²⁷ S/he has to hear claims and must also satisfy claims of creditors. If the seized property is subj ect matter of other laws²⁸, the administrator shall follow the priority laid down in said law for satisfaction of claims.

It is humbly contended that the confiscation process must be elaborated upon. The Bill must accompany rules and regulations for administrators; providing guidelines for discharge of their functions. A body can also be constituted, which could be headed by the administrator. This would not only guarantee more efficacy in the seizure process, but also keep a check on the powers of the administrator.

Section 14 confers a power on any court or tribunal in India to disentitle any:

Bhartiya Janata Dal Member of Parliament, BhartruhariMahtab had opposed the Bill in the Parliament by voicing his concern over the issue that the Bill would take away a man’s right to approach the court for justice.²⁹Section 14 clearly prevents any person declared as an offender under the Bill from filing any civil case, whether the same is related to the issue involving this Act or not. As observed by the Supreme Court, in Anita Kushwaha vs Pushap Sudan³⁰, access to judiciary forms part of Article 14 along with Article 21 of the constitution and thus, a fundamental right.

This section debars any person convicted under the Act from approaching the Civil Court. This provision is arbitrary in nature. It takes away the right to approach the judiciary for redressal, which is a fundamental right provided under the Constitution. This section confers a wide discretionary power on the judicial or quasi-judicial bodies to completely disallow such persons from making a separate claim before a court.

The burden of proof lies on:

The standard of proof is based on the principle in civil suits; that is, the preponderance of probabilities.

A power of appeal lies against any order passed under Section 10 to the High Court within 30 days of passing of such order.

The Bill encloses a schedule of offences³² that would be covered under this Act. These include offences mentioned under the Indian Penal Code, 1860, the Securities and Exchange Board of India Act, 1992, the Customs Act, 1962, the Companies Act, 2013, the Limited Liability Partnership Act, 2008 and the Insolvency and Bankruptcy Code, 2016.

The Fugitive Economic Offenders Bill, 2018 has aimed to fill the lacunae that existed in the prevailing laws in dealing with offenders that fled the country to escape liability after embezzling millions. Unlike previous legislations, the Act would have a deterrent effect and make sure absconders would submit themselves to prosecution. To summarise, the Bill deals with the following:

The law-making in respect to the present Bill seems very ambitious in its approach and aims to make sure that no person, who is responsible for economic frauds and offences, is allowed to run scot-free from any responsibility or liability. The Bill, however, suffers from major gaps and ambiguities and can be described as what is called as a ‘rushed legislation’. Though the Bill continues to be questioned by the opposition on the ground of it being unconstitutional in many respects, one cannot deny the significance of the Bill in current state of affairs