By Pranav Vaidya, Hidayatullah National Law University, Raipur.
“You cannot escape the responsibility of tomorrow by evading it today”.
Just like a debt born today shall be paid tomorrow, every individual born in the society has a certain role to play and it is because of being indulged in such societal relationships at various capacities, that they tend to take on the burden of fulfilling certain financial responsibilities, failing which, they could even be served with penalties or punishment, as justified in the eyes of law. In order to prevent such loss to the individuals of the society, the governing bodies, in their respective territories adopt countermeasures, against activities which cause harm to other individuals, in the form of rules or statutory principles.
Wealth has always been an issue of conflict amongst individuals, due to its increasing significance in this era. Hence, this craving of human beings to become wealthier, has led them to indulge in such punishable activities like causing corporate defaults at a very large scale. There are billionaire malefactors, who try to escape from their liability, by fleeing from the jurisdiction of Courts, unlike normal individuals who undergo an average standard of living. Thereafter, it becomes impossible for the Courts to entertain such matters, during the pendency of a criminal proceeding, which in turn, undermines and hampers the financial development of our Country, with special regard to the banking sector. Recent developments in such incidents of Economic Offenders has led the Indian government to adopt one such weapon, using which they can threaten or force such offenders by confiscating their property, in the form of Fugitive Economic Offenders Bill, which was introduced in the Parliament in 2017, and got approved by the Cabinet in 2018, on account of the recent case study of the Nirav Modi-PNB fraud, amounting to Rs. 12,622 crore.
All about Fugitive Offenders Bill 2018
India is one of the countries following the 3-tier government system, wherein the Legislature is responsible for working on the statutory rules and regulations (and even in case of fleeing economic offenders, there are statues like The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFESI) Act, Insolvency and Bankruptcy Money Laundering Act 2002); this time around, the Legislature introduced this Bill in the Parliament during its winter session, with a view to restricting the economic offenders who try to run away from the Jurisdiction of the Courts to avoid loan liabilities, thereby disturbing the status quo followed by the Courts for maintaining justice.
By incorporating such provisions, which could have an overriding effect against anything inconsistent, being present in any other law in force, along with the establishment of National Financial Reporting Authority (NFRA), the Legislature empowered the concerned authority under the Money Laundering Act 2002, to provisionally confiscate and attach the property (including Benami property) of such culprits, whether such property is located within the territory of India or outside, provided the financial loss which he is liable to pay is more than Rupees 100 crores, in order to derive actionable claims from such offenders. Bringing into force such monetary limitation was necessary, to reduce the burden of the Courts and to bring such offenders to the fore, as their defaults prove to be one of the reasons for the economic setbacks faced by our Country. Accordingly, any person committing such offense, and trying to escape from the Indian territory, can be restrained from doing so, by seizing his assets.
Wilful Defaulters under the Proposed Bill
While looking at the adopted provisions under the proposed Bill, one can easily arrive at the conclusion that the Legislature hasn’t held anything back in, providing the “Special Courts” with the powers, to declare an individual as a “fugitive economic offender”, under the Prevention of Money Laundering Act, 2002. These fugitive economic offenders are nothing more than such defaulter individuals who intentionally try to avoid being affected by the counter actions against their default in the eyes of law, and therefore there is nothing wrong in calling them “Wilful Defaulters”. The Bill further ensures that the definition of these individuals is inclusive of those who have previously been criminally prosecuted in any Court of Law in our Country, and those who try to leave the Country or have already left and refuse to return, in order to escape from facing a criminal prosecution.
The Government decided to work on this Bill, owing to the heavy losses incurred because of the loans taken by Vijay Mallya. He needs to settle huge debts, almost amounting to Rupees 9,091 Crores, taken by him from different banks, including State Bank of India, for one of his businesses. He has so far not been able to repay those loans, due to the heavy losses incurred by Kingfisher Airlines, which he chose to blame on the increasing oil prices; fuel costs were taking up almost half of the maintenance cost of the said Airlines. He decided to flee from the Country, in order to escape facing a Criminal Trial.
The country was barely able to recover from that incident, when another incident, by a very prominent businessman, Nirav Modi, who was found involved in taking an unauthorized Letter of Understanding (LoU), for himself and Mehul Choksi of Gitanjali Gems Ltd., from the executives of the Punjab National Bank, till the CBI intervened in the matter, to start with their investigation; the debts against such loan amount to Rs. 12,622 crore. It got so much public attention as it stands as the 2nd largest scam which took place after the UCO Bank incident, where debts amounting to $3.2 billion in exports were advanced against overseas sales, that never actually took place.
Does it really matter?
Looking at the historical background of the said Bill, one can say that there is no dearth of laws which empower the government to initiate criminal prosecution against such fugitive economic offenders through seizure of their assets and properties. However, one cannot ignore the other side of the story, where it seems nothing more than a failed attempt by the Legislature to provide statutory recognition to something which has been dealt with and covered under previous statutes; by virtue of extradition and bilateral agreements, when the Central Government already has the power to subject such offenders to criminal prosecution, was there any need to even adopt such a Bill with very less changes in its regulatory scope? Only time might be able guide us to the answer.