How India deals with fugitive economic offenders: the new Bill

On March 1st the Union Cabinet of India has approved the Fugitive Economic Offenders Bill, in order to deal with cases of evading prosecution after committing financial malpractices, such as the highly media covered cases of Vijay Mallya and Nirav Modi. Vijay Mallya is an Indian businessman and former politician who is the subject of an extradition effort with a view to force his return from the UK to India in order to face charges for his financial crimes; Nirav Modi is a diamond merchant oligarch who, together with his Uncle Mehul Choksi, escaped the country last month after fraudulently obtaining loans amounting to Rs 12,622 crore.

The Finance Minister of India Arun Jaitley informed the press at the approval of the Bill that the “Fugitive Economic Offenders Bill 2018 has been brought to allow confiscation of assets of a fugitive, including Benami assets. There will also be a provision to confiscate those assets outside of India but co-operation of that country will be needed”.

The “Benami Transactions (Prohibition) Act, 1988” is an Act of the Parliament of India that prohibits certain types of financial transactions. The act defines a ‘benami’ transaction as any transaction in which property is transferred to one person for a consideration paid by another person. These such transactions were thought to contribute to the Indian black money problem (funds earned on the black market), therefore, with this Act, they have hence been banned and the government has the right to recover property held benami without paying any compensation.

The Fugitive Economic Offenders Bill is a much revamped version of the one already tabled in September during the winter session of the Indian Parliament and its goal is to address the lacunae and lay down measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts. The Bill makes provisions for a court of law (“Special Court” under PMLA Act) to declare a person a Fugitive Economic Offender. An Economic Offender can be compelled to return to an appropriate jurisdiction to face trial.

Furthermore, in order to ensure that the courts are not over-burdened with such cases, only those cases where the total value involved in such offences is 100 crore rupees (12.5 Million Euros Approx) or more, is within the purview of this Bill. The courts with the appropriate jurisdiction are also given the right to confiscate domestic as well as foreign assets of such an absconder, there is also a provision enabling repayment of dues to creditors by disposing of confiscated assets, in case the accused offender continues to evade prosecution.

Only time can tell whether such defaulters will pay the consequences of their actions; to keep yourself updated about the latest news, or for any further information, write to us via