I am sure that the hon. Minister has to come again with amendments for meeting unlawful money transactions. Here, as per the present Act in force, it will be treated as pure and simple criminal offence. Now, when this Act will come into force, criminals will be treated in a civilised manner. They will not be sent to jails.

So, I am saying that the hon. Minister has to come again with this Bill to deal with foreign exchange offences. It is defective in many ways. It cannot deal with the modern money transactions. It will be ineffective in dealing with the foreign exchange offences and it will be ineffective in dealing with all offences. So, I am suggesting modifications to make the Bill effective.

In one sense, I may bring out the inadequacies. Now, who is the person? The person is not defined in the Act. A person who is not present in India is not defined. There are certain things in the definition. You have not defined the person. We have recommended in the Committee that the person should be defined in the Act. Person is not defined anywhere. I have gone

through both the Acts. You have not defined it. You have to define it. You have defined about the foreign exchange, but not about the person who is committing the offence. You ought to have defined. You have not done it. (Interruptions).

SHRI ANADI SAHU (BERHAMPUR, ORISSA): If the word `person' has not been defined in the Bill, the definition provided in the legal lexicon is to be accepted.

SHRI VARKALA RADHAKRISHNAN (CHIRAYINKIL): So, my humble submission is that on going through the Foreign Exchange Management Bill, I find that it is ineffective to deal with modern transactions. So, I oppose that Bill.

With these words, I conclude.

SHRI V.P. SINGH BADNORE (BHILWARA): Sir, I rise to support both the Bills -

the Foreign Exchange Management Bill which replaces the Foreign Exchange Regulation Act and the Prevention of Money-laundering Bill. One minus the other would not be really complete. So, both the Bills had to be placed here and I congratulate the Finance Minister for that. After 25 years, the Foreign Exchange Regulation Act needed a lot of changes and, therefore, this Foreign Exchange Management Bill has been introduced.

I remember the time when both Rajmata Gayatri Devi and also the ex-Maharaja of Jaipur were booked under the Foreign Exchange Regulation Act and were put into jail for some crime or the other. If it was Foreign Exchange Management Act, they would not have been put straight into the jail. This Foreign Exchange Management Bill was needed because the times have changed. In 25 years, we have gone a long way towards globalisation and liberalisation. It is because of this that the present Bill has been introduced and I congratulate the Finance Minister for that.

But there are two or three things that I want to put across to him. One is that it is very difficult to really distinguish white money from black money, and once it is laundered, it is very difficult to say how this money was acquired. In the same light, suppose a person borrows money, how does he know that this money is laundered or this money is bad money or this money is tainted money? Why should he be punished? Suppose somebody borrows money, how does he know whether it is white or black? I am unable to understand why they have put this clause. So, they must really do something about this.

The other thing is - and I welcome this thought also - that for the first time in the Indian history, the onus of proof is on the accused. In no

crime the onus of proof is on the accused and I congratulate the Finance Minister to have added teeth to this Bill. He has really opened a lot of new thinking on crime because a lot of countries in Europe and America have a system which is just dichotomy, just different from ours. While right now the accused is innocent till proved guilty, here the whole system has been changed, and I feel that is a good start.

THE MINISTER OF FINANCE (SHRI YASHWANT SINHA): Mr. Chairman, Sir, I am very grateful to the hon. Members of this House for the wide support which has been given to these two pieces of legislation. I am also grateful to them for the suggestions which they have made. There are some issues and there are some points on which, I think, the explanation which I shall offer will be able to clarify the situation.

Sir, what is the structure? Why are we discussing these two Bills together? We are doing it because while on the question of foreign exchange management we are shifting from a more draconian and difficult piece of legislation to a more liberal piece of legislation, in the case of money-laundering, we are making it very stringent, as I said in my opening remarks.

So, we are moving from FERA which, if it stands in the centre, we are moving towards liberalism in one direction and we are moving to more stringent measures in regard to others.

Now, I will take up the Foreign Exchange Management Bill first. I had said that with current account liberalisation, with the recommendation which had been made by various Committees through the amendments which were brought about in 1993, it was almost incumbent on the Government to come up with a Foreign Exchange Management Bill. The FERA, starting in 1947, through 1973 to 1993, went through a number of mutations in terms of the situation prevailing then. FEMA is our response to the situation which prevails today.

I would like to disabuse the minds of some hon. Members who felt concerned at the fragility of our foreign exchange reserves position. I would like to say that successive Governments in India have proceeded extremely cautiously as far as the foreign exchange front is concerned. The reason why India was not sucked into the East-Asian crisis to which a reference was made here was entirely on account of the fact that we have moved cautiously and that caution is not necessarily confined to strictness to non-liberalisation. That has been proceeded in a manner where the confidence of the people has not been shaken. Why is there a run on foreign exchange reserves? There is a run on foreign exchange reserves when the confidence of the people in the system shakes. Now, we as a nation, have been able to maintain the confidence not only of our nationals but also of the foreign investors.

I have had occasion to mention in this House that when the Asian crisis was blowing and it was at its peak, even at that time the reserve money which could have been taken away from our country in terms of foreign exchange stayed in our country. It was not taken away. Take even the foreign institutional investment. The net decline in 1998-99 was only about U.S. 500 million dollars in a total size of about U.S. nine billion dollars. So, that shows the confidence that the people had in the Indian system.

Now, we have current liberalisation. I would like to assure my friend Shri Kirit Somaiya who talked about capital account liberalisation. This FEMA, by itself, does not propel us to capital account liberalisation. This Government, this country will have to take a conscious decision that we want to move further towards capital account liberalisation. It will not come automatically and I would like to repeat here that caution shall continue to be our watchword. We shall never take risks which will expose this country to unnecessary hardship.

Therefore, we shall move cautiously. But I would like, as I said, to assure the hon. Members who have expressed doubts in this regard that our reserves are not only large but they are also stable. I see no reason for any particular concern in that regard. It is in that context to bring the Foreign Exchange Regulation Act in line with the situation of today that we have brought the Foreign Exchange Management Bill. It is true that the nature of offence is being shifted from criminal to civil because all offences or most of the offences are civil in nature.

If somebody, for instance, is evading or avoiding income tax, then we proceed against him under the Income-Tax laws which are of civil nature. The Income-Tax Officers do not have the right to arrest. They can move another court of law if they want somebody arrested. Now, this is the kind of change which is being brought about and therefore, I think, on the Foreign Exchange Management Bill, there should be no cause for concern.

Now, I come to the Prevention of Money-Laundering Bill. What is the basic structure? The basic structure is that certain types of offences must be committed and there must be a pecuniary gain arising out of those offences and there should be an attempt at laundering those receipts, then this Act will come into force. Now, what are the offences which have been included? All these offences are defined. I would say, for instance, `murder'. I would like to inform Shri Bansal that murder is there because he mentioned that.

SHRI PAWAN KUMAR BANSAL (CHANDIGARH): I said that murder is there and there could be other cases also.

SHRI YASHWANT SINHA: Yes. Now, I am saying that murder has been mentioned. We have taken a number of offences from the various Acts which we thought could be used for extorting money, for receiving illegal proceeds and those are the things which should be covered. For instance, Shri Anadi Sahu raised the issue of seduction in custody. I was also intrigued by this because what is quoted here is section 9 of the Immoral Traffic (Prevention) Act. If you read the whole section 9, you will find that it not only talks of seduction in custody, it talks of seduction in custody for purpose of prostitution. If it is done for prostitution, then obviously, there will be illegal gain and anything acquired out of that has to be dealt with. Similar is the case under the Prevention of Corruption Act. Then, there are drugs. Of course, we have treated drugs separately, both in terms of punishment and in terms of fine.

The point I am making is that we have picked up certain offences which are heinous, as I said in the beginning, which are of very serious nature. We are bringing this legislation on money-laundering so that receipts from those crimes and properties acquired as a result thereof, are dealt with under this Act. At the present moment, we have no legislation which will deal exclusively with this particular subject. So, we are bringing this Bill.

Now, the question was raised about the qualifications of members and their appointments in the Appellate Tribunal. I would like to inform Shri Bansal that since it is related to the original crime, we are saying that there must be a charge-sheet before we proceed with it. I mean that the charge-sheet is a given stage in a legal proceeding which is framed when the prosecuting agency comes to the conclusion that there is enough evidence to proceed with the offence or the offender. Therefore, charge is an important point. That will also lead to interim attachment of the property and the final confiscation of the property will come only when he is proved guilty under those laws which we have quoted here.

Therefore, it is important to relate the provisions of this Bill to the Schedule which we have mentioned. If we delink it from the Schedule, then all and every offence can be brought within its ambit, but that is not the intention of this legislation. The intention is to confine it to certain serious, heinous offences and that is why, we have decided to enumerate the offences under various Acts in this Schedule.

Now, I come to the question of tribunal and age. It is true that the age of the Chairperson has been fixed at 68 years. But what are we saying in clause 27(1)? We are saying :

"A person shall not be qualified for appointment as Chairperson unless he is or has been a Judge of the Supreme Court or of a High Court."

Why are we saying that for the Chairperson and not for the members? We are saying it for the Chairperson because this is a very serious piece of legislation and the offences which will be tried under this piece of legislation are offences of heinous nature. We want the Chairperson ....

SHRI PAWAN KUMAR BANSAL : I am sorry to interrupt. The offences will not be tried by the Appellate Tribunal. It is only the question of attachment and then final confiscation of the property. The offences will be tried by the special judge.

02.12.99 Uncorrected/Not for Publication ###

)) Why are we saying that for the Chairperson and not for the members? We are saying it for the Chairperson because this is a very serious piece of legislation and the offences which will be tried under this piece of legislation are offences of heinous nature. We want the Chairperson ....

SHRI PAWAN KUMAR BANSAL : I am sorry to interrupt. The offences will not be tried by the Appellate Tribunal. It is only the question of attachment and then final confiscation of the property. The offences will be tried by the special judge.

SHRI YASHWANT SINHA: Yes, Sir.

SHRI PAWAN KUMAR BANSAL : The offences will be tried by the Special Judge.

SHRI YASHWANT SINHA: I made that distinction myself. I am saying that whatever action has to be taken under this Bill, that will be taken by this Tribunal. Therefore, we want this Tribunal to be a high-powered body. Now, we are talking only about the Chairperson that he is or has been ... (Interruptions)

SHRI M.V.V.S. MURTHI (VISAKHAPATNAM): Why do you want to take retired persons?

SHRI YASHWANT SINHA: We are saying "is or has been"; both the options are open.

SHRI PAWAN KUMAR BANSAL : Whatever it may be, if his order is appealable before a High Court, no Judge of the Supreme Court will take this assignment.

SHRI YASHWANT SINHA: Therefore, we are saying, "a Judge of the Supreme Court or a Judge of a High Court"; we are not ruling out the High Court. As far as the members are concerned, there are various categories of members who qualify to be members.

SHRI PAWAN KUMAR BANSAL (CHANDIGARH): Though I am sorry to interrupt you. It is not really an interruption. The point I made was that in all the laws so far, we have had the qualification that a person who is a Judge or who has been a Judge or who is qualified to be a Judge of the High Court is eligible for it. Such attempt was made once earlier in the case of Central Administrative Tribunals. The House objected to it, and that clause was amended accordingly then because the feeling was that this part should be given to the judicial people. The same attempt is being made now.

SHRI YASHWANT SINHA: I will read it further. As far as a member is concerned, we are saying (a) is or has been a Judge of the High Court; (b) has been a member of the Indian Legal Service, and has held a post in Grade-I of that service for three years.

SHRI PAWAN KUMAR BANSAL : We have no objection to the subsequent parts. But in this part, it should be "a person who is or has been or who is qualified to be a Judge of the High Court."

SHRI YASHWANT SINHA: Shri Bansal might have noticed that in the FEMA, we have such a provision. Here, we have deliberately and thinkingly avoided putting it because we wanted to confine it to a sitting or retired Judge of the High Court or the Supreme Court. That is the reason why it has been done.

SHRI PAWAN KUMAR BANSAL : That is being uncharitable to these people.

SHRI YASHWANT SINHA: It is not an inadvertence. There is some thought which has gone into it. Now, I come to another point which Shri Bansal raised, that is, the right of the Government to appeal. We will be very cautious. it is not that we are going to appeal in every case. It is again going to be a thinking action. We will be cautious. In the administrative instructions, we will make sure that it is not treated lightly.

Now, Sir, as far as the burden of proof is concerned, it is true that in this legislation, as in some other sterner pieces of legislation, the burden of proof has been put on the accused. But we must recall to our mind that the burden of proof is put on the accused even in the case of disproportionate assets in the Prevention of Corruption Act. There are certain provisions in certain Acts where the burden of proof has been put on the accused. He has to prove himself innocent. But a point was made here about unknowingly acquiring a property which has been bought out by money-laundering. We are saying that he must be able to do it "knowingly". If he has done it unknowingly, he is not guilty. When we are saying "knowingly", the burden of proof of proving "knowingly" rests with the prosecution. So, it is not in all cases; we are protecting the citizen against that kind of a difficulty.

SHRI VIJAYENDRA PAL SINGH (BHILWARA): Suppose, he borrows, how does he know whether it is white money or black money or laundered money?

SHRI YASHWANT SINHA: That is what I am saying that if he has borrowed money which is covered by this Act, then the prosecution will have to prove that he did it "knowingly". If he knows that the money was tainted and even then he proceeded to borrow it, then he is within the mischief of this Bill. He is not guilty, unless the prosecution is able to prove that he did it "knowingly".

SHRI PAWAN KUMAR BANSAL : Due to the importance that is being attached to these provisions, you say that only people who have held important positions should be holding the office of the Chairman, Appellate Authority and other positions. At the same time, you say that the proceedings would be judicial in nature, that is what the Act says.

19.00 hrs.

But you are debarring the presence of a lawyer before them. It is again the first piece of legislation where you say that a lawyer will not appear and there will only be an authorised representative who may not be aware of the distinction, which my hon. friend from that side was trying to point out. If a case has to be put up before a judge of the Supreme Court and a lawyer is not present there; if the lawyer does not represent the accused....

SHRI YASHWANT SINHA: We are presuming that the authorised representative will have sufficient knowledge of law to be able to go and represent.

SHRI PAWAN KUMAR BANSAL : That qualification is not mentioned. Authorised representative means that an accused cannot authorise a lawyer to appear. You say that he can authorise a lawyer to appear as his authorised representative. That would be good enough.

SHRI YASHWANT SINHA: When he chooses his reprsentative...

SHRI PAWAN KUMAR BANSAL : He cannot choose. You do not want him to choose. That is why, I was submitting to the Chair that we should not hurry through these provisions. There is much to be desired. You will subsequently see, that day will come, when various provisions would be challenged, they would be struck down by the courts. You will see that. Simply because the law has been framed you are just pushing it through.


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