If a person is declared FEO, the Ordinance provides power to attach properties in India and aboard by a Special Court whereby the properties would be confiscated.
Big time offenders can no longer run away and hide as the Fugitive Economic Offenders Ordinance (FEO) 2018 has tightened the grip of offenders. With India witnessing a surge in wilful defaulters of bank loans and alleged fraudsters, the Ordinance seeks to compel the fugitive offender to face trial in India through severe deterrents. In the recent past, India has experienced ineffective and challenging extradition like in the case of Vijay Mallya, Mehul Choksi, Nirav Modi and Lalit Modi.
The Ordinance describes the fugitive economic offender (FEO) as a person against whom an arrest warrant has been issued by an Indian court for committing a ‘Scheduled Offence’ (at least Rs100 crores) and who has either left India to avoid criminal prosecution or being aboard, refuses to return to India to face criminal prosecution.
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Offenses listed in the schedule include are counterfeiting, forgery, fraudulent removal of property and cheating under the Indian Penal Code 1860. Besides, dishonour of cheque under the Negotiable Instruments Act 1881, offences under the Reserve Bank of India Act 1934, taking of gratification to influence a public servant under the Prevention of Corruption Act 1988, money laundering offences under the Prevention of Money Laundering Act 2002, fraud under the Companies Act 2013 and defaulting creditors under the Insolvency and Bankruptcy Code 2016 are some of the other mechanism to deal with offenders.
If a person is declared FEO, the Ordinance provides power to attach properties in India and aboard by a Special Court whereby the properties would be confiscated. All rights and titles of the confiscated properties, free from all encumbrances, would lay with the Central Government.
Moreover, a declared FEO would be disallowed from proceeding with or defending any civil claim before any court or tribunal in India. Furthermore, to avoid the unintended consequence of restricting the ability of banks to recover their dues from the companies of defaulting promoters, the exemption provided in the Ordinance must necessarily be exercised to assist the resolution process and allow the lenders to maximize their recovery.