The jury is still out on whether the Centre did the right thing by bringing in a new legislation — Fugitive Economic Offenders Bill — to deal with high-profile offenders who indulge in ‘loot and scoot’ crimes. After all one can argue that the existing Prevention of Money Laundering Act (PMLA) could have been strengthened to achieve the desired outcomes.
However, the Centre certainly seems to have learnt its lessons as it went about plugging the loopholes in the earlier enactments through the new Fugitive Economic Offenders Ordinance 2018, which is the first Ordinance from the Modi-led Government this year.
The ordinance — notified on Saturday — has made it clear that no civil claim can be made in any Indian court with regard to confiscation of the fugitive economic offender’s property. The PMLA was silent on the same, points out Aseem Chawla, Partner, Phoenix Legal, a law firm.
An unique feature of the Fugitive Economic Offenders Ordinance is that it empowers the Indian Government to confiscate the property of economic offenders absconding from India until they submit themselves to the jurisdiction of the appropriate legal forum.
So unlike the PMLA which has a punitive effect, the Fugitive Economic Offenders Ordinance seeks to have a deterrent effect. An individual declared as a fugitive economic offender will have to submit to Indian jurisdiction to protect his assets. Moreover, the sweep of the ordinance is wide in the sense that it covers even overseas assets acquired from criminal activity.
Chawla highlighted that PMLA is ineffective in a way that the provision of confiscation is available only upon the conclusion of a trial and therefore can rarely be used expeditiously. On the other hand, the Fugitive Economic Offenders Ordinance allows the Centre to confiscate and sell the property immediately on an individual being declared as a fugitive economic offender even without a proper trial. So much so that some argue this violates the principle of “innocent until proven guilty”.,
Some famous cases
So will this ordinance have a retroactive effect? Will it apply on liquor baron Vijay Mallya, diamantaire Nirav Modi and his uncle Mehul Choksi who fled the country to avoid criminal prosecution; and being abroad refuse to return to India to face criminal prosecution? Indian lower courts have issued arrest warrant too on them.
Some legal pundits say the fugitive economic offender ordinance will have retroactive effect. The ordinance issued on Saturday highlights that the provisions of this Ordinance would apply to “any individual who is, or becomes, a fugitive economic offender on or after the date of coming into force of this Ordinance”. So how about situations where actions have already been taken under PMLA (provisional attachment of assets under PMLA already done in Nirav Modi)? Can two laws be applied on the same offence? These is a point to ponder. So will the new Fugitive Economic Offenders ordinance help bring Vijay Mallya and Nirav Modi back to India to face criminal prosecution? This would be unlikely, as bringing people back to India, would depend much on the mutual legal assistance agreements/ extradition treaties and whether the Indian Government is keen to use them or not.
Rule of law
The Centre has been compelled to resort to the ordinance route in the case of fugitive economic offenders, to among other things, preserve the sanctity of the Rule of Law in India. However, not all legal pundits are on the same page as the Government when it comes to use of ordinance as an instrument to accomplish its goals.
“The Government thinking of issuing ordinances is a sad state of affairs and clear example of dilution of rule of law,” said Lalit Bhasin, President, Society of Indian Law Firms.