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The Law Ministry of India has given its concurrence to a draft of Fugitive Economic Offenders Bill, 2017 (Bill)that will give powers to the Government to confiscate property of economic offenders and defaulters who flee India. The Bill aims to help confiscate assets of high-value economic offenders absconding from India till they submit to the jurisdiction of the appropriate legal forum. The provisions of the proposed Bill will override other legislations dealing with economic offences.

The Bill defines a ‘fugitive economic offender’ as any individual against whom a warrant for arrest in relation to a scheduled offence has been issued by any court in India, who (i) leaves or has left India so as to avoid criminal prosecution; or (ii) refuses to return to India to face criminal prosecution.

The proposed Bill has been drafted in pursuance of the Finance Minister Mr Arun Jaitley’s 2017–18 Budget speech promising legislative changes or even a new law to confiscate the assets of such fugitives. It seeks to deter economic offenders from evading the process of Indian law by fleeing the country.

The Bill entrusts the responsibility to hear such cases to the Courts under Prevention of Money Laundering Act, 2002 (PMLA).

The proposed Bill will be applicable in cases where the value of offences is over Rs. 100 Crores. It proposes to allow the 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 confiscation of their assets. Section 10, Declaration of Fugitive Economic Offender under its ambit directs the Special Court to confiscate the proceeds of the crime situated in India and any other proceeds of the offender. For that purpose, the Bill mentions under sub-section 10(2) that the confiscation order of the Special Court, to the extent possible, identify the property that constitutes the proceeds of the crime which are to be confiscated and, in case such properties cannot be identified, quantify the value of the proceeds of the crime. Additionally, the Special Court is barred from confiscating any property where any other person, apart from the economic offender, has an interest.

The Law Ministry of India has suggested that a “Saving Clause” be inserted since the provisions of the proposed Bill, Saving Clause provides for certain exception(s) in the statute. The proposed Bill provisions will have a bearing on the provisions of existing laws. The existing laws under which such offenders are tried include Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFESI), Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI) and Insolvency and Bankruptcy Code (IBC).

The proposed Bill will ensure prevention of corruption and the recovery of assets or proceeds of corruption. In the past, there have been instances of economic offender such as Vijay Mallya. The Government is making efforts to extradite Indian businessman Vijay Mallya from the United Kingdom. He owes over Rs. 9,000 Crore to various Indian Banks and had fled India to escape legal proceedings in connection with the loans.

The Government by adopting such legislation, envisages the proposed Bill to be economically viable and ensures to penalize defaulters of the financial system of India.

Taruna Verma

Senior Associate

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