Govt Tightens Noose Around Wilful Defaulters With Fugitive Bill

The government is tightening its noose around fraudsters. Reports suggest that the Cabinet has recently approved the Fugitive Economic Offenders Bill. This Bill covers not just those who have managed to escape Indian laws by fleeing the country but even those individuals who violate laws with respect to taxes, black money, benami properties, financial sector and corruption. The Schedule brings all offences under the Indian Penal Code 1860, Prevention of Corruption Act 1988, Securities and Exchange Board of India Act 1992, Customs Act 1962, Companies Act 2013, Limited Liability Partnership Act 2008 and Insolvency and Bankruptcy Code — punishable.

What does this mean?

In order to quickly recover dues from economic offenders — the very recent examples of such offenders being Nirav Modi, Mehul Choksi and Vijay Mallya — the authorities have decided that for someone fleeing the country despite an arrest warrant issued by the judiciary would stand to lose his property across the country as well as abroad. No civil claim on the property by the offender would be entertained. However, in case the offender surrenders or submits for the proceedings, the action would be withdrawn.

Here are the salient features:

*Application before the Special Court for a declaration that an individual is a fugitive economic offender,

*Attachment of the property of a fugitive economic offender,

*Issue of notice by the Special Court to the individual alleged to be a fugitive economic offender,

*Confiscation of the property of an individual declared as a fugitive economic offender resulting from the proceeds of crime,

*Confiscation of other property belonging to such offender in India and abroad, including benami property,

*Disentitlement of the fugitive economic offender from defending any civil claim; and

*An appointment of Administrator to manage and dispose of the confiscated property under the Act.

All cases under the proposed law will be tried under the Prevention of Money Laundering Act (PMLA) and the administrator will sell the fugitive's properties to pay off the lenders.

What's more

The Bill is important given that the existing provisions did not have control over those who fleed outside the jurisdiction of the Indian courts. The Bill also arms a Special Court under the Prevention of Money Laundering Act to declare a defaulter as a Fugitive Economic Offender. It naturally also applies to those who have outstanding dues of Rs 100 crore and above and are absconding to escape a trial. For example, media reports claim that the 41 properties owned by Mehul Choksi's are worth Rs 1217.20 crore. This includes five flats and 17 office premises in Mumbai, one shopping mall in Kolkata, one farmhouse in Alibaug built in four acre and six parcels of land of total area 231 acre in Alibaug, Nasik, Nagpur, Panvel, and Villupuram (Tamil Nadu). One Hardware Park in the name of M/s Hyderabad Gems SEZ situated in Ranga Reddy District of Andhra Pradesh, spreads over 170 acre and valued at Rs 500 crores has also been attached. To help the banks recover the losses, such properties would be taken over under the Bill.

Not the first time

The Fugitive Offenders Bill is not the first of its kind as in the British-era, The Fugitive Offenders Act, 1881 was common and applied to extradition cases. However, post 1950 it did not hold relevance given the spirit of a democratic country. Hence, the new Bill has provisions that apply to modern-day India.