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  1. Nirav Modi PNB fraud case: Fugitive fraud Bill likely to come up during this Parliament session?

Nirav Modi PNB fraud case: Fugitive fraud Bill likely to come up during this Parliament session?

The existing laws have certain inadequacies when it comes to promptly attaching the assets of high-value economic offenders who flee India after committing wilful defaults or acts of fraud in the country.

By: | New Delhi | Published: February 27, 2018 6:38 AM
Nirav Modi PNB fraud case, Fugitive fraud Bill,  Parliament session, Fugitive Economic Offenders Bill  The Nirav Modi episode has prompted the government to fast-track the Fugitive Economic Offenders Bill (FEOB), which is meant to make it easier for it to confiscate the assets of economic offenders fleeing India to escape the reach of law.

The Nirav Modi episode has prompted the government to fast-track the Fugitive Economic Offenders Bill (FEOB), which is meant to make it easier for it to confiscate the assets of economic offenders fleeing India to escape the reach of law. To be tabled in Parliament once its Budget session resumes on March 6, the Bill will define a “fugitive economic offender”, empower special courts to declare one so and allow designated investigating agencies to attach such a person’s assets, without any encumbrances, even when he is not convicted by a court of law for the relevant offences. “The law ministry had cleared the Fugitive Economic Offenders Bill, 2017, in September last year. The proposed law will allow the Financial Intelligence Unit to file an application for declaration of fugitive economic offenders for confiscation of their assets,” said a finance ministry official, adding, “It will soon be presented in Parliament for passage, possibly as soon as the Budget session reconvenes.”

The existing laws have certain inadequacies when it comes to promptly attaching the assets of high-value economic offenders who flee India after committing wilful defaults or acts of fraud in the country. Criminal proceedings in such cases usually require to be in various courts in the country and there are chances that court orders on confiscation of assets are at odds with one another. The idea of FEOB was first proposed by finance minister Arun Jaitley in Budget 2017-18, against the backdrop of Vijay Mallya, who owes over Rs 9,000 crore to a clutch of Indian banks, fleeing the country to escape legal proceedings. After allegedly defrauding Punjab National Bank of Rs 11,400 crore, diamond merchant Modi and his family members are currently abroad, while the passports of Modi and his uncle Mehul Choksi have been revoked.

The minister had said: “In the recent past, there have been instances of big time offenders, including economic offenders, fleeing the country to escape the reach of law. We have to ensure that the law is allowed to take its own course. Government is therefore considering introduction of legislative changes, or even a new law, to confiscate the assets of such persons located within the country, till they submit to the jurisdiction of the appropriate legal forum. Needless to say that all necessary constitutional safeguards will be followed in such cases.” As per the FEOB, courts under the Prevention of Money Laundering Act will be entrusted with the responsibility to trying cases involving big economic offenders fleeing the country. Only where the total value involved is Rs 100 crore or more will be under the Bill’s purview. Currently, such offences are tried under multiple laws namely the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (Sarfaesi), Recovery of Debts Due to Banks and Financial Institutions Act, and Insolvency and Bankruptcy Code. The FEOB, the provisions of which will override the relevant clauses in extant laws, will also provide for appointment of an administrator to dispose of the attached property to pay off the creditors.

According to the Bill, a fugitive economic offender is one who has an arrest warrant issued in relation to a scheduled offence and who leaves or has left India so as to avoid criminal prosecution, or refuses to return to India to face criminal prosecution. The offences covered under the Bill include wilful loan defaults, cheating and forgery, and non-repayment of deposits, among others.

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