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Introduction

The Fugitive Economic Offenders Act, 2018 (FEOA) was introduced by the Indian Parliament in April 2018 with the intention of punishing economic offenders for an array of offences involving fraud and corruption. The Act recognises the necessity to serve justice to the economic offenders, who flee the country to evade punishment for their illegal financial activities. Such offenders frustrate the government’s attempts to recover dues owed to it and so to protect its economic interests, the Act has constitutionalised a number of measures to deal with offenders who have committed an offence involving an amount of Rs.100 crore or more.

The Act requires the offenders to submit themselves to the legal process or else face the consequences by the courts of India in confiscation of their property and other assets. These consequences will constitute a “discouraging effect on economic offenders” who attempt to the country to evade legal proceedings.

Analysis of Section 4, Application for Declaration of Fugitive Economic Offender and Procedure therefore

Section 4 of the Act enables the Director (‘Director’ is defined under section 2 (d) and means ‘the Director appointed under section 3 of the Prevention of Money-Laundering Act, 2002’) or any other authority authorised by the central government, [hereinafter referred to as the ‘competent authority’] to apply for the declaration of a person as a fugitive economic offender, who has committed an offence of the nature specified in the Act, and such person has left India or is so absconded that he cannot be found from the Republic of India to face the criminal proceedings initiated against him.

Under sub-section 2 of Section 4, if the competent authority feels that any person is a fugitive economic offender, it may proceed to attach any property of the said person under the provisions of the Act of the Prevention of Money-Laundering Act, 2002. Such attachment shall be valid for a period of 6 months unless it is extended by an additional 6 months by an order of the special court (defined under clause (aa) of sub-section (d) of Section 2 of the Act).

Sub-section 3 of Section 4 outlines the procedure of filing an application before the special court, seeking a declaration of a person as a fugitive economic offender. The application shall contain the details of the offence committed by the person, details of the properties of such person and the value of such properties, details of the properties of such person which have been attached and the details of the properties of such person owned outside India if the competent authority is aware of the same.

Further, sub-section 4 and 5 of Section 4 states that the court may pass an order to provide an opportunity of being heard to the person declared as a fugitive economic offender and permit the said person to submit objections within a span of thirty days from the date of receipt of the notice, given to him or her, along with supporting evidence.

Also, sub-section 6 of Section 4 states that based on the hearing, which may or may not include the persons who are accused of the criminal offence, the special court may pass an order declaring the accused as a fugitive economic offender and confiscate the properties of such person located in and outside India.

Analysis of Enforcement Directorate Working Style in India and Its Powers

The Enforcement Directorate (ED) is the premier law enforcement agency in India, responsible for enforcing the provisions of the Foreign Exchange Management Act, 1999 (FEMA) and for investigations related to the contravention of its provisions. It is important to note that ED has immense powers under FEMA to take necessary actions in case of violations of the Act, including attaching of property, issuance of notice, etc.

The ED’s functioning is authorized and recognized by the Law enforcement structure of India. It is empowered to initiate investigation, search, arrest and provide assistance to prosecuting agencies in matters related to frauds, money laundering, counterfeiting, smuggling and other economic offences. ED also has the power to freeze and seize assets associated with money laundering and other economic offences.

Moreover, ED has the power to refer the cases to investigating agencies such as the CBI and Central Bureau of Financial Investigation (CBFI). ED also assists other countries in respect of investigation relating to economic offences. The ED also has the power to issue orders for attachment of certain movable and immovable properties.

Powers of Enforcement Directorate in India

The Enforcement Directorate (‘ED’) is the foremost investigation agency in India that is authorised to investigate matters relating to foreign exchange, customs, income tax and banking frauds, and tax evasion under the provisions of the Foreign Exchange Management Act, 1999 and the Prevention of Money-Laundering Act, 2002. It is empowered to seize any property belonging to the offender as well as to attach the person as an accused in order to prevent the him from disposing off any property or hampering any investigation related to money laundering.

The ED has legal backstopping from the FEOA which permits the ED to initiate action for attaching properties of a person declared as a fugitive economic offender, or acting on behalf of such a person in India and abroad.

Conclusion

The Fugitive Economic Offenders Act, 2018 provides a legal framework to mercilessly punish those economic offenders who evade legal proceedings by fleeing the country. The Act is a significant step forward in terms of providing justice to victims of economic offences and also protect the economic interests of the country by enabling its investigative agencies such as the ED to attach property of such offenders both within and outside the country. It is believed that the Act will act as a strong deterrent against those criminals who are indulging in money laundering and other such activities.

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(Author can be reached at email address casharma.sharad2000@gmail.com or on Mobile No. 9990365673)

Disclaimer :  The contents of this article are solely for informational purpose. Neither this article nor the information’s as contained herein constitutes a contract or will form the basis of a contract. The material contained in this article does not constitute or substitute professional advice that may be required before acting on any matter. While every care has been taken in the preparation of this article to ensure its accuracy at the time of publication. Sharad Kumar Sharma assumes no responsibility for any error which despite all precautions may be found herein. We shall not be liable for direct, indirect or consequential damages if any arising out of or in any way connected with the use of this article or the informations as contained herein.

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