THE FUGITIVE ECONOMIC OFFENDERS ORDINANCE, 2018

[Mr. M. GOVINDARAJAN]

Ordinance and its applicability

In exercise of the powers conferred by Article 123(1) of the Constitution, the President promulgated ‘The Fugitive Economic Offenders Ordinance, 2018’ (‘Ordinance’ for short) which came into effect from 21.04.2018. 

This ordinance will be applicable to any individual who is, or becomes, a fugitive economic offender on or after the date of coming into force of this ordinance.

Fugitive Economic Offender

Clause 2(f) of the Ordinance defines the expression Fugitive Economic Offender as any individual against whom a warrant of arrest in relation to scheduled offence (total value involved is more than ₹ 100 crore) has been issued by any Court in India, who-

• has left India so as to avoid criminal prosecution; or
• being abroad, refuses to return to India to face criminal prosecution.

Scheduled offences

The schedule gives the following offences under various Acts for the purpose of this ordinance-

• Offences under the Indian Penal Code – Sections 120 B, 255, 257, 258, 259, 260, 417, 418, 420, 421 422, 423, 434, 467, 471, 472, 473, 475,476, 481, 482, 482, 483, 484, 485, 486, 487, 488, 489A, 489B;
• Offenceunder the Negotiable Instruments Act, 1881 – Section 138;
• Offence under the Reserve Bank of India Act 1934 – Section 58B;
• Offences under Central Excise Act, 1944 – Section 9;
• Offences under the Customs Act, 1962 – Section 135;
• Offences under the Prohibition of Benami Property Transactions Act, 1988 – Section 3;
• Offences under Prevention of Corruption Act, 1988 – Sections 7, 8, 9, 10,13;
• Offences under Securities and Exchange Board of India Act, 1992 – Section 12A, 24;
• Offences under Prevention of Money Laundering Act, 2002 – Sections 3 and 4;
• Offences under Limited Liability Partnership Act, 2008 – Section 30(2);
• Offences under Foreign Contribution (Regulation) Act, 2010 – Sections 34, 35;
• Offences under the Companies Act, 2013 – Sections 42(4), 74, 76A, 206(4), 213, 447, 452;
• Offences under the Black Money (Undisclosed Foreign Income and Assets) and imposition of Tax Act, 2015 – Section 15;
• Offences under the Insolvency and Bankruptcy Code, 2016 – Section 69;
• Offences under Central Goods and Services Tax Act, 2017 –Section 132(5).

Authority

The Authorities appointed for the purposes of the Prevention of Money Laundering Act, 2002 shall be the Authorities for the purposes of this ordinance. The ordinance provides that the Director or any other officer not below the rank of Deputy Director (‘Authority’ for short) authorized for the purposes of this ordinance to perform the functions.

Powers of Authority

The powers and functions of the Authorities are as follows-

• Powers under civil court;
• Attachment of properties;
• Survey;
• Search and seizure;
• Search of persons.

Powers under civil court

The Authorities are having the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit in respect of the following matters-

• discovery and inspection;
• enforcing the attendance of any person, including any officer of a reporting entity and examining him on oath;
• compelling the production of records;
• receiving evidence on affidavits;
• issuing commissions for examination of witnesses and documents; and
• any other matter which amy be prescribed.

Attachment of properties

The Authorities may, by an order in writing, at any time prior to the filing of the application for declaration of fugitive economic offender, attach any property-

• for which there is a reason to believe that the property is proceeds of crime, or is a property owned by an individual who is a fugitive economic offender; and
• which is being or is likely to be dealt with in a manner which may result in the property being unavailable for confiscation.

The Authority shall, within a period of 30 days from the date of such attachment, file an application.  The attachment shall be valid for a period of 180 days or such other period as may be extended by the Special Court before the expiry of such period.  This attachment shall not prevent the person interested in the enjoyment of the immovable property attached from such an enjoyment.

Survey

The Authority, on the basis of material in his possession, has reason to believe that an individual may be a fugitive economic offender, he may enter any place-

• withinthe limits of the area assigned to him; or
• in respect of which he is authorized for this purpose, by such authority who is assigned the area within such place is situated.

Where the Authority has reasons to believe that an individual may be a fugitive economic offender and it is necessary to enter any place, he may request any proprietor, employee or any other person who may be present at that time, to-

• afford him the necessary facility to inspect such records as he may require and which may be available at such place;
• afford him the necessary facility to check or verify the proceeds of crime or any transaction related to proceeds of crime which he may be found therein; and
• furnish such information as he may require as to any matter which may be useful for, or relevant to any proceedings under this Ordinance.

Further the Authority may-

• place marks of identification on the records inspected by him and make or cause to be made extracts or copies there from;
• make an inventory of any property checked or verified by him; and
• record the statement of any person present at the property which may be useful for, or relevant to, any proceeding under this Ordinance.

Search and Seizure

The Authority, on the basis of information in his possession, has reason to believe that any person-

• may be declared as a fugitive economic offender;
• is in possession of any proceeds of crime;
• is in possession of any records which may relate to the proceeds of crime; or
• is in possession of any property related to records of crime

then, he may authorize any officer subordinate to him to-

• enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept;
• break open the lock of any door, box, locker, safe, almirah or other respectable for exercising the powers conferred where the keys thereof are not available;
• seize any record or property found as a result of such research;
• place marks of identification on such record or property, if required or make or cause to be made extracts or copies there from;
• make a note or an inventory of such record or property; or
• examine on oath any person, who is found to be in possession or control of any record or any property, in respect of all matters relevant for the purposes of any investigations under this Ordinance.

Where an authority, upon information obtained during the survey is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence.

Search of persons

If an Authority has reasons to believe that any person has secreted about his person or anything under his possession, ownership or control, any record or proceeds of crime which may be useful for or relevant to any proceedings under this Ordinance, he may search that person and seize such record or property which may be useful for or relevant to any proceedings under this Ordinance.

Where an Authority is about to search any person, he shall, if such person so requires, take such person within 24 hours to the nearest Gazetted Officer, superior in rank to him, or a Magistrate.  The period of 24 hours shall exclude the time necessary for the journey undertaken to such person to the nearest Gazetted Officer, superior in rank to him, or the Magistrate’s Court.  The Authority shall not retain the person for more than 24 hours.    The said period shall exclude the time necessary for the journey from the place of detention to the office of the said Officer. 

The Gazetted Officer or the Magistrate shall, if he sees no reasonable ground for search, forthwith discharge such person but otherwise shall direct that search be made.  The Authority shall call upon two or more persons to attend and witness the search.  The search shall be made in the presence of such persons.  The Authority shall prepare a list of record or property seized in the course of the search and obtains the signatures of the witnesses on the list.   No female should be searched except a female.

The Authority shall record the statement of the person searched in respect of the records or proceeds of crime found or seized in the course of the search.

Procedure for declaration of fugitive economic offender

The procedure for declaration of an individual as fugitive economic offender is as follows-

• Application by the Authorized officer to Special Court;
• Issue of notice by Special Court to the individual concerned;
• Hearing of the application;
• Declaration by the Special Court.

Application by the Authorized officer to Special Court

• If the Authority has reasons to believe, on the basis of the material in his possession, that any individual is a fugitive economic offender, he may file an application in such form and manner as may be prescribed in the Special Court that such individual may be declared as a fugitive economic offender.
• The application shall contain the following-
  • reasons for the belief that an individual is a fugitive economic offender;
  • any information available as to the whereabouts of the fugitive economic offender;
  • a list of properties or the value of such properties including any such property outside India for which confiscation is sought;
  • a list of properties or benami property owned by the individual in India or abroad for which confiscation is sought; and
  • a list of persons who may have an interest in any of the properties listed.

Issue of notice by Special Court to the individual concerned

• On filing of the application, the Special Court shall issue a notice to the individual concerned.
• The notice shall also be issued to any other person who has any interest in the property in the application.
• A notice shall-
  • Require the individual to appear at a specified place and time not less than six weeks from the date of issue of such notice; and
  • State that failure to appear on the specified place and time shall result in a declaration of the individual as a fugitive economic offender and confiscation of property under this Ordinance.
• The notice shall be issued to such authority as the Central Government may notify, for effecting service in a contracting State.
• The Authority shall make efforts to serve the notice within a period of 2 weeks in such manner as may be prescribed.

Hearing of the application

• Where any individual to whom notice has been issued appears in person at the place and time specified in the notice, the Special Court may terminate the proceedings.
• If he fails to appear at the place and time specified in the notice, but enters appearance through counsel, the Special Court in its discretion to give a period of one week to file a reply to the application.
• If he fails to enter appearance either in person or through counsel and the Special Court is satisfied-
  • that service of notice has been effected on such party; and
  • that notice could not be served in spite of best efforts because of such individual has evaded service of notice,

it may, after recording reasons in writing, proceed to hear the application.

• The Special Court may also give any person to whom notice has been issued a period of one week to file a reply to the application.
• The burden of proof for establishing-
  • that an individual is a fugitive economic offender; or
  • that a property is the proceeds of crime or any other property in which the individual alleged to be a fugitive economic offender has an interest

shall be on the Authority.

• Where any person claims that any interest in any property was acquired bona fide and without knowledge of the fact, such property constitutes proceeds of crime, the burden of proving such fact shall lie upon him.
• The standard of proof applicable to the determination of facts by the Special Court shall be preponderance of probabilities.

Declaration by the Special Court

• After hearing the application, if the Special Court is satisfied that an individual is fugitive economic offender, it may, by an order, declare the individual as a fugitive economic offender for reasons to be recorded in writing.
• On a declaration the Special Court may order that any of the following properties stand confiscated to the Central Government-

• the proceeds of crime in India or abroad, whether or not such property is owned by the fugitive economic offender; and
• any other property or benami property in India or abroad, owned by the fugitive economic offender.

• The confiscation order shall, to the extent possible, identify the properties in India or abroad that constitute proceeds of crime which are to be confiscated and in such cases properties cannot be identified, quantify the value of the proceeds of crime.
• The confiscation order shall separately list any other property owned by the fugitive economic offender in India which is to be confiscated.
• Where the Special Court has made an order for confiscation of any property in a contracting State, the Special Court may issue a letter of request to a Court or authority in the contracting State for execution of such order.
• The Special Court may, while making the confiscation order, exempt from confiscation any property which is a proceed of crime in which any other person, other than the fugitive economic offender, has an interest, if it is satisfied that such interest was acquired bona fide and without knowledge of the fact that the property was proceeds of crime.
• All rights and title in the confiscated property shall, from the date of confiscating order, vest in the Central Government, free from all encumbrances.
• Where on the conclusion of the proceedings, the Special Court finds that the individual is not a fugitive economic offender, the Special Court shall order release of property or record attached or seized to the person entitled to receive it.
• On release by the Special Court, the Authority may withhold the release of any such property or record for a period of ninety days from the date of receipt of such order, if he is of the opinion that such property is relevant for the appeal proceedings.

Supplementary application

Where at any time after filing the application in the Special Court any other property is discovered or identified which constitutes proceeds of crime or is property or benami property owned by the fugitive economic offender in India or abroad liable to be confiscated, the Authority may file a supplementary application seeking confiscation of such properties.  The procedure involved in the application is also applicable to supplementary application.

Appeal

An appeal shall be from any judgment or order, not being an interlocutory order, of a Special Court to the High Court both on facts and on law.  The appeal shall be filed within a period of 30 days from the date of judgment or order.  The High Court may entertain an appeal after the expiry of 30 days, if it is satisfied that the appellant had sufficient cause for not providing the appeal within the period of 30 days.   No appeal shall be entertained after the expiry of 90 days.

Bar of jurisdiction

No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter in which the Special Court is empowered by or under this Ordinance to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Ordinance.

Overriding effect

The provisions of this Ordinance shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.