Socio-economic offences in India have always been treated as White Collar crimes which are not typically offences but violations. Conduct or violations when punished or penalised raise a question as to the Mens rea or intention of the person causing such violation or engaged in such conduct. Also categorised as organised crimes, white collar offences in India have spread across sector and the effects are in breeding. The Government of India to deal with one of its aspect- unaccounted money transfers and benami transactions formulated the Prevention of Money Laundering Act in the year 2012. The authorities were successful to the extent that the liberal approach towards interpretation of the scope and ambit of the Act increased its effectiveness. The objective was to impose alternative methods of punishment which would not only be retributive but also stigmatic for the offenders.
Read – White-Collar Crime In India – Detail Analysis
Several Law Commissions and committees were formed and they formulated reports specific to the method of trail and investigation of the socio-economic offences. The Law Commission in the year 1972 in its 47th Report on the Trial and Punishment of Social and Economic Offences dealt with the provision of certain acts and the process to be followed by the Government of India in social and economic offences.
The problem arose when the offenders of these organised socio-economic offences went beyond the jurisdiction of the Indian Courts; transacted in the name of family members in collusion and increased the difference between the actus and the mens of the crime creating a halo effect for the investigating agencies. It was not unheard of that men committed organised crimes affecting the society and the members also violated the rules of financial institutions and then fled to a different country while amassing lots of wealth and property both immovable and movable nature.
The PMLA proved to be ineffective because it laid down the method of restricting inflow and outflow of unaccounted money from one person to another but could not restrict the movement of human beings from one country wherein they have committed the crime to another country wherein he could enjoy diplomatic facilities. With the advent of globalisation the mobilisation of resources through organised crime increased and once the person involved travelled beyond Indian territorial boundaries, he or she was outside the purview of Indian laws and above the Rule of Law established by the magna carta, The Constitution of India.
To deal with such fleeing behaviour of criminals involved in organised crimes and make the penal provisions stringent in such crimes, The Fugitive Economic Offenders Act was introduced in the year 2018. The Fugitive Economic Offenders Act, 2018 is a special statute. It has III chapters and 26 sections. The scope of the Act is to provide for measures to deter fugitive economic offenders from evading the process of law in India. Such evasion can either be by staying outside the jurisdiction of Indian Courts or avoiding the application of Indian Law. This law was framed with the intention to uphold the rule of law in India and lay down the procedural framework. It received its formal assent on 31st July, 2018 but is deemed to be into force from 21st day of April, 2018. It extends to the whole of India.
The definition section is not exhaustive but inclusive of the definitions in the Prevention of Money-laundering Act, 2002 (15 of 2003). Some of the important definitions are discussed herein-below:
• Proceeds of Crime is defined under Section 2(k) and means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a Scheduled Offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad.
• Scheduled Offence under Section 2(m) means an offence specified in the Schedule, if the total value involved in such offence or offences is one hundred crore rupees or more.
• Special Court under Section 2(n) means a Court of Session designated as a Special Court under sub-section (1) of section 43 of the Prevention of Money-Laundering Act, 2002 (15 of 2003).
• Fugitive Economic Offender is defined under Section 2(f) as any individual against whom a warrant for arrest on relation to a Scheduled Offence has been issued by any court in India who has left India so as to avoid criminal prosecution or being abroad refuses to return to India to face criminal prosecution.
Chapter II of the Act deals with application for declaration of fugitive economic offenders and confiscation of property. Section 4 to 15 of the Act elaborates the process and the requirements. Application can be filed by a Director in the Special court which is not below a Sessions court to declare an individual a fugitive economic offender. The application shall contain the reasons to believe a particular person as a fugitive economic offender; any information if available as to the whereabouts of the person; list of properties or value of such properties believed to be proceeds of crime whether within the territorial jurisdiction of India or abroad; list of benami properties owned by the individual in India and/or abroad; and list of persons who may have any interest in such properties so listed. The term “person interested” increases the ambit of people who could be reviewed by the appropriate authorities to retrieve the proceeds of the crime. This was analysed from the view that it is not unheard of that many relatives-distant or close help a criminal dilute and mainstream the proceeds of such crimes by purchases and benami transactions. To deal with the cases under this statute, authorities appointed for the purposes of Prevention of Money-laundering Act, 2002 shall be the authorities for the purposes of the Act. The property specified can be attached by the Director or any officer specified by the Act with the permission of the Special Court. Such attachment can also be provisional in nature for a period of thirty days from such application and continue for a period of 180 days. Such attachment period can be extended by the Special Court, if the application for such extension is filed before the expiry of such period. As per the Act, the person whose property is being attached will in no manner during the process restrained from enjoying the property. Chapter III of the Act lays down the miscellaneous provisions to outline the requirements of the process and overriding contents of the statute.
The Act is a welcome step to ensure the offenders do not flee the jurisdiction of Indian Courts either anticipating criminal proceedings or during pendency of criminal proceedings. The absence of offenders while proceedings are pending hampers the investigation; delays the process; litigation is extended and rule of law of India is undermined. If such socio-economic offences affect the banks or financial institutions it affects the whole of the economy. Vijay Mallya was one of the persons against whom the Enforcement Directorate filed an application before the Court seeking to declare him a “Fugitive Economic Offender”. The act defines a Fugitive Economic Offender as a person against whom an arrest warrant has been issued for his or her involvement in economic offences involving at least Rs. 500 crore or more and has left India to avoid prosecution. The application also sought to confiscate his assets over Rs. 12.500 crore. Similar Proceedings were initiated under the Act against Nirav Modi and his Uncle Mehul Choksi for a fraud case over $2billion against Punjab National Bank (PNB).
The statute is progressive and a way forward to deal with offenders such as Vijay Mallya, Nirav Modi and Mehul Choksi who go ahead in such organised crimes and flee the due process of law by flying overseas or crossing the territorial jurisdiction of the country altogether. The Central Government is the overarching authority for the effective implementation of the Act and therefore it retains maximum powers to the execution process. More so, the Central Government can amend the offences and the punishment in the Schedule of the Act by a notification. Nevertheless, the procedural details and the loopholes in terms of implementation will increase the roadblocks of the statute. India has to ensure compliance to various diplomatic treaties and agreements while ensuring the effectiveness of the statute in the longer run. A year is too short a period to analyse the impact of a statute and given the complexity and novelty of organised crimes in India, it makes the task of the enforcement agencies all the more crucial and difficult at the same time. Organised crimes cannot be equalled to the blue collar crimes and in the process of implementing the law, the basic principles of procedure cannot be surpassed either. It is also important to understand the requirements of an organised crime along with the regular developments to ensure the success of the statutory provisions.
This Article Is Authored By –
Sovik Mukherjee & Sneha Singh
Prof. Sovik Mukherjee is an Assistant Professor in Economics and Prof. Sneha Singh is an Assistant Professor in Law, both under Faculty of Commerce and Management Studies, St. Xavier’s University, Kolkata.