White collar crimes are not new in India, they continue to occur from time to time reminding us that there are loopholes in our justice system that can be exploited and sometimes, people can get away with just about anything. With the liberalization of the economy in 1991, India faced more and more economic offences as the influx of money into the country increased, to tackle this growing problem an act was introduced by the then incumbent government known as – The Prevention of Money Laundering Act, 2002 (PMLA). This gave the government the authority to seize and confiscate properties obtained by laundered money but that was all subject to the process of criminal prosecution. In simpler terms, the offender is able to flee from the jurisdiction of the Indian courts then his or her properties cannot be seized and persecuted. It became a farcical legislative remedy to the growing ailment of economic offences.
Thus, when the recent scams involving Nirav Modi and Mallya came into light, people were outraged by the fact that government is unable to bring the perpetrators to justice or even confiscate their properties acquired by dubious means to recover some of the money. The onus was on the incumbent government to bring about a legislative approach that tackles this problem comprehensively and without any concessions. The incumbent government introduced an ordinance – “The Fugitive Economic Offenders Ordinance, 2018”. This ordinance was approved by the union cabinet and then promulgated by the President on April 21st, 2018. It is important to keep in mind that the Bill was introduced in Lok Sabha on March 12, 2018, and is currently pending.
This ordinance is brought with a clearly defined approach in mind that is to make sure that no economic offender can leave the country and even if they leave their assets can be seized and confiscated by the government without any hiccups, for this reason, the ordinance vests many special powers to the courts and the directors. The highlights of the ordinance are described below –
Who is a Fugitive economic offender?
The ordinance defines a fugitive economic offender as an offender whose offence is worth more than 100 crores and an arrest warrant has been issued on his or her name. The ordinance also goes on to add specific details about what constitutes a fugitive economic offender under this ordinance –
- A person who has left the country to avoid prosecution.
- Refuses to return to the country to face the prosecution.
The offences as stated in the schedule include –
- Cheque Dishonour.
- Transactions defrauding creditors.
- Money laundering.
- Counterfeiting government stamps or currency.
Any Director or Deputy Director appointed under the PMLA, 2002 has been empowered to file an application before a special court to declare a person as a fugitive economic offender. The application can be made on various grounds stated in the ordinance such as reasons to believe that an individual is a fugitive economic offender or any information about the person’s whereabouts, the authorized person suspects that a number of properties are acquired by means which constitutes criminal offence and hence confiscation of them are sought and so on.
After receiving this application the Special Court (ACT, 2002) is to release a notice to the individual to appear in a specific place on a date which is not less than six weeks from the issuance of the notice. The notice will also state that failure to adhere to the directives of the notice the accused will be declared as a fugitive economic offender.
The powers of the Director
The director or the authorised officer is vested with the power of a Civil Court. He or She can attach any property to the list without the prior permission of The Special Court, provided they file the attachment before the court within 30 days. The officer is also empowered to search and detain any person the officer has reasons to believe to be involved in crimes mentioned in the schedule, provided that the detained person be produced before a Magistrate Court or to a higher ranking official than the detaining officer within the next 24 hours. The officer can also direct to search a place or seize documents.
Failing to adhere to the notice issued by the Special court will lead to confiscation of –
- Anything which deems as proceeds of the crime.
- Benami properties in India and abroad.
- Other properties in India and aboard.
After, the confiscation all rights and titles will rest with the Central Government and free from any claims made by other parties on that property. An administrator is to be appointed by the Central government for the purpose of managing and disposal of these assets.
This is indeed a commendable legislative action taken by the Modi government to curb economic offences but how successful this approach will remain a question as confiscation of foreign properties are outside the jurisdiction of the Indian courts who will be issuing such directives. Although the ordinance empowers Indian courts to issue applications to the concerned authorities in the foreign countries, the feasibility of such an approach becoming effective is close to none. Also, the 100 crore slab is a bit arbitrary in nature as the issue of proportionate justice gets somewhat blurred here, by introducing this slab the government may give off a wrong impression that it is somewhat fine to commit fraud as long as it is under 100 crore INR.
While every step taken in this direction is bound to have certain limitations, the Government has taken strides in bringing the perpetrators to justice. The Fugitive Economics Ordinance is certainly a step towards that direction. Even earlier, the Benami Property Act, for example, was never notified by the Congress government and hence couldn’t be implemented. With such laws now being passed, notified and implemented, one can hope for a positive change.