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Fugitive Economic Offenders Ordinance

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May 10, 2018

What is the issue?

  • Fugitive Economic Offenders are those who leave the country in the face of scandal and refuse to return to face trial.
  • President has issued an ordinance on to make life difficult for “fugitive economic offenders”, which is likely to be welcomed by the masses.
  • But the ordinance is constitutionally inconsistent and its unintended consequences could potentially wreck havoc on innocents.

How does the ordinance affect non-offenders?

  • Fugitive offender’s ordinance provides a provision for “disentitlement”, which could victimise an innocent on suspicion of being a fugitive offender.
  • Under this provision, any court in India could issue a directive to disentitle any company related to the “fugitive offender” from defending any civil claims.   
  • For instance, let’s say the MD or a promoter of a company is alleged to have committed a “scheduled offence” as listed in law.
  • If the offender flees and refuses to come back to India, civil courts could bar the company from pursuing even legitimate dues owed to it.
  • This provision goes beyond the person rejecting the rule of law in India and may affect people who are themselves affected by the fugitive.
  • This line of thinking also loses sight of the fact that those who still remain in India continue to subscribe to Indian law and are legitimate entities. 
  • Implications - This could become an incentive for law enforcers to grab headlines by taking stringent actions that might hurt companies.
  • As civil claims get barred, 3rd parties that owe money to companies whose “promoter (or manager) is a declared fugitives” might intentionally default.
  • Also, despite being a solvent company, the company the fugitive leaves behind would face a potential prohibition on the sovereign assurance.

What are the other non-prudent provisions?

  • To have any individual declared as a fugitive economic offender, an application has to be moved by the authorities asking the competent court for the same.
  • However, even while moving the application, the authority has the power to attach any property listed in the application, for 180 days.
  • The only ground needed for such attachment is the reasonable doubt that the property is a “proceed from crime”. 
  • Another clause states that a person (other than the fugitive), whose property is attached, would have to shoulder the burden of proof to reclaim it.
  •  Additionally, if criminally acquired property is outside the country, any other property equivalent in value held within the country would be attached.

 

Source: Business Standard

 

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