The troubles for absconding diamond businessman Nirav Modi are likely to escalate by several notches once Parliament re-convenes on 5 March. In all probability, Parliament will pass the Fugitive Economic Offenders Bill, 2018, which will give Government of India the power to confiscate any property that is owned by a fugitive offender and also bar any promoter or shareholders or managerial personnel from bringing any civil claim against this action. The bill, which had already been given concurrence by the Ministry of Law and Justice in September last year, is likely to be passed in the March session. The contours of the bill were first discussed in the 2017-2018 Budget by Arun Jaitley, who had promised a new law to deter economic offenders from evading the process of Indian law by fleeing the country.
Officials aware of the proceedings said that the proposed law will only be applicable in cases where the value of offences is over Rs 100 crore, so that the special courts that will be trying these cases are not overburdened and a time-bound judgment is delivered.
In all likelihood, the Financial Intelligence Unit (FIU), which works under the Ministry of Finance, will act as the nodal agency to file an application in front of the court for declaring an individual/individuals fugitive economic offender and seek confiscation of their assets.
As of now, such offenders, inluding Vijay Mallya and Lalit Modi, are tried under different laws like 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) and Prevention of Money Laundering Act (PMLA). However, the provisions of this new law will override provisions of other existing laws.
“Even though it appears like a draconian law, all the necessary constitutional safeguards in terms of providing a proper hearing to the person through his counsel, allowing him time to file a reply, serving notice of summons to him and the provision to approach the High Court have been provided for in the bill,” an official said. The bill has provisions for appointment of an administrator to dispose of the property in order to raise funds which would be then be paid to the creditors within a time bound period.
In the recent past, there have been instances of big-time offenders, including economic offenders such as Mallya, the 61-year-old chief of the erstwhile Kingfisher Airlines who owes over Rs 9,000 crore to various Indian banks, fleeing India to escape legal proceedings.
As per the draft law, a “fugitive economic offender” means any individual against whom a warrant for arrest in relation to an economic offence has been issued and the person has left the country and refuses to return to India to face criminal prosecution.
Once a declaration of an economic offender is made, any property that is a proceed of crime that the person is accused of, as well as any property owned by such person in India, shall stand confiscated and vested in the Government of India free from all encumbrances. Second, at the discretion of any court, such person or any company where he is a promoter or key managerial personnel or majority shareholder, may be disentitled from bringing forward or defending any civil claim.
However, if at any point of time in the course of the proceeding prior to the declaration, the alleged Fugitive Economic Offender returns to India and submits to the appropriate jurisdictional court, proceedings under this Act would cease by law.
“Once the accused flees, it hampers investigation in criminal cases, it leads to wastage of precious time of courts of law and undermines the rule of law in India, especially in the international forum. This kind of conduct has also damaged the banking sector and the existing civil and criminal provisions were not proving to be adequate in dealing with the severity of the problem. The existing provision, where confiscation could have been carried out, was more of a punishment for the offence committed and not strictly a deterrent for any absconding accused, hence we came up with a new law,” the official said.