Fugitive Economic Offenders Bill, 2017’

Government invites comments / suggestions of all stakeholders concerned / public at large on the Draft ‘Fugitive Economic Offenders Bill, 2017’



It is widely felt that the spectre of high-value economic offenders absconding from India to defy the legal process seriously undermines the rule of law in India. It is, therefore, felt necessary to provide an effective, expeditious and constitutionally permissible deterrent to ensure that such actions are curbed.

            In view of the above context, a Budget Announcement was made by the Government in the Budget 2017-18 that the Government is 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. The relevant extract from the Budget Speech is re-produced below.

“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.”

            Pursuant to the above Budget Announcement, a draft law, known as ‘The Fugitive Economic Offenders Bill, 2017’ has been prepared. A copy of the Draft Bill along with an Explanatory Note explaining the key legal provisions of the Bill are also hosted on the home page of the Department of Economic Affairs, Ministry of Finance at http://dea.gov.in/recent-update

            All stakeholders concerned / public are requested to forward comments / suggestions that they may wish to submit on the Draft Bill by 3rd June 2017  by e-mail to parveen.k63@gov.in or in hard copy to Shri Parveen Kumar, Under Secretary (FSLRC), Department of Economic Affairs, Ministry of Finance, Room No. 48, North Block, New Delhi-110001. The decision of the Government with respect to the Draft Bill will be taken after receipt of public / stakeholders comments and after following due procedure thereafter.

THE FUGITIVE ECONOMIC OFFENDERS BILL, 2017

A Bill to provide for measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts, thereby preserving the sanctity of the rule of law in India.

Enacted by Parliament as follows:

CHAPTER I
PRELIMINARY

1. Short Title
This Act is the Fugitive Economic Offenders Act, 2017.

2. Commencement
(1) This section comes into force at once.
(2) The Central Government may appoint a date by notification in the Official Gazette on which
the remaining provisions will come into force.
(3) The Central Government may appoint different dates of coming into force for different
provisions of this Act.

3. Extent
This Act extends to the whole of India.

4. Definitions
(1) In this Act, unless the context otherwise requires,—
(a) “Administrator” means the person appointed under Section 12 of this Act;
(b) “Deputy Director” means the Deputy Director appointed under Section 49(1) of the
Prevention of Money Laundering Act, 2002;
(c) “Director” means the Director appointed under Section 49(1) of the Prevention of
Money Laundering Act, 2002;
(d) “contracting state” means any country or place outside India in respect of which
arrangements have been made by the Central Government with the Government of
such country or place through a treaty or otherwise;
(e) “fugitive economic offender” means any individual against whom a warrant for arrest
in relation to a scheduled offence has been issued by any court in India, who:
(i) leaves or has left India so as to avoid criminal prosecution; or
(ii) refuses to return to India to face criminal prosecution.
(f) “key managerial person” will have the meaning ascribed to it in Section 2(51) of the
Companies Act, 2013;
(g) “proceeds of crime” means any property derived or obtained, directly or indirectly, by
any person from any criminal activity relating to a scheduled offence or the value of
such property or where such property is outside the country, then the property
equivalent in value held within the country;
(h) “prescribed” means prescribed under rules made under this Act;
(i) “scheduled offence” means the offences mentioned in the Schedule to this Act, if the
total value involved in such offences is one hundred crore rupees or more;
(j) “Special Court” means a court of session designated as Special Court under Section
43(1) of the Prevention of Money Laundering Act, 2002.
(2) Terms not defined in this Act that are defined in the Prevention of Money Laundering Act,
2002 shall have the same meaning as in that Act.

5. Application of the Act
The Act applies to any individual who is, or becomes, a fugitive economic offender on or after the
date of coming into force of this Act.

CHAPTER II
DECLARATION OF FUGITIVE ECONOMIC OFFENDER AND CONFISCATION

6. Procedure for making application
(1) The Director or any other officer authorised by the Director may file an application to the
Special Court for a declaration that an individual is a fugitive economic offender.
(2) The application must contain:—
(a) reasons for the belief that an individual is a fugitive economic offender;
(b) any information available as to the whereabouts of the fugitive economic offender;
(c) a list of properties or the value of such properties believed to be the proceeds of
crime, including any such property outside India for which confiscation is sought;
(d) a list of properties owned by the person in India for which confiscation is sought;
(e) a list of persons who may have an interest in any of the properties listed under subclauses
(c) and (d).

7. Preservation of property
(1) The Director or any officer authorised by the Director not below the rank of the Deputy
Director may attach any property mentioned in the application under Section 6 by an order in
writing.
(2) Notwithstanding anything contained in sub-section (1), the Director or any officer authorised
by the Director, may, by an order in writing, at any time prior to the filing of the application
under Section 6, attach any property which:—
(a) there is reason to believe is proceeds of crime or is property owned by an individual
who is a fugitive economic offender; and
(b) is being or is likely to be dealt with in a manner which will result in the property
being unavailable for confiscation.
(3) The attachment of any property under this section will continue for a period of 180 days from
the date of the order of attachment.

8. Notice
(1) Where an application under Section 6 has been duly filed, the Special Court will issue a
notice to the individual alleged to be a fugitive economic offender.
(2) Notice must also be issued to any other person who has any interest in the property mentioned
in the application under Section 6.
(3) A notice under sub-section (1) will:—
(a) require the individual to appear at a specified place at a specified time not less than
six weeks from the date of notice; and
(b) state that failure to appear on the specified place and time will result in a declaration
of the individual as a fugitive economic offender and confiscation of property under
this Act.
(4) A notice under sub-section (1) will be forwarded to such authority as the Central Government
may notify for effecting service in a contracting state.
(5) The authority under sub-section (4) must make efforts to serve the notice within a period of
two weeks including through electronic service as may be prescribed.
(6) A notice under sub-section (1) may also be served to the individual alleged to be a fugitive
economic offender by electronic means to:—
(a) his electronic mail address submitted in connection with an application for allotment
of Permanent Account Number under Section 139A of the Income Tax Act, 1961;
(b) his electronic mail address submitted in connection with an application for enrolment
under Section 3 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies,
Benefits and Services) Act, 2016;
(c) any other account as may be prescribed, belonging to the individual which is accessed
by him over the Internet, provided it is shown to the satisfaction of the Special Court
that the account has been recently used by the individual and constitutes a reasonable
method for communication of the notice to the individual.

9. Procedure for hearing the application
(1) If any individual to whom notice has been issued under Section 8(1) appears in person at the
place and time specified in the notice, the Special Court may terminate the proceedings under
this Act.
(2) If any individual to whom notice has been issued under Section 8(1) fails to appear at the
place and time specified in the notice, but enters appearance through counsel, the Special
Court may in its discretion give a period of one week to file a reply to the application under
Section 6.
(3) If any individual to whom notice has been issued under Section 8(1) fails to enter appearance
either in person or through counsel, and the Special Court is satisfied,
(a) that service of notice has been effected on such party, or
(b) that notice could not be served in spite of best efforts because such individual has evaded service of notice, the Special Court may, after recording reasons in writing, proceed to hear the application.
(4) The Special Court may also give any person to whom notice has been issued under Section
8(2) a period of one week to file a reply to the application under Section 6.

10. Declaration of Fugitive Economic Offender
(1) After hearing the application under Section 6, if the Special Court concludes that an
individual is a fugitive economic offender, it may declare the individual a fugitive economic
offender for reasons recorded in writing.
(2) On a declaration under sub-section (1), the Special Court may order that any of the following
properties stand confiscated to the Central Government:—
(a) proceeds of crime, whether or not such property is owned by the fugitive economic
offender;
(b) any other property in India, owned by the fugitive economic offender.
(3) The confiscation order of the Special Court will, to the extent possible, identify the property
that constitutes proceeds of crime which are to be confiscated and in case such properties
cannot be identified, quantify the value of the proceeds of crime.
(4) The confiscation order of the Special Court will separately list any other property owned by
the fugitive economic offender in India which is to be confiscated.
(5) 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, provided it is shown that such interest was acquired
without knowledge of the fact that the property was a proceed of crime.
(6) From the date of the confiscation order, all the rights and title in the confiscated property will
vest in the Central Government, free from all encumbrances.

11. Disentitlement
(1) Notwithstanding anything contained in any other law, on a declaration of an individual as a
fugitive economic offender, any court in India, in any civil proceeding before it, may, in its
discretion, disentitle such individual from putting forward or defending any civil claim.
(2) Notwithstanding anything contained in any other law, any court in India in any civil
proceeding before it, in its discretion, disentitle any company from putting forward or
defending any civil claim, if an individual filing the claim on behalf of the company, or any
promoter or key managerial personnel or majority shareholder of the company has been
declared a fugitive economic offender.

12. Appointment of administrator
(1) The Special Court will, on passing a confiscation order under Section 10, appoint an
administrator, in the manner as may be prescribed, to manage and deal with the confiscated
property.

(2) Only an insolvency professional under the Insolvency and Bankruptcy Code, 2016 will be
eligible to be appointed as an administrator under this Act.

13. Disposal of confiscated property
(1) The administrator will be responsible for the disposal of the confiscated property.
(2) The administrator will hear the claims in relation to the confiscated property, in the manner as
may be prescribed, and prepare a final list of creditors.
(3) The confiscated property will be used to satisfy the claims of the creditors in the final list.
(4) In cases where any confiscated property is the subject matter of proceedings under the
Insolvency and Bankruptcy Code, 2016, the administrator will follow the priority prescribed
under the said Code for the satisfaction of claims under this section.
(5) In cases where any confiscated property is the subject matter of proceedings under the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests
Act, 2002 or the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the
administrator will follow the priority prescribed under the said Acts for the satisfaction of
claims under this section.

CHAPTER III
MISCELLANEOUS

14. Rules of Evidence
(1) The burden of proof for establishing that an individual is a fugitive economic offender is on
the Director or the person authorised by the Director to file the application under Section 6.
(2) The burden of proof for establishing that a property is proceeds of crime is on the Director or
the person authorised by the Director to file the application under Section 6.
(3) Any person referred to in Section 8(2) claiming that any interest in any property was acquired
without knowledge that such property is proceeds of crime will bear the burden of proof of
that fact.
(4) The standard of proof applicable to the determination of facts by the Special Court under this
Act is preponderance of probabilities.

15. Appeal
Notwithstanding Section 11, any individual aggrieved by an order under Section 10 may file an
appeal to the High Court within 30 days from the date of the order.

16. Powers of authorities
The powers of the Director and Deputy Director under this Act are in addition to those conferred by
the Prevention of Money Laundering Act, 2002.
6

17. Power of Central Government to amend the Schedule
The Central Government may, in furtherance of the objective of this Act, amend the Schedule to this
Act by notification in the Official Gazette.

18. Power of Central Government to make rules
(1) The Central Government may make rules for carrying out the provisions of this Act, which
will be notified in the Official Gazette.
(2) The rules made under this Act will be laid before each House of Parliament while it is in
session, for a period of 30 days.
(3) The 30 days may extend over one or more successive sessions while the Parliament is in
session.
(4) After rules have been laid as per this section, if before the expiry of the next session, both the
Houses agree:—
(a) to make any modifications in the rules; or
(b) that such rules should not be made or issued,
 the rules will have effect only in the modified form or have no effect, respectively.
(5) Any change in the rules under sub-section (4) will not affect the validity of anything
previously done under the rules.

19. Overriding effect
The provisions of this Act will override anything inconsistent in any other law in force.




SCHEDULE
Section Description of Offence

Offences under the Indian Penal Code, 1860
120B read with any offence in this
Schedule
Criminal conspiracy
255 Counterfeiting Government stamp
257 Making or selling instrument for counterfeiting
Government stamp
258 Sale of counterfeit Government stamp
259 Having possession of counterfeit Government stamp
260 Using as genuine a Government stamp known to be
counterfeit
417 Punishment for cheating
418 Cheating with knowledge that wrongful loss may
ensue to person whose interest offender is bound to
protect
420 Cheating and dishonestly inducing delivery of
property.
421 Dishonest or fraudulent removal or concealment of
property to prevent distribution among creditors.
422 Dishonestly or fraudulently preventing debt being
available for creditors
423 Dishonest or fraudulent execution of deed of transfer
containing false statement of consideration.
424 Dishonest or fraudulent removal or concealment of
property
467 Forgery of valuable security, Will, etc.
471 Using as genuine a forged document or electronic
record.
472 and 473 Making or possessing counterfeit seal, etc., with
intent to commit forgery.
475 and 476 Counterfeiting device or mark.
481 Using a false property mark.
482 Punishment for using a false property mark.
483 Counterfeiting a property mark used by another.
484 Counterfeiting a mark used by a public servant.
485 Making or possession of any instrument for
counterfeiting a property mark.
486 Selling goods marked with a counterfeit property
mark.
487 Making a false mark upon any receptacle containing
goods.
488 Punishment for making use of any such false mark.
489A Counterfeiting currency notes or bank notes
489B Using as genuine, forged or counterfeit currency
notes of bank notes.

Offences under the Prevention of Corruption Act, 1988
7 Public servant taking gratification other than legal
remuneration in respect of an official act.
8 Taking gratification in order, by corrupt or illegal
means, to influence public servant.
9 Taking gratification for exercise of personal influence
with public servant.
10 Abetment by public servant of offences defined in
section 8 or section 9 of the Prevention of Corruption
Act, 1988.
13 Criminal misconduct by a public servant.

Offences under the Securities and Exchange Board of India Act, 1992
12A read with section 24 Prohibition of manipulative and deceptive devices,
insider trading and substantial
24 Acquisition of securities or control.

Offences under the Customs Act, 1962
135 Evasion of duty or prohibitions.


Offences under the Companies Act, 2013
74 Non-repayment of deposits
76A Punishment for Contravention of Section 73 or
Section 76.
206 (4) 2nd
proviso Carrying on business of a company for a fraudulent
or unlawful purpose.
213 (b) proviso Carrying on business of a company with intent to
defraud its creditors, members or any other persons
or otherwise for a fraudulent or unlawful purpose, or
that the company was formed for any fraudulent or
unlawful purpose.
447 Punishment for Fraud.
452 Punishment for withholding of property.

Offence under the Limited Liability Partnership Act, 2008
30 (2)
Carrying on business with intent or purpose to defraud
creditors of the LLP or any other person or for any
other fraudulent purpose.

Offence under the Insolvency & Bankruptcy Code, 2016
69 Punishment for transactions defrauding creditors

 **********

THE FUGITIVE ECONOMIC OFFENDERS BILL, 2017: EXPLANATORY NOTE
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,
several such cases of economic offences involve non-repayment of bank loans thereby
causing strain on the banking sector in India.

2. Existing civil and criminal provisions in law are not entirely adequate to deal
with the severity of the problem. Civil provisions include the following:
2.1 The RBI Master Circular on Wilful Defaulters, dated July 1, 2015: The Master
Circular defines ‘wilful default’ and lays down the mechanism for identification of
wilful defaulters. Deterrent measures include debarring a promoter from raising
institutional finance from banks, financial institutions and NBFCs for floating a new
venture for a period of 5 years.
2.2 The Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 ("SARFAESI Act"): Section 13 of the SARFAESI Act is
used to recover secured assets by the banks and financial institutions without the
involvement of a court or tribunal. Following a demand notice providing 60 days’
time period after the default, the lender is entitled to take possession of the secured
assets and take over the management of the borrower's business.
2.3 Recovery of Debts due to Banks and Financial Institutions Act, 1993
("RDDBFI Act"): Under Sections 19 and 25 of the RDDBFI Act, a debt, whether
secured or unsecured, may be recovered on the issue of a recovery certificate by the
Debt Recovery Tribunal (“DRT”). The recovery officer can recover the debt by
attaching and selling the assets, arresting the debtor etc.
2.4 Insolvency and Bankruptcy Code, 2016 (“IBC”): On a default by a debtor
(corporate or individual), the debtor or the creditor can trigger the insolvency
resolution process, which involves restructuring of the debts through formulation of a
repayment plan. If the plan fails, the liquidation / bankruptcy process is triggeredinvolves
selling of the assets of the debtor to repay the creditors, as per the priority
prescribed in the IBC.

3. The civil provisions deal with the issue of non-repayment of debt. While
effective in serving this purpose, they make no special provisions to deal either with:
(a) high-value offenders; (b) those who might have absconded from India when any
criminal case is pending. In case of such absconders, the general provision pertaining
to “proclaimed offenders” under Section 82 of the Code of Criminal Procedure, 1973
may be used. Under Section 82 of the Code, a criminal court can publish a
proclamation if it has reason to believe that a person against whom a warrant has been
issued is absconding. Persons accused of serious offences listed in Section 82 (4),1
can be declared a ‘proclaimed offender’ after such inquiry as the Court deems fit.
Under Section 83, property of the person against whom proclamations is issued within
the district may be attached. If the property is outside the district, the concerned
district magistrate must endorse the attachment.

4. However this provision has certain key drawbacks when applied to high-value
economic offenders. In large defaults, criminal proceedings are likely to be in several
criminal courts across the country where assets are located. This multiplicity of
proceedings may lead to conflicting orders of attachment by different courts. Second,
a court is unlikely to attach property outside its jurisdiction in the first place without
the procedure for endorsement being followed. If followed, the same is timeconsuming.
As a result of such delays, such offenders can continue to remain outside
the jurisdiction of Indian courts for a considerable period of time.
5. The Prevention of Money Laundering Act, 2002 (“PMLA Act”) provides for
confiscation of property derived from or involved in money laundering of proceeds of

(1  Section 302, 304, 364, 367, 382, 392, 393, 394, 395, 396, 397, 398, 399, 400, 402, 436, 449, 459 or 460 of the Indian Penal Code (45 of 1860).)

crime of a scheduled offence. The Enforcement Directorate is entitled to provisionally
attach the property of the defaulter pending trial subject to confirmation by the
adjudicating authority and appeal. On conviction in the trial, the property stands
confiscated, free from all encumbrances, to the Central Government. However the
provision for confiscation being available consequent to the conclusion of trial can
rarely be used expeditiously. Further, the purpose for such confiscation is as
punishment for the offence committed and not strictly as a deterrent for any
absconding accused to return to India.

6. In order to address these lacunae and lay down measures to deter economic
offenders from evading the process of Indian law by remaining outside the
jurisdiction of Indian courts, the Fugitive Economic Offenders Bill, 2017 (“the Bill”)
is being proposed. The Bill makes provisions for a court of law (‘Special Court’ under
PMLA Act) to declare a person a Fugitive Economic Offender. A Fugitive Economic
Offender is a person who has an arrest warrant issued in respect of 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. 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.

7. On such declaration, two consequences will ensue: First, any property that is a
proceed of crime that the person is accused of, as well as any property owned by such
person in India shall stand confiscated and vested in the Government of India free
from all encumbrances. Second, at the discretion of any Court, such person or any
company where he is a promoter or key managerial personnel or majority shareholder,
may be disentitled from bringing forward or defending any civil claim. 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 this Act would cease by law.

8. It must also be noted that the provisions of United Nations Convention against
Corruption (ratified by India in 2011) recommends non-conviction-based asset
confiscation for corruption-related cases. The Bill adopts the same. 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 dispose of the property to satisfy
creditors’ demands. Where such process has already commenced under the IBC,
RDDBFI Act or SARFAESI Act, the overlap has been minimised and the procedures
harmonised.

9. It is widely felt that the spectre of high-value economic offenders absconding
from India to defy the legal process seriously undermines the rule of law in India. It is
necessary to provide an effective, expeditious and constitutionally permissible
deterrent to ensure that such actions are curbed. To serve these ends, this Bill is being
proposed.