Fugitive Economic Offenders Act

Background and evolution

In the mid-2010s, several high-profile businesspeople left India while facing charges of large-scale fraud and loan default, including the liquor businessman Vijay Mallya and the diamond traders Nirav Modi and Mehul Choksi. Existing laws allowed property attachment only after long proceedings, and the accused could challenge cases from abroad while staying out of reach. Banks faced heavy losses, and public anger grew over what was seen as impunity for the rich.

The government issued an ordinance in April 2018, and Parliament passed the Fugitive Economic Offenders Act in July 2018. Its aim is to force such persons to return and face trial by taking away their assets and their ability to pursue civil claims in India while they remain abroad.

Key features and provisions

• Who is covered: a person against whom an arrest warrant has been issued for a scheduled offence (such as fraud, money laundering, counterfeiting, cheque bouncing, tax evasion or bank loan default) worth ₹100 crore or more, who has left India and refuses to return.
• Process: the Director or Deputy Director of the Enforcement Directorate files an application before a special court under the Prevention of Money Laundering Act.
• Notice: the court issues a notice requiring the person to appear; if the person returns, proceedings under the Act stop.
• Declaration: if satisfied, the court declares the person a fugitive economic offender.
• Confiscation: property linked to the crime, as well as other property including benami property in India or abroad, can be confiscated by the Union government.
• Civil disability: courts and tribunals can refuse to hear civil claims filed by the offender or companies they control.