Fugitive Economic Offenders Ordinance, 2018 – Banking Scams push the Government to bring a hasty Ordinance

Recently, an Ordinance, namely, the Fugitive Economic Offenders Ordinance, 2018 (in Short, “Ordinance of 2018”) was promulgated by the President of India. The objective of the Ordinance of 2018 is inter alia “to provide for measures to deter fugitive economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian courts”.

It seems that the said Ordinance was brought keeping in mind the recent Banking Scams that have been unearthed in India. Let us come to the scheme of the Ordinance.

Section 2 (f) defines “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, who—

(i) has left India so as to avoid criminal prosecution; or

(ii) being abroad, refuses to return to India to face criminal prosecution;

Further, Section 2 (m) defines “Scheduled Offence” as an offence specified in the Schedule appended to the Ordinance, if the total value involved in such offence or offences is ₹100 Crores or more. The offences specified in the Schedule are offences such as Section 420, Section 467, Section 471 of Indian Penal Code, Section 138 of the Negotiable Instruments Act, offences under Prevention of Corruption Act and other such economic and financial offences.

What is interesting to observe is that how the total value involved in the offences is to be calculated has not been defined anywhere in the Ordinance. This is clearly a grey area and may lead to a lot of problems for the prosecution as well as the accused persons, as without a fixed method of valuation, any valuation done by the prosecution will be susceptible to challenge and the Courts would find themselves in a fix while adjudicating upon such pleas.

Under Section 4 of the Ordinance of 2018, the Director appointed under the Prevention of Money Laundering Act, 2002 (in short, “PMLA”), has the power to move an Application to the PMLA Court (Competent Court) for getting a person declared as a Fugitive Economic Offender. The Director also has the power to inspect, seize, discover and even attach property of such suspect before he/she is declared fugitive economic offences by the competent court. Further, the Director even has the power to forcefully enter into any premises and seize any property that has been mentioned in the Application made to the PMLA Court. The powers given to the Director or any such authorized person are of wide amplitude as any such authorized person can detain the suspect/accused for 24 hours.

When an Application for declaration of a person as a Fugitive Economic Offender is moved before the competent court, the Court shall issue notice to such person and failure to appear before the Court on designated date shall result in a declaration of the individual as a Fugitive Economic Offender and may even lead to confiscation of property under the Ordinance.

Another interesting provision of the Ordinance is Section 14 which empowers the Courts or Tribunals in India to disallow a Fugitive Economic Offender and the corporate entities owned or controlled by the Fugitive Economic Offender from putting forward or defending any civil claim, in any civil proceeding before it. Basically, the civil rights of a person will also be affected if such person is declared a Fugitive Economic Offender. It seems that this provision in the garb of acting as a deterrent measure is an unreasonably harsh punitive measure.

Further, an Administrator shall be appointed for management of confiscated properties and such properties can be disposed of by the Government or the Administrator after ninety days of confiscation.

Another distinct provision of the Ordinance is Section 16 (2) that puts the burden of proof on the accused person to prove that any interest in any property was acquired bona fide and without knowledge of the fact that, such property

constitutes proceeds of crime. Basically, the burden of proof in such cases shall not be on the prosecution rather on the accused person.

This is the basic scheme of the Ordinance. It seems that the Ordinance was drafted in a haste as many provisions seem to be either half-finished or incomplete. The Ordinance does not provide for any punishment. It is merely prescribing the procedure and lays down the modalities for identifying a person as a Fugitive Economic Offender. The Fugitive Economic Offenders Ordinance, 2018, needs a closer scrutiny and deeper analysis before it is ratified by the Parliament of India.