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Central Government's New Anti-swindler Bill: Necessity or Overreach?

This new proposed legislation intends to act against tax fraudsters and swindlers, making it difficult for them to borrow from banks and run away.

Sanket Upadhyay | CNN-News18

Updated:February 28, 2018, 9:21 AM IST
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Central Government's New Anti-swindler Bill: Necessity or Overreach?
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New Delhi: As more zeroes are being added every week to ‘Niravgate’ and with the Congress reeling under pressure ever since the name of Capt Amarinder Singh’s son-in-law cropped up in the Simbhaoli Sugars scam, the central government has announced its intent to act on bank frauds.

According to moneycontrol.com, the government is expediting work on a new law to keep fraudsters in check with the Fugitive Economic Offenders Bill.

This new proposed legislation intends to act against tax fraudsters and swindlers, making it difficult for them to borrow from banks and run away. For ease of understanding, we shall be referring to this bill as the Anti-Swindler Bill. Some of the salient features of this proposed legislation are:

It will include wilful loan defaults, cheating and forgery, forged or fraudulent document of electronic records, duty evasion and non-repayment of deposits.

It will empower investigating agencies to instantly confiscate and sell all the property of the absconding offenders – this to clear all debt.

The wilful defaulter will lose all claim over his property. They shall also be disentitled from any civil claim.

Fast track courts will try the fugitive fraudsters.

Bill intends to instantly target any financial fraud upwards of Rs 100 Crore.

The bill is likely to be introduced in the second half of the budget session beginning March 6. We tried putting this latest Modi bill through the typical political test and our results were predictable – there is no political unanimity.

Congress Spokesperson and Lawyer Aadil Singh Boparai says, “The Bill is inadequate. This is a distraction. It is an attempt by the BJP to evade culpability. Does this Bill help in getting Nirav Modi back? Does this Bill help in fixing accountability on all officials in the Prime Minister’s Office, who turned a blind eye and allowing Nirav Modi, Mehul Choksi to flee?”

The BJP was quick to retort, with BJP spokesperson Zafar Islam saying, “This was expected of the Congress. This is a party full of fraud and fraudsters. Over the years, these existing laws are not effective enough. There is a strong need for this legislation.”

The Modi government has been jolted into introducing this new bill — which had been in a gestation phase for almost a year.

“Let me take you back at least 12 months. This Bill was proposed in the last year’s budget. The finance minister said that a legislation will be brought about to deal with people like Vijay Mallya and Nirav Modi, who defraud banks, flee the country and refuse to come back to India to face prosecution. In the month of May, last year, the finance ministry came out with a first draft, it went to the law ministry and was vetted last September. That’s that. In the meantime, the PNB scam unfolded. So now, the government is going to fast track this Bill and put it for passage in Parliament,” says Gaurav Chaudhary, the moneycontrol.com journalist who first broke the news.

The Congress raises a technical argument in opposing the new legislation. They claim that “rhetoric cannot substitute governance”.

“There are two laws capable of dealing with fraudsters. There is the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (also known as the SARFAESI Act) and there is the Prevention of Money Laundering Act (PMLA). Section 13 and 14 of The SARFAESI Act says that in case a borrower defaults to pay a creditor, the creditor can take over the properties of the defaulter, can take over the management and can also further appoint a receiver. Section 5 of the PMLA provides the ED powers to attach properties. We have plenty of legislation on this subject. This new bill does not help the cause,” argues Aadil.

So is the Congress opposing for the sake of opposing a government Bill or is there merit in their claims? Is the Bill vulnerable to misuse?

“There is always a possibility of misuse by the investigating authorities, especially the officers who are handling a particular case. It entirely depends on how the rules are framed. If too much of power is vested at the investigating officer’s stage, then there is always a possibility of misuse,” explains Chaudhary.

We took this debate to independent industry experts as well. Author and Entrepreneur Ashutosh Garg feels this bill should “move away from politicking”

“Anyone who is a swindler should ideally not be supported by either the Congress or the BJP. Time has now come for us to take the strongest possible action. When Nirav Modi flew away, it was the Congress who made the maximum noise on why the government did not stop him. This is money that basically belongs to you and me. We have to stop being parochial about what the BJP said and what the Congress said. Innuendo needs to stop. This is the right time to bring in a strong legislation and everyone should support it,” he said.

Chartered Accountant and Tax Experts feel the new proposed legislation follows the “principles of natural justice”.

“This is the amplest law that could have been passed. It has the principle of natural justice. The offender gets six weeks to comply with the notice in order to escape the declaration as fugitive. When assets are confiscated, he should not be able to have a civil claim claiming control over assets,” says tax expert Charanjot Nanda.

Discourse around the Anti-Swindlers Bill can be seen both as an afterthought and also a political masterstroke by the Modi government. They have had to battle massive criticism over Nirav Modi running away right from under the government’s nose.

But now, anyone seen opposing this proposed bill will be perceived as someone sympathetic to swindlers. Can the Congress risk doing this? Especially now, when Capt Amarinder Singh’s son-in-law Gurmit Singh Mann has been accused of defrauding Oriental Bank Of Commerce to the tune of 97.85 crores.

“If we read this new law, along with the existing laws, then it is only going to make the hands of the government stronger. As far as its misuse is concerned, that is for the government to legislate. But by that logic, any law can be misused,” Garg adds.
| Edited by: Aditya Nair
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