Attachment of Property: Efficacy of the Fugitive Economic Offenders Act in the Backdrop of the Criminal Procedure Code

[Surya Rajkumar is a third year law student at the Jindal Global Law School, Haryana]

Introduction

The Fugitive Economic Offenders Act, 2018(the “Act”) came into force on the 21 April 2018. According to its preamble, the Act provides “for measures to deter fugitive economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian courts………”. While there are laws that deal with economic offenders leaving the country to escape criminal proceedings, it was felt that the existing civil and criminal provisions in law were not entirely adequate to deal with the severity of the problem. Thus the legislation was passed to provide a comprehensive new framework to deal with such offenders. There may be some truth in asserting the inadequacy of the current legal framework. However, one is impelled to note that this is not true so far as the provisions providing for the attachment and consequent disposal of property is concerned. I shall argue the same in this post with reference to the Code of Criminal Procedure, 1973 (the “Code”).

Attachment of Property

The object of attaching property in criminal proceedings is to put additional pressure on absconders to compel their appearance before a court. In similar vein, the Code provides for the attachment of the property of a proclaimed offender (persons avoiding appearance) under section 83(1). The Act too provides for such attachment in section 5. Under section 5(1), the Director can attach any property while making an application to declare an individual an economic offender. Notwithstanding anything contained in section 5 (1) of the Act, the Director may attach any property before making such application where she believes the property is proceeds of crime or benami property under section 5(2) provided that such application must be made within thirty days of attaching such property. With the exception that such attachment can take place at the pre-declaration stage (declaration of an individual as a fugitive economic offender falls within the purview of section 12 (1) of the Act and such declaration is given by the special court after hearing the application), the scheme involving the attachment of property in the Act introduces nothing new vis-à-vis the Code. Even with this exception, the basic scheme of the code regarding attachment is not altered as the application stage under the Act corresponds to the proclamation stage under section 82(1) of the Code.

In addition, under section 10(1) of the Act, the moment an application is made to declare an individual a fugitive economic offender, a notice must be duly served to such individual. Thus, whether or not a declaration is made, an alleged offender is made aware of the attachment of her property by virtue of the notice under section 10(1) of the Act. Hence, in either case, i.e. in the Act as well as in the Code, an absconder is deterred from appearing by mere knowledge of attachment. Further, unlike section 84(1) of the Code which provides for objections to attachment in situations where the property of an individual other than the proclaimed offender is attached, the Act does not provide for such claims. It must be noted in this regard that under section 5 (1) of the act, the Director can attach “any” property mentioned in the application and not just those of the alleged absconder. Thus, a redressal mechanism is required to ensure the protection of an innocent person’s property. Although under section 5(4) of the Act nothing prevents “the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment”, it does not provide for any mechanism as enshrined in section 84 of the Code. It remains to be seen what the special court established under the Act would do when it is seized of a case where an innocent individual’s property is attached.

Disposal of Attached Property

As with attachment, even with the disposal of the attached property, it was claimed that the existing law was inadequate in that the Code did not provide for the speedy confiscation of property as it could only be done at the end of the trial. This, however, is not true as section 85(2) of the Code provides for the confiscation and disposal of attached property where such proclaimed offender has not appeared within a specified time. The scheme regarding the disposal of property in the Act is also very similar to that of the Code. Under Section 12(2) of the Act, if the special court is satisfied that an individual is a fugitive economic offender, it may order the confiscation of the proceeds of crime and other property owned by such offender. This section does nothing more than inserting an additional procedure by way of declaration subsequent to attachment when compared to section 85(2) of the Code. Further, whereas under section 15 of the Act the government may dispose off the property after 90 days of such declaration, under section 85(2) of the Code the same can be done with after a period of 180 days. While some contrast the Act with the Code in that under section 85(3) of the Code attached properties may be returned if the absconder appears within two years, it must be noted that this is done only when the absconder proves that she did not abscond or conceal himself for the purpose of avoiding the execution of an arrest warrant. Similar to section 85(3) of the Code is section 12(9) of the Act whereby the special court can release an attached property where it finds that an individual is not a fugitive economic offender. Thus, with the exception of the period subsequent to attachment for disposal, the Act introduces nothing in addition to the Code. One also feels prompted to ask how the disposal of the attached property could deter an alleged offender. Whereas in the case of an attachment an offender is made conscious of how her ownership of the attached property is susceptible to be taken over, in the case of disposal the ownership is lost and the absconder has nothing else to lose leaving little incentive for her to return and face the law. If anything, the disposal of attached property is a punishment and not a deterrent.

Conclusion

On reading the Preamble of the Act, it can be discerned that the Act’s object is to compel fugitive economic offenders to face the law and such compulsion is most instrumental through the attachment and consequent disposal of property. Thus, the provisions within whose purview attachment and disposal fall form the substratum of the Act. I have attempted to show in this post that these provisions with few inconsequential exceptions introduce nothing new vis-à-vis the Code. Further, there are also concerns with the Act’s constitutionality given its power to disallow a fugitive economic offender from putting forward or defending civil claims by virtue of section 14(a). This concern stems from the judgement of the Supreme Court of India in Anita Kushwaha v. Pushap Sudan (2016) 8 SCC 209 where it was held that access to justice is a right under Article 21 of the Constitution of India. Additionally, it must be said provisions of the Act regarding proclamation, attachment, confiscation and recovery, search and seizure as well as extradition correspond to provisions of different existing laws apart from the Code, including the Prevention of Money Laundering Act, 2002, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Extradition Act, 1962. That the Act contains provisions that reiterate the existing law (mostly the Code) is perhaps testimony to the pitfalls of their implementation. Hence, this similarity of the Act to the existing law must be a clarion call for the Government to effectively implement such existing laws in a manner that suits the exigencies of the innovative ways in which offenders avoid the law.

Surya Rajkumar

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