WHITE COLLAR CRIME: IS IT REALLY A CRIME

A research report submitted in partial fulfilment of the course Criminology for

the requirements of the Degree B.A.,LL.B.(Hons.) for the Academic Session
2019-2020

Submitted By:

Name: Antra Azad

Roll Number: 1917

Submitted To:

Mr. Gaurav Kumar

NYAYA NAGAR , CHANAKYA NATIONAL LAW UNIVERSITY , PATNA-800001

 DECLERATION BY CANDIDATE

I hereby declare that the work reported in the B.A. LLB.(hons.) project report entitled “WHITE
COLLAR CRIME: IS IT REALLY A CRIME” submitted at Chanakya National Law University
is an authentic record of my work carried out under the supervision of Mr. Gaurav Kumar. I have
not submitted this work elsewhere for any other degree or diploma. I am fully responsible for the
content of my project report.

Signature of Candidate

Name of Candidate: ANTRA AZAD

CHANAKYA NATIONAL LAW UNIVERSITY, PATNA

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 ACKNOWLEDGEMENT

I would like to thank my faculty Mr. Gaurav Kumar whose guidance helped me a lot with
structuring my project.

I owe the present accomplishment of my project to my friends, who helped me immensely with
materials throughout the project and without whom i could not have completed it in the present
way.

I would also like to extend my gratitude to my parents and all those unseen hands that helped me
out at every stage of my project.

THANK YOU,

NAME : ANTRA AZAD

COURSE: BA. LLB.

ROLL NUMBER: 1917

SEMESTER: 4th

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 CHAPTERISATION

1. INTRODUCTION ……………………………………………………..……………..04
2. TYPES OF WHITE COLLAR CRIMES……………………………………………..12
3. WHITE COLLAR CRIMES IN INDIA……………………………...……………….17
4. JUDICIAL TRENDS (Role of the Judiciary)………………………………...………..21
5. ANTI-WHITE COLLAR CRIME LEGISLATION: Problem Of Enforcement...……27
6. CONCLUSION………………………………………………………………………..32

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 INTRODUCTION

BIRTH OF WHITE COLLAR CRIMES

Due to the advancement of science and technology newer form of criminality known as white
collar crime has arisen.
The concept of white collar crime was introduced in the field of ‘Criminology’ by Edwin H.
Sutherland in 1939. The Indian Penal Code was enacted in 1860.
The word white collar crime is not mentioned anywhere in the Code. However, the dimensions
of white collar crimes are so wide that after analyzing the provisions of Indian Penal Code 1860
we may conclude that certain offences under Indian Penal Code are closely linked with white
collar crimes such as corruption, bribery, counterfeiting of coins and government stamps,
offences relating to weights and measures, adulteration of food stuffs and drugs,
misappropriation of property, criminal breach of trust, cheating and dishonesty inducing delivery
of property, forgery, etc.
After analyzing relevant provisions we may conclude that even though Indian Penal Code was
enacted in 1860 and though it has been amended here and there but its main structure has
continued intact during the last 154 years. It is an admirable compilation of substantive criminal
law and most of its provisions are as suitable today as they were when they were formulated.
But the social and economic structure of India has changed to such a large extent that in many
respects the Code does not really fulfills the needs of the present day. It is dominated by the
nation that almost all major crimes consist of offences against person, property or State.

However, the Penal Code does not deal in any satisfactory manner with acts which may be
described as white collar crimes having regard to the special circumstances under which they are
committed and which have now become dominant feature of certain powerful sections of modern
society. The punishment prescribed for white collar crimes under Indian Penal Code, 1860 are
proving inadequate.

Construction of the harmonious bridge

The specific Acts dealing with white collar crimes and the provisions of Indian Penal Code
should be harmoniously interpreted to control the problem of white collar crimes. The provisions
of Indian Penal Code dealing with white collar crimes should be amended in such a way to
enhance punishment particularly fine in tune with changed socio-economic conditions.

Defining the term WHITE COLLAR CRIMES.

White collar crime is a term that was first used by a sociologist in 1939 to describe criminal
activity by members of the upper classes in connection with their professions.
His point was that this type of crime was barely acknowledged by the criminal justice system and
rarely prosecuted.

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Today, the most common definition of white collar crime now no longer focuses on the social
status of the offender but rather on the type of conduct/behavior which is involved:

 Illegal acts using deceit and concealment to obtain money, property, or services, or to secure
a business or professional advantage.

Within the field of criminology, white-collar crime has been defined by Edwin Sutherland as "a
crime committed by a person of respectability and high social status in the course of his
occupation"1
 SUTHERLAND was a proponent of Symbolic Interactionism, and believed that criminal
behavior was learned from interpersonal interaction with others. White-collar crime thus
overlaps with corporate crime because the opportunity for fraud, bribery, insider trading,
embezzlement, computer crime, and forgery is more available to white-collar employees.

Generally, however, white collar crime is defined as”violation of the law committed by a person
or group of persons in the course of an otherwise respected and legitimate occupation or business
enterprise.”2

Sutherland’s Concept of White Collar Crimes. (in figure 1.1)

Crimes
by high Crimes for
status Organizati
White-collar
Crimes

Crimes
against
Organizati
ons

The figure 1.1 illustrates the overlap of (at least) three different types of misbehavior (crimes).
The first refer to any crime committed by a person of high status (whether or not in the course of
their occupation); second to crime committed on the behalf of organizations (by people of any
1
Sutherland Definitions (1949).
2
James W. Coleman, 1989

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status); and third to crimes committed against organizations (whether or not these are carried out
by people working in the same organization, another organization, or no organization at all).
Sutherland focuses on that area of overlap in which people of high status use organizations to
commit crimes for their organization against workers, consumers or other organizations
including competitors and the government. But whatever, there may be in common among the
offences highlighted by this focus, it is probable that, for each of the 3 types misbehavior on
which his definition draws, there will be even more in common between the behavior which fits
into his central category and other examples of behavior of the same types which fall outside his
definition. This creates a continual tension in crime to develop typologies of white collar crime.3

Understanding the definitions of WHITE COLLAR CRIMES

The term “white collar crime” means different things to different disciplines, as well as to
different camps within those disciplines. Unfortunately, professionals within an environment
where there is general consensus about the term’s meaning do not always clearly specify what
they mean by the label/term of “white collar crime.”
However, this can lead to confusion and (sometimes vigorous) disagreement when they interact
with larger audiences that might contain a number of different understandings of the term. It is
therefore very significant, when understanding and discussing white collar crime, to more closely
examine and view what different people mean by it.
Generally, these definitions tend to concentrate on:
The characteristics of the offender (such as high social status) and/or the characteristics of the
crime (such as crimes occurring within the scope of one’s employment).
In the late nineteenth and early twentieth centuries, the theoretical constructs used by sociologists
to understand crime focused on it as a problem of poverty and of personal characteristics
believed to be associated with poverty (such as broken homes, mental illness, association with
criminal subcultures, and living in slum housing).

‘’One of the most influential of those theories, Anomie Theory, is still in general use (in various
forms) today, and was put forth a year before the introduction of the concept of white collar
crime. 4It holds that in a society where members are taught to value attaining certain goals (such
as wealth), but the means to achieve those goals are unevenly distributed, those without access to
the societally prescribed means are put under considerable pressure to find other ways (including
crime) to achieve those goals. In short, the theory holds that crime is a symptom of some
members of society not having the tools to achieve what their society defines as success.’’

The sociologist Edwin Sutherland coined the term “white collar crime” in a speech given to the
American Sociological Society in 1939.
While he gave no formal definition of the term in the speech, he would eventually define white
collar crimes as “crimes committed by a person of respectability and high social status in the
course of his occupation.” 5
3
Oxford Handbook of Criminology Maguire(M) & ETC
4
Robert K. Merton, Social Structure and Anomie, 3 AM. SOCIOLOGICAL REV. 672 (1938), available at
http://www.jstor.org/discover/10.2307/2084686?uid=3739968&uid=2133&uid=2&uid=70&
uid=4&uid=3739256&sid=21102625935857.
5
EDWIN H. SUTHERLAND, WHITE COLLAR CRIME: THE UNCUT VERSION (1983) (the censored first edition came out
in 1949).

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This offender-based (and crime-based) definition was well-suited to the tasks to which it was
put, serving to give sociologists a way to label and talk about offenses committed by successful,
healthy people who had ample access to societal resources and who were members of respectable
society

 A concept that was out of synch with the prominent sociological theories of the day.
Sutherland’s contribution expanded the discussion to include illegal deviance perpetrated
by those who had the tools to achieve the goals that their society taught them to desire,
and had, in fact, already used them to that effect.

One notable aspect of Sutherland’s conception of white collar crime is that he explicitly rejected
the notion that a criminal conviction was required in order to qualify. Sutherland saw four main
factors:
 civil agencies often handle corporate malfeasance that could have been charged as fraud in a
criminal court,
 private citizens are often more interested in receiving civil damages than seeing criminal
punishments imposed,
 white collar criminals are disproportionately able to escape prosecution “because of the class
bias of the courts and the power of their class to influence the implementation and
administration of the law,” and
 White collar prosecutions typically stop at one guilty party and ignore the many accessories
to the crime (such as when a judge is convicted of accepting bribes and the parties paying the
bribes are not prosecuted).

A related concept that again focuses on the offender is “organizational crime”—the idea that
white collar crime can consist of “illegal acts of omission or commission of an individual or a
group of individuals in a legitimate formal organization in accordance with the operative goals of
the organization, which have a serious physical or economic impact on employees, consumers or
the general public.”6

While these definitions were vital for expanding the realm of sociology and criminology, they
were not as well-suited to the needs of other criminal justice stakeholders who dealt with these
issues in a more practical sense (including policymakers, law enforcement, and the legal
community).

A model of white collar crime that leant itself somewhat more too empirical data analysis was
Herbert Edelhertz’s 1970 definition: “An illegal act or series of illegal acts committed by
nonphysical means and by concealment or guile, to obtain money or property, to avoid the
payment or loss of money or property, or to obtain business or personal advantage.”7
6
Laura Shill Schrager & James F. Short, Toward a Sociology of Organizational Crime, 25 SOCIAL PROBLEMS 407, 11–
12 (1978).
7
HERBERT EDELHERTZ, THE NATURE, IMPACT AND PROSECUTION OF WHITE-COLLAR CRIME 3 (1970), available at
https://www.ncjrs.gov/pdffiles1/Digitization/4415NCJRS .pdf. For various ways in which white collar crime has
been manifested today, see G. Robert Blakey & Michael Gerardi, Eliminating Overlap or Creating a Gap? Judicial
Interpretation of the Private Securities Litgation Reform Act of 1995 and RICO, 28 NOTRE DAME J.L. ETHICS & PUB.

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 As a crime-based definition, it ignored offender characteristics and concentrated instead on how
the crime was carried out. As a result, it covered a far larger swathe of criminality—including
crimes (or other illegal acts—Edelhertz’s definition also reaches to acts that are prohibited by
civil, administrative, or regulatory law, whether or not the perpetrators are ever called to answer
for them) perpetrated outside of a business context, or by persons of relatively low social status.

Edelhertz identified four main types of white-collar offending:

 Personal crimes (“crimes by persons operating on an individual, ad hoc basis, for personal
gain in a non-business context”8)
 Abuses of trust (“crimes in the course of their occupations by those operating inside
businesses, Government, or other establishments, or in a professional capacity, in violation of
their duty of loyalty and fidelity to employer or client”9),
 Business crimes (“crimes incidental to and in furtherance of business operations, but not the
central purpose of such business operations”10), and
 Con games (“white-collar crime as a business, or as the central activity of the business”11).

The FBI, when it specifically addresses white collar crimes (nowadays, it usually references
“financial crimes” instead)12, uses a very similar definition:

Those illegal acts which are characterized by deceit, concealment, or violation of trust and which
are not dependent upon the application or threat of physical force or violence. Individuals and
organizations commit these acts to obtain money, property, or services; to avoid the payment or
loss of money or services; or to secure personal or business advantage.
This has been operationalized by the FBI’s Criminal Justice Services Division to mean the
Uniform Crime Report (UCR) offences of fraud, forgery/counterfeiting, embezzlement, and a
rather longer list of National Incident-Based Reporting System (NIBRS) offenses.

POL’Y 435 (2014) (discussing the intersection been the Racketeer Influenced and Corrupt Organizations Act with
federal securities law and white collar crime); see also Cynthia A. Koller, Laura A. Patterson & Elizabeth B. Scalf,
When Moral Reasoning and Ethics Training Fail: Reducing White Collar Crime Through the Control of Opportunities
for Deviance, 28NOTRE DAME J.L. ETHICS & PUB. POL’Y 549 (2014).
8
Id. at 19.
9
Id. at 19.
10
Id. at 20
11
Id. at 20
12
While the FBI has a white collar crime webpage, the crimes listed on it are various forms of fraud. However,
these crimes are actually worked by the Financial Crimes Section. See White Collar Crime, FED. BUREAU OF
INVESTIGATION, http://www.fbi.gov/about-us/investigate/white_collar.
The FBI focuses its financial crimes investigations on such criminal activities as corporate fraud, securities and
commodities fraud, health care fraud, financial institution fraud, mortgage fraud, insurance fraud, mass marketing
fraud, and money laundering. These are the identified priority crime problem areas of the Financial Crimes Section
(FCS) of the FBI. While they do not give an explicit definition of the term “financial crime,” they do say, when
talking about financial crimes, that “these crimes are characterized by deceit, concealment, or violation of trust
and are not dependent upon the application or threat of physical force or violence. Such acts are committed by
individuals and organizations to obtain personal or business advantage.” See FED. BUREAU OF INVESTIGATION,
FINANCIAL CRIMES REPORT TO THE PUBLIC FISCAL YEARS 2010–2011, available at http://www.fbi.gov/stats-
services/publications/financial-crimes-report-2010-2011. This sounds very similar tothe definition that the FBI used
to give for white collar crime. See FED. BUREAU OF INVESTIGATION, WHITE COLLAR CRIME: A REPORT TO THE
PUBLIC (1989).

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Thus, while this definition and Edelhertz’s are very similar, the FBI’s definition functionally
excludes non-criminal illegal activity, as well as such incidents as are not reported to police, and
such incidents as don’t fit into a relevant UCR or NIBRS category (for those jurisdictions that
participate in NIBRS). On the other hand, the FBI’s definition dovetails well with already-
collected data, making it a practical tool for generating statistics on white collar crime activity.

As a practical matter, many people have rather informal interpretations of the term. White collar
crime can refer to:

• Financial crimes
• Non-physical (or abstract) crimes
That is, crimes that “occur” on a form, balance book, or computer
• Crime by or targeting corporations
• Crimes typically committed by the rich
• Criminal businesses or organizations
Including, for some, organized crime and terroristic organizations
• Corporate or professional malfeasance
For some, this can include acts that are immoral, but that are not specifically prohibited by
law (for example, an insurance company automatically targeting every policyholder who gets
diagnosed with breast cancer for an aggressive fraud investigation to find any possible pretext to
drop the account).
• Anything that is against the law that the average beat cop would not typically handle
Essentially, everything but street crime (blue collar crimes).

Finally, many people have a general sense that they know what counts as white collar crime and
what does not, but have no specifically articulated sense of what qualities separate members of
the class from Non-members.

Difference between Traditional Crimes and White- Collar Crimes

Motive of the White Collar Criminal is avarice and rapaciousness not lust or hate as is the case in
traditional crimes. Background of white collar crime is non-emotional (unlike rape, murder,
defamation etc.) whereas in case of traditional crimes some emotional aspect is normally found.
There is no reaction as between the victim and the offender in care of white collar crimes. The
victim is usually the State or a section of the public, particularly the consuming public (the
portion which consumes goods or services, buys shares or securities or other intangibles). Even
where there is an individual victim, the more important element of the offence is harm to the
society.
Mode of operation of the offender is fraud not force. Usually, the act is deliberate and willful.
Interest is protected in two-fold-
(a) Social interest in the preservation of
(i) The property or wealth or health of its individual members, and national resources
(ii) The general economic system as a whole, from
(1)Exploitation or
(2)Waste by individuals or groups

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 (b) Social Interest in the augmentation of the wealth of the country by enforcing the laws
Relating to taxes and duties, foreign exchange, foreign commerce, industries and the
like.

Limitation of the Term “White Collar Crime”13

Modern criminology generally rejects a limitation of the term by reference to type of crime and
the topic is now divided:

 By the type of offense, e.g. property crime, economic crime, and other corporate crimes
like environmental and health and safety law violations. Some crime is only possible
because of the identity of the offender, e.g. transnational money laundering requires the
participation of senior officers employed in banks. But the Federal Bureau of
Investigation has adopted the narrow approach, defining white-collar crime as "those
illegal acts which are characterized by deceit, concealment, or violation of trust and
which are not dependent upon the application or threat of physical force or violence"
(1989, 3). Because this approach is relatively pervasive in the United States, the record-
keeping does not adequately collect data on the socioeconomic status of offenders which,
in turn, makes research and policy evaluation problematic. While the true extent and cost
of white-collar crime are unknown, it is estimated to cost the United States more than
$300 billion annually, according to the FBI.
 By the type of offender, e.g. by social class or high socioeconomic status, the occupation
of positions of trust or profession, or academic qualification, researching the motivations
for criminal behavior, e.g. greed or fear of loss of face if economic difficulties become
obvious. Shover and Wright (2000) point to the essential neutrality of a crime as enacted
in a statute. It almost inevitably describes conduct in the abstract, not by reference to the
character of the persons performing it. Thus, the only way that one crime differs from
another is in the backgrounds and characteristics of its perpetrators. Most if not all white-
collar offenders are distinguished by lives of privilege, much of it with origins in class
inequality.
 By organizational culture rather than the offender or offense which overlaps with
organized crime. Appelbaum and Chambliss (1997; 117) offer a twofold definition:
Occupational crime occurs when crimes are committed to promote personal interests, say,
by altering records and overcharging, or by the cheating of clients by professionals 14.
Organizational or corporate crime occurs when corporate executives commit criminal
acts to benefit their company by overcharging or price fixing, false advertising, etc.

Relationship to Other Types of Crimes

Blue-Collar Crime

The types of crime committed are a function of the opportunities available to the potential
offender. Thus, those employed in relatively unskilled environments and living in inner-

13
Mrs. Glory Nirmala.k , Sponsorship of the Justice and Legal System Research Institute
14
Appelbaum and Chambliss (1997; 117)

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City areas have fewer "situations" to exploit 15 than those who work in "situations" where large
financial transactions occur and live in areas where there is relative prosperity. Note that
Newman (2003) applies the Situational Crime Prevention strategy to e-crime where the
opportunities can be more evenly distributed between the classes. Blue-collar crime tends to be
more obvious and attract more active police attention (e.g. for crimes such as vandalism or
shoplifting which protect property interests), whereas white-collar employees can intermingle
legitimate and criminal behavior and be less obvious when committing the crime. Thus, blue-
collar crime will more often use physical force whereas in the corporate world, the identification
of a victim is less obvious and the issue of reporting is complicated by a culture of commercial
confidentiality to protect shareholder value. It is estimated that a great deal of white collar crime
is undetected or, if detected, it is not reported. In the truest sense, the terms white and blue collar
crime refers to police slang for an arrest of a suspect, or collar. Blue collar crimes are those that
involve local police (known for wearing blue, or, "Men in Blue") and white collar crimes are
those involving Federal agents, such as FBI (who typically wear suits and ties with white shirts.)

State-Corporate Crime:
Because the negotiation of agreements between a state and a corporation will be at a relatively
senior level on both sides, this is almost exclusive a white-collar "situation" which offers the
opportunity for crime.

Types of White Collar Crimes and Elaborated Details on some of common

crimes.

 Bank Fraud: To engage in an act or pattern of activity where the objective is to defraud a
bank of funds.

15
Clarke, 1997

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 Blackmail: A demand for money or other consideration under threat to do bodily harm, to
injure property, to accuse of a crime, or to expose secrets (also in IPC).

 Bribery: When money, goods, services, information or anything else of value is offered
with intent to influence the actions, opinions, or decisions of the taker. You may be
charged with bribery whether you offer the bribe or accept it.

 Cellular Phone Fraud: The unauthorized use, tampering, or manipulation of a cellular

phone or service. This can be accomplished by either use of a stolen phone, or where a
person signs up for service under false identification or where that person clones a valid
electronic serial number (ESN) by using an ESN reader and reprograms another cellular
phone with a valid ESN number.

 Computer fraud: Where computer hackers steal information sources contained on

computers such as: bank information, credit cards, and proprietary information.

 Counterfeiting: this normally happens when someone copies or imitates an item without
having been authorized to do so and passes the copy off for the genuine or original item.
Counterfeiting is most often associated with money however can also be associated with
designer clothing, handbags and watches (i.e. branded items).

 Credit Card Fraud: The unauthorized use of a credit card of certain person to obtain
goods of value.

 Currency Schemes: The practice of speculating on the future value of currencies.

 Educational Institutions: Also, this is another field where collar criminals operate with
impunity are the privately run educational institutions. The governing bodies of those
institutions manage to secure large sums by way of government grants of financial aid by
submitting fictitious and fake details about their institutions. The teachers and other staff
working in these institutions receive a meager salary far less than what they actually sign
for, thus allowing a big margin for the management to grab huge amount in this illegal
manner.

 Embezzlement: When a person who has been entrusted with money or property
appropriates it for his or her own use and benefit. (Criminal misappropriation in IPC
-S404).

 Environmental Schemes: The overbilling and fraudulent practices exercised by

corporations which purport to clean up the environment (fictitious bills are
produced/shown for higher money generation).

 Extortion: Occurs when one person illegally obtains property from another by actual or
threatened force, fear, or violence, or under cover of official right (IPC S 383).

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  Engineering: In the engineering profession underhand dealing with contractors and
suppliers, passing of substandard works and materials and maintenance of bogus records
of work-charged labor are some of the common examples of white collar crime.
Scandals of this kind are reported in newspapers and magazines almost every day in the World.

 Fake Employment Placement Rackets: A number of cheating cases are reported in

various parts of the world by the so called manpower consultancies and employment
placement agencies which deceive the youth with false promises of providing them white
collar jobs on payment of huge amount ranging from 50 thousands to two lakhs of rupees.

 Forgery: When a person passes a false or worthless instrument such as a check or

counterfeit security with the intent to defraud or injure the recipient. ( IPC S463)

 Health Care Fraud: Where an unlicensed health care provider provides services under the
guise of being licensed and obtains monetary benefit for the service.
The white collar crimes which are common to Indian trade and business world are
hoardings, profiteering and black marketing. Violation of foreign exchange regulations
and import and export laws are frequently resorted to for the sake of huge profits. That
apart, adulteration of foodstuffs, edibles and drugs which causes irreparable danger to
public health is yet another white collar crime common in India.

 Insider Trading: When a person uses inside, confidential, or advance information to trade
in shares of publicly held corporations.

 Insurance Fraud: To engage in an act or pattern of activity wherein one obtains proceeds
from an insurance company through deception.

 Investment Schemes: Where an unsuspecting victim is contacted by the person who

promises to provide a large return on a small investment.

 Kickback: Occurs when a person who sells an item pays back a portion of the purchase
price to the buyer.

 Larceny/Theft: When a person wrongfully takes another person’s money or property with
the intent to appropriate, convert or steal it.

 Legal Profession: The instances of fabricating false evidence, engaging professional

witness, violating ethical standards of legal profession and dilatory tactics in collusion
with the ministerial staff of the courts are some of the common practices which are, truly
speaking, the white collar crimes quite often practiced by the legal practitioners.

 Money Laundering: The investment or transfer of money from racketeering, smuggling,

drug transactions or other embezzlement schemes so that it appears that its original
source either cannot be traced or is legitimate.

13
  Medical profession: White collar crimes which are commonly committed by persons
belonging to medical profession include issuance of false medical certificates, helping
illegal abortions, secret service to dacoits by giving expert opinion leading to their
acquittal and selling sample-drug and medicines to patients or chemists in all parts of the
world.

 Racketeering: The operation of an illegal business for personal profit.

 Securities Fraud: The act of artificially inflating the price of stocks by brokers so that
buyers can purchase a stock on the rise.

 Tax Evasion: When a person commits fraud in filing or paying taxes.

The complexity of tax laws in India generally has provided sufficient scope for the tax-
payers to evade taxes. The evasion is more common with influential categories of persons
such as traders, businessmen, lawyers, doctors, engineers, contractors etc. The main
difficulty posed before the Income Tax Department is to know the real and exact income
of these Professionals. It is often alleged that the actual tax paid by these persons is only a
percentage of their income and rest of the money goes into circulation as black money.

 Telemarketing Fraud: Actors operate out of boiler rooms and place telephone calls to
residences and corporations where the actor requests a donation to an alleged charitable
organization or where the actor requests money up front or a credit card number up front,
and does not use the donation for the stated purpose.

 Welfare Fraud: To engage in an act or acts where the purpose is to obtain benefits (i.e.
Public Assistance, Food Stamps, or Medic Aid) from the State or Federal Government.

 Weights and Measures: The act of placing an item for sale at one price yet charging a
higher price at the time of sale or short weighing an item when the label reflects a higher
weight.

Reasons for Growth of White Collar Crimes16

 White collar crimes are committed out of greed. The people who generally are involved
in committing these crimes are financially secure.

 Financial or physical duress.

 White collar crimes are estimated to cost and damage society many times more than
crimes such as robbery and burglary (blue collars crimes). The amount of death caused
by corporate mishap, such as inadequate pharmaceutical testing, far outnumbers those
caused by murder.

16
http://lexhindustan.com

14
  The emergence of cutting edge technology, growing businesses, and political pressures
has opened up new avenues for these criminal organizations to prosper. And these
organizations have become a hide out for these criminal to cover up these offences. Due
to the emergence of these organization, the visibility of the offences has gained better
camouflage.

 This increase is due to a booming economy and technological advancement such as the
Internet and fast money transfer systems. Law enforcement is sometimes reluctant to
pursue these cases because they are so hard to track and investigate. And well as, these
offences gets diluted in the society at large and their detection becomes a hurdle for the
legal system. As a result, most of these offences goes invisible.

 It is very difficult to detect as white collar crimes always committed in privacy of an

office or home and usually there is no eyewitness. Differentiating the impact of white
collar crimes and blue collar crimes it can be said that the former causes far much
damage to the country. However, the detection of the street crimes are easily done since
they bear eye-witnesses to give evidences against the commission of these Acts.

 But normally a very serious question arises that if we have specific legislations to trace
out White Collar Criminality then why these offenders go unpunished?

Main reasons for which these white Collar criminals or occupational criminals go
unpunished are
1. Legislators and the law implementers belong to the same group or class to which these
occupational criminals belong
2. Less police effort
3. Favorable laws
4. Less impact on individuals.

The judiciary is equally, if not more, guilty of delaying justice. With white-collar crimes on the
escalation, it is imperative for the judiciary and police to distinguish between white-collar
crimes, petty crimes and acts of homicide and violence.

Sending everyone to the same jail is also highly unfair. India needs different detention centers for
different kinds of criminal misconduct. At this present time, what we require is the strengthening
of our enforcement agencies such as Central Bureau of Investigation, the Enforcement
Directorate, The Directorate of Revenue Intelligence, The Income-tax Department and the
Customs Department. Concentration and distribution of national wealth must be done in a proper
manner. Speedy trial should be arranged by appointing more Judges. Central Vigilance
Commission must keep a constant vigil on the workings of the top ranking officers. General
public must not avoid being engaged themselves in the prosecution of the White-collar criminals
as the offence in general is directed towards them. Lastly if they are traced and proved guilty
then Deterrent Theory of punishment is an option one.

15
In my concluding words it can be said that if everyone at a particular business or company would
keep an eye out for anything suspicious that alone would detour potential thieves.
The real solution to this predicament is going to have to come from the people who are being
affected by it. They are the most likely to stop it. They cannot let anyone take advantage of them
anymore.

Most of us do not give white collar crimes much thought because they are only things that we
normally read about in newspapers and hear it on the news. If these crimes continue to grow at
the present rate, they will be out of control before we know it.
Hence, the population at large, be it the high class, middle class or lower class of the society,
each of us should give a helping hand in eradicating this social evil.

White Collar Crimes in India

White collar criminality has become a global phenomenon with the advance of commerce and
technology. Like any other country, India is equally in the grip of white collar criminality. The
reason for enormous increase of white collar crimes in the recent decade is to be found in the fast
developing economy and industrial growth of this developing countries. The Santhanam
committee report in its finding a vivid picture of white collar crime committed by persons of

16
respectability such as businessmen, industrialists, contractors and suppliers as also the corrupt
the public officials.17 Highlighting the magnitude of white collar crimes in India the commission
of prevention of corruption in its report observed:

“The advance of technological and scientifically developments is contributing to the emergence

of “mass society” with a large rank of file and small control elite, encouraging the growth of
monopolized, the rise of a managerial class and intricate institutional mechanisms. The strict
adherence to high standard of ethical behaviors is necessary for the even and honest functioning
of the new social, political and economic processes. The inability to all sections of society to
appreciate this need in full results in the emergence and growth of white collar and economic
crimes, renders enforcement of laws, themselves not sufficiently deterrent, more difficult. Tax
evasion and avoidance, share pushing, malpractice in share market and administration of
companies, monopolistic control, usury, under invoicing or over invoicing, hoarding,
profiteering, substandard performance of contracts of constructions and supply, evasion of
economic laws, bribery and corruption, election offence and malpractices are some examples of
white collar crime”.18

The Commission broadly classified white collar and socio economic crimes into various
categories and suggested insertion of a new chapter on white collar crime in the Indian Penal
Code.

The matter was referred by the government to the Law Commission of India of consideration.
The Law Commission, however, disagree with the proposal and observed that “such offences are
better left to be dealt with by special and self-contained enactments which supplement the basic
of criminal law”. The rapid industrialization has also led us to discover new modes of economic
offences. New groups of individuals are engaged themselves in manipulating of accounts and
misuse of government permits and licenses to make illegal financial gains.
Another reason for the increase in the white collar crime in India is the emergence of the concept
of the welfare of the State after the independence of the country. In a welfare State, the
government tends to control a vast number of means of production of goods and essential
services in the interest of the community. But the fact remains that such controls provide the
grounds for the emergence of white collar crime in the community which is infested with severe
shortage, corruption, fraud and endemic administrative inefficiency of the management. 19

 Interestingly, the Report of the Vivin Bose Commission of Inquiry into the affairs of
Dalmia-Jain groups of companies in 1963 highlights how these big industries indulge in
white collar crimes such as frauds, falsification of accounts, tampering with records for
personal gains and tax evasion etc. Similar observations were made by Mr Justice M.C
Chagla about the big business magnate Mundhra who wanted to “build up an industrial
empire of dubious means”. There were as many as 124 prosecutions against this business
tycoon and companies on controlled by him between 1958 to 1960 and as many as 113 of
them resulted into convictions.20

17
Santhanam Committee Report, pp. 151-53
18
Law Commission of India Report of the commission on prevention of corruption para 213, p 11.
19
Criminology & Penology, J.P.S SIROHI p 90
20
Fourth annual report on the working of Indian Companies Act 1956 Government of India (1960)

17
Hoarding, Black Marketing and Adulteration

The white collar crimes which are common to Indian trade and business world are hoarding,
profiteering and black-marketing.
Violation of foreign exchange regulations and import and export laws are frequently resorted for
the sake of huge profits. That apart, adulteration of food stuff, edible and drugs which causes
irreparable danger to public health is yet another white collar crime common in India. The Law
Commission in India has suggested drastic measures against such offenders. In the Commission
observations the tedious prosecution process involved in the trial of such cases frustrates the
cause of justice and often unjustified acquittal due to defective report of the analyst or delay in
examination of sample or lack of legal expertise etc.

Tax-evasion

The complexity of tax laws in India as provided sufficient scope for the tax payers to evade taxes
the evasion is more common with influential categories of persons such as traders, businessmen,
lawyers, doctors, engineers, contractors, etc. The main difficulty posed before the income tax
department is to know the real and exact income of these professionals. It is often alleged that the
actual tax paid these person is only a fraction of their income and rest of the money goes into
circulation as ‘black money’. Despite frequent modification in tax laws of the country the
menace of tax evasion countries unabated and it is causing considerable loss to government
revenue.

The supreme court in its majority decision in ‘R.K Garg vs. Union of India’ upholding the
validity of the special bearer bonds (immunities and exemption) act, 1981, observed that the act
was not intending to encourage tax evasion in future and condone such evasion committed in
past but the real object of the act was to nation-wide search to uncertain undisclosed wealth by
encouraging small incentives to those who declare their undisclosed case. The main intention
was to uncertain “black money” so as to prevent further loss of government revenues.

It is significant not in this context that was constitutes crime is ‘tax-evasion’ not the ‘tax-
avoidance’. Though both these terms appears to be synonymous, there is a fine distinction
between the two. While the former implied the non-payment of tax due to be paid, the latter
signifies arranging the spread over of one’s income in such a way that it doesn’t incur tax
liability legally and lawfully21.

Main reasons of White Collar Crimes in India

Corruption in Government and Politics

Corruption is one of the most talked about subjects today in the country since it is believed to
have penetrated into every sphere of government and political activity. Corruption of various
forms have always existed not only in India but also in countries which are materially and
politically more advanced. What distinguishes India from other societies is the variety and
21
White Collar Crimes in India | Yogesh V Nayyar |

18
degree of corruption afflicting our society. To quote James Cameron, an eminent journalist of
Fleet Street:

In India, corruption, public or private venality, is sanctified by the oldest tradition, it is denied by
nobody, indeed, totality and pervasiveness of Indian corruption is almost a matter of national
pride. Just as India’s droughts are the driest, her families the most cruel, the overpopulation the
most uncontrolled, so are all aspects of India’s corruption and bribery the most wholly
widespread and spectacular22.

Corruption in the modern context has acquired much wider connotation compared to the
traditional meaning given to the term which was confined to the concept of bribes of illegal
gratification taken by public servant. In its wider sense, corruption includes all forms of
dishonest gains in cash, kind or position by person in government and those associated with
public and political affairs.

Corruption in government:

The factors which make public servant corrupt are connected with the economic
condition of most of the government employees. In India, though government
service has some special prestige, the salaries given to employees, by and large,
are quite low. This factor in combination with some other factors like inflation
contributes a great deal towards corruption. Fortunately, the judiciary has been by
and large, free from corruption so far but lately some unhealthy trends have set
in.23

Corruption in Politics:

Corruption among ministers and other political personages is more dangerous

than corruption in governmental machinery in terms of enormity of the stakes
involved in public life. The Santhanam Committee noted that while there were
elaborate rules to ensure probity among officials, there were none for Ministers,
legislators and political parties.24
The more usual form of political corruption in India are grafts, violation of
election laws and the abuse of official and political machinery because of the
liaison of political forces with big business. The popular episodes, known as
Mundhra Sirajuddin Tul Mohan Ram, in the party affairs involving Central
Cabinet Minister and Members of Parliament are typical example of political
corruption.

The cases of political corruption in India is on increase. Over the years, we have
seen that the politician/ministers are involved in number of corruption cases, some
of which after pending even before the various courts of the country. The Bihar

22
James Cameron
23
In quite a few decided cases, Magistrates have been found guilty of corruption. In Delhi as many as our civil
judges have been removed from their office in the recent past.
24
Santhanam Committee Report (p101-102)

19
 Fodder Scam Case25, Centre for Public Interest litigation V Union of India 26 (2G
spectrum Case), cash for vote27, coal scam28 are some of the examples.

White Collar Crimes and Indian Laws

The process of development has its own inherent hazardous speedy economic growth through
industrialization, liberalization, globalization, and growing influence of market force on
economy has open huge possibilities for white collar crimes in India.

In the history of modern India, initially rampant white collar crime was noted during World War
II, when lots of discretion was given to the government officers through licensing system. This
trends continued after the independence of India.

Though Indian Penal Code does provide certain provision dealing with the crime similar to white
collar crimes, but they were not only found inefficient but also conventional as they were
inadequate in prohibiting white collar crimes. After independence, the government of India
formulated various regulatory Acts including the Essential Commodities Act 1955, The
Industrial (Development and Regulatory) Act 1951, The Import and Export (Control) Act 1947,
The Foreign Exchange Regulation Act 1974, Companies Act 1956 and 2016, Monopolies and
Restrictive Trade Practices Act 1968 etc..

Due to demand and the urgency of the making the market more accountable and inherently
resilient, MRTP Act 1968 was abolished into 2002, with the framing of Competition Act 2002
which provide greater safeguard to market system and at the same time provide greater sanction
against violators. Other statutes dealing with the White Collar Crimes include the Conservation
of Foreign Exchange and Prevention Activities (COFEPOSA), the Smugglers and Foreign
Exchange and Manipulators ( Forfeiture of Property) Act 1976 (SAFEMA) 29 and the Prevention
of Money Laundering Act of 2002.

Judicial Trends

Courts normally have been giving differential treatment to white-collar criminals. At times.
Instead of punishing the guilty our courts have been using ceased and desist orders in case of
white-collar criminals, a method/technique which is not resorted to for ordinary criminals. There
seems to have occurred stiffening of the judicial attitude in the US of late as manifested in the
famous case of GENERAL ELECTRIC of electrical equipment companies decided in 1961.

25
Union of India v. Sushil Kumar Modi, (1997) 4 SCC 770
26
(2012) 3 SCC I
27
P.V Narasimha Rao V State, (1998) 4 SCC 626; 1998 SCC (Cri) 1108
28
Manohar Lal Sharma V. Union of India (2014) 2SCC 532
29
Kesar Devi vs U.O.I AIR 2003 SC 4195.

20
“The plea of nolo contender (no contest) by a person formally accused of a crime is a
backhanded plea of guilty. For decades, businessmen accused of violating anti-trust laws have
pleaded nolo contender when the evidence against them was clearly overwhelming. Never, until
1959, did imprisonment follow such a plea. In that year, to their astonishment, 4 Ohio
businessmen were sentenced to jail for anti-trust violation.
In February 1961, 44 executives of 29 electrical equipment companies, together with GENERAL
ELECTRIC and Westinghouse, pleaded guilty or nolo contendre to charges of price-fixing and
rigging bids on $7billion worth of heavy electrical equipment. In addition to fines ranging up to
$12,500, 23 executives, one of whom was a Westinghouse vice-president, were variously
sentenced to 30 and 60 day jail terms. Most of these sentences were actually served. The
extensive Press coverage given to this incident was apparently based not upon the enormity of
the crimes involved, but upon nationwide surprise at the jail sentences meted out upon the verbal
reprimands uttered by the sentencing judge.”30

Trial Courts in India at times fail to realize the extent of damage that the criminality of white
collar crimes causes, and, hence, they tend to be contended by providing light or even token
punishments to white collar criminals. The Law Commission has been completely aware of the
judicial smugness vis-à-vis white-collar crimes and the dangers inherent in it. In its 47 th Report
Commission observed:

Suggestions are usually made that in order that the lower magistracy may realize/see the gravity
of some of the social and economic offences, few methods should be evolved of making the
judiciary conscious of the serious damage caused to the country’s economy and health by such
anti-social crimes.
We hope that the higher courts are completely alive to the injury, and we have no doubt that on
appropriate occasions, such as judicial conferences, the subject will gain attention. It is of utmost
importance that all State instrumentalities involved in the investigation, prosecution and trial of
these offences must be oriented to the philosophy which treats these economic offences as a
means of grave challenge to the material wealth of a nation31.

What has been normally been observed concerning offences by the Commission is equally
opposite to white-collar crimes generally.

CASE: M.H.HOSKOT v. STATE OF MAHARASHTRA

This case illustrates the attitude of the lower judiciary towards white collar criminals. Hoskot, a
reader in Saurashtra University, was found guilty of an attempt to concoct degree certificates of
the Karnataka University. The session court gave him a single day’s imprisonment. The court
justified the token punishment on the basis of the background of the offender, his not having
criminal tendencies as such and the unlikelihood of his indulging in criminal activities in future.
On appeal by the State, the High Court enhanced the period of imprisonment to three years.
While upholding the sentence awarded by the High Court and the Supreme Court termed the

30
(Taft and England, Criminology 203)
31
Law Commission 47th Report

21
sentence provided by the Sessions court as “incredibly indiscreet”. Censuring the Sessions Court
for the wrong sentencing, the Supreme Court observed:

It is surprising that the Public prosecutor has consented on the behalf of the State, to this unsocial
softness to an anti-social offender on conviction for grave charges32.

Does the administration sternly view white-collar crimes offenders, or merely abet them by
agreeing to award of token punishment, making elaborate trials mere tremendous trifles?

Social defence is the criminological foundation of punishment……. That Court which ignores
the grave/serious injury to society implicit in economic crimes by the upper-berth ‘mafia’ ill
serves social justice. Soft sentencing is gross injustice where many innocent are the potential
victims….
While iatrogenic prison terms are bad because they dehumanize. It is functional failure and
judicial pathology to hold out a benignly self-defeating non-sentence to deviants who endanger
the morals and morale, the health and wealth of society.

The Supreme Court has made its approach to white collar crimes absolutely clear in the above
observation. It is, however, submitted that the Hoskot case was, truly speaking, not a case of
white collar criminality, according to meaning given to the term by Sutherland and others. It
certainly would be an instance of white collar criminality if the certificates were forged or
manipulated by an officer. Hoskot despite being in the university, did not commit the crime in
the course of his trade, business or occupation and he could have been regarded just an ordinary
forger and dealt with as such.

Besides prescribing stiffer punishment for white collar offenders, the supreme court has also held
in a number of cases that liberal interpretation must be given to the penal laws must be dealing
with social welfare legislation to see that the legislative object is not defeated.

In Murlidhar Meghraj loya vs State of Maharashtra, the Court observed:

Pedantic literal and lexical construction likely to leave loopholes for this dangerous criminal
tribe to sneak out of the meshes of the law should be discouraged. For the new criminal
jurisprudence must depart from the old canons, which make indulgent presumption and
constructions benefiting accused persons and defeating criminal statutes calculated to protect
public health and the nation’s wealth33.

Similarly, in State of Maharashtra V. Mohd Yakub, the Court was of the view that penal
provisions calculated to suppress smuggling activities must be construed liberally.

It may be noted that these rulings in favor of the liberal interpretation of penal provisions relating
to socio-economic crimes are at variance with the ordinary rules of construction of penal statutes
which require strict interpretation and benefit of doubt, if any, must be given to the accused.

32
M.H.HOSKOT v. STATE OF MAHARASHTRA
33
Murlidhar Meghraj loya vs State of Maharashtra

22
Finally the Courts in India have given strict interpretation to the socio-economic statutes which
do not require any mens rea either in the form of intention or knowledge for committing an
offence. This is how it normally should be, though it may be pointed out that courts have been
somewhat reluctant in finding mens rea excluded from statutes dealing with more traditional
offences34.

Dealing with a violation of the Foreign Exchange Regulation Act, the majority in State of
Maharashtra V Mayer Hans George held that the very object and purpose of this Act and its
effectiveness as an instrument for the prevention of smuggling would be entirely frustrated if
conditions were to be read into Section 8(i) or Section 8(i-A) of the Act qualifying the plain
words of the enactment that the accused should be proved to have knowledge that he was
contravening the law before he could be held to have contravene the provision.35

Again in Pyarali K.Tejani V Mahadeo Ramchandra Dange, a case under the Prevention of Food
Adulteration Act, the Supreme Court said:

It is trite law that in food offences strict liability is the rule not merely under the Indian Act but
all the world over. Section 7 of that particular Act casts an absolute obligation regardless of
scienter, bad faith and mens rea. If you have sold any article of food contrary to any of the sub
sections of S7, you are guilty and there is no more argument about it36.

J. Jayalalitha V. Union of India, the Supreme Court admitted that corruption is rampant among
the public servants. Court further stated that corruption corrodes the moral fabric of the society
and is harmful to the national economy. Corruption by person occupying high post in
Government, by misusing their power can cause considerable damage to the national economy,
national interest and image of the country37.

Govt. of A.P V. P.V Reddy, the Apex observed that when the legislature has given
comprehensive of public servant to achieve the purpose of punishing and curbing growing
corruption, it would be appropriate not to limit the contents of the definition close by
construction which would be against the spirit of the statutes. The definition of public servant,
therefore, deserve a wide construction. The court is required to adopt a purposive approach as
would give effect to the intention of the Legislature. Employees or servant of the corporative
society which is controlled or added by the Government, were said to have been by the definition
of “public servant”38.

R.K Garg V. Union of India, the Supreme Court in its majority decision upholding the validity of
the Special Bearer Bonds Act, 1981 observed that, the act was not intended to encourage tax-
evasion in future and condone such evasion committed in past but the real object the act was to
launch a nationwide search to unearth undisclosed wealth by encouraging small incentive to

34
State of Maharashtra V. Mohd Yakub
35
State of Maharashtra V Mayer Hans George
36
Pyarali K.Tejani V Mahadeo Ramchandra Dange ,Prevention of Food Adulteration Act
37
(1999) 5 SCC 138; See also R. Sai Bharathi vs J Jayaalitha, 1999 AIR SCW 2257
38
AIR 2002 SC 3346.

23
those who declare their undisclosed case. The main intention was to unearth “black-money” so
as to prevent further loss of government revenues39.

Lily Thomas V. Union of India, the court held that S8 (4) of the representation of people act,
1951, was ultra vires the constitution. Court held that, from the “affirmative terms of articles
102(1)(E) and 191(1)(e ) of the constitution the parliament has been vested with the powers to
make law laying down the same qualifications for person to be chosen as a member of
parliament or a state legislature and for a sitting member of a house of parliament or a house of a
state legislature. The court added that the “provision of article 101(3)(a) and 190(3)(a) of the
constitution expressly prohibit parliament to defer the date from which the disqualification will
come into effect in case of a sitting member of parliament or state legislature”40.

Recent Cases and Case Laws

CASE: Sebi vs. Burman Plantation & Others41

Per contra, learned counsel appearing for the SEBI submits that during the winding up
proceedings before the Hon`ble High Court of Allahabad, counsel appearing for company made
a submission that company accused was not in a position to make payment to its debtors
(including investors). It is further submitted that no doubt, the advertisement was given in the
newspapers in the year 2003 during the winding up proceedings, but the order was passed in the
year 2004 wherein counsel made the submission that company was not in a position to make the
payment to its debtors. It is submitted that in its letter dated January 29, 2001 (Ex. CW1/25),
company accused admitted that the total liability of the company was ` 24, 26,507/-, but convict
failed to produce any document to show that company accused had made the said payment to the
investors. It is further submitted that considering the gravity of the offence, legislature has
enhanced the punishment from one year to 10 years with a fine to the tune of ` 25 crore by way
of Amendment which shows that the legislature is not intending to take such type of white collar
crimes lightly.

Have heard rival submissions advanced by counsel for both the parties, perused the record
carefully and gave my thoughtful consideration to their contentions.42

By way of Amendment Act 52 of 2002 w.e.f October 29, 2002, the punishment provided under
Section 24(1) of SEBI Act had been enhanced to the extent of 10 years or with fine which may
extend to ` 25 crore or with both. Thus, at the time of determining the sentence, Court has also to
keep in mind the intention of the legislature. The said amendment shows that the legislature
intends to deal with the offenders of such white collar crime with iron hands.

39
AIR 1981 SC 2138
40
Writ Petition (civil) No. 490 of 2005. Constitution of India provisions
41
Sebi vs. Burman Plantation & Others (1st August 2013)
42
CC No. 69/10 Page no. 20 of 22 SEBI vs. Burman Plantation & others

24
No doubt, there is no criminal antecedent against the convict Ravi Arora but it is also true that in
such white collar crime, there is hardly any instance where convict has any criminal antecedent,
thus it cannot be considered as sufficient mitigating factor. Similarly, though the convict has
taken the plea that no complaint of any investor is pending before any authority but it is also true
that during the trial no document has been placed on record to show that company accused had
refunded the amount to the investors. Since, the company accused had collected the amount, it
was the duty of the company accused as well as its directors to place documents on record to
show that the company accused had refunded the amount to all the investors. Thus, to my mind,
the said plea is also not a sufficient mitigating factor to impose a token sentence.

Case: Abhay Singh Chautala V. CBI 43

This case disposed of two special leave petitions, one fled by Abhay Chautala, as both the
petitioners revolve around the same issue. The issue was related to sanction for prosecution
under section 19 of the Prevention of Corruption Act, 1988. The issue in particular was whether
there was a need of sanction for prosecuting the appellants?

The facts which gave rise to this question is as follow: charge sheets were filed against both the
appellants for the offences under sections 13(1)(e) and 13(2) of the PCA read with section 109 of
the IPC in separate trials. It was alleged that both the accused while working as the members of
the Legislative Assembly had accumulated wealth disproportionate to their known sources if
income. Need of such investigation and charge sheet had arisen from the direction of the court
which had directed the CBI to investigate the case of JBT recruitment. When the CBI started
investigating the case, it found that the father of the appellants had acquired huge properties and
same was the case with the both appellants. The CBI submitted that in the check period of
7.6.2000 to 8.3.2005, the appellant Abhay Chautala had amassed wealth worth Rs
1,19,69,82,619/- which was 522.9% of known sources of income. During the check period, Shri
Abhay Singh Chautala was the Member of the Legislative Assembly of Haryana, Rori
Constituency.

Similarly, in the case of Ajay Chautala, his check period was taken as 24.5.1993 to 31.5.2006,
had accumulated wealth worth Rs 27, 74,74,260/- which was 339.26% of his known sources of
income. In the said period Ajay Chautala held various post of MLA and MP. It was on this basis
that the charge sheet came to be filed.

In this case, the High Court was absolutely right to hold that the appellants in both the appeals
had abused entirely different office or offices than the one which they were holding on the date
on which cognizance was taken and, therefore, there was no necessity of sanction under s19 of
the act. The appeals are without any merit44.

43
MANU/SC/0715/2011
44
Prevention of Corruption Act, 1988

25
Case: Binod Kumar Vs. State of Jharkhand & Ors. 45

This case relates to a suspicion entertained by the CBI against various ministers of the state of
Jharkhand including the Chief Minister. The case was filed against the judgment of the division
bench of the High Court. In the impugned judgment, the High Court had referred the matter to
CBI to investigate the matter relating to unaccounted money being found in the possessions of
various ministers. The high court also directed the Central Government to use its power under
sect 45 (1A) to handover the investigation from ED to CBI. It was the rational of the High Court
that as the material have been found indicating that the unaccounted monies are also invested in
various countries, so a specialized agency like CBI is more competent to investigate such
complex matters.

Here it was submitted that the money alleged to have been so earned is of unprecedented
amounts. It is further recorded that, however, there is no clear allegation so far about its
laundering in the sense recorded in the Prevention of Money Laundering Act. It is further
observed that there is an allegation of his investment in the property, shares, etc. not only in
India, but also abroad. Having so observed it is recorded, that, therefore, the basic investigation
requires determining whether money has been acquired by abuse of official position amounting
to an offence under the Prevention of Corruption Act and under the Indian Penal Code and
persons by whom the same has been done, the amount of money which has been so earned and
the places where it has been invested.

It was submitted that the Central Bureau of Investigation is investigating into the commission of
offences relating to IPC and Prevention of Corruption Act alone and presently is not
investigating any offence under the PML Act as the investigation under PML Act is solely and
exclusively within the jurisdiction of the Enforcement Directorate, which is of course subject to
the exercise of powers by the Central Government under S45 (1-A) of the said Act.46

The arguments of CBI was upheld and the appeal was dismissed.

Anti-White Collar Crimes Legislation: Problem Of Enforcement

As regards to the above discussion it can be clearly deduced that criminals are much more
dangerous to the society than the ordinary or blue-collar criminals. White collar crimes by their
very nature are such that the injury or damage caused as a result of them is so widely diffused in
the large body of the society that their gravity in regard to individual victim is almost negligible.
It must be carefully noted that a white collar crime is far much more harmful to the society than
ordinary crimes because the financial loss to society from white collar crimes to society is far
greater than the financial losses resulting from burglary, robbery and larcenies.47

45
(2011) 11 SCC 463
46
Prevention of Money Laundering Act
47
S.M.A. QADRI, AHMAD SIDDIQUE’S CRIMINOLOGY PENOLOGY AND VICTIMOLOGY P 83

26
Now here, a question arises as to why many white collar criminals go unpunished?

According to Sutherland, the preferential treatment of white-collar offenders could be explained

in terms of their high socio-economic status, the remedial philosophy of the laws in question and
the relatively unorganized resentment of the public against the white collar crimes. The reasons
for the absence of such resentment were stated as to be as follows:

 The violations of law in such cases are complex, and can be appreciated only by experts.

 The public agencies of communication (like the media) do not express the organized
moral sentiments of the community, partly because the crimes are complicated and
cannot be easily presented as news items, but probably in a greater degree because these
agencies of communication are themselves controlled by businessman involved in the
violation of many of these laws.

 The laws for the regulation of business belong to a relatively new and specialized part of
the statutes.

As to the reasons given above why such crimes went unpunished, Sutherland made the following
observations:

The difference in the implementation of the criminal law is due principally to the difference in
the social position and status of the 2 types of offenders. Because of their social status,
implementation of the criminal law in relation to white collar criminals become difficult. They
are more powerful than the traditional criminals. Consumers, investors and stock holders are
unorganized, lack of technical knowledge and cannot protect themselves.
White collar crimes goes undetected because it normally transcends the visibility of ordinary
cheating practices of small merchants.

Another obstruction in the prosecution and punishment of white collar criminals apart from the
fact that the public is not only indifferent and apathetic toward such violations of law is that quite
often the members of the community themselves contribute to the commission of various white-
collar crimes.

In other words, the “victims” of the crimes are also to blame for white collar criminality.

In fact, such crimes cannot be committed unless there is a demand for illegal goods and services
in a community. Black marketing and illegal gratifications to public workers are some of the
common examples.

Ultimately, one more factor is believed to be responsible for the failure to punish or for
inadequate punishments so far as white-collar crimes are concerned. Judges of the courts
ordinarily belong to the upper strata of society and this factor may determine their attitude,

27
consciously or otherwise, towards white collar crimes offenders who also come from the same
social strata.

White collar crime being different in their nature and execution from ordinary crimes present
peculiar in terms of detection, investigation, prosecution and trial relating to such offences. It is
evident that for an effective enforcement of the laws, specially trained personnel are needed to
detect and investigate such crime.

It is because of different kind of challenge that the trend now is to separate the investigating and
prosecution agencies for such crimes; a deviation from the traditional practice of vesting the two
functions in the same agency. This may be, however, give the desired advantage only if there is a
proper coordination between the 2 agencies.

 The next problem related to the forum of trial and the substantive and procedural aspects
of the law governing it. The issue regarding the forum has generated some controversy. It
has been argued that to secure greater efficiency and effectiveness socio-economic crimes
must be handled by tribunals or quasi-judicial bodies which may not be fettered by some
of the unnecessary, archaic and disabling features of ordinary criminal law.

Apprehensions have been expressed on the other hand that such forums may not be immune
from the influence of the executive branch of the government and they, therefore, may not
command the confidence of the general public.

 One possible approach is to retain the jurisdiction of ordinary criminal courts but to do
away with some of the over-indulgent provisions of criminal law in the context of white
collar crimes. As a result of the recommendation of the Santhanam Committee some of
the relevant laws were amended on these lines.

By these amendments greater powers have been conferred on investigating officers and on the
magistracy and summary trials are also possible for some of the offences. 48The law has also
been made slightly less benevolent to accused person by incorporating certain presumptions
against them under certain circumstances.

Under Section 4 of the Prevention of Corruption Act49, there is a presumption, for instance, that
money received other than legal remuneration by a public servant is an illegal gratification.

REMEDIAL MEASURES

In a country like India where large scale starvation, mass literacy and ignorance affect the life of
the population, white collar crimes are ought to multiply in large ratio.50

48
Some of the more important legislative pieces in this direction are : Anti-Corruption Laws( Amendment) Act,
1964; Foreign Exchange (Amendment) Act, 1964; Prevention of Food Adulteration (Amendment) Act, 1964 and
Wealth Tax (Amendment) Act, 1964
49
Section 4 of the Prevention of Corruption Act
50
Prof. N. V. Paranjape Criminology and Penology

28
However, some of the remedial measures for combatting the white collar criminality may be
stated as follows:

 Creating public awareness against these crimes through the media of press, platform and
other audio-visual aids. Intensive legal literacy programs may perhaps help in reducing
the incidence of white collar criminality to a considerable extent.

 Special Tribunals should be constituted with power to give sentence of imprisonments up

to 10 years for white collar criminals.

 Stringent regulatory laws and drastic punishment for white collar criminals may help in
reducing these crimes. Even legislations with retrospective operation may be justified for
this purpose.

Dr. RadhaKrishnan, the 2nd President of India, in this context once observed:

“The practitioner of this evil (i.e. White collar and socio-economic crimes) the hoarders,
the profiteers, the black marketeers, the speculators are the worst enemies of our country.
They have to be dealt with sternly, however well-placed, important and influential they
may be, if acquiesce in wrong doing, people will lose faith in us.”
The penalty for white collar crime which are a potential damages to human lives may be
extended to the imprisonment for life or even to death, if the circumstances so demand.

 A complete separate chapter on white collar crimes and socio economic crimes should be
incorporated in the Indian Penal Code by amending the Code so that White Collar
Criminals who are convicted by the court do not escape punishment because of their high
social status.

 White Collar offenders should be dealt with sternly by prescribing stiffer punishments
keeping in view the gravity of injury caused to society because of these crimes.

The Supreme Court, in M.H Hoskot V. State of Maharashtra 51, in this context observed,
“soft sentencing justice is gross injustice where many innocents are the potential
victims”.

 There is an urgent need for a National Crime Commission which may squarely tackle the
problem of crime and criminality in all its facets.
 Most significantly, public vigilance seems to be cornerstone of an anti-white collar crime
strategy. Unless white collar crimes become abhorrent to public mind, it will never be
possible to contain this growing menace.
In order to attain this objective, there is a need for strengthening of morals particularly, in
the higher strata and among the public services. It is further necessary to evolve sound
group norms and service ethics based on the twin concepts of absolute honesty and
integrity for the sake of national welfare. This is only possible through character building

51
(1987)3 SCC 544.

29
 a grass root level and inculcating a sense of real concern for the nation among youngsters
so that they are prepared and trained for an upright living when they enter the public life.

Ultimately, it must be stated that a developing country like India where population density is fast
escalating, economic offences are increasing by leaps and bound besides the traditional crimes.
These are mostly associated with middle and upper class of society (but not in all the cases) and
have added a new chapter to criminal jurisprudence.
To a greater extent, they are an outcome of industrial and commercial developments and
progress of science and new technology. With the growing materialism all around the globe,
acquisition of more and more wealth has become the final end of human activity.

As a consequence, moral values have either changed or thrown to winds and frauds,
misappropriation, misrepresentation, corruption, adulteration, evasion of tax etc. have become
the techniques of trade, commerce and profession.

It is for the criminal law administrators to contain this tendency by stringent legislative
measures.

It is rather disappointing to note that though white collar crimes such as black market activities,
evasive price violations, rent-ceiling violation, rationing law violations, illegal financial
maneuvering etc. by businessman are widespread in society, no effective program for repressing
them has so far been launched by the law enforcement agencies.

Maybe the reason for white collar crimes being carried on unabated is that these crimes are
committed generally by influential persons who are shrewd enough to resist the efforts of law
enforcement against them.

The economic offences which are often referred as white collar crimes are master-minded and
carried out on a planned manner by technocrats, highly qualified person, well to do businessmen,
corporate officials in the form of scams, frauds etc. facilitated by technological advancements.

In these offences, not only individuals get victimized with pecuniary loss but also, such offences
often damage the economic and financial growth of a country and as well as creates a
disturbance in the national defence. These offences such as smuggling of narcotic substances,
counterfeiting of currency, financial scams, frauds etc. are some of the white collar crimes which
evoke serious concern and impact on national security and governance. Hence, referring to all
the measures above we should try to help in reducing the rate of these offences since they cause
an irreparable damage to the public at large.

Important Recommendations: Forty Seventh Law Commission52

The commission made suggestion regarding the inadequacy of the punishment and the offenders
being let off with minor punishments in the form of monetary fines or token imprisonment. It
was observed that the increase in these punishments will also give message that the society

52
Forty Seventh Law Commission

30
disapproves these activities and as well as make these crimes cognizable and non-bailable which
will be helpful in investigating them.

It observed “Consistently, with our approach in dealing with the menace to social health and
wealth posed by socio-economic offences, we are also recommending an increase in punishment
for the principal offences under most of the Acts. In doing so, our main object is to give adequate
expression to the social disapproval of such crimes. One of the objects of punishment is the
emphatic denunciation of the crime by the community, and we believe that this denunciation
could be achieved only if the gradation of punishments is so devised as to evoke in the public
mind an intelligent reaction, and this in turn would be facilitated if the scales of punishment
exhibit a modicum of uniformity based on rational considerations. Too many scales and
variations in the quantum of punishment lead to a failure of this object. The increase of the
maximum punishments will also make the offence cognizable and non-bailable and that we
regard as a welcome consequence.

One more recommendation is to provide for the trial of these offences by Special Judge of a
Senior Cadre, and it is further our intention that such cases should be assigned only to one
particular Judge in an area, so that he may develop the expertise necessary for the purpose, also
require familiarity with the special feature of these offences.
That time has now arrived when Government should take suitable steps to study in depth the
important question of evolving one code dealing with dealing comprehensively in one place with
all these offences committed under white collar crimes.

CONCLUSION AND SUGGESTIONS: How to reduce the rate of White

Collar Crimes?

White collar crime thrives on weak institutions, bad leadership and bad governance. Something
urgently needs to be done to nip in the bud, the increasing incidence of white collar crime before
the economy collapses.

Institutions that have been set up to fight economic crimes have not been effective because they
have not been truly independent; there may be political interference. It is hoped that institutions
such as the Commission on Human Rights and Administrative Justice, the Economic and
Organized Crime Office, the BNI would be adequately resourced and given the necessary
logistical support to operate effectively and fearlessly. We equally need independent prosecutors
when it comes to the prosecution of white collar crime.

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Every institution, private or public should have in place anti-fraud mechanisms that are
operational, effective and efficient to combat economic crime. Internal controls must be
strengthened and all loopholes plugged to prevent fraudulent deals from manifesting.

Internal auditors must be trained and motivated to perform their duties without fear or favour.
The training they receive should make them capable, effective and efficient auditors.

External auditors must also be well paid so that they will not take bribes and cover up economic
crimes they discover during audit operations.

The judiciary must be made truly independent, sufficiently motivated with good salaries and
better working conditions so that they are not easily influenced when performing their legitimate
duties.

A severe penalty should be meted out to those found guilty of white collar crime so as to deter
others.

There is the need for a moral crusade in the country to instill important work values such as
diligence, hard work, integrity and honesty, self-discipline, a high sense of responsibility and a
commitment to excellence.

The media has an important role to play in our national moral recovery efforts. Just as the media
has been giving wide publicity to street crimes, it must do so with white collar crime. They must
report white collar crimes irrespective of who is involved.

Workers who exhibit a lifestyle of honesty and integrity must be motivated so as to encourage
others to follow suit. There is also the need to maintain confidentiality for the whistle blower
apart from motivating him/her.

There is also the need for us to collaborate with the international community to effectively
combat cross-border crimes that include economic crimes.

In conclusion, white collar crime is as detrimental to the economic well-being of a nation as is

street crime and therefore requires stringent measures to uproot it. Stamping out white collar
crime must be the concern of all.
We conclude that by noting the privileges afforded those who commit white collar crimes are
pivotal to their crimes’ commission. The offenders’ relatively privileged position permits them to
choose crimes that pay and to protect themselves from the criminal justice system and form the
public’s scorn.
Although some are certainly more privileged than others, white collar criminals are allowed to
mitigate their deliberate criminal decisions using excuses unavailable to their street-crime
counterparts. Their stories resonate with those familiar with finance, office, politics, business
competition, and regulation, whereas street criminal’ explanations often fall on deaf ears.
Academic understanding and public policy are inevitably influenced by empathy for criminals of
privilege.

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Where advances have been made in combating white collar crime, they have originated in
movements against it. The demands of these movements counteract influence on state policy
from anti-regulation constituencies and constrain the ability of state representatives to cozy up
privileged interests and white collar criminals.

The movement against white collar crime, to the extent that one exists, is largely reactive.
Business is allowed to proceed freely until some tragic offense reminds people and the
government that an oversight is needed. When life-threatening or blatant white collar criminal
come to light, regulations are enforced and preventive measures are taken until media and public
attention subside.

Public opinion survey shows that some white collar offenses are judged to be as serious as
violent street crimes, particularly ones that result in physical harm to innocent parties 53. Those
who expect that the public will be incensed to discover for example, that they have been paid
three cents extra for orange juice, because of fixed prices, therefore, inevitably are
disappointed54. Mundane crimes like price-fixing in the folding box industry and insider trading
do not hold the media’s attention. When damage from white collar crime is imperceptible and
diffuse, offenders easily escape detection and condemnation.

Despite the perception in some quarters of a social movement against crimes in the suites, it is
unclear that the public generally has an abiding concern about white collar criminals. Assessed
against the accomplishments of the larger victims’ rights movement, the movement against the
white collar crime thus far has seen little success in raising public consciousness or in changing
public policy significantly.

Bibliography and References

Book Referred:

1 S.M.A Qadri, Ahmad Siddique’s Criminology, Penology & Victimology (Eastern

Book Company, Lucknow, 7th Edition. 2016)
2 Joseph F. Sheley, Criminology (Wadsworth Thomason learning, Belmont, USA,
3RD Edition)
3 Prof. N. V. Paranjape, Criminology and Penology (Central law Publications,
Allahabad, 14th Edition. 2010)
4 J.P.S SIROHI, Criminology & Penology (Allahabad Law Agency, Faridabad
(Haryana) 6th Edition, 2004)
5 MAGUIRE (M) & ETC., OXFORD HANDBOOK OF CRIMINOLOGY

53
Schrager and Short,1980; Wolfgang et al., 1985

54
Box, 1983

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6 Sponsorship of the Justice and Legal System Research Institute, Mrs. Glory
Nirmala.k

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