Introduction:
In recent times, economic offences were increasing. These offences shall make an adverse impact on the country. The person who is responsible for such offences fled from that particular country to evade from the legal process is called as the fugitive economic offender. The existing law did not contain any specific provisions to deal with such offenders. So there is a need for a new legal framework to prosecute such offenders. Fugitive Economic Offenders should be confined and prosecuted.
A step against the fugitive economic offenders was taken by the Lok Sabha on 19th July 2018 passed a bill that empowers high authorities to sequester the assets of the offenders. Later this bill was passed by the parliament on 25th July 2018[1]. Thus Fugitive Economic Offender Act came into force all over India except in Jammu and Kashmir. In this article, the author deals with the Fugitive Economic Offenders Act and some laws relating to such white-collar crimes.
Laws to Convict an Offender
Under Section 420 of the Indian Penal Code, the offenders are punishable with imprisonment and also liable to fine. The offender is punishable when he/she fraudulently preventing the debts which are available for creditors (Section 422 of Indian Penal Code). Under the Prevention of Money Laundering Act, if a person gains an asset by doing any criminal activity, he/she is punishable with rigorous imprisonment and he is liable to fine up to 5 lakhs. The authority had the right to decide whether the seized property is a money laundering or not.
For high economic offenders, surely there will be Benami behind them. Being a Benami is punishable under the Benami Transactions (Prohibition) Act. Such Benami’s properties are also grabbed by the authorities. Mostly the economic offenders involve in fraudulent activities while doing their business. Under the Companies Act, a person is liable for fraudulent conduct of business. These laws are not sufficient to convict high economic offenders. Therefore the Fugitive Economic Offenders Act was introduced.
Fugitive Economic Offender Act (FEOA)
Under Section 4 of the said Act, the Director has the power to apply in the Special Court and declare an individual as a Fugitive Economic Offender. The authorities who are responsible for the Prevention of Money Laundering Act shall be the authorities for this FEOA. If a person is declared as Fugitive Economic Offender, the authorities have the right to seize their property or any evidence regarding the crime under Section 8 of the said act. The Central Government has the right to sell the confiscated property. The property which is confiscated by the authorities should not be disposed of for a period of 90 days from the date of order (Section 15 of FEOA).
Under section 9 the authority can search the offender and should produce before the Magistrate within 24 hours excluding the travelling time. Here a female should not be searched by any male authorities. The Special Court may issue a notice to such offender and he/she should appear before the Court within the period of 6 weeks from the date of issue of the notice (Section 10 of FEOA). After the Special court’s order, the appeal should be made within 30 days. This law did not bar any other laws which were in force[2].
Reasons Behind Enforcement of FEOA
Some persons like Vijay Mallaya, Nirav Modi act as a major reason for the enforcement of the said act. Vijay Mallaya is an owner of a Kingfisher Company which is famous in beer and airlines. He owes nearly 9000 crores from the banks in India[3]. As there is a downfall in his business, he can’t repay the loan. Without repaying his debts, he fled to the United States and denied to attend any of the court proceedings.
Fraudulently Nirav Modi acquired the Letters of Undertaking from one of the Punjab National Banks branches. Later the bank noticed about Rs 11,400 crores scam. As he was liable for that activity, he fled from the country before the complaint was lodged to CBI[4]. Here the scam amount is more and the government cannot convict these persons with simple fraudulent laws. So Fugitive Economic Offenders Act was introduced which helps the government to convict these types of persons easily.
Importance of FEOA
Before the introduction of such an act, the number of fraud cases was increasing which creates a heavy loss to the banking sector. The laws such as the Prevention of Money Laundering Act (PMLA), Benami Properties Transactions Act, Companies Act, Indian Penal Code, and Code of Criminal Procedure were insufficient to control the white-collar crimes. Thus the Fugitive Economic Offender Act enforced in India. This act helps the government to deal with the offender who is outside India and refused to return. It directs the investigating officers to confiscate the property of the fugitive offender.
Under this act, only the assets of the offender can be confiscated before conviction. This bill also ensures the return of the fugitive economic offender and they should stand before the court of law. This act is considered to be a supplement of the Prevention of Money Laundering Act. This act is applicable to all the persons who commit offence after the enforcement of such acts.
Conclusion
Earlier, the laws relating to fraudulent cases were time-consuming and it may lead to blockades in the investigation. So the financial health of the banks was affected. The introduction of the Fugitive Economic Offenders Act helps the Special Court to take speedy decisions regarding the crime which may also help to balance the economy of the country effectively.
References:
[1] Parliament passes Fugitive Economic Offenders Bill, The Economic Times, July 25,2018
[2] https://www.indiacode.nic.in/handle/123456789/4035?view_type=browse&sam_handle=123456789/1362
[3] https://lapaas.com/vijay-mallya-case-study/
[4] Nirav Modi case: How PNB was defrauded of Rs 11,400 crore, Business Today, Mrach15, 2018
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