Context

• Absconding liquor baron Vijay Mallya on Saturday became the first person to be declared a fugitive economic offender by the special court hearing cases under the Fugitive Economic Offenders Act (FEOA).
• Mallya, who left the country in March 2016, was arrested by the U.K. Metropolitan Police’s extradition unit on April 18, 2017. On December 10, 2018, a U.K. court ordered that Mr. Mallya could be extradited.

Fugitive economic offender

• A Fugitive Economic Offender is a person who has an arrest warrant issued in respect of a scheduled offence and who leaves or has left India so as to avoid criminal prosecution, or refuses to return to India to face criminal prosecution.
• The FEOA, which became a law on July 31, 2018, allows for declaring a person as an offender after an arrest warrant has been issued against the individual and the value of offences exceeds ?100 crore.
• Another condition for declaring a person a fugitive economic offender (FEO) is when the individual refuses to return to the country to face prosecution.
• As per the new law, a special FEOA court can order the confiscation of a FEO’s properties, including those which are benami, and the proceeds of crime in and outside India. Once properties are confiscated, the Union government has the right over them, and it can dispose them after 90 days.

Highlights of the Fugitive Economic Offenders Act (FEOA) 2018

• The act aims to curb the practice of evading the criminal prosecution by the economic offenders who flee from the country to stay out of the jurisdiction of Indian courts.
• The act will give the right to the government to confiscate the property of such economic offenders in India and abroad. The act will also be applicable on the proxy-owned properties of the economic offenders.
• The act defines the economic offenders as those against whom a legal warrant has been issued, but they refuse to adhere to the summons of the legal authorities.
• The law balances itself with a provision that allows the accused to file an appeal in the High Court to state their case.
• The act keeps the banks and other financial institutions at the Centre and seeks to help them recover the amount. The act will only be used for economic offences over Rs 100 crores.
• The act makes provisions for a Court (‘Special Court’ under the Prevention of Money-laundering Act, 2002) to declare a person as a Fugitive Economic Offender.

Significance of the act

• There have been several instances of economic offenders fleeing the jurisdiction of Indian courts, anticipating the commencement, or during the pendency, of criminal proceedings.
• The absence of such offenders from Indian courts has several deleterious consequences— first, it hampers investigation in criminal cases; second, it wastes precious time of courts of law; third, it undermines the rule of law in India.
• The act is expected to re-establish the rule of law with respect to the fugitive economic offenders as they would be forced to return to India to face trial for scheduled offences.
• This would also help the banks and other financial institutions to achieve higher recovery from financial defaults committed by such fugitive economic offenders, improving the financial health of such institutions.
• It is expected that the special forum to be created for expeditious confiscation of the proceeds of crime, in India or abroad, would coerce the fugitive to return to India to submit to the jurisdiction of Courts in India to face the law in respect of scheduled offences.