The Fugitive Economic Offenders Ordinance, 2018, that has come in to force following the assent by the President Ram Nath Kovind is seen as a key step against fraud and corruption in the country.
The ordinance, as per a release by the Union Finance Ministry “lays down the measures to empower Indian authorities to attach and confiscate proceeds of crime associated with economic offenders and the properties of the economic offenders.”
The new law will prevent offenders from fleeing the country in order to escape the legal action by the Indian judicial system.
The need of the new law arise after it emerged that several high net worth individuals (HNI) fled the country in order to escape from any legal action against them. This vulnerability of our current system was particularly highlighted when economic fugitives like Vijay Mallya and Nirav Modi fled the country in order to escape legal proceedings for financial offences.
As a result, a five-member committee was formed under the Central Board of Direct Taxes (CBDT) to oversee the implication of taxes on HNIs who leave the country to settle abroad.
The government on its part then announced during 2017-18 budget that it is planning to introduce amendments or a new law enabling authorities to take over assets of the absconders unless they submit themselves to the authorities.
Following this, the bill was introduced in the Lok Sabha in March. However, in view of the adjournment of the lower house, the ordinance was proposed.
As per the Union Finance Ministry release, the ordinance makes provision for a court (‘Special Court’ under the Prevention of Money-laundering Act, 2002) to declare a person as fugitive economic offender. But only cases that involve a minimum amount of Rs 100 crore will come under it.
(i) making an application before the Special Court for a declaration that an individual is a fugitive economic offender.
(ii) attachment of the property of a fugitive economic offender and proceeds of crime.
(iii) issue of a notice by the Special Court to the individual alleged to be a fugitive economic offender.
(iv) confiscation of the property of an individual declared as a fugitive economic offender or even the proceeds of crime.
(v) disentitlement of the fugitive economic offender from defending any civil claim.
(vi) appointment of an Administrator to manage and dispose of the confiscated property under the Act.
The new development is expected to thwart the attempts by the economic offenders to flee from the country to escape legal action.