Open Access Research Article
INITIATIVES TO CURVE THE MENACE OF FUGITIVE ECONOMIC OFFENDERS IN INDIA: AN ANALYSIS OF THE FUGITIVE ECONOMIC OFFENDERS ACT, 2018 (By: Dr. Shashi Bhushan & Ms. Archana Kumari)
Abstract
INITIATIVES TO CURVE THE MENACE OF
FUGITIVE ECONOMIC OFFENDERS IN INDIA: AN ANALYSIS OF THE FUGITIVE ECONOMIC
OFFENDERS ACT, 2018
Authored By:
Dr. Shashi Bhushan
Assistant
Professor
School of
Legal Studies and Governance
Career
Point University Hamirpur
Ms. Archana Kumari
Assistant
Professor
Indian
Institute of Legal Studies
Hari
Devi-Ghanahatti, Shimla
Initiatives To Curve The Menace Of
Fugitive Economic Offenders In India: An Analysis Of The Fugitive Economic
Offenders Act, 2018
Abstract
The economic
offenders abscond from India to defy the legal processes and thus seriously
undermine the rule of law in India. The banks and the government become dead
beat trying to prosecute willful defaulters of large loans and accused persons
of money laundering as they continue to evade legal process by residing out of
India. After the escape of the Lalit Modi, Vijay Malya and recently Nirav Modi
and Mehul Choksi emerged a wave of thinking that how to curb such offenders
because such offenders not only inflict pecuniary losses on individuals but
also damage the national economy and have security implications as well and
further by fleeing from the prosecution proceedings they also defy the rule of
law'. Finally, the Government has introduced Fugitive Economic Offenders Act,
2018 to deal with such type of offenders. This is an Act that provides measures
to deter fugitive economic offenders from evading the process of law in India
by staying outside the jurisdiction of Indian courts, to preserve the sanctity
of the rule of law in India.[1] The
Fugitive Economic Offenders Act, 2018, gives powers to the government to
confiscate property of economic offenders and defaulters who flee. The Act 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. In this research article
researcher have tried to study the salient features of the Fugitive Economic
Offenders Act 2018, and how this Act is helpful in preserving the rule of law
in India.
Keywords: Economic Offenders, Fugitive Economic Offenders and Rule
of Law.
I.
Introduction
An
economic offence is a socially harmful violation of regulations on economic or
financial operations which has caused or may have caused graver consequences
and which is defined as an offence under the law of land. Economic
offences not only inflict pecuniary losses on individuals but also damage the
national economy and have security implications as well. The offences of
smuggling of narcotic substances, counterfeiting of currency and valuable
securities, financial scams, frauds, money laundering and hawala
transactions etc. evoke serious concern about their impact on the national
security.[2]
Local
police deals with considerable number of
economic offences falling under the broad category of `cheating',
`counterfeiting' and `criminal breach of trust'. A number of special laws
regulating customs, excise, taxes, foreign exchange, narcotic drugs, banking,
insurance, trade and commerce relating to export and import have been enacted
in the country. These laws are enforced by the respective departmental
enforcement agencies created under the statutory provisions. Legal powers for
investigation, adjudication, imposition of fines, penalties, and arrest and
detention of persons under special circumstances are derived from the same
legislations.[3] The
legal definition of a fugitive is “an individual who, after having committed a
criminal offence, leaves the jurisdiction of the court where such crime has
taken place or hides within such jurisdiction to escape prosecution”.[4] In the recent trends it has been noticed that the
suspects and accused of the economic offences and scams in order to evade that
process of legal proceedings flee from India and continue to live luxury life
in spite of being offender of pecuniary losses to society at large. Such
economic offenders are generally termed as ‘fugitive economic offenders’.
II.
Need Of
Special Law For Fugitive Economic Offenders
The need of the special law to curve the problem
of fugitive economic offenders has been well described in the objective to the
Fugitive Economic Offenders Act, 2018. There have been several instances of
economic offenders fleeing the jurisdiction of Indian courts, anticipating the
commencement, or during the pendency, of criminal proceedings. The absence of
such offenders from Indian courts 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 in India. Further, several
such cases of economic offences involve non repayment of bank loans thereby
causing strain on
the banking sector in India.[5]
1.
Inefficiency
Of Present Laws In India
The existing civil and criminal law in the country
including the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (SARFAESI Act) that used to recover assets of financial
institutions without the involvement of courts, Recovery of Debts due to Banks and Financial Institutions Act, 1993
(RDDBFI Act) under which a debt may be recovered on the issue of a
recovery certificate by the Debt Recovery Tribunal, the Prevention of Money Laundering Act, 2002 (PMLA Act), the RBI
Master Circular on Wilful Defaulters that has given deterrent measures like
expelling a promoter from raising institutional finance for floating a new
venture for five years, and Insolvency and
Bankruptcy Code, 2016 (IBC) under which a debtor or the creditor can
trigger the insolvency resolution process on default involving a restructuring
of the debts and if the plan fails, the liquidation/bankruptcy process is
triggered, provides several loopholes when
applied to high-value economic offenders. This can be illustrated through the
instance of liquor baron Vijay Mallya, who under pressure from banks to
repay thousands of crores of debt owed by his collapsed Kingfisher Airlines,
left India despite a ‘look out circular’ against him at the country’s exit and
entry points. The circular was issued at the request of the Central Bureau of
Investigation after the agency registered an FIR against Mallya, Kingfisher
Airlines and others.[6] Industrialist Vijay Mallya left the
country the very day the banks, to which he owed over nine thousand crore
rupees, moved the Debt Recovery Tribunal (DRT).[7]
The apex court observed that court cannot analyse it in his (Mallya) absence.
Court hold central government that it has to produce him before court and only
when you will produce him here, we will then proceed. “As and when you will
produce him before us, we will go ahead and will see what is to be done,” the
bench told the Attorney General.[8]
Thus despite of several legislations when a person escapes the limits of Indian
courts there seems some special legislation to deal particularly with such
cases.
2.
Problems Relating To Extradition Of
Such Offenders
Extradition
may be briefly described as the surrender of an alleged or convicted criminal
by one State to another. More precisely, extradition may be defined as the
process by which one State upon the request of another surrenders to the latter
a person found within its jurisdiction for trial and punishment or, if he has
been already convicted, only for punishment, on account of a crime punishable
by the laws of the requesting State and committed outside the territory of the
requested State.[9]
Soon after charged with offences, Vijay Mallya
fled to the United Kingdom. India kept requesting The United Kingdom for Vijay
Mallya's extradition, but all in vein.[10]
India has had a history of facing problems in extraditing fugitives from the
United Kingdom. It has a list of about 60 people that India wants extradited
which includes Vijay Mallya and the
Former IPL mastermind, Lalit Modi, who is charged with the evasion of Indian
Law has also found refuge in the United Kingdom and has not been extradited as
yet.[11]
'Aut dedere aut judicare' in Latin means- ‘either extradite or prosecute’.
It puts a legal obligation on States to prosecute a person guilty of committing
a crime where no other state has requested for his/her extradition. This
obligation does not limit itself to territorial crimes, it applies to
extra-territorial crimes and is binding on criminals or victims of alien
nationality as well. The States have also agreed to cooperate amongst them and
with the competent International Tribunal to stop fugitives from escaping
justice and to fight against the impunity granted against crimes whether they
are offences of national or international concern. [12]
The law of extradition whether implemented through
multilateral treaties or bilateral treaties, faces problems of enforcement. One
major problem is that these treaties are binding only on the signatory states
and hence there is no obligation to extradite a fugitive if a country is not
signatory to an agreement. Further, even if they are signatories to the
treaties for extradition, they cannot be forced to extradite criminals because
there exists no system of sanctions imposed on countries not abiding by the law
of extradition.[13] In such
situations, the fugitives tend to believe that they can flee justice by going
to a country which does not have an extradition treaty with the country in
which the crime was committed. This encouragement can lead to evasion of
justice on a massive scale, thus undermining the sole intention behind the
formulation of extradition laws in the first place. [14]
Though
the UK has offered India further assistance in the case asking the country to
request extradition, it wouldn’t be easy for India. Extradition from the UK is
a too difficult a process and Mallya can easily fight his case in the UK
courts. If one goes by reports, there are around more than one hundred extradition
requests from India in the UK, which involves even wanted criminals. Chances
are very little that India can make a convincing case for Mallya’s extradition
given that it doesn’t have a foolproof case against him beyond loan default and
alleged financial fraud. Legal experts point out several cases in the past
where the Indian government has failed to bring back absconders and criminals.[15]
III.
Analysis Of
The Fugitive Economic Offenders Act, 2018
1.
Meaning of 'Fugitive Economic
Offender'
The term 'fugitive economic
offender' has been defined under Fugitive Economic Offenders Act, 2018.
According to the Act “any individual against whom a warrant for arrest in
relation to a Scheduled Offence has been any Court in India, who has left India
so as to avoid criminal prosecution; or be refuses to return to India to face
criminal prosecution is fugitive economic offender”.[16]
2. Declaration of Offender as
‘Fugitive Economic Offender’ and ‘Confiscation’ of Property
The director[17]
or any other officer not below the rank of deputy director[18]
authorized by the director for the purpose may file an application in such form
and manner as may be prescribed by the Special Court to declare individual as a
fugitive economic offender. Fugitive economic offender is the person who has
committed the 'Scheduled Offence of value involving rupees one hundred crore of
more. Scheduled Offence means the offences mentioned in the Schedule of
Fugitive Economic Offenders Act, 2018.[19]
The Act provides for confiscation of
property of fugitive economic offenders. Director can attach the property of
the offender with permission of the Special Court by an order. However, the
Director or any officer authorized by the Director, may, by an order in
writing, at any time prior to the filing of such application attach any
property that is believed to be the proceeds of the crime or is property owned
by an individual who is a fugitive economic offender; and is being or is likely
to be dealt with a manner which will result in the property being unavailable
for confiscation, but such attachment of any property prior to application will
continue for a period of 180 days from the date of the order of attachment.[20]
The application by director must
contain the reasons for the belief that an individual is a fugitive economic
offender. The application shall also contain any information available as to
the whereabouts of the fugitive economic offender. The application shall be
accompanied with certain lists i.e. a list of properties and the value of such
properties believed to be the proceeds of crime, including any such property
outside India for which confiscation is sought; a list of properties or benami
property owned by the individual in India or abroad for which confiscation is
sought; and, a list of persons who may have an interest in any of the
properties listed and attached with application.[21]
After hearing the
application under the Special Court is satisfied that an individual is a
fugitive economic offender, it may declare the individual as a fugitive
economic offender. On such declaration the Special Court may order that the
proceeds of crime in India or abroad, whether or not such property is owned by
the fugitive economic offender, any other property or benami property in
India or abroad, owned by the fugitive economic offender shall stand
confiscated to the Central Government.
The Special Court may,
while making the confiscation order, exempt from confiscation any property
which is a proceed of crime in which any other person, other than the fugitive
economic offender, has an interest if it is satisfied that such interest was
acquired bona fide and without knowledge of the fact that the property
was proceeds of crime.[22]
3. Powers of Director and other officers
Ø Power of Discovery, Inspection and Enforcing
the Attendance of any Person
The Director or any
other officer shall have the same powers of a civil court while trying a suit
in respect of discovery and inspection, enforcing the attendance of any person,
including any officer of a reporting entity and examining him on oath,
compelling the production of records, receiving evidence on affidavits, and
issuing commissions for examination of witnesses and documents.[23]
Ø Power
of survey
Where a Director or any
other officer authorized by the Director, on the basis of material in his
possession, has reason to believe that an individual may be a fugitive economic
offender; he may enter any place within the limits of the area assigned to him.
Before entering any such place he must record the reasons in writing. He may
request any proprietor, employee or any other person who may be present at that
time, to afford him the necessary facility to inspect such records as he may
require and which may be available at such place and to check or verify the
proceeds of crime or any transaction
related to proceeds of crime which may be found therein
The Director or any other officer may place marks of identification on
the records inspected by him and make or cause to be made extracts or copies
therefrom, make an inventory of any property checked or verified by him; and
record the statement of any person present at the property which may be useful
for, or relevant to, any proceedings.[24]
Ø
Search and Seizure
Where Director or any
other officer not below the rank of Deputy Director authorized by him on the
basis of information in his possession has reason to believe that a person may
be declared as a fugitive economic offender; or, is in possession of any
proceeds of crime; or, is in possession of any records which may relate to
proceeds of crime; or, is in possession of any property related to proceeds of
crime, then he may authorize any officer subordinate to him to—
(a) enter and
search any building, place, vessel, vehicle or aircraft where he has reason to
suspect that such records or proceeds of crime are kept;
(b) break open the
lock of any door, box, locker, safe, almirah or other receptacle for exercising
the powers conferred by clause (a) where the keys thereof are not
available;
(c) seize any
record or property found as a result of such search;
(d) place marks of
identification on such record or property, if required or make or cause to be
made extracts or copies therefrom;
(e) make a note or
an inventory of such record or property; and
(f) examine on
oath any person, who is found to be in possession or control of any record or
property, in respect of all matters relevant for the purposes of any
investigation under this Act.[25]
Ø Search
of Persons
An authority, authorized
in this behalf by the Central Government by general or special order, has
reason to believe that any person has secreted about his person or anything
under his possession, ownership or control, any record or proceeds of crime
which may be useful for or relevant to any proceedings under this Act, he may
search that person and seize such record or property which may be useful for or
relevant to any proceedings under this Act. However if such person so requires,
the authority shall take such person within twenty-four hours to the nearest
Gazetted Officer, superior in rank to him, or a Magistrate. The authority shall
not detain the person for more than twenty-four hours prior to taking him
before the Gazetted Officer, superior in rank to him, or the Magistrate. If
such Officer or Magistrate sees no reasonable ground for search shall discharge
such person otherwise shall direct that search be made. Before making the
search the authority shall call upon two or more persons to attend and witness
the search and the search shall be made in the presence of such persons. No
female shall be searched by anyone except a female.[26]
4. Notice
Where an application
under section 4 has been filed, the Special Court shall issue a notice to an
individual who is alleged to be a fugitive economic offender and any other
person who has any interest in the property. The notice shall require the
individual to appear at a specified place and time not less than six weeks from
the date of issue of such notice; and state that failure to appear on the
specified place and time shall result in a declaration of the individual as a
fugitive economic offender and confiscation of property.[27]
5. Procedure for Hearing Application
Where any individual to
whom notice has been issued appears in person at the place and time specified
in the notice, the Special Court may terminate the proceedings. If he fails to
appear but enters appearance through counsel, the Special Court may in its
discretion give a period of one week to file a reply to the application under
section 4.[28]
6. Appeal
An appeal shall lie from
any judgment or order, not being an interlocutory order, of a Special Court to
the High Court both on facts and on law. Every appeal under this section shall
be preferred within a period of thirty days from the date of the judgment or
order appealed from provided that the High Court may entertain an appeal after
the expiry of the said period of thirty days, if it is satisfied that the
appellant had sufficient cause for not preferring the appeal within the period
of thirty days. However, no appeal shall be entertained after the expiry of
period of ninety days.[29]
IV.
CONCLUSION
The Fugitive Economic Offenders Act
is the government's response to the embarrassment of a string of large bank
defaulters fleeing the country after duping them of several thousand crore of
rupees. This legislation is a kind of blanket ban on economic offenders
contesting the seizure and sale of their assets and properties without a trial
in a court. According to information circulated in the news papers recently
that Mehul Choksi is ready to return the money which is the result of this Act.[30]
But Government should also take care that the fate of this Act should not be
like other legislations which are already in existence such as Prevention of
Money Laundering Act (PMLA) and the Foreign Exchange Regulation Act (FERA)
which failed to stop Indian industrialists from stashing large amounts of
wealth in tax havens abroad, but has been a great tool of harassment, blackmail
and control by politicians and corrupt officials.[31]
Published Paper
Author Details
Author Name: Dr. Shashi Bhushan & Ms. Archana Kumari
Title: INITIATIVES TO CURVE THE MENACE OF FUGITIVE ECONOMIC OFFENDERS IN INDIA: AN ANALYSIS OF THE FUGITIVE ECONOMIC OFFENDERS ACT, 2018
Email Id: Dr. Shashi Bhushan-shashibhushan.law@cpuh.edu.in & Ms. Archana Kumari-archanarana592@gmail.com
Article Information
INITIATIVES TO CURVE THE MENACE OF FUGITIVE ECONOMIC OFFENDERS IN INDIA: AN ANALYSIS OF THE FUGITIVE ECONOMIC OFFENDERS ACT, 2018 (By: Dr. Shashi Bhushan & Ms. Archana Kumari)
Authors: Author Name: Dr. Shashi Bhushan, Ms. Archana KumariTitle: INITIATIVES TO CURVE THE MENACE OF FUGITIVE ECONOMIC OFFENDERS IN INDIA: AN ANALYSIS OF THE FUGITIVE ECONOMIC OFFENDERS ACT, 2018, Ms. Archana KumariEmail Id: Dr. Shashi Bhushan-shashibhushan.law@cpuh.edu.in, Ms. Archana Kumari-archanarana592@gmail.com
- Journal IJLRA
- ISSN 2582-6433
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International Journal for Legal Research and Analysis
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