AN ASSIGNMENT

ON

WHITE COLLAR CRIME & WRONGFUL GAIN

“DIMENSION & INTER-RELATION”

SUBJECT – WHITE COLLAR CRIMES

ACADEMIC ASSIGNMENT 2023-24

Submitted to Submitted by
Ms. Nancy Manju Dhruv
Faculty of Law Class- LL.M (one year) 1stSEM
Roll No: MU23LLM1Y037

MATS UNIVERSITY
DEPARTMENT OF LAW
 DECLARATION

I Manju Dhruv declare that the project work entitled White Collar Crime & Wrongful Gain

“Dimension & Inter-Relation” submitted to Mats school of law, is an original and authenticated

work written by me, under the guidance of Ms. Nancy Faculty of law. The conclusions therein

are based on material collected by myself.

Manju Dhruv
Class LL.M (one year) 1st Sem
Roll No: MU23LLM1Y037
 CERTIFICATE

This is to certify that Manju Dhruv, student of LL.M 1st semester of Mats school of law, has

completed the project titled “White Collar Crime & Wrongful Gain “Dimension & Inter-

Relation” under my guidance and completed it to my satisfaction. The best of my

knowledge.

The present work is the result of her own original investigation and study.

Signature
Ms. Nancy
Faculty of White-collar crimes
 INDEX

ACKNOWLEDGMENT………………………………………………………………

RESEARCH METHODOLOGY………………………………………………………

LIST OF CASES………………………………………………………………………

CHAPTER

I. Introduction.

II. Classification Of White-Collar Crimes.

III. Laws and Acts Preventing White Collar Crimes.

IV. White Collar Crime in India.

V. Remedial Measures.

CONCLUSION…………………………………………………………………………

BIBLIOGRAPHY………………………………………………………………………
 ACKNOWLEDGMENT

The writing a project has one of the most significant academic challenges I have ever faced. Any attempt at any
level can’t be satisfactorily completed without the support and guidance of learned people. I am overwhelmed in all
humbleness and gratefulness to acknowledgment our depth to all those helped us to put these ideas, well above the level
of simplicity and into something effectively and moreover on time

I would like to sincerely thank the Ms. Nancy Ma’am for giving me this project on the WHITE-COLLAR CRIME
& WRONGFUL GAIN “DIMENSION & INTER-RELATION” which has widened my knowledge on the scope
and relevance of it in present time. Her guidance and support have been instrumental in the completion of this project.

I’d also like to thank all the authors, writers, columnists and social thinkers whose ideas and works have been made
use of in the completion of this project.

In addition, I would like to extend the thanks to my parents for their selfless encouragement and support given to me
at critical junctures during the making to this project.

Manju Dhruv
Class- LL.M (one year) 1stSEM
Roll No: MU23LLM1Y037
 R E S E A R C H METHO DOLO GY

TITLE
White-collar crime and wrongful gain” dimension and inter-relation”

RESEARCH METHODOLOGY
This project has been made by Doctrinal Research. It is descriptive in approach. The researcher has made extensive
uses of the available resources of law books, articles, law reports, legislations for the purpose of research. The
data and information given in this project based on my research upon various gathered books.

STATEMENT OF PROBLEM

The main aim of this study about to know more about various ingredients and types of white-collar crimes
particularly keeping in focus its significance and its interrelationship with the concept of wrongful gain. To reach
at the desired conclusion various case laws has been discussed to present a holistic understanding. About the
working and thought process of the court with the respect of applicable concept of laws.

RESEARCH QUESTIONS

1. Define the white-collar crime? Is there any limitation for usage of this term?
2. Is white collar crime related to tradition crime? If so, how?
3. Is white collar crime in any way related to blue collar crime? If so, how?
4. Relationship of white-collar crime with the concept of wrongful gain?
5. What should be done to eliminate or reduce the rate of white-collar crime?
6. Is there any remedial measure to lessen white collar crimes?
7. Is the government only responsible for the high increase of white-collar crime?

AIM & OBJECTIVE OF THE STUDY

The aim of the study is to give knowledge about the concept of White-Collar Crimes and it’s and intertwined
relationship with the Concept of Wrongful Gains.
Following are the research objectives:
1. To briefly understand the concept of white-collar crime.
2. To explore the interrelation of white-collar crimes with concept of wrongful gain.

SCOPE OF STUDY
The study primarily focuses on the rule as it is developed in the common law system and its implications India. Its
secondary focus also deals with the situations prevailing in European Countries.

SIGNIFICANCE OF THE STUDY

The study is significant as it helps us to know about the Evolution and Various aspects pertaining to white collar
crimes. The study contains certain national cases which shows how the Concept evolved in India.
SOURCE OF DATA COLLECTION
Both primary and secondary sources have been used for collection of the relevant data:
 Bare act
 Books
 Law Reports
 Articles

LITERATURE REVIEW

 NV. Paranjape, criminology & penology (central law publications, Allahabad, 14th edition
2010)

A scholarly work by Dr. N.V. Paranjape, providing a clear and comprehensive explanation of the basic
principles of Criminology, Penology and Victimology. The author has endeavoured to bring out this edition
in a thoroughly revised form with all relevant statutory amendments and authoritative decisions on the
subject.
 NV Paranjape, Crime and Punishment Trends and Reflections (LexisNexis publications) 2016th
edition.

The book begins with an explanation of the concept of crime and its prevalence in India, the fundamental
principles of criminal law, the theories of crime and criminality and goes on to classify crime into organised
crime, and crime against women. It also discusses crime control and prevention, punishment and its theories
and forms of punishment, namely, capital punishment, collective fine and community service, and the
alternatives to punishment.

For the purpose of this project various case laws, statutes, articles were referred by me for gathering relevant
information. One of the Articles on Blog. I pleader.in titled ‘White Collar Crimes in India’ which I referred
provided me with deep insight about the topic and helped me immensely to grasp the knowledge regarding
my topic for research.

HYPOTHESIS
With the help of various case laws and certain theories the provisions and evolution of white-collar crime in India
has been discussed in order to see how liabilities can be affixed to the same while considering it as part and parcel
of wrongful gains.

METHOD OF WRITING
The method of writing followed in the course if this research project is primarily doctrinal.

MODE OF CITATION
The researcher has followed a uniform mode of citation throughout the course of this project.

TIMESCALE
It took a week to collect all the relevant data and information.
 L I S T OF C A S E S

I. State of Gujrat v. Mohanlal jitamalji porwaland anr. AIR 1987 SC 1321.

II. RK Garg Vs Union of India, AIR 1981 SC 2138.
III. Vineet Narain & Others vs. Union of India & Another, (1996) 2 SCC 199
IV. Dr. Subramanian Swamy vs Dr. Manmohan Singh and Anr, AIR 2012 SC 1185.
V. J. Jayalalithaa v. Union of India and Ors. 1999 (3) SCR 653.
VI. Bihar fodder scam.
VII. Centre for Public Interest Litigation and Ors. etc. v. Union of India and Ors. (2G spectrum scam).
VIII. Cash for vote.
IX. Coal scam case.
X. M.H. Hoskot vs. State of Maharashtra, AIR 1978 SC 1548.
 I. INTRODUCTION

BIRTH OF WHITE-COLLAR CRIMES

Due to the advance feats of scientific and technological temperament, a modernized form of criminality known as
white collar crime came into being. The concept of white-collar crime was introduced in the field of ‘Criminology’ by
Edwin Sutherland in 1939 as “crimes committed by people who enjoy the high social status, great repute, and
respectability in their occupation”. The five attributes of the given definition are:

 It is a crime.
 That is committed by an important person of the company.
 Who enjoys a high social status in the company.
 And has committed it in the course of his profession or occupation.

There may be a violation of trust. Furthermore, Indian Penal Code was enacted in 1860 but the Enigma herein is that,
the word white collar crime is nowhere mentioned in the Code. But the dimension of the crime is so wide that certain
offences under Indian Penal Code are closely linked with white-collar crime such as bribery1, corruption, food
adulteration, forgery2, fraud, cheating3, extortion4 etc.

The Codified criminal law has also provided the punishment for the offences that comes under the dimensions of white-
collar crime or socio- economic offences. However, the dimensions of white collar crimes are so wide that after
analysing 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. These aforementioned crimes are
typically an extension of the Concept of ‘Wrongful Gains’, which is defined as “Wrongful gain” is gain by unlawful
means of property to which the person gaining is not legally entitled 5.

Henceforth, it can be quite evidently construed that White Collar Crimes are basically an extension of Wrong Gains as
Explained in IPC 1860, therefore in theory, it is possible to affix liabilities to White Collar Crimes.

CONCEPT OF HARMONIOUS CONSTRUCTION

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.

1
Section 171B of Indian Penal Code (45 of 1860)
2
Section 463 of Indian Penal Code (45 of 1860)

3
Section 415 of Indian Penal Code (45 0f 1860)

4
Section 383 of Indian Penal Code (45 of 1860)
5
Section 23 of the Indian Penal Code 1860
INTERELATION OF WHITE-COLLAR CRIME WITH UNJUST ENRICHMENT

Unjust Enrichment can be understood as the retention of a benefit conferred by another, without offering compensation,
in circumstances where compensation is reasonably expected.

 A benefit obtained from another, not intended as a gift and not legally justifiable for which the beneficiary
must make restitution or
 recompense.
 The area of law dealing with unjustifiable benefits of this kind

This theory primarily deals with contract laws. Basically, as per the theory of unjust enrichment, a person who has
been unjustly enriched at the expense of the other is required to reimburse the other party to the extent of the
enrichment. It happens that sometimes a person uses the benefit from other person and then there is no point of
compensation raised at the time of contract but after the completion of the act, sometimes the person becomes morally
liable to pay the damages to the party. In substantial ways it means certain illegal benefit derived by an individual to
which the same was not legally Entitled to avail the same. For instance, Corruption and Bribery can be attributed to
Unjust Enrichments wherein officials who are not entitled to monetary gains exploit individuals to avail the same with
the aid of various mechanisms such as Red-Tapism, etc. Such wrongful Gains are the primeval source of White-Collar
Crimes in essence.

INTERRELATION OF WHITE-COLLAR CRIMES WITH WRONGFUL GAINS

The phrase "wrongful gain" is broadly defined under Section 23 of the Indian Penal Code as any error, distortion,
activity, or exclusion that occurs in any act and is regarded as a violation of the law. Wrongful gain is when someone
obtains something to which they are not lawfully entitled by using illegal means. The word “wrongful” means
prejudicially affecting on a party in some legal right. Wrongful gain includes wrongful acquisition or wrongful
retention with the intention of appropriation.

Suppose, A takes B’s mobile phone without his permission. A then sells the mobile phone to C. Here, A has gained
wrongfully as he has taken B’s property without his consent. C, who bought the mobile phone from A, has also gained
wrongfully as he has acquired property which belonged to someone else.

INGREDIENTS OF WRONGFUL GAIN

The ingredients of wrongful gain are as follows –

 There must be gain of sum property

 The property to which a person was not legally authorized must be gained
 Any such gain must be made by unlawful or illegal means

It is important to keep in mind that the term "wrongful gain" encompasses both the acquisition and retention of
property obtained in an improper manner. This implies that a person may be held accountable for both situations in
which property has been improperly acquired and improperly retained. Wrongful gain is the term used to describe
when someone gets something by illegal means to which they are not lawfully entitled.
Therefore, whilst analysing the concept of wrongful gain and harmonious constructing the principle of the same
within the purview of white-collar crime, theoretically, criminal liability under IPC can be affixed on the involvement
of any individual in the white-collar crime as white-collar crimes are basically an extension of wrongful gain.

DIFINE THE TERM WHITE COLLAR CRIME

White-collar crime is a non-violent crime where the primary motive is typically financial in nature. White-collar
criminals usually occupy a professional position of power and/or prestige, and one that commands well above average
compensation.

The term “white-collar crime” was coined in the 1930s by sociologist and criminologist Edwin Sutherland. He used
the phrase to describe the types of crimes commonly committed by “persons of respectability” – people who are
recognized as possessing a high social status. Sutherland eventually founded the Bloomington School of Criminology
at the State University of Indiana.

Prior to Sutherland’s introduction of the concept of white-collar crime, the upper classes of society were thought to
be largely incapable of engaging in such criminal activity. Such a belief was so deeply entrenched in society that
when Sutherland first published a book on the subject, some of America’s largest companies successfully sued to get
the book heavily censored.

Today the most common definition of white-collar crime now no longer focuses of the social status of the offender
but rather on the type of conduct/behaviour 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.

• SUTHERLAND was a proponent of Symbolic Interactionism, and believed that criminal behaviour 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.”

The nature of White Collar is so grievous in nature that the injury or damage caused as the result of them is so
widely diffused in the society at large scale that the gravity in regard to individual victim is almost negligible.
Therefore, its nature is such that it overlaps the multiple type of violation of criminal code, and it also includes
moral or ethical violation of causing most serious social as well as economic harm.
 SUTHERLAND’S CONCEPT OF WHITE-COLLAR CRIMES. (IN FIGURE 1.1)

Crimes by Crimes for

high status Organizations
people

White-collar
Crimes

Crimes
against
Organization
s

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 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.

DIFFERENCE BETWEEN TRADITIONAL CRIMES AND WHITE- COLLAR CRIMES

It is pertinent to note that the mens-rea of the White-Collar Criminal is excessive greed and rapaciousness
not lust or hate as is the case in traditional crimes. Modus Operandi as pertaining to white collar crimes
is essentially non-emotional (unlike rape, murder, defamation etc.) whereas in case of traditional crimes
some emotional aspect is normally found. Also, 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 wilful. 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

(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.

LIMITATIONS THAT OF THE TERM “WHITE COLLAR CRIME

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 behaviour, 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 6. Organizational or corporate crime

6
Appelbaum and Chambliss (1997; 117)
 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-City areas have fewer "situations" to exploit 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 behaviour 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.) The difference between ‘blue collar crimes’, which are crime of a
general nature, and ‘white collar crimes’ was laid down by the Supreme Court of India in the case of State of Gujarat
v. Mohanlal Jitamalji Porwal and Anr7. Justice Thakker elucidated that one person can murder another person in the
heat of the moment, but causing financial loss or say committing economic offences requires planning. It involves
calculations and strategy making in order to derive personal profits.

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.

7
AIR 1987 SC 1321
 2. CLASSIFICATION OF WHITE-COLLAR CRIMES

White Collar Crimes Can Broadly be classified into Following Categories principally

AD HOC CRIMES:

They are also called as personal crimes as in this category, the offender pursues in his own individual objective having
no face-to-face contact with the victim. For example: - Hacking on computers, credit- card frauds, tax evasion etc.

BREACH OF TRUST

In this type of crime breach of faith bestowed by an individual or institution on perpetrator.

INSIDER TRADING

When some uses the confidential information to trade in shares of publicly held corporations.

BANK FRAUD

It means to engage in such activities which is taken place in order to defraud a bank or using illegal means to obtain
assets held by financial or non - financial institution.

BRIBERY

Bribery means offering money, goods or any kind of gift to some government officials in order to have control over
his actions or making them to work as per the choice of giver in an illegal manner.

COMPUTER FRAUD

Computer frauds are very common these days. It has increased with the advancement in the technology. It can also
include cyber- crimes. Computer frauds in simple words can be defined as, such frauds which involve hacking or
stealing information of some other persons without his or her permission.

EMBEZZLEMENT

Embezzlement means when a person illegally obtains someone’s property by actual or threatened force or coercion.
It can also be called as criminal breach of trust.

EXTORTION

When someone illegally obtains someone’s property by means of threatening or obtains any property by unlawful
means or in a dishonest manner.

TAX EVASION

The complex tax law structure in India have provided sufficient scope for the tax payers to evade from payable taxes.
Tax evasion is common between persons of high class such as traders, businessman, lawyers, doctors, businessmen,
engineers etc. In case of R. K. Garg v. Union of India 8 Supreme Court upheld that the validity of the Special Bearer
Bonds (Immunities and Exemption) Act, 1981, observed that the Acts was not intended to encourage tax evasion in

8
(19811) 133 ITR 239
future and condone such evasion committed in past but real legal intent of the act is to launch a nation –wide search
to unearth wealth encouraging small incentive to those who declare their disclosed cash.

CORRUPTION

It is a dishonest or fraudulent conduct by those in power, typically and highly involved bribery. Corruption is an
illegal act and his controlled by Prevention of Corruption Act. The Supreme Court in Vineet Narayan v. Union of
India,9 observed that agency having disclosed a prime facie case against the public servant. the corruption cases
against the public servant were often delayed the investigation

In case of Subramanium Swamy v. Dr. Man Mohan Singh,10 Supreme Court reiterated that the time –limit of three
months for grant of government sanction under Section 19 of the Prevention of Corruption Act, 1988 for the
prosecution of public servant alleged of corruption charges, must be strictly followed.

Further in case of Jayalalithaa v. Union of India11, Supreme Court observed that corruption erodes the moral fabric
of society and is detrimental to national economy. Misuse and abuse of power by persons occupying high position in
the Government has reached alarming dimensions and it has tarnished the image of the country.

9
(1998) 1 SCC 226

10
AIR 2012 SC 1185

11
(1999) 5 SCC 138.
 3. LAWS AND ACTS PREVENTING WHITE COLLAR CRIMES.

PREVENTION OF MONEY LAUNDERING ACT, 2002

In India, black money is generated in large scale from last few decades from various socio-economic crimes and
this black money is converted into white money so the economic offenders can easily get escape of his or her
criminal liability and that money can easily be used in the economy with the notice of the government authorities.
The process of conversion of tainted money into untainted money is called the money laundering. Thus, the main
purpose and object of the mentioned Act, is to prevent money laundering.
The concept of money laundering is an international concept and menace and for the same reason, United Nations
adopted a political declaration in June 1998 and asked its members to enact the national legislations for the
prevention of money laundering. The present Act has been passed to implement the resolution of United Nations.
The main aim of the guidelines is-
• To safeguard banks from acting as a chain in money laundering activities or in the process of money laundering.
• To help banks to know more about the clients and customer and to keep a check on them thus to protect them
from the losses.

PREVENTION OF CORRUPTION ACT, 1988

In context with white collar crime, The Prevention of Corruption Act, 1988 is very important Corruption erodes
the authority of state and promotes crime. The issue of corruption is very dangerous to nation. The Santhanam
Committee Report of 1964 defines the problem of corruption as a complex problem having its roots and ramification
in the society itself as a whole. The Act came into force because of increasing cases of bribery and corruption among
the public authorities. The Act consolidated the provisions of IPC, CrPc and Criminal Act, 1952. The act has
provided the definition of “public duty”, “public authority”, “public servant”. The provided definitions are very
important in determining the criminal liability of a public officer.

COMPANIES ACT, 2013

The act also deals with the white-collar crimes. The Companies Act, 2013 contains special provisions for offences,
penalties and their Compounding in many of its sections. The provisions of Companies Act, 2013 also provides
provisions to deal with effective penalty, mechanism, speedy trials according to the gravity of offences committed
under the Act. The Companies Act, 2013 in Sec. 447 provides list of offences and punishment for fraud where- as
Sec. 212 deals with investigation into the affairs of the Company by Serious Fraud Investigation Office.
The Act states that notwithstanding anything in CrPc, 1973, every offence under the act expect to offence mentioned
under sub- section (6) of Sec 212 shall be deemed to be non- cognizable offence.
Section 435- 438 of the Act provides establishment of special courts for the purpose of providing speedy trials for
offence committed which is punishable under the Act. Sec.447 of the Act provides punishment for fraud and Sec
448 provides punishment for producing or providing any false statement. Thus, the act tried to cover every aspect
to deal with the white-collar crime or corporate criminal liability of the corporate houses.
 ESSENTIAL COMMODITY ACT, 1955

It is another act, which is enacted with a legislative intent to prevent the socio – economic offences or white-collar
crime. The main object of this Act is to control the production, supply and the distribution of certain commodities
in the market. The act tries to protect the interest of general public in order to secure equitable distribution of
essential commodity at a reasonable distribution. The act itself gives the definition of essential commodity. The
items and commodity declared as “essential commodity” under the Act are reviewed from time to time in the light
of liberalized economic policies in the consultation and particularly with regard to their production, demand and
supply.

Section 6 of the Act imposes penalties and punishment for cognizable offences. The punishment impose
under section 6 of the Act is non –bailable offence. The Act provides that mens rea is an essential
element of the offence punishable under the Act. The Act expressly that no Civil Court can grant any
injunction or make any order for any other relief against the Central or State Government or any public
officer, in respect of any act done, or purporting to be done. 12Thus, the Act does not give any privilege
to high authorities or to high officers of the Government. The act intended to impose criminal liability
upon the offender(s).

INDUSTRIAL (DEVELOPMENT AND REGULATION) ACT, 1951

As earlier mentioned, the increasing rate of white-collar crime has started with era of industrialization in India. With
the growth of industrial sector at high rate and on sustained basis forced the Govt. of India to issue industrial policies
in order to avoid any kind of malpractices in this sector. Thus, the Industrial Policies Resolution of 1948 provided a
legal support and aid to enact the Industrial (Development and Regulation) Act, 1951.
The main objective of the act is to empower the Govt. to take necessary steps for the growth and development of the
industry. It also empowers the Govt. to take necessary steps to –

 regulate the pattern and direction of industrial development, to control the activities,

 performance of industrial knowledge in the public interest.

The acts also give power to Central Govt. to take over the industrial undertakings without going for any kind of
investigation under the certain circumstances. Sec. 24 of the Act imposes penalties for the contravention or attempt
to contravene or abetment of the contravention, by any person.

Sec 24A of the Act provides that if any person when required by the Act or by an order publish or made under the
Act, makes or furnishes any information which is false or misleading and he knows or has a reasonable cause to
believe that the produced information or statement is false or misleading shall be punished under the Act with the
fine of Rs 2000 or imprisonment of three months or both. Misleading information may include the misrepresentation
of accounts, records or any declaration or any document. Thus, the policies made under the act and a provision tries
to prevent the occurrence of white-collar crime at a very high rate in the country.

12
Economic and Commercial laws, The Institute of Company Secretary of India, June 201(pg.no504).
 INFORMATION TECHNOLOGY ACT, 2002

In order to tackle with computer- related crimes, Information Technology Act, 2000 has enacted to provide legal
recognition to authentication of information exchanged on social media websites or any E- Commerce networking
sites. The act contains certain provisions that deal with white collar crimes. Some of the section also deals with the
awareness of crimes. The Act in its Section 43 and 44 of Information Technology provides penalty for offences
committed as prescribed by the Act. Some of the following such offences are as follows: -
 Unauthorized copying of an extract forms any kind of the data
 Unauthorized access and downloading files illegally.
 Causing any damage to computer system or computer networking system.
 Providing any kind of assistance in any form to any unauthorized person who can access to the other person’s
computer without his or her permission
.

FUGITIVE ECONOMIC OFFENDER’S BILL, 2017

Recent case of Vijay Mallia has forced Government and Legislature to make a law on economic offenders who
commits white collar crime in India and flee to other country in order to escape from their criminal liability and
jurisdiction of Indian Courts. The Bill has been referred to the Standing Committee of Parliament. The draft of Bill
provides provision which empowers the Govt. to confiscate any property of economic offender in India who flees
to other country. The proposed bill will be applicable to all those economic offenders who had a criminal liability
of Rs 100 Crore or more. The Bill provides a list of offences in its Scheduled List which can be termed as “economic
offences”. The bill provides provisions to a establish Special Court under The Prevention of Money Laundering
Act, 2002 to declare a person as fugitive economic offender. The key feature of the Bill is that it provides the
definition of fugitive of economic offenders and talks about the procedure of Special Court and the applicability of
the Act. The Bill also provides that the Central Government may enter into any treaty with any nation through any
means inter alia devising a mechanism to extradite the Fugitive Economic Offender of India which is present in
their country or allowing the Govt. or any respective authority to confiscate any foreign property of such offender.
 4. WHITE COLLAR CRIMES IN INDIA

India is vehemently in the clutches 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 the nation. The
Santhanam committee report in its finding a vivid picture of white-collar crime committed by persons of
respectability such as businessmen, industrialists, contractors and suppliers as also the corrupt the public officials. 13
Highlighting the magnitude of white-collar crimes in India the commission of prevention of corruption in its report
observed:

 “The advance of technological and scientifical 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 behaviours is necessary
for the event 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”.14

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, which however, disagreed 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 have 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. 15

 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

13
Santhanam Committee Report, pp. 151-53
14
Law Commission of India Report of the commission on prevention of corruption para 213, p 11.
15
Criminology & Penology, J.P.S SIROHI p 90
 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. 16

HOARDING, BLACK MARKETING AND ADULTERATION

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 who benefit themselves with such wrongful gains. 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 by these persons 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 India17’ 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 appear 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 lawfully18.

ROLE OF GOVERNMENT IN WHITE COLLAR CRIMES IN INDIA

 Corruption in government:

16
Fourth annual report on the working of Indian Companies Act 1956 Government of India (1960)
17
1982 133 ITR 239 SC
18
White Collar Crimes in India | Yogesh V Nayyar |
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. 19

 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. 20
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 Fodder Scam Case21, Centre for Public Interest litigation V Union of India 22 (2G spectrum Case), cash for
vote23, coal scam24 are some of the examples.

19
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 lately.
20
Santhanam Committee Report (p101-102)
21
Union of India v. Sushil Kumar Modi, (1997) 4 SCC 770
22
(2012) 3 SCC I
23
P.V Narasimha Rao V State, (1998) 4 SCC 626; 1998 SCC (Cri) 1108
24
Manohar Lal Sharma V. Union of India (2014) 2SCC 532
 5. 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. 25

However, few of the suggested reforms to curb the Wrongful Gains derived out of white-collar crime are as
follows: -

 Generating public awareness against such crimes via media of press, platform and other audio-visual aids.
Intensive legal literacy programs might 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 damage 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 as the current practice of drawing harmonious construction between Wrongful Gains and white-
collar crimes is vague and grossly lacks proper legal sanctions. Amending the Code would ensure 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 Maharashtra26, 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.

25
Prof. N. V. Paranjape Criminology and Penology
26
(1987)3 SCC 544.
 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 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.
 CONCLUSION

The advancement of science and technology in last few decades has created a new form of crime which is known as
“white collar crime”. It is a socio- economic offence due to which economy suffers a lot. The person who commits
these types of crime is called socio-economic offenders. The term white collar is not defined in criminal law but
although certain form of white-collar crime is defined in Indian Penal Code.

The concept of Wrongful Gains as under IPC is closely intertwined with the nature of White-Collar Crimes and
appropriate certain sanctions can also be imposed upon White Collar Crimes while incorporating the concept of
Harmonious Construction.

The provision of white-collar crime also deals with the punishment and fine associated with the nature of crime. In
past years many scams have been witnessed by India in form of white-collar crimes.

Govt. of India has taken many steps to prevent this type of crime in India. The act such as Prevention of Corruption
Act, 1988, Prevention of Money Laundering Act, 2002, Essential Commodity Act,1955 helps the Govt. to penalize
such offences. The recent bill pending in Parliament, The Economic Offender’s Bill, 2017, is an initiative of NDA
Govt. to have jurisdiction on economic offenders to flee off to other country to escape from their criminal liability.
The above-mentioned acts (or any other related act which prevents white collar crimes) along with legal provisions
of Indian Penal Code, 1860 should be harmoniously interpreted in such a strict manner to control problem of white-
collar crimes in India.
 BIBLIOGRAPHY

 NV. Paranjape, criminology & penology (central law publications, Allahabad, 14 th edition 2010)

 NV Paranjape, Crime and Punishment Trends and Reflections (LexisNexis publications) 2016th
edition.
 https://www.legalserviceindia.com/legal/article-10873-white-collar-crimes-in-india.html
 https://blog.ipleaders.in/white-collar-crimes/
 https://lawsstudy.com/white-collar-crime-in-indian-law/
 https://blog.finology.in/Legal-news/white-collar-crime