Beating the Rhetoric
In the last two decades the character of crimes in India has change considerably. While traditional crimes continue to hold space in public narratives, gradual liberalization has also led to the proliferation of white collar crimes. White collar crimes are often financial in nature and swindle the government and country of crores of rupees. The Harshad Mehta stock exchange scam in mid 1990’S, was India’s first tryst with the world of financial crimes. Mehta had gamed the stock system and Indian banks to make himself a princely sum in those days. For the first time, India came face to face with a new set of challenge. And since then financial crimes have got bigger and more serious.
In the late 2000’s the owner of the Kingfisher group Vijay Mallya left behind a crumbling empire in debt while finding home in England. Repeated attempts of the Government to bring Mallya back have met with diplomatic and legal entanglements. In 2018 , however the biggest news came when Nirav Modi and Mehul Choksy left the country after allegedly defrauding Punjab National Bank of hundreds of crores, by defaulting on loan payments and alleged issuance of fake Letters of Undertaking (LoU).
The government has risen to the occasion by bringing in the Fugitive Economic Offenders Bill, 2018 in the Lok Sabha. Once this bill is passed it will ensure that the government has legal sanctity to recover from any person who has allegedly defrauded the country and scooted. The salient features of the Bill make this intent absolutely clear. The bill would seek to confiscate properties of those who flee India after committing an economic offence. This is the first time; the government has been given such a power to recover dues from those who flee the country.
In the Bill, fugitive economic offender has been defined as a person against whom an arrest warrant has been issued for committing any offence as listed in the schedule of the Act. The Bill further defines an economic offender as someone who has committed anyone of these crimes (i) left the country to avoid facing prosecution, or (ii) refuses to return to face prosecution. Some of the offences listed in the schedule are: (i) counterfeiting government stamps or currency, (ii) cheque dishonour for insufficient funds, (iii) money laundering, and (iv) transactions defrauding creditors. The Bill allows the central government to amend the schedule through a notification.
The bill has notified the process through which the system can be kick-started. If any individual has committed an economic crime or is an economic offender then a director or deputy director (appointed under the Prevention of Money-Laundering Act, 2002) may file an application before a special court (designated under the 2002 PMLA Act) to declare a person as a fugitive economic offender. The application will contain the following sections. The first section would pertain to the reasons to believe that an individual is a fugitive economic offender; the second section would pertain to any information about his whereabouts. The third section would be a list of properties believed to be proceeds of a crime for which confiscation is sought, while the fourth section would contain a list of benami properties or foreign properties for which confiscation is sought. Finally the application would contain a list of persons having an interest in these properties.
Once the application is received by the special court, the court in turn will issue a notice to the individual: (i) requiring him to appear at a specified place within six weeks, and (ii) stating that a failure to appear will result in him being declared a fugitive economic offender. If the person appears at the specified place, the special court will terminate its proceedings under the provisions of this Bill, while those who fail to appear before the Court will by their absence kick- start proceedings under the Act against themselves.
After hearing the application, the special court may declare an individual as a fugitive economic offender. It may confiscate properties which: (i) are proceeds of crime, (ii) are benami properties in India or abroad, and (iii) any other property in India or abroad. Upon confiscation, all rights and titles of the property will vest in the central government, free from all encumbrances, such as any charges on the property. Once the property is confiscated the Bill confers the right to the central government to appoint an administrator to manage and dispose of these properties.
This Bill gives the director or deputy director the power to attach any property mentioned in the application with the permission of a special court. Further, these authorities may provisionally attach any property without the prior permission of the special court, provided that they file an application before the court within 30 days. The attachment will continue for 180 days, unless extended by the special court. If at the conclusion of proceedings, the person is not found to be a fugitive economic offender, his properties will be released.
The Bill allows any civil court or tribunal to disallow a person, who has been declared a fugitive economic offender, from filing or defending any civil claim. Appeals against such orders from the Special Court will lie with the jurisdiction of the High Court. This Bill is indeed a landmark step towards combating economic offences in India in the long run.
( Views expressed are personal)