After the Nirav Modi–PNB fraud worth more than ₹12,000 crore, the Union Cabinet has approved the Fugitive Economic Offenders Bill, 2017.

After it was known that Vijay Mallya had fled the country to avoid being arrested for economic fraud, Finance Minister Arun Jaitley had announced in last year’s Union Budget that the government would soon bring about a law that would allow the state to take possession of properties belonging to such offenders.

Now, after the Nirav Modi–PNB fraud worth more than ₹12,000 crore, the Union Cabinet has approved the Fugitive Economic Offenders Bill, 2017.

What is the Bill?

The Bill aims to stop economic offenders who leave the country to avoid due process. Offences involving amounts of ₹100 crore or more fall under the purview of this law.

Economic offences are those that are defined under the Indian Penal Code, the Prevention of Corruption Act, the SEBI Act, the Customs Act, the Companies Act, Limited Liability Partnership Act, and the Insolvency and Bankruptcy Code.

Who is a ‘fugitive economic offender’?

According to Section 4 of the law, a ‘fugitive economic offender’ is “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.”

How is a person declared an offender?

A Director, appointed by the central government, will have to file an application to a Special Court to declare a person as a ‘fugitive economic offender’.

Under Clause (2) of Section 6, the application must contain:

“(a) reason/s for the belief that an individual is a fugitive economic offender;

(b) any information available as to the whereabouts of the fugitive economic offender;

(c) a list of properties or the value of such properties believed to be the proceeds of crime, including any such property outside India for which confiscation is sought;

(d) a list of properties owned by the person in India for which confiscation is sought;

(e) a list of persons who may have an interest in any of the properties listed under sub-clauses (c) and (d).”

The Director has the power to attach any property the accused holds.

What does the offender have to do?

The Court will issue a notice to the person named a ‘fugitive economic offender’. Within six weeks from the date of notice, the person will have to present themselves at “a specified place at a specified time”. If the offender fails to do so, they will be declared a ‘fugitive economic offender’ and their properties as listed in the Director’s application will be confiscated.

Once property is confiscated, can the offender file a civil claim?

No. Section 11 of the Act disqualifies those declared as offenders from either filing or defending a civil claim in court.

What happens to the properties?

The Special court will appoint an ‘administrator’ to oversee the confiscated property. This person will be responsible for disposing of the property as well, and the property will be used to satisfy creditors’ claims.

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