Fugitive Econom Ic Offenders Act

Fugitive Economic Offenders Act
The Post Second World War era witnessed the transition of traditional society into an
industrial society globally, including India. The evolution of extreme business
competitiveness also gave birth to socio- economic criminality. It has been psychologically
observed that Socio- economic offences drives its origination from the upper and advanced
middle class indulged in trade, businesses, Profession and Public offices. The ethical,
spiritual and moral values get turned into love and lure for money, which ultimately gets
transformed into the socio- economic offences. The recent events in our country like the
fleeing away of Nirav Modi and Vijay Mallya with a huge debt has compelled the legislature
to come up with a law that deals with these offences. In my opinion, when the world’s 89%
wealth is concentrated in just the 1% elite, the crime or the economic corruption done by
them is against the very idea of economic equality in the society. In this short piece, the
author is going to discuss the economic offences, law on economic offences in India and
further the legal recourse available with such offences against public welfare.
Rationale of Economic Offences:
The Supreme Court in the case of Y.S. Jagan Mohan Reddy v. CBI held that economic
offences having deep rooted conspiracies and involving huge loss of public funds need to be
viewed seriously and considered as grave offences affecting the economy of the country as a
whole and thereby posing a serious threat to the financial health of the country.
Generally, the prime rationale behind the economic offences are the centralisation of power
and the misuse of public offices viz; the whole issue of Non-Performing Assets (NPAs) is the
misuse of power and the interconnection of corporate lobby with the political lobby that has
created this vicious cycle.
Evolution of such offences:
Before the middle of the 19th century, a new judicial practice developed in England, where
the English Courts convicted the persons for criminal offences without the proof of mens rea
in certain instances, such as selling adultered or impure food. In 1846, another new
development came into existence in England with the decision of Regina v. Woodrow,
wherein the Court of Exchequer held the respondent liable for having in his possession
adultered tobacco despite the fact that the respondent was able to prove that he had
purchased the tobacco as genuine and “had no knowledge or cause to suspect”.
Edwin Sutherland, was the originator of the concept: “White collar crimes”. He defined
white collar crime as follows: White Collar Crime means a crime committed by a person of
responsibility and a high social status in the course of his occupation. One thing noteworthy
about white collar crime is that it is not associated with poverty or with social and personal
pathologies which accompany poverty. A general notion is that crime is due to poverty and
its related pathologies are proved to be invalid in these instances.
Features of the Fugitive Economic Offenders Act, 2018:
➢ The Act allows for a person to be declared as a fugitive economic offender (FEO) if: (i)
an arrest warrant has been issued against him for any specified offences where the value
involved is over Rs 100 crore, and (ii) he has left the country and refuses to return to face
prosecution.
➢ To declare a person an FEO, an application will be filed in a Special Court (designated
under the Prevention of Money-Laundering Act, 2002) containing details of the
properties to be confiscated, and any information about the person’s whereabouts. The
Special Court will require the person to appear at a specified place at least six weeks from
issue of notice. Proceedings will be terminated if the person appears.
➢ FEOA allows authorities to provisionally attach properties of an accused, while the
application is pending before the Special Court.
➢ Upon declaration as an FEO, properties of a person may be confiscated and vested in the
central government, free of encumbrances (rights and claims in the property). The central
government may dispose of the properties after 90 days. Further, the FEO or any
company associated with him may be barred from filing or defending civil claims.
➢ Any court or tribunal may bar an FEO or an associated company from filing or defending
civil claims before it. Article 21 of the Constitution (right to life and personal liberty) has
been interpreted to include the right to access justice and barring these persons from
filing or defending civil claims may be violative of such right.
➢ An FEO’s property may be confiscated and vested in the Central Government. The Act
allows the Special Court to exempt properties where certain persons may have an interest
in such property (e.g., secured creditors). However, it does not specify whether the
central government will share sale proceeds with any other claimants who do not have
such an interest (e.g., unsecured creditors).
➢ It does not require the authorities to obtain a search warrant or ensure the presence of
witnesses before a search. This differs from other laws, such as the Code of Criminal
Procedure (Cr.P.C), 1973, which contain such safeguards. These safeguards protect
against harassment and planting of evidence. Howsoever, it must be noted that the
Fugitive Economic Offenders Ordinance, 2018 now specifies that the procedure under
Cr.P.C will apply in case of a search.
➢ The Act provides for confiscation of property upon a person being declared an FEO.
This differs from other laws, such as Cr.P.C, 1973, where confiscation is final two years
after proclamation as absconder.
Conclusion and the Critical Aspects:
In recent times, the Hon’ble Supreme Court has given due regard to matters of compelling
public, social, moral and state interests along with other reasonable restrictions to uphold the
constitutional validity of various laws. For example, it had upheld the constitutional validity
of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974
(COFEPOSA) and Smugglers and Foreign Exchange Manipulators (Forfeiture of Property)
Act, 1976 (SAFEMA) which stipulate for preventive detention consequent to certain offences
under the Act and the forfeiture of the illegally acquired properties of smugglers and foreign
exchange manipulators, respectively.
The Hon’ble Supreme Court upheld the constitutionality of COFEPOSA and SAFEMA in
the case of Attorney General for India and Ors. v. Amratlal Prajivandas. Further, in the case
of Dropti Devi and Anr. v. Union of India and Ors. , R. M. Lodha, former CJI of the SC,
held that the menace of these economic offences need to be curbed. Notwithstanding the
disadvantages that measure, such as preventive detention, and violation of Article 21, it is
paramount to assess the validity of these laws keeping in view the gravity of the offence or
evil that is sought to be countered by way of such a measure.

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Fugitive Econom Ic Offenders Act

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Fugitive Economic Offenders Act

Rationale of Economic Offences:

Evolution of such offences:

Features of the Fugitive Economic Offenders Act, 2018:

Conclusion and the Critical Aspects:

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