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Centre Ready With New Law for Speedy Recovery of Assets From Fugitive Defaulters Like Nirav Modi

Once voted into law, the new legislation will empower investigating agencies to confiscate, and vest with themselves, any property of the absconding offenders without any encumbrances.

News18.com

Updated:February 26, 2018, 6:59 PM IST
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Centre Ready With New Law for Speedy Recovery of Assets From Fugitive Defaulters Like Nirav Modi
In this file photo, security guards stand inside a Nirav Modi showroom during a raid in New Delhi. (Reuters)
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New Delhi: In an effort to seize assets and recover dues from bank loan defaulters, the Centre is coming up with a new law—the Fugitive Economic Offenders Bill—to access and sell-off assets of Nirav Modi-type escapees, reported Moneycontrol.com.

A special court will be set up to look into the matter of absconding corporate defaulters.

The law ministry had in September approved the finance ministry’s draft of Fugitive Economic Offenders Bill, 2017, and its passage into law is now being expedited as part of the Narendra Modi government’s response to the Punjab National Bank (PNB) scam.

The Bill is likely to be introduced after Parliament reconvenes on 6 March, 2018, for the second part of the Budget session.

The Bill defines a fugitive economic offender as a person who has an arrest warrant issued in respect of a scheduled offence and who leaves or has left India to avoid criminal prosecution, or refuses to return to India to face criminal prosecution.

The draft Bill covers a wide range of offences including wilful loan defaults, cheating and forgery, forged or fraudulent document of electronic records, duty evasion and non-repayment of deposits, among others.

Once voted into law, the new legislation will empower investigating agencies to confiscate, and vest with themselves, any property of the absconding offenders without any encumbrances.

Also, at the discretion of any Court, such person or any company where the absconder is a promoter or key managerial personnel or majority shareholder, may be “dis-entitled” from bringing forward or defending any civil claim.

This could effectively take away the fugitive offenders rights to reclaim the assets.

The proposed law comes in the backdrop of the alleged Rs 11,400 crore defrauding of Punjab National Bank (PNB)—India’s second largest public sector bank—by diamond merchant Nirav Modi and his uncle Mehul Choksi.

Both Modi and Choksi have left the country and are believed to be somewhere in Europe. They have joined a growing list of economic offenders, including liquor baron Vijay Mallya who is facing charges of bank loan defaults worth an estimated Rs 9,000 crore.

In order to ensure that courts are not over-burdened with such cases, only those cases where the total value of the offence is Rs 100 crore rupees or more will fall within the purview of this Bill.

The Bill makes provisions for a court of law—a “Special Court” under the Prevention of Money Laundering Act (PMLA)—to declare a person a “fugitive economic offender”.

The existing provisions have 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.

Also, a court is unlikely to attach property outside its jurisdiction in the first place without the procedure for endorsement being followed. As a result of such delays, such offenders can continue to remain outside the jurisdiction of Indian courts for a considerable period of time.

The Fugitive Economic Offenders Bill is aimed at addressing these drawbacks.

It will allow quicker attachment and disposal of property and assets helping recovery of defrauded or defaulted amount. It will also act as a deterrent for offenders to flee the country.

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