Govt drafts stringent law against absconding economic offenders

The Union cabinet on March 1, 2018 approved the Fugitive Economic Offenders Bill, 2017 that provides sweeping powers to the Enforcement Directorate to seize the properties of absconding corporate defaulters to recover the amounts due from them. This Bill comes in the wake of rising cases of absconding defaulters such as Vijay Mallya, Nirav Modi and MehulChoksiand is aimed at protecting the interests of the lenders affected by the default. Once the Bill becomes law, it will empower the investigating agencies to confiscate any property of the absconding offenders without any encumbrances.

The Bill will be tabled in the Parliament in the second part of the Budget session which starts on March 6. The government expects the Bill to have a smooth passage in both the houses of parliament.

The Bill defines a ‘fugitive economic offender’ as “any individual against whom a warrant for arrest in relation to a scheduled offence has been issued by any court in India and who leaves or has left India so as to avoid criminal prosecution and refuses to return to India to face criminal prosecution”.

The draft Bill covers a wide range of offences described in the Schedule of the Bill, including cheating, forgery, wilful loan defaults, insider trading in securities, corruption, forged or fraudulent document of electronic records, evasion of duty or prohibitions, non-repayment of deposits, among others.

The Bill vests all the rights and title in the confiscated property in the Central government free from all encumbrances. The Bill also disentitles an absconder from the confiscated property and bars the offender from putting forward or defending any civil claim to reclaim the seized assets.

The Bill will be applicable only to those cases where the total value of the fraud or default is Rs 100 crore or more. This limit is aimed at preventing the courts from being flooded with such cases of economic offences.

The provisions of the Bill suggests that the government has taken the “loot and scoot” modus operandi of economic offenders very seriously and plans to come down with a heavy hand against absconding fugitives such as Mallya, Modi and Choksi.