Swindlers like Nirav Modi beware: Cabinet approves promulgation of Fugitive Economic Offenders Ordinance

cabineta_45983718

The Union Cabinet on Saturday approved to promulgate an Ordinance to crack down on corporate defaulters who refuse to return to India to avoid investigation by Indian authorities.

The Fugitive Economic Offenders Bill was approved by the Union Cabinet on March 1, 2018.

The Bill was intended to lay down measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts.

It seeks to confiscate properties of economic offenders - like Nirav Modi and Vijay Mallya - who have left the country to avoid facing criminal prosecution.

The cases where the total value involved in such offences is Rs 100 crore or more, will come under the purview of this Bill, the Cabinet had said earlier.

Moneycontrol had first reported that the government will introduce such a bill.

In September, the Union Law ministry had approved the finance ministry’s draft of Fugitive Economic Offenders Bill, 2017, and now the ordinance has been introduced by the Cabinet as part of the Modi government’s response to the PNB scam.

The Bill was expected to be introduced in Parliament in second half of the Budget session, but the session was a washout in the backdrop of various reasons including the PNB scam.

The proposed law comes in the backdrop of the alleged Rs 11,400 crore defrauding of  Punjab National Bank(PNB)—India’s second largest public sector bank—by diamond merchant Nirav Modi and his uncle Mehul Choksi.

The Ordinance is expected to re-establish the rule of law with respect to the fugitive economic offenders as they would be forced to return to India to face trial for scheduled offences. This would also help the banks and other financial institutions to achieve higher recovery from financial defaults committed by such fugitive economic offenders, improving the financial health of such institutions.

It provides for confiscating assets even without conviction and paying off lenders by selling off the fugitive's properties.

Such economic offenders will be tried under Prevention of Money Laundering Act (PMLA).

The ordinance defines a fugitive economic offender as a person against whom an arrest warrant has been issued for committing offence like counterfeiting government stamps or currency, cheque dishonour for insufficiency of funds, money laundering, and transactions defrauding creditors.

According to the Ordinance, a director or deputy director (appointed under the PMLA, 2002) may file an application before a special court (designated under the 2002 Act) to declare a person as a fugitive economic offender.
The application will contain the reasons to believe that an individual is a fugitive economic offender.

Besides, the application will have information about his whereabouts, a list of properties believed to be proceeds of a crime for which confiscation is sought, a list of benami properties or foreign properties for which confiscation is sought, and a list of persons having an interest in these properties.

Upon receiving the application, the special court will issue a notice to the individual, requiring him to appear at a specified place within six weeks. If the person appears at the specified place, the special court will terminate its proceedings under the provisions of the Bill.

Any property belonging to the fugitive economic offender may provisionally be attached without the prior permission of the special court, provided that an application is filed before the court within 30 days.

Appeals against the orders of the special court will lie before the High Court.

(With inputs from PTI)