The rising instances of white collar crimes and offences have led the Modi Government to draft “Fugitive Economic Offenders Bill 2017”. This Bill is extremely significant and is a step towards protecting the Nation’s financial interest, especially in evasion cases such as of Vijay Mallya and Nirav Modi who have defaulted on repaying loans worth thousands of crore and have fled the country.
Union Law Ministry has approved “Fugitive Economic Offenders Bill” to empower the government to confiscate the 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
The bill was drafted in pursuance of Finance Minister Arun Jaitley’s 2017-2018 Budget speech, promising legislative changes or even law to confiscate the assets of such fugitives. Finance Ministry had prepared the draft and sought Law Ministry’s opinion on it.
Who according to the bill, is classified as Fugitive Economic Offender? The Bill defines ‘Fugitive Economic Offender’ as an individual against whom warrant for arrest in relation to the economic offence has been issued and the person has left the country and refuses to return to India to face criminal prosecution. The burden of proof for establishing that the individual is a Fugitive Economic Offender rests on the 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 the declaration of Fugitive Economic Offender for the confiscation of their assets.
Bill entrusts such cases to be tried under “Prevention of Money Laundering Act 2002 (PMLA)”. The Bill has provision for appointment of an administrator to dispose of property of fugitive offender to pay off the creditors. Besides, it has provisions to override provisions of other existing laws.
The Bill mentions two consequences for Fugitive Economic Offenders:
- Any property involved in the offence that the individual is blamed for as well as any property owned in India by a fugitive offender will be confiscated. Such properties will become vested with the government, free from all encumbrances.
- If such a person is a promoter/key managerial personnel/shareholder of any company, he/she will not be allowed to present or defend any civil claim.
The draft bill covers a wide range of offences including wilful loan defaults, cheating and forgery, forged or fraudulent document of electronic records, duty evasion and non-repayment of deposits among others. The Union Law Ministry wants “Saving Clause” to be incorporated in the Bill before it is introduced in Parliament. Saving clause provides for a certain exception(s) in a statute. It enables repealed the 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)”.
Modi government is addressing the problem of NPA’s it received as a legacy from the previous corrupt Congress government, which are being recognized only recently by RBI Governor Urjit Patel. Earlier NPA accounts were not shown, evergreening was done and NPA’s were hidden by restructuring mechanisms such as corporate debt restructuring.
Modi government has carried out various reforms for rebuilding the strength of public sector banks since it came to power like Integration of State Bank of India and Recapitalisation, passing of new Insolvency and Bankruptcy code for time-bound recovery of loans.
Modi government is planning to bring law to tighten the noose on fraudsters like Nirav Modi and Mehul Choksi. The government is likely to introduce the “Fugitive Economic Offenders Bill” in the second part of Budget Session commencing on March 6. The Bill will enable the government to impound and sell assets of absconding corporate defaulters and also allow recovery of dues through special court.
Once implemented this bill will enforce strict adherence to the law by curbing instances of economic defaults and controlling economic losses the country has to bear due to such offences.
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