India’s legal landscape for the attachment and seizure of property has undergone significant changes with the introduction of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, which came into effect on July 1, 2024, replacing the Code of Criminal Procedure (CrPC). The BNSS has expanded the scope of powers available to Indian courts, particularly with respect to property attachment, and has generated considerable discussion on how it compares to two other significant laws: the Prevention of Money Laundering Act, 2002 (PMLA), and the Fugitive Economic Offenders Act, 2018 (FEOA).
While the PMLA and FEOA were enacted to address specific economic offences and provide for the recovery of assets, including foreign assets, the BNSS has introduced a broader framework that may overshadow the relevance of these laws. This article presents a comparative analysis of the BNSS, PMLA, and FEOA, examining their provisions concerning the attachment of property and the implications of the expanded powers of Indian courts under BNSS.
The Importance of Asset Recovery and Transnational Property Seizure
Asset recovery, particularly at the transnational level, has gained “high priority” in India due to the increasing presence of fugitive economic offenders who have substantial properties in foreign jurisdictions. The PMLA and FEOA were introduced to address this issue, empowering the Indian government to attach and confiscate the property of accused individuals involved in economic offences, both domestically and abroad.
However, the advent of the BNSS has introduced an overlap in the jurisdiction of courts regarding the attachment of foreign assets, expanding the scope beyond the specific economic offences covered under PMLA and FEOA. As a general law governing criminal procedure, the BNSS grants Indian courts the authority to order the attachment of both domestic and foreign property for a broader range of offences, potentially rendering PMLA and FEOA less significant in certain cases.
A Comparative Analysis of PMLA, FEOA, and BNSS: Property Attachment Provisions
1. Scope and Definition of Property
Under the PMLA [Section 2(1)(u)] and FEOA [Section 2(1)(k)], “proceeds of crime” (PoC) refer to any property obtained or derived from a criminal activity related to a “scheduled offence,” including property situated outside India. The laws emphasize the recovery of foreign property, highlighting the global reach of Indian authorities in securing assets. In both statutes, the phrase “wherever located” emphasizes the inclusion of assets in foreign jurisdictions.
By contrast, the BNSS takes a broader approach. Under Section 107, “property” includes any asset derived from the commission of any offence, without restricting itself to specific economic crimes. This expansion in the definition allows Indian courts to attach foreign and domestic property linked to any criminal activity, not just economic offences. The wide-ranging scope of BNSS positions it as an umbrella legislation for asset attachment, transcending the narrower definitions of property in the PMLA and FEOA.
2. Authority to Attach Property
Under the PMLA, the Enforcement Directorate (ED) has the power to issue a “Provisional Attachment Order” (PAO) under Section 5, subject to confirmation by an Adjudicating Authority [Section 8(3)]. In exceptional cases, the Director of ED can bypass the adjudication process if they believe that the non-attachment of property could frustrate ongoing proceedings. This provides flexibility for the immediate attachment of property in cases of money laundering.
Similarly, under the FEOA, the Director must first apply to a special court for permission to attach foreign property of a fugitive offender, but can bypass this requirement under certain circumstances [Section 5(2)] if they believe the property may be concealed or dealt with to avoid confiscation.
In contrast, the BNSS introduces a multi-step process for property attachment. First, a police officer must seek the consent of a higher-ranking officer (Superintendent or Commissioner of Police), then file an application with a court or magistrate. The court is required to issue a “show cause notice” to the accused, allowing them 14 days to respond. Only after considering the response (or in some cases, failing to receive one), can the court order the attachment of property. This detailed process is more complex compared to the direct authority vested in the ED under the PMLA and FEOA.
3. Threshold for Attachment
The threshold for property attachment under PMLA and FEOA is similar in that the Director must have a “reason to believe,” recorded in writing, based on material evidence that the property is PoC. However, under the BNSS, there is no such requirement for written reasons by the investigating officer, nor is there a specific standard of material evidence required before initiating the attachment process.
This lack of a clear threshold for attachment under the BNSS presents challenges, as the police have broad discretion in determining whether property qualifies as PoC. This contrasts with the more stringent evidentiary requirements under PMLA and FEOA.
4. Scope of Offences
The PMLA and FEOA are limited to the attachment of property derived from specific “scheduled offences,” which primarily include financial and economic crimes. These offences must be listed in the schedule to the acts. The BNSS, however, allows for the attachment of property related to any offence under Indian law, vastly expanding its scope beyond the economic offences addressed by PMLA and FEOA.
Moreover, the BNSS replaces the Indian Penal Code (IPC) with the Bharatiya Nyaya Sanhita, 2023, which further alters the landscape of offences. The list of scheduled offences in the PMLA and FEOA will need to be updated to reflect the changes introduced by the new criminal code.
5. Conditions for Attachment
The conditions for attachment under FEOA are straightforward. The accused must be classified as a “fugitive economic offender,” defined as someone with an arrest warrant for a scheduled offence who has left India or refuses to return to face legal proceedings. The PMLA requires the ED to establish that the accused possesses PoC and is likely to transfer or conceal it to frustrate confiscation efforts.
In contrast, the BNSS provides vague conditions for attachment, requiring only that the police believe the property was obtained from criminal activity. There is no requirement to classify the accused as a fugitive or to provide detailed reasoning for the attachment, making the process under BNSS more flexible but also more prone to potential misuse.
6. Right to Be Heard
Under the PMLA, the Adjudicating Authority must issue a 30-day notice to the accused, allowing them to present evidence or explanations regarding how they acquired the attached property [Section 8(1)]. The FEOA does not provide the same specific period, but similarly allows the accused an opportunity to contest the attachment.
Under the BNSS, the accused is given a shorter period—14 days—to respond to the show cause notice. Additionally, courts have the authority to pass an interim ex-parte order of attachment if the accused fails to appear or respond within this timeframe. This compressed timeline under BNSS limits the ability of the accused to challenge attachment orders effectively, especially in cases involving foreign assets.
7. Duration of Attachment
The PMLA and FEOA specify that property may be provisionally attached for a maximum of 180 days, unless the order is confirmed or extended by the appropriate authority. The BNSS, however, does not stipulate any maximum period for provisional attachment. Furthermore, BNSS introduces a new concept of “rateable distribution” of PoC among victims within 60 days, a term that remains undefined and unexplained within the law, leading to potential ambiguity in its implementation.
Implications of BNSS and the Future of Asset Seizure Laws
A comparative analysis of the BNSS, PMLA, and FEOA reveals that the BNSS significantly expands the powers of Indian courts to attach property. This expansion may diminish the relevance of PMLA and FEOA in cases involving property attachment, as the BNSS allows for the attachment of assets for a wider range of offences, without the stringent procedural safeguards present in PMLA and FEOA.
In light of these developments, there is a growing concern that the broader powers under BNSS could be used to create undue pressure on the accused. The vagueness of certain provisions and the absence of clear procedural safeguards may lead to potential abuses of power, particularly in cases involving high-profile economic offenders or fugitives.
Conclusion: A Need for Legislative Reform
Given the expanded powers of Indian courts under BNSS, a legislative overhaul of the PMLA, FEOA, and BNSS is imperative. Such reform is necessary to ensure that PMLA and FEOA remain relevant in the context of economic offences and transnational asset recovery, while the BNSS must be amended to introduce clearer safeguards and limits on the attachment of property. Additionally, the introduction of timelines and procedural standards similar to those in the PMLA and FEOA will help balance the need for effective asset recovery with the protection of the rights of the accused.