Fugitive Economic Offenders are those who leave the country in the face of scandal and refuse to return to face trial.
President has issued an ordinance on to make life difficult for “fugitive economic offenders”, which is likely to be welcomed by the masses.
But the ordinance is constitutionally inconsistent and its unintended consequences could potentially wreck havoc on innocents.
How does the ordinance affect non-offenders?
Fugitive offender’s ordinance provides a provision for “disentitlement”, which could victimise an innocent on suspicion of being a fugitive offender.
Under this provision, any court in India could issue a directive to disentitle any company related to the “fugitive offender” from defending any civil claims.
For instance, let’s say the MD or a promoter of a company is alleged to have committed a “scheduled offence” as listed in law.
If the offender flees and refuses to come back to India, civil courts could bar the company from pursuing even legitimate dues owed to it.
This provision goes beyond the person rejecting the rule of law in India and may affect people who are themselves affected by the fugitive.
This line of thinking also loses sight of the fact that those who still remain in India continue to subscribe to Indian law and are legitimate entities.
Implications - This could become an incentive for law enforcers to grab headlines by taking stringent actions that might hurt companies.
As civil claims get barred, 3rd parties that owe money to companies whose “promoter (or manager) is a declared fugitives” might intentionally default.
Also, despite being a solvent company, the company the fugitive leaves behind would face a potential prohibition on the sovereign assurance.
What are the other non-prudent provisions?
To have any individual declared as a fugitive economic offender, an application has to be moved by the authorities asking the competent court for the same.
However, even while moving the application, the authority has the power to attach any property listed in the application, for 180 days.
The only ground needed for such attachment is the reasonable doubt that the property is a “proceed from crime”.
Another clause states that a person (other than the fugitive), whose property is attached, would have to shoulder the burden of proof to reclaim it.
Additionally, if criminally acquired property is outside the country, any other property equivalent in value held within the country would be attached.
