The Fugitive Economic Offenders Act, 2018

Fugitive Economic Offenders Act was brought to address the cases of high value economic offenders fleeing the country to avoid persecution.

Key Features

Definition of Fugitive Economic Offenders (FEO): An FEO is a person against whom an arrest warrant has been issued for committing any offence listed in the Schedule of the Act (of 55 offences), and the value of the offence is at least Rs 100 crore. Further, the person has left the country and refuses to return, in order to avoid facing prosecution.

Authorities: The authorities under the PMLA, 2002 will exercise powers given to them under the Act. These powers will be similar to those of a civil court, including: (i) search of persons in possession of records or proceeds of crime, (ii) search of premises on the belief that a person is an FEO, and (iii) seizure of documents.

Process

1. Authorities assigned may approach a special court to list a person as FEO and it approved, Authorities may attach any property mentioned in the application with the permission of the Special Court. The attachment will continue for 180 days, which may be extended by the Special Court. They may provisionally attach any property without the permission of the Special Court, if they file an application before the court within 30 days.
2. The special court may issue notice to the person in question and ask him to appear at a specified place on a date which is at least six weeks after the issuing notice, failure would amount to him being declared as FEO. He may send a counsel to represent his interest.
3. Post judicial trail, there’s also a limit on the appeal by the FEO if not happy with the verdict.

Key Challenges and Issues

• Under the Act, any court or tribunal may bar an FEO or an associated company from filing or defending civil claims before it. Barring these persons from filing or defending civil claims may violate Article 21 of the Constitution i.e. the right to life. Article 21 has been interpreted to include the right to access justice.
• Under the Act, an FEO’s property may be confiscated and vested in the central government. The Bill 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).
• The Act 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 (CrPC), 1973, which contain such safeguards. These safeguards protect against harassment and planting of evidence.
• The Act provides for confiscation of property upon a person being declared an FEO. This differs from other laws, such as CrPC, 1973, where confiscation is final two years after proclamation as absconder.
• Given the rise in number of NPAs and FEOs, an act like this is a step in the right direction. But draconian provisions under the act which denies an individual right to appeal must be amended and proper safeguards be stated to ensure undisputable delivery of justice.