Topic:- A Critical Study on White-Collar Crimes in India

Introduction:
White-collar crime is a type of crime committed by persons from
upper-class backgrounds who are members of a recognized social
group. These crimes are perpetrated as a result of their employment.
People that perpetrate this crime often have a superior awareness of
the people they are working with, technology, their area, disciplines,
and so on.
White-collar crime has developed dramatically over time. These
crimes are committed in massive organizations that engage in a variety
of activities. These crimes are typically committed in industries such as
trade, business, health, education, and a variety of other huge
organizations.

How white-collar crimes are different from ordinary crimes?

White-collar crime is difficult to detect since the perpetrators are
usually sophisticated and knowledgeable about their surroundings.
Ordinary crimes, on the other hand, are straightforward and easy to
identify since they utilize aggressive means such as force.
Ordinary crimes are conducted out of fury, revenge, and other
emotions, and are very well planned and executed with the aid of
specialists. White-collar crimes are committed out of greed and are
very well planned and executed with the help of professionals. White-
collar crimes cause reputational or financial injury, and if caught, result
in significant financial loss, whereas conventional crimes cause bodily
and emotional trauma. However, these crimes have an impact on the
person and society as a whole.

Social-economic Crimes are another term for white-collar crimes:

It's social because it has a direct influence on society as a whole, not
just on criminals.
Financial, because these crimes result in Signiant financial loss.
Various frauds and scams occur in a nation; as a result of these frauds
and scams, the country's economy becomes unstable, and the country
suers Signiant losses.
White collar crime has a major influence on society since it causes
losses in every industry, from commodity prices to securities and
insurance. Economic losses result in increased prices for consumers
due to greater taxes, costs, government income, and so on. A single
scam can damage a businessman, an investment, the government, and
the general population. People conduct white collar crimes for financial
gain, resulting in the degradation of an organization's reputation, a lack
of earnings, and a gain of losses.

Brief Historical Background:

Since sociologist Sir Edwin Sutherland first characterized white-
collar crime in 1939, it has been associated with clever, educated, and
1
rich individuals. He characterized them as "a crime done in the course
of one's employment by a person of respectability and high social
rank." He stated that a wrongdoer is someone who has been entrusted
with a great deal of faith and trust, and that perpetrators of this crime
are those who have been entrusted with a great deal of faith and trust.
Apart from the usual ones like bribery, perjury, anti-trust actions,
tax violations, and breach of trust, they now encompass cybercrime and
healthcare fraud.
It is stated that crimes have existed since human beings first began
to live together. There are a variety of crimes that have evolved over
time, including some that have taken on new aspects as society has
become more contemporary. According to an ancient Vedic book, the
notion of white-collar crime has been in civilization from the dawn of
time.

Growth in The Modern Era:

After the First World War (1914-1919), India's fast industrialization
created a class division. There were two kinds of people: the capitalists,
or those who owned the principal means of production, or the
bourgeoisie, and the proletariats, or those who worked in the factories.
The proletarian class was socially excluded as a result of the severe
business conditions that accompanied the fast-growing economy.
The high degree of competition and the desire to enjoy monopoly led to
an increase in illegal behavior. By this time, the germ of white-collar
crime had been sowed. While the country was preoccupied with the
liberation struggle and waging wars, these criminal actions gained in
prominence, posing a danger to the Indian economy's progress.

Kinds Of White-Collar Crimes:

White collar crimes are so diverse that they cannot be generalized,
necessitating a thorough knowledge in order to identify and discourage
them.
"One prevalent misperception regarding corporate crime is that its
impacts are primarily financial," Sir Edwin Sutherland correctly stated.
However, in order to properly codify and assess such offences, it is
necessary to understand that any act or omission committed with the
intent to defraud and in order to avoid financial loss or gain a
subsequent financial advantage are all crimes, and when committed by
sophisticated members of society, they become white-collar crimes”.
In a case involving Hooker Chemical Company, it was discovered
that the alleged company, which was involved in the manufacture of
chemical products, disposed of them without proper treatment into the
abandoned Love falls at Niagara and sold the adjoining land to a family
for residential purposes without disclosing material facts about the land
being polluted by chemical effluent discharge, which eventually led to
miscarriages, birth defects, and other major health issues to the family.
The chemical company's failure to clean chemical effluent and
properly dispose of hazardous chemicals, which caused such major

2
difficulties and put other people's lives in danger, is nothing short of
whitecollar criminality.
Negligence on the rm's side, refusal to complete assessment reports,
and the desire to mislead the school board first and then the family are
all punishable by substantial fines and punitive damages.

Classification Of White - Collar Crimes:

Individual and corporate white-collar crimes are the two types of
white- collar crimes. The type of the perpetrator is used to classify the
offender. Individual white-collar crime refers to crimes committed for
personal gain or enrichment, whereas corporate crime refers to crimes
committed as part of a collective and coordinated attempt to promote
the economic objectives of a corporation or a company.
 Causes For White - Collar Crimes:
Greed, financial gain, or economic instability are the primary
motivations for such activities. The following are some of the causes
behind the rise in white-collar crime:
 Lack of Awareness:
Because white-collar crimes differ from typical crimes in
their method, victims frequently misunderstand them and
are readily duped by offenders.
 Greed:
Because white-collar crimes differ in strategy from
traditional crimes, victims usually misunderstand them
and are easily fooled by perpetrators.
 Not a really a crime:
Because these activities lack the violent characteristics
that dene typical crimes, the perpetrators or offenders
frequently convince themselves that they are not crimes.
 Necessity:
Not generally, but occasionally, such crimes are
committed as a last alternative to overcome financial
difficulties in sustaining their families.
 The satisfaction of one’s ego:
The offenders often commit such acts to satisfy their ego
and impulse.
 The lack of proper implementation of laws in this regard:
The inability to enforce existing rules in a stringent
manner frequently leads to the emergence of such
activities.

 White - collar crimes - A detailed study:

White-collar crimes are carried out in a variety of methods, ranging
from minor sums to large sums. The following is a full overview of
these methods:
 Bribery:

3
 Conduct performed with the goal of exerting undue
influence over a party in a position of power or in order
to hasten and hide specific acts with the intent of
defrauding others.
 Black Marketing:
Acts involving the sale of unlawful goods or the sale of
legal goods in an illegal manner for the purpose of
making money.
 Corporate Fraud:
Corporate acts that entail accounting systems designed to
deceive investors, auditors, and analysts about a
corporation's or business entity's genuine financial status.
 Insider Trading:
Trading in a public company's stock by someone who has
non-public, significant knowledge about the stock for
whatever reason.
 Wire Fraud:
A crime in which a person plots a scheme to defraud or
obtain money based on false representation or promises.
This criminal act is achieved using analogy or digital
electronic communications techniques. Also, known as
cybercrime by some people.

This category also includes a number of additional offences. The

most frequent sorts of white-collar crimes, such as insider trading
and wire fraud, have been thoroughly examined in this article.
1. Insider Trading:
Insider trading is the activity of exchanging securities by
someone with substantial non-public information about a company's
security or critical operations. Insider trading can be either unlawful
or legal, depending on when the incident or transaction occurred.
It is impolite to engage in such actions when the relevant
information is still unavailable to the public. Insider trading occurs
when individuals with access to strategic and sensitive information
about a rm, such as key employees, executives, or top-level
management, use that knowledge to trade in the company's stocks or
securities. Insider trading is strongly discouraged by the SEBI
{Securities and Exchange Board of India}.
The sensitive information discussed in the definition of insider
trading is knowledge relating to the company's private and
confidential affairs that has been kept a secret for whatever reason,
unknown to lower-level management.

To encourage fair trading in the market for the benefit of the average
investor, the SEBI devises ways to combat corruption and promote
fairness in the securities market. Insiders could include:

 Persons who are related to the company,

4
  Persons who were in some mater were related to the
company and have access to such information, 
Persons who are deemed to be a part of the company.
2. Role of SEBI in Curbing the Insider Trading:
The SEBI (Securities Exchange Board of India) is the regulatory
agency in charge of enacting and amending regulations governing
unfair activities in the nancial markets. The SEBI ensures that all
essential information is available to participants while also ensuring
that no sensitive information is disclosed in the process.
Under Chapter IV-A of the SEBI Act, the penalties for doing
corrupt activities such as insider trading have been outlined. The
SEBI (Amendment) Act, 2002, talks about the punishments.

Cases of Money Laundering in INDIA:

1. Anosh Ekka v. Central Bureau of Investigation

Anosh Ekka was accused of money laundering after acquiring a
large amount of movable and immovable properties in his name and
that of his family within a three-year period after becoming the
minister. The defendants were found guilty of plundering and
laundering a large quantity of public funds by the Supreme Court.
He postponed the verdict and tampered with the evidence against
him. He was also accused of misusing the legal system and
attempting to defraud the court system.

2. Arun Kumar Mishra v. Directorate of Enforcement Five persons

opened a fictitious account with the Punjab National Bank
(PNB) and made personal gains while causing PNB to lose a
significant amount of money. Because the offence did not come
under any section of the Prevention of Corruption Act, the
money laundering case was dismissed. Ex-post facto laws,
according to Article 20(1) of the Indian Constitution, have no
legal force. It is a basic right under the stated Article not to be
tried under a legislation that did not exist at the time the offence
was committed. The court did say, however, that if money
laundering has been proven against the petitioner, the
Enforcement Directorate can bring a new case against him under
the statute in effect at the time.

White - Collar Crime in Legal Profession:

In exchange for money or other services from their clients,
lawyers frequently offer fraudulent evidence and false witnesses in
court. For a fee, legal practitioners with ministerial support engage
in unethical actions and break all of their ethical norms.
Manipulation of evidence and fabricating witnesses by bringing in

5
skilled witnesses gives the case a new twist, and the genuine guilty
is often set free while the innocent is imprisoned.
So, in D.K. Gandhi v. M. Mathias, the Supreme Court upheld the
appeal and allowed the subject to be handled by the State
Commission based on the law, citing what the Supreme Court had
said in Jacob Mathew v. State of Punjab
In the case of Jacob Mathews, the Supreme Court stated that in
the law of negligence, professionals from various professions such
as legal, medical, or architecture, or any other, would be held liable
for negligence in practicing their profession if either of the
following two conditions are met: a. He lacked the required skill to
be professed, and b. Even if he possessed the required skill, he did
not exercise it.

Laws regulating white - collar crimes:

Several laws have been passed in India to address this issue. The
Essential Commodities Act of 1955, the Industrial Development and
Regulation Act of 1951, the Import and Exports (Control) Act of
1947, the Foreign Exchange (Regulation) Act of 1973, the
Companies Act of 2013, the Prevention of Money Laundering Act
of 2002, the Indian Penal Code of 1860, and the Information and
Technology Act of 2000 are just a few examples. Not only the
government, but also the Reserve Bank of India, has been working
hard to remove white-collar crime (banking and insurance scams)
from Indian society. The RBI's KYC (Know Your Customer) effort
has been a game-changing breakthrough in the fight against white-
collar crime.
The SEBI (Securities Exchange Board of India) has also played
a significant role in reducing such violations. It has enacted strong
laws and regulations in the area of white-collar crime, as well as
imposing severe and harsh punishments on those who violate them.
The Securities Contract and Regulation Act (SCRA) has also
made significant contributions to making markets safer and
preserving investors' rights.

Courts and White - Collar Crimes in India:

White collar crimes are not specially specified in the law,
although they are implied by a number of statutes. These crimes
have increased dramatically in recent years as a result of the advent
of new technology and advancements in many sectors, such as the
industrial sector, commercial sector, and so on.
We are all aware that the Indian judiciary is now dealing with
over 3 crore cases. In this circumstance, it would be extremely
difficult to resolve white collar crime cases as quickly as feasible.
It is critical to establish fast track courts and tribunals in the
country in order to expedite the resolution of white-collar crime
cases. Also, once the tribunal or the fast-track court has made a final
ruling in the matter, the parties are bound by that decision. The

6
parties would not be permitted to argue the identical concerns before
a different court in the same case.

White - Collar Crime Investigation Process:

In India, there has been a substantial increase in the number of
white-collar crime investigations. Companies are facing an increase
in time-to-time investigations as the number of anti-corruption
marches grows. Internal investigations serve as a deterrent to any
unwelcome action. This also protects the rm against humiliating
raids. In India, there is no specific method that must be followed
while conducting internal investigations into white-collar offences.
Companies now have an incentive to expedite their
investigations into sexual harassment complaints as a result of the
#MeToo movement's emergence.
For Example:
1. When ICICI Bank's CEO, Chanda Kochhar, was charged
with fraud, the bank enlisted the help of the Reserve Bank of India,
the Securities and Exchange Board of India, and the Central Bureau
of Investigation to conduct an internal investigation. An impartial
commission led by former Supreme Court Judge Justice B.N.
Srikrishna was formed to investigate the situation.
2. When Binny Bansal, Flipkart's co-founder and group chief
executive, was accused of significant misbehavior, the bank decided
to commission an independent inquiry on behalf of Flipkart and
Walmart.

In India, There Are A Variety Of Laws That Are Utilized To

Identify White Collar Crimes: [Indian Case Laws]:

Harshad Mehta Case

The tale of white-collar crime in India began in 1988, and it
has been steadily increasing since then. The case of Harshad Mehta
is an excellent illustration of the "pump-and-dump" plan in white-
collar crime. He was known as the 'Sultan of Dalal Street,' and he
made money by manipulating and misappropriating the stock
prices of several companies.
As a result, money was pumped into the stock markets in an
artificial manner, generating a sharp and rapid surge in the price of
these shares or assets. The stock market dropped by 0.1 million
every day after the hoax was disclosed. The stock market has never
seen anything like this before. The Securities and Exchange Board
of India (SEBI) issued recommendations to govern similar
behavior in the future.

Punjab National Bank Fraud or Nirav Modi Case

Nirav Modi, the accused, is a diamond merchant and a
highend jewelry designer. It is alleged that Nirav Modi and
corporate organizations related to him collaborated with
7
government authorities to get Guarantees or Letters of Undertaking
(LOU) to assist fund buyer's credit from other foreign or
international banks/financial institutions.
Following the requisite inquiry into the situation, it was discovered
that two bank personnel illegally issued LOUs to the
aforementioned entities without following the proper procedure.
These Lou's were then passed to the SWIFT messaging system,
which was used to extend credit to the aforementioned
organizations. PNB had previously reported the fraud to the stock
exchange and had gone through a $1.8 billion scam, one of the
largest of its kind to be discovered in the Indian banking sector to
date.

SEBI v. Burman Plantation and Others

The learned counsel for SEBI contended before the
Allahabad High Court that the business is being falsely charged
since it was unable to full its debts, including payments to its
investors. When the rm's advertisement was questioned, the
council stated that the advertisement was issued in 2003 and the
order was issued in 2004, when the company was unable to repay
its obligations.
Furthermore, the amount of money claimed by the investors was
never mentioned. By modifying the provisions under section 24(1)
of the SEBI Act, the counsel's principal argument compelled
legislators to enhance the penalty from one year to ten years, as
well as the ne, which may now reach 25 crores. Finally, the
accused, Ravi Arora, was found guilty.

Binod Kumar v. State of Jharkhand and Others

This complaint was brought against various ministers in the
state of Jharkhand, as well as the Chief Minister, for having
unaccounted for funds. The High Court had asked the Central
Government to transfer the matter from the Enforcement
Directorate to the CBI under Section 45 of the Constitution (1A).
The ministers were suspected to be in possession of large sums of
money, and despite the lack of proof to prosecute them with
money laundering, a thorough inquiry was recommended.
The ministers were believed to hold property not just in India but
also in other countries. As a result, the court requested an inquiry
to discover if this money was obtained via the use of a government
position. It had to be determined if a white crime was committed
under the Prevention of Corruption Act of 1988 and the Indian
Penal Code of 1860.
The CBI began its investigation under the Prevention of Corruption
Act, 1988, and the Indian Penal Code, 1860, because the
Enforcement Directorate had sole authority to conduct
investigations under the Prevention of Money Laundering Act,
which is subject to the power granted to the Central Government

8
under Section 45 (1-A) of the Prevention of Money Laundering
Act.

Analysis:
There may be some of the measures that could be taken into
account or adopted in order to prevent the commission of white -
collar crimes described as follows:
 It is critical to put stringent restrictions in the system to
eliminate the presence of such crimes. Because of the
lower fines and shorter jail terms, criminals are more
likely to perpetrate such crimes.
 As the methods for committing such white-collar crimes
evolve, so should the training of those who investigate
them. It is common for senior officers to have enough
expertise to comprehend the nature and tactics of the job,
yet they are unable to use technology to hunt down the
suspect. This occurs as a result of a lack of training. As a
result, every investigating officers must be taught in such
a way that they can simply handle any case, no matter
how hard it is.
 Fast track courts and tribunals should be established
around the country to expedite the resolution of these
matters. The tribunal should have the authority to
penalize or jail those who have been found guilty. White
collar crime rates would be reduced as a result of such
actions.
 The country's key investigative agencies, such as the
Central Bureau of Investigation, the Enforcement
Directorate, the Income-tax Department, the Directorate
of Revenue Intelligence, and the Customs Department,
all need to be strengthened by enacting robust regulatory
laws. To maintain system transparency, the Central
Vigilance Commission should monitor and cross-check
the activities of officials in key positions.
 Offenders should face strict regulations, large fines, and
long jail sentences if they commit such crimes. And, in
order for this to happen, the Indian Penal Code, 1860,
needs be changed to contain white-collar crime
provisions. White collar crimes, for example, may have
their own chapter in the IPC.
 The government may create a separate agency to
investigate the issue of crime and criminality in the
country. The National Crime Commission might be the
name of the autonomous authority. Because their whole
job would be focused on crimes and they would be an
independent organization, they would be able to work
more effectively to reduce criminality in the country.

9
  To raise awareness of white-collar crimes, the electronic
and print media should be used effectively. The general
public has to be aware of these crimes and understand
that they may occur anywhere, from a little cafe to large
multinational corporations. They should also be informed
of the legal options available to them if they are a victim
of such crimes.

Conclusion:
White collar crimes are the country's main source of
international concern since they are non-violent crimes that
undermine the country's economy. Various studies have shown that
white collar crimes do far more financial harm to the country than
conventional crimes. While it is true that completely eliminating
white collar crime is unachievable, the government and relevant
authorities should make every effort to reduce these crimes by
taking the necessary steps.
Strict regulations should be enacted, and specific courts
should be formed, to put an end to these behaviors for the good of
society, as they impede the country's progress. As our civilization
progresses toward innovation and technological advancements,
crime rates have risen dramatically. Crime is perpetrated in every
industry, obstructing our country's development.
White collar crimes are frequently unreported, and the media
may play an essential role in this area by becoming more active in
publicizing and exposing scams and frauds, as well as making
efforts to educate the public about white collar crimes and the fines
and penalties associated with them. As a result, the government
should not be tolerant when it comes to social-economic offences.
To reduce the rate of white-collar crime in India, appropriate
legislation and strong restrictions should be enacted.
White collar crimes have two startling characteristics: first,
they are nonviolent crimes, despite the perpetrators' drive to obtain
power or a sense of entitlement, and second, they are perpetrated by
persons in positions of higher authority.
However, similar crimes are also perpetrated by low-paid
underlings, even if the mastermind behind the crime is a wealthy
individual with a higher social rank in his profession. White collar
crimes are frequently perpetrated as a result of peer pressure or as a
result of the company's culture.
As our civilization progresses toward modernity and the
globe gains new technical advancements, the rate of crime rises at a
quicker pace. The increase in white collar crime, in particular, has
been significant. These crimes are done everywhere, from the
medical profession to educational institutions.
The media has a critical role to play in slowing the rise of
whitecollar crime. The majority of white-collar crimes go
undetected, according to reports. So, if the media becomes more

10
active in publishing frauds and scams at higher levels and revealing
how people in higher positions in a company use their power
arbitrarily, as well as making efforts to raise public awareness about
white collar crimes and encourage people to avoid corrupt practices,
this will undoubtedly help to reduce the rate at which white collar
crimes are committed.

11