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FUGITIVE ECONOMIC OFFENDERS ACT 2018 AS A DETERRENT TO CORRUPTION



SUBMITTED BY:

HIMANSHU AGARWAL


FUGITIVE ECONOMIC OFFENDER-MEANING-S 2(F)

  • A ‘fugitive economic offender’ (FEO) as a person against whom an arrest warrant has been issued by any Indian court for committing a ‘Scheduled Offence’ and;

  • He has either left India to avoid criminal prosecution, or being abroad, refuses to return to India to face criminal prosecution.

  • The Act adds a Monetary threshold that the value of such Scheduled Offence must be at least Rs. 100 crores.

OFFENCES LISTED UNDER THE SCHEDULE OF THE ACT

  • Counterfeiting, forgery, fraudulent removal of property and cheating under the Indian Penal Code, 1860.

  • Dishonor of cheque under the Negotiable Instruments Act, 1881;

  • Offences under the Reserve Bank of India Act, 1934;

  • Taking of gratification to influence a public servant under the Prevention of Corruption Act, 1988;

  • Money laundering offences under the Prevention of Money Laundering Act, 2002;

  • Fraud under the Companies Act, 2013; and

  • Defrauding creditors under the Insolvency and Bankruptcy Code, 2016.

The Fugitive Economic Offenders Act, 2018 (FEO) Objectives;

  • Deter fugitive economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian courts, to preserve the essence and effectiveness of the rule of law in India and for matters connected therewith or incidental thereto.

  • Aims on confiscating the offender's property not only within the territorial limits of India but also outside India as well, acquired both from legitimate as well as illegitimate means.

  • The FEO extends to the whole of India. It came in to effect on 21 April 2018. It applies to any individual who is, or becomes, a fugitive economic offender on or after the above date.

  • Fugitive Economic Offender “Fugitive economic offender” means 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.

  • Proceeds of Crime “Proceeds of Crime” means any property derived or obtained, directly or indirectly, by any person from any criminal activity relating to a scheduled offence or the value of such property or where such property is outside the country, then the property equivalent in value held within the country.

  • Section 2(1) (m), the FEO is applicable when the amount involved in the offence or offences is one hundred crore rupees or more and the offence is specified in the schedule.

  • Specified offences under the (i) the Indian Penal Code, (ii) the Negotiable Instruments Act, 1881, (iii) the Reserve Bank of India Act, 1934, (iv) the Central Excise Act, 1944, (v) the Customs Act, 1962, (vi) the Prohibition of Benami Property Transactions Act, 1988, (vii) the Prevention of Corruption Act, 1988, (viii) the Securities and Exchange Board of India Act, 1992, (ix) the Prevention of Money Laundering Act, 2002, (x) the Limited Liability Partnership Act, 2008, (xi) the Foreign Contribution (Regulation) Act, 2010 (xii) the Companies Act, 2013, (xiii) the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.The Insolvency and Bankruptcy Code, 2016 and (xv) the Central Goods and Services Tax Act, 2017.


  • The Act provides for the Director can make an Application before the Special Court for a declaration that an individual is a fugitive economic offender on a reasonable belief;

  • Act enables the attachment of the property of a fugitive economic offender;

  • Issue of a notice by the Special Court to the individual alleged to be a fugitive economic offender Confiscation of the property of an individual declared as a fugitive economic offender resulting from the proceeds of crime;

  • The Act states that all the rights and title in the confiscated property shall, from the date of the confiscation order, vest in the Central Government, free from all encumbrances and disentitles the fugitive economic offender from defending any civil claim.

  • It provides the appointment of an Administrator to manage and dispose of the confiscated property under the Act.

  • If at any point of time in the course of the proceeding prior to the declaration, however, the alleged Fugitive Economic Offender returns to India and submits to the appropriate jurisdictional Court, proceedings under the proposed Act would cease by law.

  • All necessary constitutional safeguards in terms of providing hearing to the person through counsel, allowing him time to file a reply, serving notice of summons to him, whether in India or abroad and appeal to the High Court have been provided for in the act so as to maintain the constitutionality of the Act and not to breach the general law and rights of the accused as reiterated by the courts through judicial pronouncements from time to time.





THE POSITIVITIES OF FUGITIVE ECONOMIC OFFENDERS ACT

  • The Act helps the banks and other financial institutions to achieve higher recovery from financial defaults committed by such fugitive economic offenders, by improving the financial health of such institutions.

  • The Act has provides for a ‘Special Court’.

  • The feature of the Act is that it permits the Central Government to confiscate the property of economic offenders absconding from India until they submit to the jurisdiction of the appropriate legal forum.

  • The Act provides for confiscation of property upon a person being declared an FEO. This differs from other laws, such as Criminal Procedure Code, 1973, where confiscation is final two years after proclamation as absconder.

  • The FEO provides for the appointment of an administrator to manage and dispose of the confiscated property in order to raise funds which would be utilized for payment to the creditors within a time bound period.

  • The FEO is expected to re-establish the rule of law as the fugitive economic offender will be forced to return to India and face trial for his offences.

The Fugitive Economic Offenders Act does:

  • Provides for a method of deterrence for those fraudsters who commit crimes in India and hide in a safe haven in a foreign country.

  • The act has definitely made an improvement in the criminal prosecution scenario since it is very rampant for economic offenders to flee the country and take advantage of the loopholes in the extradition process of the country.

  • This act empowers the authorities to confiscate and sell the properties in question to realise the money in default in the fastest possible method.

  • The act has also included within its ambit, the properties which are situated in abroad as well those which are a part of the benami transactions, thus hastening the process of recovery and realisation.

  • Further in order to avoid any kind of delays due pendency of cases, the act prevents the FEO from filing any civil claim or defend any claim before the Courts.

  • To balance such prevention, it has been endowed as a discretionary power on the Courts or Tribunals in India.

  • Thus "any Court or tribunal in India, in any civil proceeding before it, may, disallow such individual from putting forward or defending any civil claim".

  • The act also further refers to the creation of a Special Court under the Prevention of Money Laundering Act, 2002 to provide speedy justice to the financial i