Sources:

https://www.livemint.com/Companies/fjzxN4pbr0JSTPM2tdBSjL/Fugitive-Economic-Offenders-Bill-needs-tweaks-Analysts.html

http://www.thehindu.com/news/national/the-hindu-explains-the-fugitive-economic-offenders-bill-2017/article22908904.ece

Mentor’s Comments

      Highly probable question as this is an important development and was in the news for over 2 months. The questions is simple and straightforward. Start with mentioning what is fugitive economic offender. In the main body part ,first explain the need of the Act (mention examples of Mallya and Nirav modi), In the second part mention the concerns associated with the Act and conclude the answer by mentioning some steps needed to improve the situation.

 

Model Answer

Fugitive Economic Offender is 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

Why we need this Act?

1. Cases of economic offenders fleeing the jurisdiction of Indian courts and settling abroad with an aim to obstruct justice have been rampant. Recent cases of Nirav Modi and Mallya point out the lacunae in the existing laws. These have far reaching implications.
2. There have been several instances of economic offenders fleeing the jurisdiction of Indian courts, anticipating the commencement, or during the pendency, of criminal proceedings.
3. Under the existing laws, the bank has failed to recover the dues in the past three years.
4. The absence of such offenders from Indian courts has several deleterious consequences— first, it hampers investigation in criminal cases; second, it wastes precious time of courts of law; third, it undermines the rule of law in India.

The Fugitive Economic Offenders Act has been passed to fill this lacunae. Its provisions are

1. The Act makes provisions for a Court (‘Special Court’ under the Prevention of Money-laundering Act, 2002) to declare a person as a Fugitive Economic Offender. A Fugitive Economic Offender is a person against whom an arrest warrant has been issued in respect of a scheduled offence and who has left India so as to avoid criminal prosecution, or being abroad, refuses to return to India to face criminal prosecution;
2. Attachment of the property of a fugitive economic offender;
3. Issue of a notice by the Special Court to the individual alleged to be a fugitive economic offender;
4. Confiscation of the property of an individual declared as a fugitive economic offender. This will be ensuring they don’t sell assets while their case is in progress;
5. Disentitlement of the fugitive economic offender from defending any civil claim;

Issues/Challenges with the Act:

1. Violation of the Indian Constitution: Under the new law there will be blanket ban on offenders contesting the confiscation of their properties through civil suits.. An absolute ban is contrary to the basic tenets of justice and fair play, besides being in violation of the Indian Constitution.
2. Violates principle of innocent unless proven guilty: Another area where the provisions of the Act may see a challenge is on selling the property without trial. “Sale of property of a fugitive economic offender without adjudicating after a proper trial whether or not the said person is actually liable for the offence, would amount to violation of the settled principle under the Constitution that one is considered innocent unless proven guilty.
3. Not easy to find buyers: assets confiscated by enforcement agencies and courts are termed as distressed properties, and seldom find buyers. A case in point is Sahara’s Amby Valley, which despite efforts by Bombay high court’s official liquidator has been unable to find suitable buyers for almost a year.

Way forward

1. The blanket disentitlement from pursuing or defending any civil claim under the law should be clarified and made reasonable.
2. To avoid failed attempts at sale the Act should provide for time limits for disposal and encashment of property, separate limits for movable-immovable property and running business, and any property which would be subject to valuation loss over a period of time must be disposed of quickly