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Applicability: It extends to the whole of India

Key Definitions:

1. 'Administrator' means an Administrator appointed under sub-section (1) of section 15;

2. 'Benami Property' and 'Benami Transaction' shall have the same meanings as assigned to them under clauses (8) and (9) respectively of section 2 of the Prohibition of Benami Property Transactions Act, 1988;

3. 'contracting State' means any country or place outside India in respect of which arrangements have been made by the Central Government with the Government of such country through a treaty or otherwise;

4. 'Deputy Director' means the Deputy Director appointed under sub-section (1) of section 49 of the Prevention of Money-laundering Act, 2002;

5. 'Director' means the Director appointed under sub-section (1) of section 49 of the Prevention of Money-laundering Act, 2002;

6. 'fugitive economic offender' means any individual against whom a warrant for arrest in relation to a Scheduled Offence has been issued by any Court in India, who -

(i) has left India so as to avoid criminal prosecution; or
(ii) being abroad, refuses to return to India to face criminal prosecution;

7. 'person' includes -

(i) an individual;
(ii) a Hindu Undivided Family;
(iii) a company;
(iv) a trust;
(v) a partnership;
(vi) a limited liability partnership;
(vii) an association of persons or a body of individuals, whether incorporated or not;
(viii) every artificial juridical person not falling within any of the preceding sub-clauses; and
(ix) any agency, office or branch owned or controlled by any of the above persons mentioned in the preceding sub-clauses;

8. 'proceeds of crime' means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a Scheduled Offence, or the value of any such property, or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad;

9. 'Scheduled Offence' means an offence specified in the Schedule, if the total value involved in such offence or offences is one hundred crore rupees or more;

10. 'Special Court' means a Court of Session designated as a Special Court under sub-section (1) of section 43 of the Prevention of Money-laundering Act, 2002.

The provisions of this Act shall apply to any individual who is, or becomes, a fugitive economic offender on or after the date of coming into force of this Act.

Application for declaration of Fugitive economic offender and procedure thereof (Section 4)

Where the Director or any other officer not below the rank of Deputy Director authorized by the Director for the purposes of this section, has reason to believe (the reasons for such belief to be recorded in writing, on the basis of material in his possession, that any individual is a fugitive economic offender, he may file an application in such form and manner as may be prescribed in the Special Court that such individual may be declared as a fugitive economic offender.

The Application shall include the following:

(a) reasons for the belief that an individual is a fugitive economic offender;

(b) any information available as to the whereabouts of the fugitive economic offender;

(c) a list of properties or the value of such properties believed to be the proceeds of crime, including any such property outside India for which confiscation is sought;

(d) a list of properties or benami property owned by the individual in India or abroad for which confiscation is sought; and

(e) a list of persons who may have an interest in any of the properties listed under clauses (c) and (d).

Attachment of Property (Section 5)

(1) The Director or any other officer authorized by the Director, not below the rank of Deputy Director, may, with the permission of the Special Court, attach any property mentioned in the application by an order in writing in such manner as may be prescribed.

(2) Notwithstanding anything contained in sub-section (1) or section 4 the Director or any other officer, not below the rank of Deputy Director, authorized by the Director, may, by an order in writing, at any time prior to the filing of the application under section 4, attach any property -

(a) for which there is a reason to believe that the property is proceeds of crime, or is a property owned by an individual who is a fugitive economic offender; and

(b) which is being or is likely to be dealt with in a manner which may result in the property being unavailable for confiscation:

Provided that the Director or any other officer who provisionally attaches any property under this sub-section shall, within a period of thirty days from the date of such attachment, file an application under section 4 before the Special Court.

(3) The attachment of any property under this section shall continue for a period of one hundred and eighty days from the date of order of attachment or such other period as may be extended by the Special Court before the expiry of such period.

Power of Directors and other officers (Section 6)

The Director or any other officer shall, for the purposes of section 4, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908while trying a suit in respect of the following matters, namely:

(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer of a reporting entity and examining him on oath;
(c) compelling the production of records;
(d) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and documents; and
(f) any other matter which may be prescribed.

Power of Survey (Section 7)

Notwithstanding anything contained in any other provisions of this Act, where a Director or any other officer authorised by the Director, on the basis of material in his possession, has reason to believe (the reasons for such belief to be recorded in writing), that an individual may be a fugitive economic offender, he may enter any place -

(i) within the limits of the area assigned to him; or

(ii) in respect of which he is authorized for the purposes of this section, by such other authority, who is assigned the area within which such place is situated.

Where the Director or any other officer authorized by him, on the basis of material in his possession, has reason to believe (the reasons for such belief to be recorded in writing) that an individual may be a fugitive economic offender and it is necessary to enter any place as mentioned in sub-section (1), he may request any proprietor, employee or any other person who may be present at that time, to -

(a) afford him the necessary facility to inspect such records as he may require, and which may be available at such place;

(b) afford him the necessary facility to check or verify the proceeds of crime or any transaction related to proceeds of crime which may be found therein; and

(c) furnish such information as he may require as to any matter which may be useful for, or relevant to any proceedings under this Act.

Search and Seizure (Section 8)

Notwithstanding anything contained in any other law for the time being in force, where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person -

(i) may be declared as a fugitive economic offender;

(ii) is in possession of any proceeds of crime;

(iii) is in possession of any records which may relate to proceeds of crime; or

(iv) is in possession of any property related to proceeds of crime, then, subject to any rules made in this behalf, he may authorise any officer sub-ordinate to him to -

(a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept;
(b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available;
(c) seize any record or property found as a result of such search;
(d) place marks of identification on such record or property, if required or make or cause to be made extracts or copies therefrom;
(e) make a note or an inventory of such record or property; and
(f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act.

Search of persons (Section 9)

Notwithstanding anything contained in any other law for the time being in force–

(a) if an authority, authorized in this behalf by the Central Government by general or special order, has reason to believe (the reason for such belief to be recorded in writing) that any person has secreted about his person or anything under his possession, ownership or control, any record or proceeds of crime which may be useful for or relevant to any proceedings under this Act, he may search that person and seize such record or property which may be useful for or relevant to any proceedings under this Act

Notice (Section 10)

Where an application under section 4 has been duly filed, the Special Court shall issue a notice to an individual who is alleged to be a fugitive economic offender.

The notice referred to in sub-section (1), shall also be issued to any other person who has any interest in the property mentioned in the application under sub-section (2) of section 4.

A notice under sub-section (1) shall -

(a) require the individual to appear at a specified place and time not less than six weeks from the date of issue of such notice; and

(b) state that failure to appear on the specified place and time shall result in a declaration of the individual as a fugitive economic offender and confiscation of property under this Act.

A notice under sub-section (1) shall be forwarded to such authority, as the Central Government may notify, for effecting service in a contracting State.

(5) The authority referred to in sub-section (4) shall make efforts to serve the notice within a period of two weeks in such manner as may be prescribed.

A notice under sub-section (1) may also be served to the individual alleged to be a fugitive economic offender by electronic means to -

His electronic mail address submitted in connection with an application for allotment of Permanent Account Number under section 139A of the Income-tax Act, 1961

Procedures for hearing application (Section 11)

Where any individual to whom notice has been issued under sub-section (1) of section 10 appears in person at the place and time specified in the notice, the Special Court may terminate the proceedings under this Act.

Where any individual to whom notice has been issued under sub-section (1) of section 10 fails to appear at the place and time specified in the notice, but enters appearance through counsel, the Special Court may in its discretion give a period of one week to file a reply to the application under section 4.

Where any individual to whom notice has been issued under sub-section (1) of section 10 fails to enter appearance either in person or through counsel, and the Special Court is satisfied -

(a) that service of notice has been affected on such party; or
(b) that notice could not be served in spite of best efforts because such individual has evaded service of notice, it may, after recording reasons in writing, proceed to hear the application

The Special Court may also give any person to whom notice has been issued under sub-section (2) of section 10 a period of one week to file a reply to the application under section 4.

Declaration of Fugitive economic offenders (Section 12)

After hearing the application under section 4, if the Special Court is satisfied that an individual is a fugitive economic offender, it may, by an order, declare the individual as a fugitive economic offender for reasons to be recorded in writing.

On a declaration under sub-section (1), the Special Court may order that any of the following properties stand confiscated to the Central Government -

(a) the proceeds of crime in India or abroad, whether or not such property is owned by the fugitive economic offender; and
(b) any other property or benami property in India or abroad, owned by the fugitive economic offender.

The confiscation order of the Special Court shall separately list any other property owned by the fugitive economic offender in India which is to be confiscated.

Where on the conclusion of the proceedings, the Special Court finds that the individual is not a fugitive economic offender, the Special Court shall order release of property or record attached or seized under this Act to the person entitled to receive it.

Where an order releasing the property has been made by the Special Court under sub-section (9), the Director or any other officer authorised by him in this behalfmay withhold the release of any such property or record for a period of ninety days from the date of receipt of such order, if he is of the opinion that such property is relevant for the appeal proceedings under this Act.

Supplementary Application Section 13

Where at any time after the institution of the application under section 4, any other property is discovered or identified which constitutes proceeds of crime or is property owned by the fugitive economic offender liable to be confiscated under this Act, the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, may file a supplementary application in the Special Court seeking confiscation of such properties.

Power to disallow civil claims Section 14

Notwithstanding anything contained in any other law for the time being in force: (Prevails over civil law)

(a) on a declaration of an individual as a fugitive economic offender, any Court or tribunal in India, in any civil proceeding before it, may, disallow such individual from putting forward or defending any civil claim; and Declaration of fugitive economic offender.

Management of properties confiscated under this Act Section 15

Insolvency Professional(s) registered under the IBC 2016 once the act is enacted would be entitle to be appointed as an Administrator under section 15 of the said act and inter alia have been given the following duties:

  • Responsibility for the disposal of the confiscated property
  • To hear the claims in relation to the confiscated property. In the manner as may be prescribed and prepare a final list of creditors
  • The confiscated property will be used to satisfy the claims of the creditors in the final list
  • In cases where any confiscated property is the subject matter of proceedings under the IBC 2016, the administrator will follow the priority prescribed under the said code for the satisfaction of claims under this section
  • In cases where any confiscated property is the subject matter of proceedings under the SRFAESI Act 2002 or the recovery of debts to banks and Financial Institution Act 1993,the Administrator will follow the priority prescribed under the said act for the satisfaction of claims under the act

Appeals section 17

An appeal shall lie from any judgment or order, not being an interlocutory order, of a Special Court to the High Court both on facts and on law. Every appeal under this section shall be preferred within a period of thirty days from the date of the judgment or order appealed from

Provided that the High Court may entertain an appeal after the expiry of the said period of thirty days, if it is satisfied that the appellant had sufficient cause for not preferring the appeal within the period of thirty days.

Provided further that no appeal shall be entertained after the expiry of period of ninety days.

Overriding effect Section 21

The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

Flowchart

Section 4 Application:

Application for declaration of Fugitive economic offender shall be filed with special court for a reason to be recorded in writing

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Section 5 Attachment:

The Director or any other officer authorized by the Director, not below the rank of Deputy Director, may, with the  permission of the Special Court, attach any property mentioned in the application by an order in writing

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Provision to Section 5 Provisional Attachment:

The Director or any other officer who provisionally attaches any property under this sub-section shall, within a period of 30 days from the date of such attachment, file an application under section 4 before the Special Court.

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Section 10 Notice:

Where an application under section 4 has been duly filed, the Special Court shall issue a notice to an individual who is alleged to be a fugitive economic offender

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Procedures for hearing application (Section 11)

Where any individual appears through counsel the Special court given one week to file a reply to the application under section 4

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Declaration of Fugitive economic offenders (Section 12)

After hearing the application under section 4, if the Special Court is satisfied that an individual is a fugitive economic offender, it may, by an order, declare the individual as a fugitive economic offender for reasons to be recorded in writing

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Management of properties confiscated under this Act Section 15

Insolvency Professional(s) registered under the IBC 2016 once the act is enacted would be entitle to be appointed as an Administrator under section 15

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Appeals section 17

Every appeal under this section shall be preferred within a period of thirty days from the date of the judgment or order appealed from

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Overriding effect Section 21

The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force

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