India: Fugitive Economic Offenders Ordinance 2018

Last Updated: 17 May 2018
Article by Trilegal .

Promulgated on 22 April 2018, the Fugitive Economic Offenders Ordinance, 2018 aims to 'preserve the sanctity of the rule of law in India' by putting in place deterrence measures against 'fugitive economic offenders' who evade criminal trials for economic offences in India.

Responding to the clamour for tough action against absconding offenders, particularly those involved in financial misdemeanors and wilful defaulters of bank loans, the Fugitive Economic Offenders Ordinance, 2018 (Ordinance) was promulgated by the President of India on 22 April 2018. Subsequently, various Rules under the Ordinance were notified with effect from 24 April 2018.

The Ordinance comes into effect immediately (i.e. with effect from 22 April 2018) and will have to be placed before the Parliament during the upcoming monsoon session for formally legislating it into a statute.

Focus of the Ordinance

As the name of the Ordinance suggests, it applies only to cases of economic offences/ frauds. The Ordinance provides for measures to deter 'economic offenders' from evading the process of law in India by staying outside the jurisdiction of Indian courts.

A 'fugitive economic offender' is defined as an individual against whom an arrest warrant in relation to a 'Scheduled Offence' has been issued by an Indian court, and who has left India, or being abroad refuses to come to India to avoid criminal prosecution. A 'Scheduled Offence' in relation to which the arrest warrant is issued, refers to an offence specified under the Schedule of the Ordinance, where the total value involved in such offence is INR 100 crore or more. These 'Scheduled Offences' include:

  • Cheating and counterfeiting under the Indian Penal Code, 1860 (IPC);
  • Dishonour of cheques under the Negotiable Instruments Act, 1881;
  • Customs evasion under the Customs Act, 1962;
  • Insider trading under the Securities and Exchange Board of India Act, 1992;
  • Money-laundering under the Prevention of Money Laundering Act, 2002 (PMLA);
  • Illegal gratification/ bribery to public officials under Prevention of Corruption Act, 1988 (PoCA); and
  • Conducting of business for a fraudulent or unlawful purpose under the Companies Act, 2013.

The Special Courts under the Ordinance are the same as the Court of Sessions designated as Special Courts under the PMLA. Before declaring an individual a 'fugitive economic offender', the Special Court is required to issue a notice to the accused individual, demanding appearance. Apart from following diplomatic channels with contracting countries (whether under a Mutual Legal Assistance Treaty (MLAT) or multilateral treaties), such a notice may also be served by e-mail to the accused individual. This statutorily acceptable electronic mode of service in criminal proceedings is the first of its kind, and considerably reduces the time-period involved in following diplomatic channels.

Once declared a 'fugitive economic offender' by the Special Court, the Ordinance provides for two significant deterrence measures:

(a) The Special Court can order immediate confiscation of the proceeds of crime and/ or other assets owned by the fugitive economic offender, whether in India or abroad. The term 'proceeds of crime' continues to have a wide scope (much like in the case of the PMLA) to include 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 India, the property equivalent in value held within India or abroad.

While provisions for confiscation are already provided under the PMLA and the Code of Criminal Procedure, 1973 (CrPC), such confiscation can be ordered only as the final step after the conclusion of the trial, which usually takes several years. Until then, the government could have only attached the property. Attachment, as differentiated from confiscation, does not have the effect of vesting the property in the government's name and consequently does not allow for its sale. However, the Ordinance gives powers to order such confiscation within a few months. Thereafter, upon the expiry of 90 days from the order of the confiscation, the government may take steps to sell the property.

(b) Courts and tribunals in civil proceedings may: (i) disallow such individual from putting forward or defending any civil claim; and (ii) disallow any company or limited liability partnership from putting forward or defending any civil claim, if such individual files the claim on behalf of the company or the limited liability partnership, or if such individual is a promoter or key managerial personnel or majority shareholder of the company or has a controlling interest in the limited liability partnership.


(a) The Ordinance is only a deterrence measure against a 'fugitive economic offender' and does not provide any penal measures for the offences alleged to have been committed – those continue to be a matter of trial under the relevant statutes (IPC, PMLA, PoCA, etc). The deterrence measures especially relating to the immediate confiscation (and consequent sale) of the property, could have a significant effect on an accused individual's willingness to submit to the jurisdiction of Indian criminal courts.

(b) A criminal trial cannot proceed without the accused being present before the court in person. Criminal trials, therefore, suffer delay for several years since it is practically impossible for any country to be able to force a person abroad (whether national or not) to face prosecution before its courts. Apart from the high-profile Vijay Mallya and Nirav Modi examples, the Indian courts have on several occasions expressed their constraints on this. Recently, in the Aircel-Maxis 2-G spectrum case, a Special CBI Judge noted "[i]t is obvious that when warrant is issued against an accused residing or staying in a foreign country, the chances of execution of warrant are very bleak. In such a situation, no useful purpose would be served by keeping the case live on the register of this Court."

The Ordinance is neither intended towards, nor capable of, solving this inherent problem in the system. Measures to force presence are already found in the CrPC, MLAT or multilateral treaties, either in the form of extradition or red-corner notices of the Interpol or diplomatic assistance. That said, the threat of immediate confiscation (and consequent sale) of property may provide a partial solution to this problem.

(c) The Ordinance mentions that in the proceedings before the Special Court, an accused is permitted to appear through counsel and file its pleadings through such counsel. This liberty may have the effect of defeating the underlying purpose of the Ordinance insofar as it can give considerable breathing space to an accused to present their case without returning to India.

(d) Issuance of an arrest warrant is a condition precedent for the authorities to initiate proceedings under this Ordinance. Under the CrPC, an arrest warrant must be preceded by issuance of summons and sufficient opportunity to appear, which can span up to several months.

Apart from the inescapable attorney-created procedural delays (for which the Ordinance gives room), it would have to been seen if the threat of confiscation (and consequent sale) of property and barring of remedies in civil proceedings would prove to be enough, especially when an absconder may weigh these outcomes with the possibility of facing prolonged prosecution and possible arrest in India. Effective and robust implementation of the Ordinance could allow the government to swiftly recover the money lost by the exchequer or the public as a result of white-collar crimes by selling the property so confiscated.

Since its promulgation, there have already been news reports that the Enforcement Directorate may institute proceedings under the Ordinance against Nirav Modi and Mehul Choksi, which will be the litmus test for the 'deterrence effect' of the Ordinance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions