The Fugitive Economic Offenders Bill was introduced in Lok Sabha on March 12 but could not be passed due to logjam in Parliament over various issues.
It seeks to confiscate properties of economic offenders - like Nirav Modi- who have left the country to avoid facing criminal prosecution.
The ordinance was approved at a Cabinet meeting chaired by Prime Minister Narendra Modi, the sources said.
It will come into effect after the assent of the President.
The provisions of the ordinance will apply for economic offenders who refuse to return, persons against whom an arrest warrant has been issued for a scheduled offence as well as wilful bank loan defaulters with outstanding of over Rs 100 crore.
It provides for confiscating assets even without conviction and paying off lenders by selling off the fugitive's properties.
Such economic offenders will be tried under Prevention of Money Laundering Act (PMLA).
The ordinance defines a fugitive economic offender as a person against whom an arrest warrant has been issued for committing offence like counterfeiting government stamps or currency, cheque dishonour for insufficiency of funds, money laundering, and transactions defrauding creditors.
According to the ordinance, a director or deputy director (appointed under the PMLA, 2002) may file an application before a special court (designated under the 2002 Act) to declare a person as a fugitive economic offender.
The application will contain the reasons to believe that an individual is a fugitive economic offender.
Besides, the application will have information about his whereabouts, a list of properties believed to be proceeds of a crime for which confiscation is sought, a list of benami properties or foreign properties for which confiscation is sought, and a list of persons having an interest in these properties.
Upon receiving the application, the special court will issue a notice to the individual, requiring him to appear at a specified place within six weeks. If the person appears at the specified place, the special court will terminate its proceedings under the provisions of the Bill.
Any property belonging to the fugitive economic offender may provisionally be attached without the prior permission of the special court, provided that an application is filed before the court within 30 days.
Appeals against the orders of the special court will lie before the High Court.