Patna High Court
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Patna High Court: Expressing that the entire community is aggrieved if the economic offenders, who ruin the economy of the State are not brought to book, Anjani Kumar Sharan, J., held that economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community.

What is the Prosecution case?

Shashi Kumar and Rajesh Kumar had lodged a case under Sections 419, 420 467, 468, 469, 471 and 120B of the Penal Code, 1860 against the Chief Manager and other officials of Bank of India. Further, it was revealed that the bank account in their names and in the firm’s name and their family members held with the Bank of India were misutilized in connivance with the bank officials and huge amount of cash was deposited and transferred to other bank accounts without their knowledge and consent.

Petitioner during the investigation had revealed that a cash of Rs 50 lakhs was deposited in the account of the firm which was transferred on the same day to bank account of Radha Trading Company and out of the said amount, Rs 10 lakhs was transferred to the account of Sanjog Steels (P) Ltd.

Similarly, cash of Rs 25 lakhs was deposited in the account in the name of M.T.I. Cotton Mills Pvt. Ltd. and on the same day it was transferred to the account of Radha Trading Company, Delhi and out of this an amount of Rs 10 lakhs was transferred in the account of Sanjog Steels Pvt. Ltd., Jaipur.

Thus, proceeds of crime amounting to Rs 25 lakhs originated from a bank account held with Bank of India, G.B. Road Branch, Gaya have merged in the bank account of Sanjog Steels Pvt. Ltd., Jaipur after being layered through the bank account of fake and non-existent firms.

Further, it was alleged that the petitioner who claimed to have received sale proceeds of sale of the product of his factory but either the petitioner or his representative failed to produce documents justifying the transactions of sale and purchase documents justifying the transactions of sale and purchase between the petitioner and Radha Trading Company. He also could not produce any documents in support of the claim that he received Rs 20 lakhs against the supply of the goods.

Analysis, Law and Decision

Whether the applicant would qualify to get bail?

There was no doubt about the complicity of the applicant and there are no reasonable grounds to believe that he is not guilty.

Though the Bench added that it should be considered whether there was a likelihood of the applicant committing any offence while on bail?

High Court noted that during investigation it was found that the firms namely, M/s Radha Trading Company, Delhi, M/s Shree Ram Overseas, M/s Shree Ganesh Overseas, M/s Sandeep Traders, M/s Rajesh Trading Company, M/s Sunil Trading Company and M/s Azad Singh and Manoj Kumar were fake and fictitious firms and had not been operating from the addresses as mentioned in their bank accounts or the sales invoices.

In the above manner, Rs 20 lakhs cash after deposit in the accounts was transferred to the bank accounts of M/s Sanjog Steel (P) Ltd. after being layered through the bank accounts of fake and non-existent firms. Hence, the transactions, through the said firms were involved in money laundering in terms of Section 23 of the PMLA.

High Court expressed that,

A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the National Economy and National Interest.

In view of the above discussion, the anticipatory bail was rejected.[Pankaj Goel v. Union of India, 2022 SCC OnLine Pat 643, decided on 11-3-2022]


Advocates before the Court:

For the Petitioner/s : Mr. S.D. Sanjay, Senior Advocate Mr. Mohit Agarwal, Advocate

For the Opposite Party/s : Mr. K.N.Singh, A.D.S.G. Mr. Tuhin Shankar, Advocate

Op EdsOP. ED.

The incarceration of an accused pending trial is considered necessary in the interests of justice when there is a reasonable apprehension that he might attempt to subvert the case against him by tampering with the evidence, by intimidating the witnesses, or where he poses a flight risk. In absence of such apprehensions, it is considered judicious to release the accused from custody on bail. In Sanjay Chandra v. CBI[1], the Supreme Court held that the object of bail is neither punitive nor preventative, it is merely to secure the appearance of the accused at the trial by a reasonable amount of bail. The Court further held that the deprivation of liberty must be considered a punishment unless it is absolutely necessary in the interests of justice.

This otherwise laudable approach is not very practicable in cases of offences that are of a continuing nature. The concept of an offence of a continuing nature was explained by the Supreme Court in State of Bihar v. Deokaran Nenshi

“A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. … The question whether a particular offence is a ‘continuing offence’ or not must, therefore, necessarily depend upon the language of the statute which creates that offence, the nature of the offence and the purpose intended to be achieved by constituting the particular act as an offence.

… the distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues, and therefore, constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission is committed once and for all.”[2]

Thus, as distinguished from general offences which are of a standalone nature, in a continuing offence the commission or consequences of such a crime is not affected over a small period of time or on a single occasion but are rather spread out over a considerable period of time. An example of such an offence is money laundering.

Thus, in the case of a continuing offence, it is difficult to ascertain the conclusion or termination of the criminal act and its object. For example, in the case of money laundering, while the initial part of the offence is over quickly, the proceeds of the illegal act can theoretically be utilised over an indefinite period of time. It is in this background that releasing on bail an accused who is charged with committing an offence of a continuing nature becomes problematic since it is highly probable that he will attempt to frustrate the case against him especially since the criminal act would still be in progress. 

The need for a further classification

The primary intention behind treating “economic offences” as a separate class of crime stems from the fact that compared to a regular offence which is generally directed towards a particular person or section of the society, economic offences affect and harm the populace at large by impairing the economic stability and well-being of the nation. In Y.S. Jagan Mohan Reddy v. CBI, the Supreme Court explained the nature of economic offences and went on to hold that: 34. … The 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 serious threat to the financial health of the country.[3]

The need for a separate classification further stems from the distinct treatment of offenders under certain statutes, especially those pertaining to economic offences. These special laws follow a different approach towards bail and act as a further barrier between the accused and his quest for liberty by imposing additional obligations, popularly referred to as the “twin conditions” for bail. We refer to Section 45[4] of the Prevention of Money-Laundering Act, 2002 (PMLA) to better understand the concept of twin conditions for bail:

(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973[5], no person accused of an offence under this Act shall be released on bail or on his own bond unless—

(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and

(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail.

These twin conditions lay down a special duty upon the court by making it mandatory to ensure that the Public Prosecutor is allowed a chance to oppose the application for release on bail and where the Public Prosecutor opposes the bail petition, the court has to be prima facie satisfied that the accused is not guilty of the offences charged with and that he shall not commit any further offences while on bail. Such satisfaction of the court must be recorded in writing in the order granting bail. The satisfaction contemplated regarding the accused being not guilty has to be based on reasonable grounds. The expression “reasonable grounds” means something more than prima facie grounds. It contemplates substantial probable causes for believing that the accused is not guilty of the alleged offence. The reasonable belief contemplated in the provision requires existence of such facts and circumstances as are sufficient in themselves to justify satisfaction that the accused is not guilty of the alleged offence.[6]

These twin conditions are in addition to the conditions as stipulated under the Code of Criminal Procedure (CrPC) and form a part of multiple statutes dealing with special offences such as the Narcotic Drugs and Psychotropic Substances Act, 1985[7] (NDPS), Terrorist and Disruptive Activities (Prevention) Act, 1987[8] (TADA), Companies Act, 2013[9], Maharashtra Control of Organised Crime Act, 1999[10] (MCOCA) and Unlawful Activities (Prevention) Act, 1967[11] (UAPA).

The great schism in bail jurisprudence

The origins of the distinct treatment of economic offences vis-à-vis general offences at the stage of bail can be traced back to a batch of petitions that were heard by the Supreme Court back in 2013[12].  In Y.S. Jagan Mohan Reddy v. CBI[13], the Supreme Court while dealing with the bail applications for offences under the Prevention of Corruption Act[14] (PC Act) discussed in length the concept of an economic offence and its ramifications on the society at large:

  1. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail….
  2. 35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.[15]

The landmark judgment delivered in Jagan Mohan Reddy[16]  has been pivotal in changing the approach from bail as rule to custody as rule in cases concerning economic offences. The judicial approach laid down in Jagan Mohan Reddy[17] was thereafter followed by the Supreme Court in Gautam Kundu v. Directorate of Enforcement[18] wherein the petitioners who were charged with offences under the Securities and Exchange Board of India Act, 1992[19] (SEBI) and the PMLA Act had challenged the order passed by the Calcutta High Court denying them bail. The Supreme Court relying on the precedent laid down in Jagan Mohan Reddy[20] upheld the order passed by the High Court. The Court further went on to discuss the rationale behind the distinct treatment of economic offenders—

There is no doubt that PMLA deals with the offence of money laundering and Parliament has enacted this law as per commitment of the country to the United Nations General Assembly. PMLA is a special statute enacted by Parliament for dealing with money laundering.

In State of Bihar v. Amit Kumar[21], the Supreme Court while dealing with a matter concerning large scale fraud in intermediate examinations in Bihar reiterated the law laid down in Jagan Mohan Reddy[22] and held that—

It is well settled that socio-economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. Usually, socio-economic offence has deep-rooted conspiracies affecting the moral fibre of the society and causing irreparable harm, needs to be considered seriously.

When the seriousness of the offence is such, the mere fact that he was in jail for however long time should not be the concern of the courts. We are not able to appreciate such a casual approach while granting bail. The government’s interest in preventing crime by arrestees is both legitimate and compelling. Although “bail is the rule and jail is an exception” is well established in our jurisprudence, we have to measure competing forces present in facts and circumstances of each case before enlarging a person on bail.

While this distinct treatment of economic offenders while granting bail has commenced after the judicial pronouncement in Jagan Mohan Reddy[23], the twin conditions for bail as laid down by Section 45 of the PMLA are not exactly new and similar provisions form a part of multiple statutes. These twin conditions are generally a part of legislations aimed at dealing with terrorism and organised crime. In Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra[24], Supreme Court upheld the validity of sub-section (4) of Section 21 of the MCOCA which imposed similar twin conditions as under PMLA for grant of bail.

… the validity of sub-section (4) of Section 21 of the Act must be interpreted keeping in view the aforementioned salutary principles. Giving an opportunity to the Public Prosecutor to oppose an application for release of an accused appears to be reasonable restriction.

Rationale behind the distinct treatment of economic offenders

Economic offences unlike regular offences are not standalone in nature and they act as facilitators for other crimes. They help drain public funds, accelerate economic inequalities and can be used to undermine and destabilise nations. It must be appreciated that the stringent conditions as laid down under statutes such as PMLA are in line with the standards laid down by international bodies such as the United Nations General Assembly and the Financial Action Task Force. To understand the rationale behind the harsh treatment meted out to economic offenders by a judicial system which has always stood up against curtailing the liberty of even accused persons, it is important to refer to some of the landmark judgments delivered by the Supreme Court on this issue.

The approach of the judiciary towards economic offenders can be summed up by the observations made by the Supreme Court in State of Gujarat v. Mohanlal Jitamalji Porwal wherein the Court laid down that the:

  1. 5. … entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community.[25]

The Court in this case recognised the long-term ramifications of economic offences and laid down the basis for the distinct treatment of such offenders.

A similar approach was taken by the Supreme Court in P. Chidambaram v. Directorate of Enforcement[26] wherein the Court laid down that:

“Power under Section 438 CrPC being an extraordinary remedy, has to be exercised sparingly; more so, in cases of economic offences. Economic offences stand as a different class as they affect the economic fabric of the society. The privilege of the pre-arrest bail should be granted only in exceptional cases… Exercising the power to grant anticipatory bail in cases of the Prevention of Money-Laundering Act would be to scuttle the statutory power of the specified officers to arrest which is enshrined in the statute with sufficient safeguards… Grant of anticipatory bail, particularly in economic offences would definitely hamper the effective investigation.”

The Court further held that a delicate balance is required to be established between safeguarding the personal liberty of an individual and the societal interest, and refusal to grant anticipatory bail cannot be termed as a denial of the rights conferred upon the accused under Article 21[27] of the Constitution of India. In this case, the Court also recognised that money laundering poses a serious threat not only to the economy of the country but also to its integrity and sovereignty.

A similar view was taken by the Court in Serious Fraud Investigation Office v. Nittin Johari[28] where the Court while dealing with a bail application under Section 212(6)[29] of the Companies Act, 2013, which imposes similar twin conditions for bail, once again reiterated that economic offences constitute a class apart and need to be viewed seriously and considered as grave offences affecting economy of country as a whole and thereby posing serious threat to the financial health of the country.

Cases involving economic offences are among a small minority of crimes where the court has regularly overruled fears associated with custodial interrogation and has gone on to favour incarceration of the accused to facilitate a fruitful investigation by the authorities. In State v. Anil Sharma[30] where an ex-minister was charged with offences under the PC Act and had been granted anticipatory bail by the Himachal Pradesh High Court, Supreme Court overturned the order and held that:

  1. … custodial interrogation is qualitatively more elicitation-oriented than questioning a suspect who is well ensconced with a favourable order under Section 438[31] of the Code. In a case like this effective interrogation of a suspected person is of tremendous advantage in disinterring many useful information and also materials which would have been concealed. Success in such interrogation would elude if the suspected person knows that he is well protected and insulated by a pre-arrest bail order during the time he is interrogated. Very often interrogation in such a condition would reduce to a mere ritual.

 A similar view was taken by the Supreme Court recently in CBI v. Ramendu Chattopadhyay[32] wherein the accused who was charged with playing a key role in the promotion of a chit fund scam in the State of Orissa was remanded to custody by cancelling the order passed by the High Court of Orissa granting him interim bail.

At this juncture, it is pertinent to mention that statutes such as the PMLA also function under a reverse burden of proof system where the initial burden of proving that the accused is not guilty of the offences that he is charged with lies on him and not the prosecution and until he discharges such burden, the court shall presume him to be guilty. This acts as a further rider against the grant of bail in cases of economic offences as it goes against the cardinal principle of criminal jurisprudence which treats an accused as innocent until proven otherwise. In the case of regular offences, bail is granted to the accused as a general rule as he is presumed to be innocent while no such presumption exists in favour of economic offenders. In Rohit Tandon v. Directorate of Enforcement[33], Supreme Court observed that the provisions of Section 24[34] of the PMLA provide that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant.

In Union of India v. Hassan Ali Khan[35] it was held that allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifted on the accused persons under Section 24 of the PMLA. The same proposition of law was reiterated and followed by the Orissa High Court in Janata Jha v. Directorate of Enforcement.[36]

It is also pertinent to mention herein that the precedents cited hereinabove do not create an absolute bar against the grant of bail and the Supreme Court has categorically ruled that merely because the allegations against an accused are of grave economic offences, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so.[37]

Conclusion

From the discussion hereinbefore, it is apparent that the departure from the basic jurisprudence of bail being the norm and jail being the exception to a scenario where custody has become the default has arisen from a realisation of the gravity of economic offences whose ramifications are far-reaching and extend over a prolonged period of time. In a recent judgment, the Delhi High Court held that “… economic offences are offences which corrode the fabric of democracy and are committed with total disregard to the rights and interest of the nation and are committed by breach of trust and faith and are against the national economy and national interest….”[38] These observations made by the High Court are in line with the views expressed by the Supreme Court holding economic offenders to be “a menace to the society”. [39]

Keeping in mind the consequences of economic offences that would befall the society, the courts have held them to be of a distinct class and under the category of grave offences which can threaten the democratic set-up and the national economy. Hence, appreciating the sensitivity of the nature of allegations in cases involving economic offences, the courts have justifiability departed from the general rule involved in granting of bail and have put the societal interests in preventing and punishing economic offenders at a higher pedestal than the rights of an accused facing incarceration before conviction.


Advocate, Calcutta High Court.

[1] (2012) 1 SCC 40.

[2] (1972) 2 SCC 890.

[3] (2013) 7 SCC 439.

[4] <http://www.scconline.com/DocumentLink/CSH9fgCN>.

[5] <http://www.scconline.com/DocumentLink/y587uE3Q>.

[6] Collector of Customs v. Ahmadalieva Nodira, (2004) 3 SCC 549.

[7] <http://www.scconline.com/DocumentLink/206RMMRJ>.

[8] <http://www.scconline.com/DocumentLink/xKZQnZ4c>.

[9] <http://www.scconline.com/DocumentLink/A5aqjfDv>.

[10] <http://www.scconline.com/DocumentLink/1iGLPK20>.

[11] <http://www.scconline.com/DocumentLink/M11S873T>.

[12] Y.S. Jagan Mohan Reddy v. CBI, (2013) 7 SCC 439, Nimmagadda Prasad v. CBI, (2013) 7 SCC 466

[13] (2013) 7 SCC 439

[14] <http://www.scconline.com/DocumentLink/zo935L02>

[15] (2013) 7 SCC 439.

[16] (2013) 7 SCC 439.

[17] (2013) 7 SCC 439.

[18] (2015) 16 SCC 1.

[19] <http://www.scconline.com/DocumentLink/mulMMe8P>.

[20] (2013) 7 SCC 439.

[21] (2017) 13 SCC 751.

[22] (2013) 7 SCC 439.

[23] (2013) 7 SCC 439.

[24] (2005) 5 SCC 294.

[25] (1987) 2 SCC 364.

[26] (2019) 9 SCC 24.

[27] <http://www.scconline.com/DocumentLink/VN1u87S9>.

[28] (2019) 9 SCC 165.

[29] <http://www.scconline.com/DocumentLink/jeRCN9VL>.

[30] (1997) 7 SCC 187.

[31] <http://www.scconline.com/DocumentLink/i3F1S08A>.

[32] (2020) 14 SCC 396.

[33] (2018) 11 SCC 46.

[34] <http://www.scconline.com/DocumentLink/6bbcTlES>.

[35] (2011) 10 SCC 235.

[36] 2013 SCC OnLine Ori 619.

[37] P. Chidambaram v. Directorate of Enforcement, (2020) 13 SCC 791.

[38] Malvinder Mohan Singh v. State, 2020 SCC OnLine Del 2001

[39] Enforcement Officer v. Bher Chand Tikaji Bora, (1999) 5 SCC 720.

Legislation UpdatesStatutes/Bills/Ordinances

Fugitive Economic Offenders Ordinance, 2018 has come into force as the President of India has given his assent to the Union Cabinet’s decision to promulgate the said Ordinance. Earlier, the Union Cabinet, in its meeting held on 21st April, 2018, had decided to approve the proposal of the Ministry of Finance to promulgate the Fugitive Economic Offenders Ordinance, 2018.

Fugitive Economic Offenders Ordinance, 2018 (“the Ordinance”) lays down the measures to empower Indian authorities to attach and confiscate proceeds of crime associated with economic offenders and the properties of the economic offenders and thereby deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts.

The need for the Ordinance has arisen as there have been instances of economic offenders fleeing the jurisdiction of Indian courts, anticipating the commencement, or during the pendency, of criminal proceedings. 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 existing civil and criminal provisions in law are not entirely adequate to deal with the severity of the problem. In view of the above context, a Budget announcement was made by the Government in the Budget 2017-18 that the Government was considering to introduce legislative changes or even a new law to confiscate the assets of such absconders till they submit to the jurisdiction of the appropriate legal forum.Pursuant to the above announcement, the Fugitive Economic Offenders Bill, 2018 was introduced in Lok Sabha on the 12th March, 2018. The Fugitive Economic Offenders Bill, 2018 was listed for consideration and passing in Lok Sabha on many occasions after its introduction. The Lok Sabha has since been adjourned sine die and both the Houses of Parliament were prorogued on 6thApril, 2018.

In order to address the deficiency in the present laws and lay down measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts, the Ordinance is being proposed. The Ordinance 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. A scheduled offence refers to a list of economic offences contained in the Schedule to this Ordinance. Further, in order to ensure that Courts are not over-burdened with such cases, only those cases where the total value involved in such offences is 100 crore rupees or more, is within the purview of this Ordinance. The Fugitive Economic Offenders Ordinance, 2018, inter alia provides for–

(i) making an application before the Special Court for a declaration that an individual is a fugitive economic offender;

(ii) attachment of the property of a fugitive economic offender and proceeds of crime;

(iii) issue of a notice by the Special Court to the individual alleged to be a fugitive economic offender;

(iv) confiscation of the property of an individual declared as a fugitive economic offender or even the proceeds of crime;

(v) disentitlement of the fugitive economic offender from defending any civil claim; and

(vi) appointment of an Administrator to manage and dispose of the confiscated property under the Act.

If at any point of time in the course of the proceeding prior to the declaration, however, the alleged Fugitive Economic Offender returns to India and submits to the appropriate jurisdictional Court, proceedings under the proposed Act would cease by law. All necessary constitutional safeguards in terms of providing hearing to the person through counsel, allowing him time to file a reply, serving notice of summons to him, whether in India or abroad and appeal to the High Court have been provided for.

Major impact: It is expected that a special forum to be created for expeditious confiscation of the proceeds of crime, in India or abroad,would coerce the fugitive to return to India to submit to the jurisdiction of Courts in India to face the law in respect of scheduled offences.

Since the proposed law would utilise the existing infrastructure of the Special Courts constituted under under the Prevention of Money-laundering Act, 2002 and the threshold of scheduled offence is high at Rs. 100 crores or more, no additional expenditure is expected on the enactment of the Bill.

No. of beneficiaries: The Bill is expected to re-establish the Rule of Law with respect to the Fugitive Economic Offenders as they would be forced to return to India to face trial for scheduled offences. This would also help the banks and other financial institutions to achieve higher recovery from financial defaults committed by such fugitive economic offenders, improving the financial health of such institutions.

States/districts covered:   The new law would cover all the States and Districts.

Ministry of Finance

Cabinet DecisionsLegislation Updates

The Union Cabinet has approved the proposal of the Ministry of Finance to introduce the Fugitive Economic Offenders Bill, 2018  in Parliament.  The Bill would help in  laying down measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts. The cases where the total value involved in such offences is Rs. 100 crore or more, will come under the purview of this Bill.

Impact:

The Bill is expected to re-establish the rule of law with respect to the fugitive economic offenders as they would be forced to return to India to face trial for scheduled offences. This would also help the banks and other financial institutions to achieve higher recovery from financial defaults committed by such fugitive economic offenders, improving the financial health of such institutions.

It is expected that the special forum to be created for expeditious confiscation of the proceeds of crime, in India or abroad, would coerce the fugitive to return to India to submit to the jurisdiction of Courts in India to face the law in respect of scheduled offences.

Salient features of the Bill:

  1. Application before the Special Court for a declaration that an individual is a fugitive economic offender;
  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 resulting from the proceeds of crime;
  5. Confiscation of other  property belonging to such offender in India and abroad, including benami property;
  6. Disentitlement of the fugitive economic offender from defending any civil claim; and
  7. An Administrator will be appointed to manage and dispose of the confiscated property under the Act.

If at any point of time in the course of the proceeding prior to the declaration, however, the alleged Fugitive Economic Offender returns to India and submits to the appropriate jurisdictional Court, proceedings under the proposed Act would cease by law. All necessary constitutional safeguards in terms of providing hearing to the person through counsel, allowing him time to file a reply, serving notice of summons to him, whether in India or abroad and appeal to the High Court have been provided for. Further, provision has been made for appointment of an Administrator to manage and dispose of the property in compliance with the provisions of law.

Implementation strategy and targets:

In order to address the lacunae in the present laws and lay down measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts, the Bill is being proposed. The Bill 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. A scheduled offence refers to a list of economic offences contained in the Schedule to this Bill. Further, in order to ensure that Courts are not over-burdened with such cases, only those cases where the total value involved in such offences is 100 crore rupees or more, is within the purview of this Bill.

Background:

There have been several instances of economic offenders fleeing the jurisdiction of Indian courts, anticipating the commencement, or during the pendency, of criminal proceedings. 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. Further, most such cases of economic offences involve non-repayment of bank loans thereby worsening the financial health of the banking sector in India. The existing civil and criminal provisions in law are not entirely adequate to deal with the severity of the problem. It is, therefore, felt necessary to provide an effective, expeditious and constitutionally permissible deterrent to ensure that such actions are curbed. It may be mentioned that the non-conviction-based asset confiscation for corruption-related cases is enabled under provisions of United Nations Convention against Corruption (ratified by India in 2011). The Bill adopts this principle. In view of the above context, a Budget announcement was made by the Government in the Budget 2017-18 that the Government was considering to introduce legislative changes or even a new law to confiscate the assets of such absconders till they submit to the jurisdiction of the appropriate legal forum.

Ministry of Finance