FUGITIVE ECONOMIC OFFENDERS

February 26, 2021 Simplified

Context:

The Westminster Magistrates Court in London has allowed India’s extradition request against businessman Nirav Modi, who is wanted in connection with the ₹13,758 crore Punjab National Bank fraud, ruling that a prima facie case had been made out.

The order will be sent to the Secretary of State for the United Kingdom’s Home Department for further action. The Secretary of State has to take a decision within two months or seek an extension from the High Court. Appealing the Secretary of State’s decision in the High Court is only possible with the court’s permission.

Notice of application for approval to appeal has to be sought within 14 days of extradition, or discharge, ordered by the Secretary of State.

Who is a Fugitive Economic Offender?

A person can be named an offender under this law if there is an arrest warrant against him or her for committing any offence listed in the schedule of the act and for involvement in economic offences involving at least Rs. 100 crore or more and has fled from India to escape Legal Action.
Major criteria that have to be satisfied are:

1. The Person has left the country to avoid facing prosecution.

2. He refuses to return to India to face prosecution.

The Fugitive Economic Offenders Bill, 2018

Highlights of the Bill and Ordinance

The Bill allows for a person to be declared as a fugitive economic offender (FEO) if: (i) an arrest warrant has been issued against him for any specified offences where the value involved is over Rs 100 crore, and (ii) he has left the country and refuses to return to face prosecution.
To declare a person an FEO, an application will be filed in a Special Court (designated under the Prevention of Money-Laundering Act, 2002) containing details of the properties to be confiscated, and any information about the person’s whereabouts. The Special Court will require the person to appear at a specified place at least six weeks from issue of notice. Proceedings will be terminated if the person appears.
The Bill allows authorities to provisionally attach properties of an accused, while the application is pending before the Special Court.
Upon declaration as an FEO, properties of a person may be confiscated and vested in the central government, free of encumbrances (rights and claims in the property). Further, the FEO or any company associated with him may be barred from filing or defending civil claims.

Key Issues and Analysis

Under the Bill, 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 Bill, 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 Bill 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 Bill 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.

Comparison of current laws with the Bill

Provision	The Fugitive Economic Offenders Bill, 2018	Current Laws
Absconding	A person may be declared an FEO if he leaves the country and refuses to return to face prosecution. He may be asked to appear at a specified place at least six weeks after notice.	CrPC: Section 82 allows a Court to issue a proclamation requiring a person evading a warrant to appear at a specified time and place at least 30 days after notice.
Attachment	A person’s property may be attached for 180 days. Attached properties may include those believed to be proceeds of crime and benami properties.	CrPC: Section 83 allows properties of absconders to be attached. PMLA: Section 8 allows attachment of properties which are proceeds of crime.
Confiscation or recovery	An FEO’s property may be confiscated and vested in the central government, free of encumbrances. The central government may dispose this property only after 90 days. The Special Court may exempt certain properties from confiscation where any other person has a genuine interest.	CrPC: Section 85 allows attached property to be sold by the state government after six months. It will have to return the property or proceeds if the absconder returns within two years. PMLA: Section 8 allows a person’s property to be confiscated upon conviction, or if trial cannot be concluded. Such property will be vested in the central government, free of encumbrances. SARFAESI: Under SARFAESI, creditors can take possession of collateral without court intervention.
Search and seizure	Authorities may search premises and persons on the belief that a person may be an FEO, or has proceeds of crime, among others. They may also seize documents. While searching a person, if the person requires, authorities may take him to a gazetted officer or a Magistrate, within 24 hours.	CrPC: Under Section 100, authorities may conduct a search. The search will have to be conducted in the presence of two witnesses, upon issuance of a search warrant. Provisions related to search under CrPC followed in other laws such as: (i) the PMLA, (ii) the Securities and Exchange Board of India Act, 1992, (iii) the Central Excise Act, 1944, (iv) the Companies Act, 2013, and (v) the Central Goods and Services Tax Act, 2017. PMLA: While searching a person, if he so requires, authorities may take him to a gazetted officer or a Magistrate, within 24 hours.
Contracting state	The Special Court may request a court or authority in a contracting state (countries with whom an agreement has been signed to enforce provisions of the law) to execute its confiscation order.	CrPC: Under Chapter VIIA, courts may request contracting states to execute their orders (where central government has entered into agreements with such countries). PMLA: Provisions under Chapter IX similar to CrPC. Extradition Act, 1962: Chapter IV allows for the extradition of an offender (accused or convicted) from a foreign country.

Way Forward:

Extradition is as much a Political Process as it is a judicial one.
The expeditious processing of extradition requests and the commitment to prepare for and defend the case before Courts depends on bilateral relations and the opportune use of diplomacy and negotiations to push for the process by the requested country.
India needs to take steps to dispel concerns regarding poor Prison Conditions and potential human rights violations of the requested Person.
India could consider signing international instruments, such as the UN Convention against Torture (1984) to establish India’s zero tolerance towards torture and custodial violence.
For addressing investigational delays, it is imperative to improve the capacity and organizational efficiencies of law enforcement agencies so that they may conduct speedy investigation in these cases.
To ensure that India’s extradition requests are in compliance with treaty conditions and documentary requirements, India must put in Place Suitable Organizational Mechanisms to familiarize itself with laws and regulations of Treaty states.
India could adopt the good practices of the US’ Office of International Affairs (OIA), Washington’s primary body to handle extradition requests, and employ lawyers and station Trained Liaison officers in countries with which the country has extradition Relations.

Source: The Hindu