Approach:

Introduction: Briefly introduce the Fugitive Economic Offenders Act of 2018, highlighting the purpose of the act in tackling economic offenses.

Body:

• Mention the salient features of the act.
• Examine how the act has helped in the reforms of the Indian Banking Sector
• Mention its criticisms.

Conclusion: Provide suggestions for dealing with the criticism.

Answer:

 A fugitive economic offender, according to the Fugitive Economic Offenders Act of 2018 (FEO), is one who has committed one or more scheduled crimes involving 100 crore rupees or more and has either fled India or refuses to return in order to evade or face criminal punishment. The act allows for the confiscation of the properties of fugitive economic offenders and creates a mechanism for their speedy trial. The act aims to tackle economic offenses and prevent financial fraud.

Salient features of the act:

1. Its purpose is to take the assets of economic criminals who have left the country to escape prosecution or refuse to return to face charges.
2. Statement of FEO: After hearing the application, a special court (created under the PMLA, 2002) may designate someone as a fugitive economic offender.
3. It has the right to take any property, whether in India or abroad, including Benami assets and criminal gains.
4. Upon confiscation, the central government will become the only owner and own all rights and titles to the property (such as any charges on the property).
5. Prohibition Against Filing or Defending Civil Claims: The Act permits any civil court or tribunal to bar a designated fugitive economic offender from filing or defending any civil claim.

The Fugitive Economic Offenders Act of 2018 has played a significant role in the reform of the Indian banking sector by helping to tackle economic offenses and bringing transparency and accountability to the sector:

• Recovering Loan Defaults: The key provision of confiscation of properties of fugitive economic offenders has helped in recovering loan defaults, which has been a major problem for Indian banks. For instance, in 2019, the Enforcement Directorate (ED) confiscated assets worth over Rs 18,000 crore belonging to fugitive economic offender Vijay Mallya. This helped in recovering a significant portion of the loans owed by him to Indian banks.
• A deterrence for Economic Offenders: The act has acted as a strong deterrence for economic offenders from absconding. In the past, many economic offenders fled the country to escape prosecution, leaving Indian banks to suffer significant losses.
• International Cooperation: The act provides a mechanism for international cooperation in the investigation and prosecution of economic offenses. This has helped in the extradition of economic offenders who have fled the country. For instance, fugitive economic offender Nirav Modi was arrested in the UK and is currently facing extradition to India for his alleged involvement in the PNB scam.
• Transparency and Accountability: The act has helped in bringing transparency and accountability to the Indian banking sector by ensuring that economic offenders are held responsible for their actions. For instance, the act requires economic offenders to disclose all their assets, which helps in tracking and confiscating their properties.

Criticisms of the Act:

1. Under the Act, any court or tribunal may prohibit FEO from initiating or defending civil cases in its court or tribunal.
2. It seems that excluding these individuals from initiating or defending civil claims would violate Article 21 of the Constitution, which protects the right to life. The interpretation of Article 21 includes the right to obtain justice.
3. The property of an FEO may be seized and transferred to the central government. It permits the Special Court to exclude properties in which third parties may have an interest (e.g., secured creditors). It does not define, however, whether the central government would split sale revenues with other claimants who do not have such an interest, e.g., those who do not own the land (secured creditors).
4. Before conducting a search, the Act does not require authorities to acquire a search warrant or verify the presence of witnesses. Other statutes, such as the Code of Criminal Procedure (CrPC) of 1973, incorporate comparable protections. These measures provide protection against harassment and abuses such as evidence planting.
5. It permits the forfeiture of an FEO’s property. This varies from other regulations, such as the Criminal Procedure Code of 1973, where confiscation is final two years after an absconder is declared. The time period ensures due process without jeopardizing the defendant's legal interests.

To address these criticisms, the government can consider introducing measures to ensure that the act is not misused, providing greater clarity on the definition of economic offenses, and improving the efficiency of the legal system to ensure speedy trials. By taking these steps, the government can address the criticisms of the act and further strengthen the Indian banking sector.