Fugitive Economic Offenders Bill Current Affairs

Cabinet approves Fugitive Economic Offenders Bill, 2018

The Union Cabinet has approved introduction of Fugitive Economic Offenders Bill, 2018 in Parliament. The bill proposed by Finance Ministry aims to curb practice of evading criminal prosecution by economic offenders (wilful defaulters) who flee from country to evade clutches Indian law by remaining outside jurisdiction of Indian courts.

Features of Bill

It defines fugitive economic offender (FEO) as any individual against whom warrant for arrest in relation to scheduled offence (enlisted in the this law) has been issued by any court in India, but he leaves or has left India to avoid criminal prosecution or  refuses to return to India to face criminal prosecution.

The onus is on authorities to prove that an individual is a fugitive economic offender. It gives government right to confiscate property of such economic offenders in India and abroad. Its provisions are also be applicable on proxy-owned properties of economic offenders.

It is applicable in cases where total value involved in such economic offences is Rs.100 crore or more. It keeps banks and other financial institutions at Centre and provide help to them recover amount.

It establishes Special Court under the Prevention of Money-laundering Act (PMLA), 2002 to declare a person as FEO. The special court will also appoint ‘administrator’ to oversee confiscated property. It will be responsible for disposing of confiscated property and t property will be used to satisfy creditors’ claims.

It debars fugitive economic offender from defending any civil claim at the discretion of any court including High Court. If prior to the declaration, the alleged FEO returns to India and submits to the appropriate jurisdictional court, proceedings under this Act will cease by law.

Background

There have been several instances of economic offenders (eg Vijay Mallya and Nirav Modi) fleeing country to evade clutches Indian law to remain outside jurisdiction of Indian courts. The absence of such offenders from Indian courts has several deleterious consequences. It hampers investigation in criminal cases, wastes precious time of courts of law, undermines rule of law in India.

Further, most such cases of economic offences involve non-repayment of bank loans thereby worsening financial health of banking sector. Moreover, existing non-coherent civil and criminal provisions in law are not entirely adequate to deal with severity of problem. This bill will provide effective, expeditious and constitutionally permissible deterrent legal teeth to enforcing agencies to ensure that such actions of FEO are curbed.

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Law Ministry approves Fugitive Economic Offenders Bill, 2017

The Union Law ministry has approved Fugitive Economic Offenders Bill, 2017 to empower government to confiscate property of economic offenders and defaulters who flee India.

The Bill seeks to deter economic offenders from evading the process of Indian law by fleeing the country. It was drafted in pursuance of Finance Minister Arun Jaitley’s 2017-18 Budget speech promising legislative changes or even new law to confiscate the assets of such fugitives. The Finance Ministry had prepared the draft Cabinet note on the bill and sought the law ministry’s opinion on it.

Features of Bill

It defines fugitive economic offender as any individual against whom warrant for arrest in relation to economic offence has been issued and person has left the country and refuses to return to India to face criminal prosecution.  The burden of proof for establishing that an individual is fugitive economic offender will be on authorities.

The proposed bill will be applicable in cases where the value of offences is over Rs 100 crore. It will allow Financial Intelligence Unit (FIU), the premier technical snoop wing under the finance ministry, to file an application for declaration of fugitive economic offender for confiscation of their assets.

The bill entrusts responsibility to try such cases to the courts under Prevention of Money Laundering Act, 2002 (PMLA). The bill has provision for appointment of an administrator to dispose off property of fugitive offfender to pay off the creditors. Besides, it has provisions to override provisions of other existing laws.

Law Ministry Suggestions

It wants Saving Clause to be incorporated in the Bill before it is introduced in Parliament. Saving clause provides for certain exception(s) in a statute. It enables repealed law to be in force with respect to some existing rights as provisions of the proposed bill has  bearing on the provisions of existing laws.

The existing laws under which such fugitive economic offender are tried include Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI), Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFESI) and Insolvency and Bankruptcy Code (IBC).

Need for such Law

In the recent past, there have been instances of big-time offenders, including economic offenders, fleeing the country to escape reach of jurisdiction of Indian courts. Most recently, Vijay Mallya, chief of terstwhile Kingfisher Airlines who owes over Rs 9,000 crore to various Indian banks, had fled India to escape legal proceedings in connection with the loans. Such cases have several deleterious consequences as it hampers investigation in criminal cases, wastes precious time of courts of law and undermines the rule of law of the country.

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