By Rabia Mohamed Ismail Abdul Rahim, NUALS, Kochi.
It all went downhill for the “King of Good Times” in July 2015, when the Central Bureau of Investigation (CBI) registered a case against him, Vijay Mallya, Indian Businessman and Politician, for loan default based on a complaint by IDBI Bank. The 61 year-old Chief of the Kingfisher Airlines who now owes over Rs. 9,000 crores to various Indian banks, fled India, on March 2, 2016 to escape legal proceedings in connection with the loans. And he is not the one to start this trend.
In the recent past, there have been instances of big-time offenders, including economic offenders, fleeing the country to escape the reach of the law. Such absconding not only hampers the investigation and wastes the precious time of the Courts of Law, but also defies the legal process and hence, undermines the rule of law in India. By defying the legal process, these men are flouting Dicey’s principle of Supremacy of Law and preventing the principle of Equality of Law from being realized.
The Government of India has been making every effort to avoid this and bring back fugitive criminals who have absconded after the commission of an offence in the Country. The Extradition Act, 1962 which deals with the law and the matters relating to the extradition of fugitive criminals was an attempt to pursue the same. Furthermore, India has signed extradition treaties with 47 countries and entered into extradition arrangements with nine countries to facilitate extradition. The Government has also brought about laws under which fugitive offenders are tried, these include the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI) and the Insolvency and Bankruptcy Code, 2016 (IBC).
Further, the Budget Announcement (2017-18) by the Finance Minister Arun Jaitley, reflected upon the Government’s contemplation to bring about legislative amendments or to introduce a new law to accommodate the confiscation of assets of such fugitives, till they submit to the jurisdiction of the appropriate legal forum.
Corollary to the budget speech, introduced, was the Draft Fugitive Economic Offenders Bill of 2017. The necessity to provide an effective, expeditious and constitutionally permissible deterrent to curb such actions of offenders, the new Bill is proposed. Seeking to deter economic offenders from evading the process of Indian law by fleeing the country, it provides for confiscation of their assets.
The Bill adopting the non-conviction-based asset confiscation for corruption-related cases, as recommended by the United Nations Convention against Corruption (UNCAC), has no retrospective application.
As per the draft law, a ‘fugitive economic offender’ means any individual against whom a warrant for arrest in relation to an economic offence has been issued and the person has left the country and refuses to return to India to face criminal prosecution. The provisions of the proposed bill will override other legislations dealing with economic offences.
It only deals with cases, where the total amount involved is 100 crores or more and has provisions for appointment of an administrator to dispose off the property to pay off the creditors.
It is on the authorities to apply for the declaration of a person as a fugitive offender. In other words, the burden of proof for establishing that an individual is a fugitive economic offender will be on the authorities.
It is also on them to attach any property mentioned in the application and such attachment has a validity of 180 days. The property attached must either be from proceeds of crime (such property may be outside of India) or owned by the fugitive economic offender in India. The Bill mandates effective delivery of notice to the offender and any other person who may have interest in the property being attached. On receipt of notice, if the offender fails to appear, the Special Court proceeds to hear the application. On hearing, if the Court is satisfied that the individual is a fugitive economic offender, then, declares the same with reasons and orders confiscation of the property to the Central Government, free from all encumbrances. Under the circumstance, wherein the property cannot be identified, the value of the proceeds of the crime are to be quantified by the Court.
However, the Bill protects the rights of those persons who have interest in the property, provided that they were unaware of the fact that the property was a proceed of a crime.
Such declaration will disentitle the fugitive offender from defending or bringing forward a civil claim. The Bill prevents a company from legally proceeding or defending a civil matter, if the individual filing on behalf of the company or the promoter or the key managerial personnel or majority shareholder has been declared an offender.
The Bill further provides for the appointment of an Administrator, who would be in charge of disposing of the confiscated property in order to satisfy the creditors’ demands. Where such process has already commenced under the IBC, RDDBFI Act or SARFAESI Act, the chances of overlap have been minimised and harmony has been brought to the procedures.
The powers vested in the government authorities by this bill are extraordinary. However, the necessary constitutional safeguards in terms of providing a hearing to the person through counsel, allowing him time to file a reply, serving notice of summons to him and an appeal to the High Court (in any Country) have been provided for in the Bill. There is no prima facie violation of any fundamental right either. The Bill was even put in the public domain, seeking feedback and suggestions for a short period of time.
The Bill is to be introduced in the Lok Sabha during the winter session of the Parliament. It has been approved by the Union Law Ministry. Inclusion of a Saving Clause was suggested by the Ministry, before introduction of the Bill. A Saving Clause provides for certain exception(s) in a Statute as it will enable the repealed law to be in force with respect to some existing rights.