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The Post Second World War era witnessed the transition of traditional society into an industrial society globally, including India. The evolution of extreme business competitiveness also gave birth to socio- economic criminality. It has been psychologically observed that Socio- economic offences drives its origination from the upper and advanced middle class indulged in trade, businesses, Profession and Public offices.
The ethical, spiritual and moral values get turned into love and lure for money, which ultimately gets transformed into the socio- economic offences. The recent events in our country like the fleeing away of Nirav Modi and Vijay Mallya with a huge debt has compelled the legislature to come up with a law that deals with these offences. In my opinion, when the world’s 89% wealth is concentrated in just the 1% elite, the crime or the economic corruption done by them is against the very idea of economic equality in the society. In this short piece, the author is going to discuss the economic offences, law on economic offences in India and further the legal recourse available with such offences against public welfare.
Rationale of Economic Offences:
The Supreme Court in the case of Y.S. Jagan Mohan Reddy v. CBI held that economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing a serious threat to the financial health of the country.
Generally, the prime rationale behind the economic offences are the centralisation of power and the misuse of public offices viz; the whole issue of Non-Performing Assets (NPAs) is the misuse of power and the interconnection of corporate lobby with the political lobby that has created this vicious cycle.
Evolution of such offences:
Before the middle of the 19th century, a new judicial practice developed in England, where the English Courts convicted the persons for criminal offences without the proof of mens rea in certain instances, such as selling adultered or impure food. In 1846, another new development came into existence in England with the decision of Regina v. Woodrow, wherein the Court of Exchequer held the respondent liable for having in his possession adultered tobacco despite the fact that the respondent was able to prove that he had purchased the tobacco as genuine and “had no knowledge or cause to suspect”.
Edwin Sutherland, was the originator of the concept: “White collar crimes”. He defined white collar crime as follows: White Collar Crime means a crime committed by a person of responsibility and a high social status in the course of his occupation. One thing noteworthy about white collar crime is that it is not associated with poverty or with social and personal pathologies which accompany poverty. A general notion is that crime is due to poverty and its related pathologies are proved to be invalid in these instances.
Features of the Fugitive Economic Offenders Act, 2018:
- The Act allows for a person to be declared as a fugitive economic offender (FEO) if: (i) an arrest warrant has been issued against him for any specified offences where the value involved is over Rs 100 crore, and (ii) he has left the country and refuses to return to face prosecution.
- To declare a person an FEO, an application will be filed in a Special Court (designated under the Prevention of Money-Laundering Act, 2002) containing details of the properties to be confiscated, and any information about the person’s whereabouts. The Special Court will require the person to appear at a specified place at least six weeks from issue of notice. Proceedings will be terminated if the person appears.
- FEOA allows authorities to provisionally attach properties of an accused, while the application is pending before the Special Court.
- Upon declaration as an FEO, properties of a person may be confiscated and vested in the central government, free of encumbrances (rights and claims in the property). The central government may dispose of the properties after 90 days. Further, the FEO or any company associated with him may be barred from filing or defending civil claims.
- Any court or tribunal may bar an FEO or an associated company from filing or defending civil claims before it. Article 21 of the Constitution (right to life and personal liberty) has been interpreted to include the right to access justice and barring these persons from filing or defending civil claims may be violative of such right.
- An FEO’s property may be confiscated and vested in the Central Government. The Act allows the Special Court to exempt properties where certain persons may have an interest in such property (e.g., secured creditors). However, it does not specify whether the central government will share sale proceeds with any other claimants who do not have such an interest (e.g., unsecured creditors).
- It does not require the authorities to obtain a search warrant or ensure the presence of witnesses before a search. This differs from other laws, such as the Code of Criminal Procedure (Cr.P.C), 1973, which contain such safeguards. These safeguards protect against harassment and planting of evidence. Howsoever, it must be noted that the Fugitive Economic Offenders Ordinance, 2018 now specifies that the procedure under Cr.P.C will apply in case of a search.
- The Act provides for confiscation of property upon a person being declared an FEO. This differs from other laws, such as Cr.P.C, 1973, where confiscation is final two years after proclamation as absconder.
Conclusion and the Critical Aspects:
In recent times, the Hon’ble Supreme Court has given due regard to matters of compelling public, social, moral and state interests along with other reasonable restrictions to uphold the constitutional validity of various laws. For example, it had upheld the constitutional validity of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) and Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) which stipulate for preventive detention consequent to certain offences under the Act and the forfeiture of the illegally acquired properties of smugglers and foreign exchange manipulators, respectively.
The Hon’ble Supreme Court upheld the constitutionality of COFEPOSA and SAFEMA in the case of Attorney General for India and Ors. v. Amratlal Prajivandas. Further, in the case of Dropti Devi and Anr. v. Union of India and Ors. , R. M. Lodha, former CJI of the SC, held that the menace of these economic offences need to be curbed. Notwithstanding the disadvantages that measure, such as preventive detention, and violation of Article 21, it is paramount to assess the validity of these laws keeping in view the gravity of the offence or evil that is sought to be countered by way of such a measure.
Author: Rajesh Ranjan from National Law University, Jodhpur.
Editor: Farsana Sadiq from Faculty of Law, Jamia Millia Islamia.