The Fugitive Economic Offenders Act, 2018: An Analysis in the Context of Company Law
Introduction to Fugitive Economic Offenders Act
The Fugitive Economic Offenders Act, 2018 and the Companies Act are two significant pieces of legislation in India. The former aims to deter economic offenders from evading Indian law, while the latter governs the operation of companies. A recent case involving these acts provides valuable insights into their interplay.
Fugitive Economic Offenders Act, 2018
The Fugitive Economic Offenders Act, 2018 was enacted to deter fugitive economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian courts. The Act allows for a person to be declared a fugitive economic offender (FEO) if an arrest warrant has been issued against him/her for any Scheduled Offences where the value involved is over Rs 100 crore, and he/she has left the country and refuses to return to face prosecution.
- An application should be filed in a Special Court designated under the Prevention of Money-Laundering Act, 2002 to declare an individual a ‘fugitive economic offender’.
- The Act allows designated authorities to provisionally attach properties of an accused, while the application is pending before the Special Court.
- When a person is declared an FEO, his properties may be confiscated and vested in the Central Government, free of encumbrances (rights and claims in the property).
- The person declared an FEO or any company associated with him can also be barred from filing or defending any civil claims.
The Companies Act governs the operation of companies in India. In this context, it appears to be related to the process of winding up a company and the role of the Official Liquidator in this process.
Case Study: Mehul Choksi vs State of Maharashtra
In this case, the Bombay High Court observed that there are two stages provided under Section 12 of the Fugitive Act, 2018:
- A declaration has to be made about the individual being a fugitive economic offender.
- Confiscation of the properties.
The court stated that the application filed for issuing notice to the Official Liquidator to appear and represent the company Gili India Ltd. cannot be considered at this stage as the matter as to confiscation was not to be considered first as per the order dated 31.1.2019. It can be taken up at an appropriate stage subject to result of the declaration sought under Section 4 read with Section 12 of the FEO Act.
Conclusion of Fugitive Economic Offenders Act
The interplay between the Fugitive Economic Offenders Act, 2018 and Companies Act is complex and multifaceted. The case discussed above illustrates how these laws work together in practice. It’s always best to consult with a legal professional for advice specific to your situation.