ARREST OF MR. NIRAV MODI UNDER THE FUGITIVE ECONOMIC OFFENDERS ACT

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Economic offences refer to illegal acts committed by an individual or a group of individuals to obtain a financial or professional advantage primarily motivated for personal economic gain. It is one of the most menacing and predatory of offenses as the average citizen is completely left to the mercy of the perpetrators of these offences.

Economic offences entail, embezzlement, fraud, counterfeiting, money-laundering, and tax evasion, cheating, transactions defrauding creditors, benami transactions, inter alia. The Government of India brought in the ‘Fugitive Economic Offenders Act’ in 2018 (hereinafter referred as the “Act”) as then the existing Civil and Criminal laws were devoid of specific provisions to tackle such offenders. The procedures laid down under the Prevention of Money-Laundering Act (“PMLA”), the Benami Properties Transactions Act, 1988, the Companies Act, 2013 and the Indian Penal Code, 1860 were riddled with procedural delays and loopholes, which obstructed investigation and thereby impacted the financial state of the banks. We have witnessed several instances where such offenders have successfully fled and eluded the grasp of Courts, costing the country billions of dollars which eventually resulted in an exponential downfall in investor confidence in the country.

The Act defines a Fugitive Economic Offender (“FEO”) as a person against whom an arrest warrant has been issued and the offence exceeds Rs 100 crore in value. Further, the person has fled the country and refuses to return, in order to circumvent prosecution.

The Adjudicating authority under the Act is the Special Court established under PMLA, 2002. The powers of the Special Court pursuant to this Act are similar to those of a Civil Court, including search of persons in possession of records or proceeds of crime, search of premises on the belief that a person is an FEO, and seizure of documents.

The Act further provides for provisional attachment of properties, and subsequent confiscation if a person is declared a FEO. Furthermore, most importantly the Act disables the FEO from filling or defending any civil claim.

In the past, we have witnessed a number of scams and economic offences which have left an adverse impact on the Indian economy and also on the banking sector.  Some notable of these have been the IPL Scam, the Rotomac Scam, the fraud by Kingfisher Airlines Vijay Mallya, and now the most recent pervading media is the Punjab National Bank Scam by diamantaire Nirav Modi who was arrested in London on 19^th March, 2019.

The Westminister Magistrate’s Court rejected the bail application of fugitive diamantaire terming him a ‘flight risk’. He is charged with conspiracy to commit fraud and conspiracy to conceal criminal property. The Indian Agencies have expedited the efforts to extradite him to face criminal trial in India.   

The Act aims to tackle a peril of today that has far reaching implications upon the well-being of the economy.  The Act is an efficacious attempt to curtail the impact of these economic offences which create an everlasting dent on the economy of the country.

Sonam Yadav

Associate

The Indian Lawyer