Government proposes law to seize properties of fugitive economic offenders

The government proposed a stringent legislation to confiscate properties of ‘fugitive economic offenders’ to deal with persons like Vijay Mallya who flee the country

The proposed law is to provide for measures to deter economic offenders from evading the process of Indian law. Photo: Abhijit Bhatlekar/Mint
The proposed law is to provide for measures to deter economic offenders from evading the process of Indian law. Photo: Abhijit Bhatlekar/Mint

New Delhi: The Narendra Modi government plans to enact a law under which any property owned by fugitive economic offenders involving amounts in excess of Rs100 crore can be confiscated and vested with the government for expeditious disposal.

The law is expected to deter economic offenders from fleeing the country like Vijay Mallya did.

The draft Fugitive Economic Offenders Bill 2017 has been put in the public domain by the finance ministry, which is seeking public feedback until 3 June.

The Central Bureau of Investigation has been investigating a case against Mallya and the companies he controlled over allegations of money laundering since early last year and secured a non-bailable warrant against the businessman in a case related to money laundering and wilful default of loans.

Mallya, who fled to UK in March 2016, was briefly arrested by the Scotland Yard in London on 18 April on India’s request for his extradition on fraud charges. He was released on bail a few hours later after he appeared at a central London police station. Extradition proceedings are on.

The finance ministry listed several reasons why the government has to act against such fugitives. “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. Further, several such cases of economic offences involve non-repayment of bank loans, thereby causing strain on the banking sector in India,” it said in a statement.

The government considers existing civil and criminal provisions in law inadequate to deal with the severity of the problem. The civil provisions deal with the issue of non-repayment of debt but make no special provisions to deal either with high-value economic offenders or those who might have absconded from India when a criminal case is pending.

In large defaults, criminal proceedings are likely to be in several criminal courts across the country where assets are located. This multiplicity of proceedings may lead to conflicting orders of attachment by different courts. A court is unlikely to attach a property outside its jurisdiction without endorsement by relevant judicial authorities. The procedure is considered time consuming and as a result of such delays, such offenders can continue to remain outside the jurisdiction of Indian courts for a considerable period of time.

Such a person or any company where he is a promoter or key managerial personnel or majority shareholder could be disentitled from bringing forward or defending any civil claim. However, if at any point of time in the course of the court proceedings prior to the judgment, the alleged offender returns to India and submits to the appropriate jurisdictional court, proceedings under this law would cease, according to the proposed bill.

The finance ministry said there would be constitutional safeguards in terms of providing a hearing to the person through counsel, allowing him time to file a reply and serving notice of summons to him, whether in India or abroad and the right to appeal.

Rahul Garg, partner with consulting firm PwC, said the power vested with government authorities provided under the bill are extra-ordinary. “When the powers vested with authorities are extra-ordinary, they also need to be executed with extra-ordinary care,” he added.

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