Fugitive Economic Offenders Act 2018 – Why is it Necessary?

Fugitive economic offenders act 2018 upsc ias gk essay

Recently, there have been many instances of Enforcement Directorate (ED) filing charge sheet against economic offenders under the Fugitive Economic Offenders Act, 2018. In this scenario, it is essential to understand the need, features, benefits, and concerns regarding the Fugitive Economic Offenders Act, 2018.

What is the need for Fugitive Economic Offenders Act? (Benefits)

Rule of Law: There have been many instances of economic offenders escaping the jurisdiction of Indian courts anticipating the criminal proceedings, or during the pendency of criminal proceedings. (ex- Vijay Mallya case). The absence of such offenders from Indian courts has many ramifications like:

  • It affects investigation in criminal cases,
  • It consumes the precious time of courts of law,
  • It undermines the rule of law in India.

Economy: Non-repayment of bank loans affects the financial health of the banking sector in India leading to Non-Performing Assets which affect the economy as a whole.

Ineffective laws: The current civil and criminal provisions in law are not enough to deal with the severity of this issue. Hence it is essential to provide an effective, quick, and constitutionally permissible mechanism to prevent such actions.

Confiscation without conviction: The law adopts the principle of asset confiscation without conviction for corruption-related cases under provisions of the United Nations Convention against Corruption which India ratified in 2011.

  • The United Nations Convention against Corruption is the only legally binding universal anti-corruption instrument.
  • It was adopted by the General Assembly in 2003 and entered into force in 2005.
  • The Convention encompasses 5 major areas: preventive measures, criminalization and law enforcement, international cooperation, asset recovery, and technical assistance and information exchange.

What are the existing laws for seizing Assets?

Most probable and repeated topics of upsc prelims

What are the salient features of Fugitive Economic Offenders Act, 2018?

Definition of fugitive economic offender: A person can be named an offender under this law if there is an arrest warrant issued against him or her for committing economic offences involving at least  Rs. 100 crore or more and has fled from India to escape legal action.

Economic offences: are the offences under the following laws:

  • Negotiable Instruments Act, 1881
  • Reserve Bank of India Act, 1934
  • Central Excise Act, 1944
  • Customs Act, 1962
  • Prohibition of Benami Property Transactions Act, 1988
  • Prevention of Money Laundering Act, 2002 and
  • Indian Penal Code

Procedure:

  • The investigating agencies have to submit an application in a Special Court under the Prevention of Money-Laundering Act, 2002 containing information regarding the properties to be confiscated, and any details about the person’s whereabouts.
  • The Special Court will issue a notice for the person to appear at a particular place and date at least 6 weeks from the issue of notice.
  • Proceedings will be ended if the person appears. If not, the person would be declared as a Fugitive Economic Offender depending on the evidence submitted by the investigating agencies.
  • The person who is declared as a Fugitive Economic Offender can challenge the accusation in the High Court within 30 days of such declaration.

Attachment and Confiscation of property:

  • Attachment of the property of a fugitive economic offender.
  • Confiscation of the property or even the proceeds of the crime from the fugitive economic offender.
  • The property can be located in India or abroad including benami property.
  • Deprivation of the rights of the fugitive economic offender from defending any civil claim and,
  • Appointment of an administrator to manage and dispose of the confiscated property under the act in order to pay off the lenders (banks or others).

Overriding effect: This law will have an overriding effect over all other pieces of legislation.

What are the Challenges in implementing the law?

  • Impunity: The Rs. 100 crore threshold would allow many other offenders to go free with impunity.
  • Judicial review: The blanket ban on offenders opposing the confiscation of their properties through civil suits may not survive the judicial review. Because, an absolute ban violates the basic principles of justice and fair play, besides being in violation of the Indian Constitution.
  • Selling the property of a fugitive economic offender without adjudicating after a proper trial = violation of the Constitutional principle, that is, “one is considered innocent unless proven guilty”.
  • Asset value and buyers: Decrease in value of seized assets and finding suitable buyers are some other concerns around the law.

What is the way forward?

Time limits:

  • The law should provide for time limits for disposal and encashment of confiscated property.
  • Separate time limits should be provided for movable-immovable property and running business.
  • Any properties which are vulnerable to valuation loss over a period of time should be disposed of quickly.

Legal expertise: The capacity of our legal system needs to get better. The problem of lack of time, and domain knowledge and expertise need to be taken care of.

Rules and enforcement:

  • The government needs to focus a lot on how the rules are framed in a manner that they reflect the true spirit of the law.
  • The government should reach out to various countries with whom we don’t have any arrangement for the enforcement of the provisions under the law.
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