WHITE COLLAR CRIMES IN INDIA

Dissertation Submitted
In Partial Fulfilment of the Requirements
For the Degree of
Master of Laws ( LL. M.)

Submitted By
HAMMAD ALI
Roll No. 1170997016
SESSION 2017 – 18

Under Supervision of
Dr. Aditya V. SIngh

School of Legal Studies, BBDU LUCKNOW ( U.P.)

BABU BANARASI DAS UNIVERSITY,

LUCKNOW ( U.P.) INDIA

[i]
 CERTIFICATE

This is to certify that HAMMAD ALI, Student of LL.M. Second semester, BBD
University, Lucknow, has worked on the topic titled as “WHITE COLLAR CRIMES IN
INDIA” under my supervision. To the best of my knowledge this dissertation embodies
the original work of the candidate himself and the findings and suggestions put forth in
this dissertation are his own.

Under Supervision of

DATE: Dr. Aditya V. SIngh

PLACE:

[ii]
 ACKNOWLEDGEMENTS

Words are often too less to reveal one’s deep regards. An understanding of the work like
this is never the outcome of the efforts of a single person. I take this opportunity to express
my profound sense of gratitude and respect to all those who helped me through the duration
of this LLM dissertation. First, I would like to thank the Almighty-GOD, for being with
me and always guiding me to walk on the right path of life. Without His grace, this would
not have been possible. My special words of thanks goes to my research guide, Professor
, Dr. Aditya V. SIngh for always being so kind, helpful and motivating. He cooperated
so much towards timely completion of this research work. I am equally grateful so also to
all my teachers who taught me in the department in law. My deepest gratitude goes to my
family for their unflagging love and support throughout my life; this dissertation was
simply impossible without them. I am indebted to my father- J. Mahboob Ali and my
mother - who inspired, supported and encouraged me at every step. My Family provided
the best possible environment for me. I am ever grateful to their unselfish blessings and
support. Their prayer for me was what sustained me so far. Thank you for supporting me
for everything, and especially I can’t thank them enough for encouraging me throughout
this experience. I am also thankful to Library staff in the department of Law at Lucknow
and in Indian Law Institute at New Delhi.

[iii]
 ABBREVIATIONS

A.P. - Andhra Pradesh

AAR - Authority for Advance Rulings
ACB - Anti-Corruption Bureau
AIA - Administration Improvement Act
AIDS -Acquired Immune Deficiency Syndrome
AIIMS - All India Institute of Medical Sciences
AIR - All India Reporter
ARC - Administrative Reform Commission
BBCA -Bhrashtachar Bharat Choddo Andolan
BCC - Blue Collar Crimes
BCI -Bar Council of India
BIS - Bureau of Indian Standards
BPRD -Bureau Of Police Research And Development
CBI -Central Bureau Of Investigation
CCFS - Central Committee of Food Standards
CJI - Chief Justice of India
COFEPOSA - Conservation of Foreign Exchange and Prevention of Smuggling
Activities Act
COS -Committee of Securities
CPA - Consumer Protection Act
CQIM -Corruption Quit India Movement
Cr.P.C - Criminal Procedure Code
Cri.L.J. -Criminal Law Journal
CVC -Central Vigilance Commission
CVO -Chief Vigilance Officer
DDP - Defence Procurement Policy
DGHS -Directorate General of Health Services
DGS&D - Directorate General of Supplies & Disposals
DRT -Debt Recovery Tribunal
DSPE - Delhi Special Police Establishment
DTAC - Double Taxation Avoidance Convention
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DTC - Direct Tax Code
E - Electronic
E.H. - Edwin Hardin
EC - Essential Commodities
ED - Directorate of Enforcement
EOW - Economic Offences Wing
EU - European Union
FBI - Federal Bureau Of Investigation
FCPA - Foreign Corrupt Practices Act
FCRA - Foreign Contribution Regulation Act
FDA - Food Development Authority
FICCI - Federation of Indian Chambers of Commerce and Industry
FIR - First Information Report
FIU - Financial Intelligence Unit
FPO - Food Product Order
FRA - Food Regulation Authority
FSSA - Food Safety and Standards Act
GAAR - General Anti Avoidance Rules
GM - Genetically Modified
HACCP - Hazard Analysis and Critical Control Point
HEW - Health, Education And Welfare
HTIL - Hutchison Telecommunications International Limited
IAS - Indian Allied Services
IB - Intelligence Bureau
ICC - Interstate Commerce Commission
IEM - Independent External Monitor
IES - Indian Education Sector
ILI - Indian Law Institute
IMF - Indian Monetary Fund
IP - Integrity Pact
IPC - Indian Penal Code
IPS - Indian Police Service
IRS - Internal Revenue Service
ISI - Indian Standards Institutions
[v]
ITA - Income Tax Act
ITD - Income Tax Directorate
LHA -Local Health Authority
MFPI -Ministry of Food Processing Industries
MMP -Mission Mode Projects
MMPO - Milk and Milk Products Order
MRTP -Monopolies and Restrictive Trade Practices
PBMMSEC - Prevention of Black Marketing and Maintenance of Supplies of Essential
Commodities
PCA -Prevention of Corruption Act
PDI -Positive Deviation Initiation
PFA -Prevention of Food Adulteration
PIDR - Public Interest Disclosures and Protection of Informer Resolution
POTA -Prevention of Terrorism Act
Raj. -Rajasthan
RTI - Right to Information Act
SACB -State Anti-Corruption Bureau
SC - Supreme Court
SPS -Sanitary Phyto-Sanitary
SVC -State Vigilance Commission
TI -Transparency International
TMC -Terminal Market Complex
TQM -Total Quality Management
U/S - Under Section
UNCAC -United Nations Convention against Corruption
V. -Versus
VAT -Value Added Tax
WCC - White Collar Crimes
WTO -World Trade Organization

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 LIST OF CASES

• A.K. Roy v. State of Punjab, AIR 1986 SC 2160

• Bhupendra Singh A Chudasama v. State of Gujarat, AIR 1997 SC 3790
• Carborandum Universal Madras v. Food Inspector Thiruvettiyur Municipality, 1989(1)
FAC 367.
• D.K. Joshi v. State of U.P, (2000) 5 SCC 80
• Divisional Forest Officer V. Sudhakar Rao, AIR 1986 SC 328
• Dy. Commissioner v. Rudolph Fernandez, AIR 2000 SC 1132.
• Food Inspector, Health Deptt., Chandigarh v. M/s Krishna Dhaba, AIR 1994 SC 664.
• Juggankhan Jamshankhan v. State, AIR 1963 MP 102
• Khushaldas v. State, AIR 1960 MP 50.
• MV Dhabolkar Vs state of Maharastra (1975) 2.SCC.702
• M/s. Thakur Das Babu Ram v. State of Himachal Pradesh, 1989(1) FAC 343.
• Mulai Singh Case, (1906) 28 All 402
• Olga Telis case, AIR 1986 SC 180
• PUCL v. Union of India, Supreme Court,2010
• R. K. Garg v. Union of India, (1981) 133 ITR 239.
• R.Banerjee v. H.D. Dubey, AIR 1992 SC 1168.
• Radha Krishna Nair v. Food Inspector, 1989(1) FAC 234.
• Rajesh Kumar Srivastava v. A.P. Verma and Ors, AIR 2005 All 175
• Ramesh Chander Padhi v. Collector of Ganjam & Anr, Supreme Court,2009
• S. Samuel, M.D. Harrisons, Malayava v. Union of India AIR 2004 SC 218 358 Shivaji
Narayan Shinde v. State of Maharshtra, (1971) 73 Bom LR 215
• Shri Bhagwan Samardha v. State of Andhra Pradesh, AIR 1999 SC 2332
• State ofAssam v. Paban Kumar Aggarwal, 1990 (1) FAC 115.
• The Me Dowell Dictum Case, (2003)5 SCC (J).
• U.P. Roller Flour Mills Association & Ors. V. Govt.
• Yamuna Sah v. State of Bihar, 1990(2) FAC 16 359

[vii]
TABLE OF CONTENT

Acknowledgement ( iii )
Abbreviations ( iv - vi)
List of cases ( vii )
Table of content ( viii – vi )
CHAPTER – 1 INTRODUCTION
1.1 Introduction 1- 10
1.2 Hypothesis of the study 11
1.3 Objectives of the study 12
1.4 Methodology adopted for this work 13
1.5 Plan of the work 14
CHAPTER – 2 WHITE COLLAR CRIMES
2.1 White Collar Crimes-A Retrospect 15 - 24
2.2 Concept And Definitions 25 - 38
CHAPTER – 3 NATURE AND SCOPE
3.1 Nature and Scope 39 - 46
3.2 Legal basis of white collar crimes 47 - 49
3.3 Classification 50 - 59
3.4 White Collar Crimes Vis-a-vis Other Crimes 60 - 63
3.5 White Collar Crimes / Corporate Crimes 64
3.6 White Collar Crimes / State Crimes 65
3.7 White Collar Crimes / State Corporate Crimes 66
3.8 White Collar Crimes / Economic Crimes 67 - 68
3.9 White Collar Crimes / Organised Crimes 69
CHAPTER – 4 PROBLEMS OF WHITE COLLAR CRIMES
4.1 Problems of White Collar Crimes in India 70 – 76
CHAPTER – 5 CAUSATIVE FACTORS
5.1 Causative Factors of White Collar White 77 - 84
5.2 Reasons For the Growth of White Collar Crimes in India 85 - 90
CHAPTER – 6 EMERGING TRENDS IN INDIA
6.1 Emerging Trends In India 91 - 100
CHAPTER – 7 CONCLUSIONS AND SUGGESTIONS
[viii]
7.1 Conclusions and Suggestions 101 - 102
7.2 Bibliography 103 – 108

[ix]
[i]
INTRODUCTION

“ The present decades are experiencing a major socioeconomic phenomenon called

globalization. This phenomenon was driven by vast increase in trade, mobility, fast means
of communication and technological innovations. Trafficking in narcotics, trafficking in
arms and explosives, fraudulent financial deals, foreign exchange manipulations, etc.,
falling under the head ‘White Collar Crimes’ are adding new dimensions to the emerging
crime scenario. Economic Offences are the manifestations of the criminal acts done either
solely or in an organized manner with or without associates or gangs with intent to earn
wealth through illegal means, and earn out of illicit activities violating the laws of the land,
other regulatory, statutory provisions governing the economic activities of the government
and its administration. These offences are not different from the traditional penal offences
as far as their criminality is concerned. The categorization of these offences as a separate
class is mainly due to the fact that they differ in modus operandi, and such activities are
continued without legality by taking advantage of the deficiencies of the laws, rules, and
regulations. Such operations are also conducted with precision by circumventing the
prescribed rule of law with impunity until after passage of time, the consequences of such
offences surface leading to post facto legal intervention by the enforcement authorities.
The activities of the above nature indulged in by organized crime groups by adopting
various strategies need to be specially dealt with by an appropriate counter strategy. To
tackle such forms of crimes one of the important legal development within the country as
well as other developed countries in the world is to bring under the ambit of law powers
to confiscate assets acquired by illicit means. Traditional laws to some extent deal with
confiscation of assets acquired by criminal acts and these have to be supplemented by
some special measures as well. Institutional supports have been developed over the years
to concentrate the enforcement drives by setting up special units exclusively to deal with
such forms of economic crimes. The economic offences cause irreparable damage to the
economy of the country, and its impact is felt in the economy down to a common man
affecting the growth and development of the country.
Some of the major impacts that may be caused by the economic offences illustratively
are:
■ Increase in inflationary pressure,
■ Distortion of developmental work,
■ Uneven distribution of resources and creation of elitism,
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■ Marginalization of tax base,
■ Generation of enormous amount of black money,
■ Creation of a parallel economy,
■ Development works/efforts are undermined,
■ The country’s economic equilibrium is at stake,
■ The breeding ground of corruption in various forms at various levels,
■Illicit business and public office corruption thrive and affect normal business activities,
■Resources of financial institutions and commercial institutions are diverted and
distorted, abused for personal gains;
■ Weakens morale and commitment of the citizens, and
■ The poor/weakest continue to be poorer and are at risk.
There being a range of economic offences, some are cognizable and some non cognizable
in nature. Hence, the police alone are not directly empowered nor are they equipped
adequately considering the range of specific laws to investigate and successfully arrest the
offenders except in cognizable offences. None the less, regular police deal with a
considerable number of economic offences falling under the broad category of ‘cheating’,
‘counterfeiting and criminal breach of trust.’ The present day range of economic
offences are far too many in range as well as levels of sophistication of their commission.
Considering the importance to deal with such kind of offences which undermine the
economy of the country, the Government of India has established a number of enforcement
agencies having the requisite skills to investigate such crimes with successful results.
These enforcement agencies are specially authorized under relevant provisions of various
acts and statutes.1 Although the basic principles of enquiries, investigations and collection
of information are well known to police officers, there is need to reorient their approach
while dealing with economic offences. Doubtless, the Finance Ministry has various
specialized agencies to deal with Foreign Exchange violations, of fiscal laws. While these
agencies are concerned with the enforcement aspects, they would be handicapped in
dealing with many-sided ramifications of economic offences. Each of these agencies
would be able to tackle only the direct aspects of the matter but they will not be able to
handle the subtler and complicated details of such organized crime, especially those called
White Collar Crimes. Hence, an important Wing of the CBI has been set up to deal with

1
See R.C. Mishra, “Crime Trends and Criminal Justice” 1st Edition, 2001, Pg.No. 219

[2]
such cases2. Exchange control in India is not the only official restriction affecting the
country’s external transactions. It supplements other regulations particularly those applied
under the Imports and Exports (Control) Act. The two controls are closely allied with each
other. An economic offence, say smuggling, cannot be viewed as an isolated fiscal offence.
The smuggler by the very process of financing the racket is committing violations of
exchange control, as such; the transactions are made across international frontiers. The
money used in such financing is definitely not a declared income in the income tax returns.
It follows that false entries in tax returns have been made if at all those returns have been
filed. As a result, the provisions of the income Tax Act and probably some sections of the
Indian Penal Code for making false declarations will be attracted. For instance if gold is
to be bought outside the country, one has to pay either in the currency of that country or
in the form goods that are in demand there. It is well known that silver is smuggled out of
India for payment against purchase of luxury goods that are brought into the country
through devious means. It is also known that in order to hoodwink the Customer’s
authorities, the Indo-Nepal Treaty of Trade and Transit is abused and third country goods
are brought in India via Nepal. Likewise under forged export license, goods of our country
are smuggled through Nepal into third countries. One other method adopted for acquiring
foreign exchange is to purchase dollars or pounds from tourists by paying a higher value
than the exchange rate. Some of this illegal money is used in the purchase of narcotic
substances for being smuggled out to foreign countries where the street value is enormous.
Here we see the interconnection between exchange violations and smuggling of narcotics
in which a number of interstate and international gangs are involved. Interpol, two-third
of whose work concerns drugs, has repeatedly brought the problem of narcotic to the
forefront in international forums and laid great emphasis on the need to take effective
action to stamp out this type of illegal traffic. India is a signatory to international
agreements on Narcotics Control and is, therefore, obliged to act effectively in this area.
Another deleterious economic offence is the forgery and dissemination of currency notes
both of our country and of hard currency areas. There are frequent rumours and speculation
regarding the foreign origin of some of the forged rupee notes. In fact, there have been
questions in Parliament to the effect that lack of counterfeit currency which are suspected
to be from a neighbouring country are found distributed in some parts of India. The
ramifications of the counterfeit currency cases transcend interstate and international

2
See F.V. Aral, “ Some thoughts on economic offences” CBI Bulletin, Vol.9, June 2001

[3]
borders. As the facilities available with the State Police Force to undertake such
complicated investigations are limited, the responsibility has to be borne by the CBI which
a central agency is having good report with the NCB’s of foreign countries. Malpractices
indulged in by Public Limited Companies are another aspect of economic offences as
implied White Collar Crimes which adversely affect public interest. Though many of the
offences under the Companies Act arise out of defaults or illegal omissions, there are a
number of offenses involving frauds, misappropriation etc.3 In view of the circumstances,
Socio-economic has emerged as a separate field of study in the late twentieth century. If
we probe into the enigma of socio economic offences the root cause lies in the lust for
money. These crimes are always committed by educated, highly qualified and socially
reputed people. The prominent hall marks in socio-economic crimes are that these
offenders pretend this illegitimated earned money as a legitimate money. In the lap of
globalization and advancement a new paradox has come in sight. It is conglomerate
challenge before our law. On one hand we have set our foot in the world of competition,
information technology, cyberspace and e-world, however, on the other hand the rate of
socio-economic crimes have been increasing and degrading the quality of life day by day
and, therefore, increasing gap between classes of people. While law could never have been
divorced from other disciplines, the technology-law interface has surely freed
jurisprudence from the clutches of solitude. Technological advancement has necessitated
that legal system adopting to change and embrace technical phenomenon, so that order,
harmony and peace are preserved in the e-world. It has been observed that the banking
industry has become a haven for the growth of this new stream of e-crime. A new
dimension of offences has taken birth in the lap of cyber-world, Electronic crime, or
Computer crime.4 Not only in India but in other countries too white-collar crimes have
been brought into a sharper focus of public attention. The loss from business frauds affects
the entire economy of the country as against the unlimited damages caused by offences
against life and property. A whole community of taxpayers is cheated out of the benefits,
that a welfare society is expected to provide, by antisocial elements who comer pecuniary
benefits without much effort and without the fear of law. There is a strong feeling wide
spread that white-collar crimes be included in the general criminal law of the country, that
punishment for such offences be enhanced with mandatory sentences; and that the

3
ibid
4
Information available at http://www.jurisonline.in/

[4]
definition of “stolen property” be extended so as to include assets obtained through fraud
and cheating with provision in the law for confiscating such illegal proceeds on the
conviction of the offender.5 Admittedly, Economic crimes which in their ambit also
include white-collar crimes because of the diverse nature of their component activities,
they are incapable of simple definition. However, certainly and directly they undermine
the stability of the society albeit in a subtle fashion and can lead to considerable political
and social discord. Thus, crimes committed by the convicts employed in white collar jobs
are termed as White Collar Crimes. White Collar Crime is an illegal act or series of illegal
acts or doing of legal act for achieving an illegal objective committed by any person by
nonphysical and/or non-violent means and by guile, to gain money or property wrongfully
or to avoid payment of legal dues to retain money. White Collar Crimes which are mostly
economic offences are broadly categorized in certain classes like banking and allied fields,
tax and duty evasion and smuggling, foreign exchange and export-import violation,
violation of industrial labour and environmental regulations, hoarding and black
marketing, adulteration of foods and drugs, Hawala and other benami transactions, bribery
and other corrupt practices, coordinated drug trafficking and money laundering etc. Recent
crimes, i.e. related to internet, website etc. In most of the developing countries, where
corruption in public life is at zenith, the degree of white collar crime has also reached the
menacing dimensions. Government officials from bottom to top, are frequently reported
to be engaged in many such crimes. Bank scams, Hawala fraud and computer generated
crimes, crime in electronic banking, corporate frauds, and counterfeiting coins and
currency, doctors and drug companies cheats, corruption in business, black money,
misappropriation of govt, funds, match fixing etc. are among the cases most frequently
reported in media in India.6 A number of special laws have been enacted in our country to
regulate customs, excise, foreign exchange, narcotics drugs, banking, insurance, trade and
commerce relating to export and import, etc. The respective laws directly empower
enforcement of the laws by their respective departmental enforcement agencies created
under statutory provisions. These laws provide necessary legal powers of investigation,
adjudication, imposing of fines, penalties and under special circumstances arrest and
detention of the persons for the offences committed by them. These officers of the
enforcement agencies are also vested with powers similar to those of police to summon

5
F.V. Aral, “ Some thoughts on economic offences” CBI Bulletin, Vol.9, June 2001
6
See, Giriraj Shah, “White Collar Crimes”, First Edition, 2002, Vol.l,Chapter-1

[5]
witnesses, search and seize goods, documents and confiscate the proceeds. Undoubtedly,
the economic offences which carry the principal motive of acquiring wealth through illicit
means require special strategies to counter. The universally emerging legal recourse to
combat economic crimes which is popularly getting characterized as ‘money laundering’
and ‘dealing in proceeds of crime’ is by enacting legislations bringing under its ambit
powers to attach and confiscate proceeds so as to deny the monetary advantage illicitly
achieved. Some of the existing legislations of the country provide scope for confiscation
of the proceeds of crime and forfeiture of assets. These include the following:7
I. Criminal Law (Amendment) Ordinance, 1944
II. Customs Act, 1962 (Sec .l 19 to 122)
III. Law of Criminal Procedure Code 1973 (Sec.452)
IV. Foreign Exchange Regulation Act, 1973 (Sec.63)
V. Smugglers and Foreign Exchange Manipulators(Forfeiture of Property) Act,
1976)
VI. Narcotic Drugs and Psychotropic Substances Act, 1985(Sec. A to Sec. 68 Y)
VII. Terrorist and Disruptive Activities (Prevention) Act, 1987 (Sec.8 to Sec.21
relating to presumption)
New legislations may be called for to plug the existing loopholes and to bring into
force a comprehensive legislation to make confiscation of properties and forfeiture
of assets more effective, in the light of new legislations adopted in different
countries. There has been no dearth of attempts to define the term “Economic
Offences”. Several Commissions, theorists and administrators have, from time to
time, drawn attention to the serious menace which Economic Offences pose to the
moral and legal o fabrics of society, and also suggested ways and means to counter
this menace. Viz.8
§ Law Commission 29 and 47 reports,
§ Santhanam Committee on Corruption,
§ UP Police Commission Report 1971, had gone into the matter in enough
details.
§ Economic Offences Wing in UP CID was established in 1970 as a modest
step in this direction.

7
See, R.C. Mishra, “Crime Trends and Criminal Justice” 1st Edition, 2001, Pg.No. 219
8
See, Giriraj Shah, “White Collar Crimes”, First Edition, 2002, Vol.l, Chapter-1.

[6]
A developing country like India where population 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 and have added new chapter to criminal
jurisprudence. To a great extent, the anti-social activities are the outcome of industrial and
commercial developments and progress of science and new technology. With the growing
materialism all over the world, acquisition of more and more wealth have become the final
end of human activity. Consequently 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. These offences are
master minded and carried out in a planned manner by technocrats, highly, qualified
persons, well to do businessmen, corporate officials in the form of scams, fraud etc.,
facilitated by technological advancements. In these offences, not only individual get
victimized with pecuniary loss but also offences often damage the economy and the
national defence. The offences such as smuggling of narcotic substances, counterfeiting
of currency, financial scams, fraud etc., are some of the socio-economic offences, which
evoke serious concern and impact on national security and governance. It is for the
criminal law administrators to contain this tendency by stringent legislative measures. It
is rather disappointing to note that though socio-economic offences such as black market
activities, evasive price violations, illegal financial manoeuvring, rent-ceiling violations,
rationing law violations etc., by businessman are widespread in society, no effective
programmes for repressing them has so far been launched by the law enforcement
agencies. Perhaps the reason for socio-economic offences being carried out unabated is
that these crimes are committed generally by influential persons who are shrewd enough
to resist the efforts of law enforcement against them. Of all the factors, the economic and
industrial growth throughout the world has perhaps been the most potential cause of
increase in socio-economic offences in recent years. The changing socio-economic
scenario of the society couples with increase in wealth and prosperities has furnished
opportunities for such crimes. Commenting on the growing instances of socio-economic
offences in India, the Law Commission in its Twenty Ninth Report observed9 that the
modem scientific and technological developments and monopolistic trends in business
world have led to enormous increase in socio-economic offences. The post independence
period in India ushered an era of welfare activities, which necessitated regulatory

9
See, Indian Law Commission in its Twenty Ninth Report, 1966, pg.3.

[7]
measure10on the part of government to control means of production and distribution so as
to sub serve the common good11. The contravention of such regulatory measures generally
gives rise to socio-economic offences/white collar crimes. Marshal B. Clinard asserted
that the problem of socio-economic offences has its root in competitive business
community, which tries to oust their rival competitors in order to earn huge profits.
Sometimes such crimes may also be committed for the sake of merely retaining existence
in the competitive business. To illustrate, the members of industrial and business class
who enjoy high status in the society have tendency to suppress their real profits by
furnishing false and fabricated accounts of their income and property in order to claim tax
exemption or avoid payment of heavy taxes. One more reason for the multiplicity of socio-
economic offences is relatively high socio-economic status offenders. They belong to an
influential group, which is powerful enough to handle their occupation tactfully and
persons affected thereby hardly know what they are being victimized. Moreover, the
public in general is also somewhat apathetic to such crimes thus causing obstruction in
prosecution and punishment of offenders. It is often alleged that criminal law
administrators and judges being member of above strata of the society, are generally
sympathetic towards offenders while dealing with them. But there seems no justification
in this assertion. If this allegation is based on the large number of acquittals of offenders,
it may be pointed out that it is not because of the sympathy of judges for those criminals
but because of the thin line of demarcation between criminality and immorality involved
in socio-economic offences. The recent development in information technology,
particularly during the closing year of the twentieth century, have added new dimension
to socio-economic offences. There has been unprecedented growth of the new variety of
computer dominated socio-economic offences, which are commonly called as cyber
crimes. These crimes have become a matter of global concern and a challenge for the law
enforcement agencies. Because of the specific nature of these crimes, they can be
committed anonymously and far away from the victim without physical presence. The
areas affected by cyber crimes are banking and financial institutions, energy and
telecommunication services, transportation, business, industries etc. The growth in
socioeconomic crime is traced to the materialism and business competitiveness fostered
by industrialization, coupled with a decline in the influence of religious ethics that demand

10
Examples are IPC, Adulteration Act, Drugs, and Opium Act, FEMA, MRTP Act, Consumer Protection
Act.
11
Article 39 (b) and (c) of the Constitution ofIndia.

[8]
material accomplishments while emphasizing honest and fair dealings with others. These
factors influenced India after World War II, and India's criminal jurisprudence had limited
opportunity to shape itself to counter the growing tide of socioeconomic crime. Currently,
there are elements of a new criminal jurisprudence evidenced in legislation intended to
regulate and control socioeconomic crime. This includes treating socioeconomic crimes
as having strict liability, with curtailment or abandonment of the necessity to prove intent.
Further, vicarious criminal liability, which involves the liability of a principal for the acts
of its agents, is being increasingly recognized. Sentencing for socioeconomic crimes is
also becoming more severe, including mandatory minimum imprisonment, large fines, and
the confiscation of goods and property. In addition to providing stronger deterrent
elements for socioeconomic crime through more effective law enforcement, prosecution,
and sentencing, the stigma attached to socioeconomic crime should be increased by raising
the social consciousness against such crime through increased publicity about the trials
and convictions of those accused of such crimes.12According to various studies conducted
by the Association of Certified Examiners, approximately 95% of white collar criminals
have no previous criminal record. In fact, the higher the monetary value of the economic
crime, the less likely it is that the perpetrator will have a previous criminal record. White
collar criminals know that people live on the hope of a better financial future. The white
collar criminal’s job is to feed people’s hope with their spin and lies. Initially, the white
collar criminals attempt to build a wall of false integrity around them to gain the trust of
their victims. They showcase their good deeds, such as giving money to charity and
helping the poor and needy, in order to help build a public perception of integrity. White
collar criminals measure their effectiveness by the comfort level of their victims. Those
false perceptions of integrity that criminals build around themselves help to mask their
criminal intents by increasing the comfort level of their victims, and corroding scepticism
of the criminal’s actions. The white collar criminal always has the initiative to commit
their crimes. They have no respect for society and their victims. Trust is a professional
hazard that will destroy the careers of journalists, Wall Street analysts, auditors, and
criminal investigators. For example, during the cold war, President Regan used to say
about his dealings with the Soviets, ‘Trust, but verify.” The inclination to initially trust
and later verify, gives white collar criminals a major advantage over their victims. No
criminal finds morality and stops committing crime simply because another criminal went

12
Information available at http://www.ncjrs.gov/App/publications/Abstract.aspx7id-80538

[9]
to jail. Many people mistakenly believe that strong punishment such' as long prison
sentences are a deterrent to crime. Recently, many white collar criminals have received
very stiff sentences. However, strong punishment is not a material deterrent to crime, but
rather a society's policy for dealing with the consequences of those found guilty of it.
Criminals don’t plan on going to prison just like entrepreneurs don’t plan on business
failure. These crimes are directly affecting the economy of the nation and the public's
confidence, therefore corrective action must be taken immediately for preventing,
detecting, investigating, and prosecuting economic crimes in order to minimize their
outcome. Main blockade to get to the bottom of the white-collar crime hazard is that the
public is not aware of its seriousness. It is more important to create wakefulness and
businesses, and the nation's lawmakers must be convinced with its significance in
identifying that such high-tech and economic crimes have an undesirable effect on society.
Mostly people are innocent and they are not aware of the degree to which their lives,
financial status, businesses, families, or privacy might be pretentious by electronic crime.
A rock-hard inspection or accounting background is obliging to detect white-collar crime
because swindlers are very clever and they can manipulate the situation very well.13 “

13
3 Information available at http://www.jurisonline.in/

[10]
HYPOTHESIS OF THE STUDY:

Our study of White Collar Crimes, having American overtones, envisages the existing
scenario of rampant Socio-economic offences and wide spread corruption in Indian
context. The emerging trends of such crimes are elusive indeed in as much as the law and
its enforcing agencies over all tends to be failing to prove the governance and its legitimacy
to the satisfaction of common people who suffer at large. It appears to be an admitted fact
of common knowledge that certain business, occupations and professions [having links
(direct/indirect) with some power or status] provide opportunities for violation of rule of
law in India since long. Such violations leading to number of socio-economic offences/
crimes which often attract no public attention (they deserve) in the country due to
widespread poverty, illiteracy and rampant corruption in almost all organs/ agencies of
governance due to systematic failure thereof. It was perhaps in background in the context
of American society- a well-known criminologist- Sutherland conceptualized “white
collar crimes’ which tend to have their demoralizing effect on the total crime- picture in
India as well. Admittedly, besides the traditional crimes like assault, battery, robbery,
dacoity, murder, rape, kidnapping and other acts and omissions involving violence, there
are increasing number of anti-social and anti- human activities which the persons of upper
strata, in a sick society like ours, carry on in course of their business, occupation or
profession. Thus, any report or complaint against such business or occupation/professional
tacties often goes unheeded and unpunished to the advantage of culprits-the violators of
law leading to corruption in the form of white collar crimes all around. But the people
know very little about the trickery of these business mafia criminals and even when they
know, they are apathetic towards the problem and as enormity because of the bitter fact
that the legal battles involving such crimes are dragged on for years in the courts and
tribunals. As a result the charges against the offenders/ criminals are forgotten long before
they are actually settled. While, in fact, India has no dearth of laws but the challenging
problem is there due to lack of enforcement

[11]
OBJECTIVES OF THE STUDY

§ To analyse the concept of white collar crimes prevailing in today’s scenario.

§ To find various practical problems regarding the enforcement and adjudication of
the white collar crimes.
§ A positive analysis of various legislations relating to white collar crimes meant
for curbing the white collar crimes
§ To find out the working position, role and effect of various institutions/
authorities dealing with Anti-White collar crimes.

[12]
METHODOLOGY ADOPTED FOR THIS WORK

It is an analytical research based on the study of Books, Reports, Journals, Magazines,

Legislative and Judicial pronouncements, declarations, conventions, treaties and
information available on internet etc. for this I visited libraries of various institutions, to
consult the journal and books of learned authors. I also consulted articles published in
various newspapers and magazines related to the matter.

[13]
PLAN OF THE WORK

The present work is organized into Seven chapters. In Chapter-II an effort has been made
to trace out the historical background of white collar crimes and further Developments.
This chapter deals with Concept and Definitions. Chapter-III deals with nature and scope
of white collar crimes with legal basis and their classification. In Chapter-IV an attempt
has been made to trace the Problems of White Collar Crimes in India. Chapter-V is
“Causative Factors of White Collar Crimes “. In Chapter VI, a sincere attempt has been
made to throw light on white collar crimes the emerging trends in India. Finally at the end,
the conclusion is based on respective chapters along with the suggestions emerged out of
this study. An appraisal of discussion made in the previous chapters and suggestions are
given for effective implementation of the laws, rules & regulations for curbing the menace
in the interest of the people of the country for their fullest enjoyments of basic needs,
liberty & dignity of life as guaranteed by the constitution & others laws in India.

[14]
 CHAPTER-II
WHITE COLLAR CRIMES: CONCEPT AND
DEFINITIONS

A RETROSPECT-HISTORICAL BACKGROUND:

“Since World War II, a most significant and recent development in criminology has been
the emergence of the concept “White Collar Crime” as an area of scientific enquiry. The
crime of this nature, of course, is not at all a new one, but the generalization of such
phenomena and the incorporation of facts concerning illegal behaviour of the higher
classes into theories of crime causation is an outcome of the recent research in this field.
The literature in the shape of speeches and publication produced by Edwin Sutherland, not
only gave the name “White Collar” to this new area, but stimulated wide-spread
criminology circles concerning the appropriateness of this concept as a legitimate focus of
research and theory.14 Perhaps, the earliest documented case of white-collar crime law
dates back to 15th century15 England. There has been a case popularly known as the
Carrier’s case in 1473. Where the agent was entrusted to transport wool and he attempted
to steal some of it for him. Therefore the Star Chamber and Exchequer Chamber of the
English Court of Law adopted the ‘breaking bulk’ doctrine as it constituted the crime of
larceny. However, the growth of industrial capitalism in the eighteenth century ushered a
new history of crime and criminality. The very base of industrial capitalism is based on
coercion and robbery. Now, before we discuss the topic let us understand the meaning of
capitalism. In the words of V.L. Lenin, “Capitalism is the name given to the social
system under which the land, factories, implements, etc. belong to a small number of
landed proprietors and capitalists, while the mass of a people possess no property or
very little property and are compelled to hire themselves out as workers. The land
owners and factory owners hire workers and make them produce wires of different
kind which they sell on the market. The factory owners furthermore, pay the workers
only such a wage as provides a bare subsistence for them and their families, while
everything that the worker produces over and above these amount goes to the factory

14
See, JanakRaj Jai, “ White Collar Crimes - Naked Exposures” 1st Edition 1987, Pg no. 6
15
Information available at, http://money.howstuffworks.com/white-collar-crime3.htm

[15]
owner’s pocket as his profit.” Seen in this context, since there has been nothing to the
major mass of the society except their bare subsistence, they were left with no better option
than to sell their labour-power to survive. Whereas, the exploiting class, generally termed
as the bourgeoisies, took the advantage of the situation and made more and more wealth
out of the labours of the working class. Consequently, the wealth remained concentrated
in the hands of only certain class of people, where most of them formed a part of the
exploited class left with no freedom for work but to sell their labour-power. The process
of emergence of these conditions was termed by Karl Marx as ‘primitive accumulation’
while in the words of Adam Smith, it was ‘previous accumulation.’ Therefore, the Dutch
Marxist, William Bonger contended that criminal attitude develops among the working
class under capitalism due to conditions of misery and at the same time the criminal
attitude develops among the bourgeoisie from the avarice fostered when capitalism
strives.16 Albert Morris refers to a paper entitled ‘Criminal Capitalists’ which was read
by Edwin C. Hill before the International Congress on the Prevention and Repression of
Crime at London in 1872. In this paper the learned writer underlined the growing incidence
of crime as an organized business and its evil effects on society.17 Therefore, it is to be
understood that industrial capitalism brought about a grave change in the mind and attitude
of the people. Accumulating money at the cost of others became the sole goal of the
individual who were in a position to dominate over the will of the others. With this began
the eat fight of grabbing money by hook or by crook. Britain, among the other European
countries were concerned, played the most nasty game in acquiring wealth giving up all
the ethics and morals they ever had. They made wealth by looting their colonies and
adopting the devastating barbaric method in doing it. According to the Parliamentary
Reports, it has been found that the British East India Company, only within their first ten
years of colonial rule in India extorted wealth from the Indians in the name of ‘gifts’ which
worth round six million pound sterling. Therefore, there can be no denial of the fact the
very structure of the industrial capitalism is built on crimes and criminality. Therefore, as
being discussed, the birth of white collar crimes took place in the Industrial Revolution in
Western industrial societies which led a vast impact all throughout the globe. The
developing countries, which at that time were the colonies of the great European Nations,
were the worst victims of these crimes so committed against them. New companies rose

16
See, G. Nagaijan & Khaja Sheriff, “White Collar Crimes in India”, International Journal of Social Science
and Interdisciplinary Research (IRJC), Vol.l Issue 9, September-2012.
17
See, N.V. Pranjape,“Criminology & Penology with Victimology” 15th Ed. 2011, Pg. no. 125.

[16]
into power, they were able to squelch competitors and then implement monopolistic
policies without fear of being outsold by other companies. The public had to pay
outrageously exorbitant prices for the same thing that was available previously at a much
cheaper rate. The reason behind the exorbitant rise in the price rate was nothing but the
corporate greed. However, it is to be understood that the greed of making money by the
people of the upper class was not confined within the boundaries of Europe. The Industrial
revolution threw a global impact whereby worldwide people indulged in making money.
These gave rise to resentment and political movements rallied for laws so as to prevent
monopolistic practices. It succeeded in United States of America in 1890, when Congress
passed the Sherman Antitrust Act which took the initiative to make the monopolistic trade
illegal. Other industrialized countries like Great Britain had a history of penalties
involving white-collar crime by that time, but it was not as sweeping as the Sherman Act.
Some nations implemented a smattering of these laws, known as competition or antitrust
law, but did not have a strong binding force for a long time. But more anti-white-collar
crime sentiment rose in the late 19 century and early 20th century in the United States as
a result of a group of journalists known as muckrakers who more often than not started
exposing corruption both in the public and private sectors. They laid much focus on the
prevalent stock fraud, insurance fraud and underhanded practices of monopolistic
companies that had grabbed under the Sherman Act. The muckrakers’ exposes gave rise
to public resentment and thereby called for in some reform. By 1914, Congress attempted
to solidify and strengthen the sentiment laid down by the Sherman Act, which was used
against labour unions, with the Clayton Antitrust Act. This Act was much stricter and went
much further than the Sherman Act in making particular monopolistic practices illegal.18
In 1934, Morris drew attention to the necessity of a change in emphasis regarding crime.
He asserted that anti-social activities of persons of high status committed in course of their
profession must be brought within the category of crime and should be made punishable.19
In addition to these anti-trust laws, there have been certain other fiscal laws which were
passed prior to Sutherland’s address at the American Sociological Society. After the
economic depression prevailing at that time, people went to great lengths to rebuild their
financial security, and it is theorized that this led many hard workers who felt they were
underpaid to take advantage of their positions. Despite the great lengths, Sutherland went

18
Information available at, http://www.jurisonline.in/?page_id=9115, “White Collar Crime in India”
February 1, 2011.
19
See, N.V. Paranjape, “Criminology & Penology with Vicitmology” 15th Ed. 2011, Pg. no. 125

[17]
to describe exactly what he categorized as white-collar crime. Though he tried to bring
about clarity of the subject, it suffered from certain ambiguities as discussed later.20
§ Finally, Edwin Hardin Sutherland for the first time coined the term “white collar
crime” in his address to the American sociological society in 1939.
§ Prior to Sutherland, scholars like W.A. Bonger (1916) EA Ross (1907) Sinclair
(1906) and Steffens (1903), laid emphasis on the misdeeds of by businessmen and
elites.
§ The concept of “white collar crime” found its place in criminology for the first
time in 1941 when Sutherland published his research on “white collar
criminality” in the American Sociological Review. E.H. Sutherland through his
pioneering work emphasized that these ‘upper world’ crimes which are
committed by the persons of upper socio-economic group in course of their
occupation violating the trust, should be termed “white collar crime” so as to be
distinguished from traditional crimes which he called, “Blue-collar crime.”
§ Much of Sutherland’s work was focused at separating and defining the
differences in blue collar street crimes such as murder, burglary, theft, assault,
rape, arson, vandalism, so on and so forth which are often blamed on
psychological, associational, and structural factors. Instead, he evaluated that
white-collar criminals are opportunists, who overtime look for the opportunity to
take advantage of their circumstances to accumulate financial gain. They are
educated, intelligent, affluent, confident individuals, who were qualified enough
to get a job which allows them the unmonitored access to often large sums of
money. Many also use their intelligence to convince their victims into believing
and trusting in their credentials.21 In the 2000s, white-collar crime has become a
topic of almost daily news. The white-collar crime that caused the bankruptcy of
Enron Corporation resulted in financial losses exceeding $66 billion to
stockholders, and likely helped lead to the recall of the governor of California.
Massive violations of laws pertaining to improper investments in mutual funds
and large banking firms in the United States have resulted in major losses to
legitimate investors, whose losses are still being calculated. The use of share
holders’ assets to fund the lavish private lifestyles of corporate chief executive

20
Infonnation available at, http://www.jurisonline.in/?page_id=9115, “White Collar Crime in India”
February 1, 2011.
21
See, N.V. Paranjape, “Criminology & Penology with Vicitmalogy” 15th Ed. 2011, Pg. no.125

[18]
officers, presidents, and chairs of the board of large corporations are becoming the
fodder of scandal and media. For example, television viewers were treated to an
edited version of a videotape of Tyco International Limited head Dennis
Kozlowski and friends in a $2-million bacchanal celebrating his wife’s birthday
at the expense of the corporation. The WorldCom bankruptcy that resulted from
white collar crime caused billions of dollars in lost investments. The costs to
ordinary stockholders are massive, but costs to employees, collateral business,
communities, and society are incalculable. Human lives have been altered forever
by the unlawful actions of a few whose need for power and profit resulted in
illegal, unethical, and immoral acts. While one conceive of the plausibility that the
offenders did not define their behaviour as criminal, that in part could be because
there is no clear definition of what is meant by the term white-collar crime. The
concept of white-collar crime was first conceived by Edward Alsworth Ross
(1907), and approximately 30 years later white-collar crime was born in the ideas
of Edwin H. Sutherland (1939-40). Sutherland, in coining the term, defined white
collar crime as “a crime committed by a person of respectability and high
social status in the course of his occupation.” For Sutherland, the white-collar
category included “business managers and executives,” although, in research,
he included corporations as offenders as well. He believed that a white-collar
offense was a crime if it proved to be socially injurious and punishable. Therefore,
an act of white-collar crime could be dealt with in a criminal, civil, or
administrative manner. Paul Tappan (1947), a lawyer and sociologist, disagreed
with Sutherland’s argument. Tappan believed that a behaviour could only be
considered a white-collar crime if the act was legally defined as a crime and if the
offender had been convicted for the offense. That is, he rejected Sutherland’s
belief that a white-collar crime could be a violation of civil or administrative law
without being condemned by criminal law. Frank Hartung (1950) argued that
while legal definitions were important in the general scheme the general scheme
of things, white-collar crimes represented a special case. Whereas, in most
instances, it is possible to distinguish between criminal and civil violations, in the
case of white-collar crime the artificial distinction between civil and criminal laws
was blurred and lacked importance. In response to Hartung’s statement, Ernest
Burgess (1950) rejected a totally legal definition of crime, arguing for a labelling
-perspective definition that required that persons could only be criminals if they
[19]
perceived of themselves as such. From the white collar offender’s perspective,
Gilbert Geis’s (1967) findings would support Burgess’s definition of crime. Geis
found that white-collar criminals often do not perceive their acts as crime, and
therefore do not perceive of themselves as criminals. Marshall Clinard and
Richard Quinney (1973) replaced the term white-collar crime with two other
classifications/ categories: Corporate Crime and Occupational Crime. Corporate
Crime referred to the criminal behaviours of corporate entities, while 30
Occupational Crime referred to the criminal behaviours of persons within their
occupational status. Laura Schrager and James Short (1978) proposed the term
organizational crime. They considered such crime in the context of the operative
goals of the organization, the actual unstated goals of the organization, which
often differ from its official goals. Clinard and Peter Yeager (1980) defined
corporate crime as “... any act committed by corporations that is punishable
by the state, regardless of whether it is punished under administrative, civil,
Or criminal law.”Albert Biderman and Albert Reiss (1980) withdrew the idea of
status from the definition of white collar crime. They argued that individuals, other
than those of an upper-class, were capable of committing crimes in their
occupational roles. As a result, they emphasized the importance of defining white-
collar crime as a violation of a position of trust. For example, if a waitress inflates
a customer’s bill, the customer is likely to pay both the inflated amount as well as
a larger tip without realizing that she has been victimized. The waitress, for her
part, not only profits personally, but also violates the trust placed in her by her
employer. James Coleman (1989) suggested that many of the attempts to redefine
white-collar crime in other terms have undermined Sutherland’s 1949 position
since they “do not include many of the offenses covered in Sutherland’s
original definition,” and/or “are best seen as varieties of white-collar crime.”
Clinard (1990) suggested replacing white-collar crime with the terms corporate
corruption and abuse of corporate power. These terms included both corporate and
occupational crimes, regardless of whether they violate criminal, civil, or
administrative laws. In addition, Clinard included behaviours that may not be
explicitly defined as violations of law, but that may be unethical and/or immoral
in the corporate or occupational context. For example, a scientist who cheats on
her research by altering the findings of a study may not have violated a law or
regulation, but instead has violated an ethical rule or norm of the scientific
[20]
community. Under Clinard’s hypothesis, that person may have committed a white-
collar offense, since she engaged in an unethical and/or immoral behaviour in her
occupational context. Broadly understood the phrase “white collar crime” can be
defined as:
Any behaviour that occurs in a corporate and/or individual occupational context;
and, that is committed for personal and/or corporate gain; and/or, violates the trust
associated with that individual’s and/or corporation’s position and/or status; and
that is a violation of any criminal law, civil law, administrative law, rule, ruling,
norm, regulation condemning the behaviour. This definition is necessarily both
sociological and legalistic in nature, and therefore includes any behaviour that
may be socially defined as unethical or immoral, as well as behaviour that is not
legally defined as an offense. In addition, the definition does not include
Sutherland’s requisite that the violation be “committed by a person of
respectability and high social status.” This description was not included because
white-collar crimes can be committed by persons who do not necessarily hold
“high social status.” Bank tellers do not usually enjoy high social status in our
society however; they are in a position of trust where they can engage in white-
collar crime. Furthermore, John Hagan and Patricia Parker (1985) have suggested
that those persons convicted for white-collar offenses are more likely to be in
middle- management than in the high prestige and social status group of the top
managers in criminal corporations. Finally, punish ability for an act is not an
important issue. However, it may be assumed that if an act is a violation of some
law, then it must be punishable as well. This broad definition of white- collar
crime may bother some scholars in the field. However, given the diversity of the
behaviours that have come to be described as white-collar and corporate crime, it
is difficult to create a succinct definition without necessarily excluding some of
the tangential behaviours. George Robb (1993) described the cyclical
development and repeal of white-collar crime laws in response to specific acts of
fraud and immorality in business that brought fortunes to some and ruin to many.
Many of these laws were developed to deal with “stock touting,” a practice that
has existed as long as there have been stock markets, and that continues to occur
to this day. Stock touting involves creating companies, and issuing stock in those
companies based on false and/or misleading assets, information, or promise. For
example, Robb wrote about persons who created companies to build railroads in
[21]
far parts of Great Britain, claiming that they possessed government guarantees that
when the railroad was built, stock holders would be instantly wealthy. The stock
sold quickly to speculators interested in making money, and the tooters quickly
disappeared, money in hand, with no railroad ever built. Such frauds aimed at
unsuspecting speculators can be found in modern days as well. For example, the
high-technology “bubble” of the 1990s resulted in the sale of stock in companies
with much promise, but little if any underlying market value. When the bubble
burst, stockholders were left holding shares in companies that lacked any tangible
assets. Compounding the problem, many stockholders had borrowed money using
their stockholdings as collateral, leaving those unable to repay their debts bankrupt
and their lenders taking losses as well. Robb noted that touting laws were enacted
in reaction to such losses, and would be repeatedly repealed once the British
Parliament decided that there was no longer a risk of such behaviours.
Unfortunately, as soon as the laws were repealed, stock touts reappeared, new
laws were created in response to their behaviours, and the cycle would continue
over and over. The Interstate Commerce Commission (ICC) Act of 1887 was
enacted in the United States in response to the behaviours of the robber barons in
the rail road industry. The robber barons, who included so-called reputable
business leaders and politicians such as Leland Stanford, Sr., and Jay Gould, built
railroads connecting the East and West Coasts of the United States, often without
investing a cent of their own, and used their transportation monopoly to their own
benefit. Before the passage of the ICC act, the railroad owners were free to set
their own prices for transporting goods, often raising prices to the point that
western farmers and ranchers could not make a profit on their goods. The ICC act
created a commission that was meant to regulate the cost of interstate
transportation of goods to guarantee that railroads would receive a fair income for
their services, while farmers and ranchers would still be able to profit from their
labours and goods. The Sherman Antitrust Act of 1890 was enacted as a response
to the growth of monopolies that threatened to destroy competition in the
marketplace. A monopoly occurs when a producer controls an entire market for a
product to the exclusion of others who would produce the product for a lesser cost.
A monopoly allows the controlling producer to set any price for a product. A
monopoly producer can set that price as high as she wants, with no fear of losing
business due to competition from other producers. The Sherman Act was officially
[22]
enacted because companies in various industry groups were attempting to
eliminate their competition in the marketplace, thus hurting the economy. It is
noteworthy, however, that for the first decade of its existence, the Sherman Act
was used almost exclusively as a tool to harass and criminalize the labour unions
in their attempts to organize employees of those corporations which the act was
enacted to regulate. Other acts, such as the Clayton Antitrust Act of 1914, the
Federal Trade Commission Act of 1914, the Robinson- Patman Act of 1936, the
Cellar Kefauver Act of 1950, and the Hart-Scott- Rodino Act of 1976, furthered
attempts to shape and regulate unethical behaviours of business. The Pure Food,
Drug, and Cosmetic Act of 1906 served to rein-in industries that produced
products that might endanger the welfare of Americans. Prior to this act, there
were no enforceable regulations over food production in the United States.
Authors, such as Upton Sinclair, in his novel The Jungle, exposed the abuses in
the meatpacking industry. Also, prior to the passage of the act, potions sold as
drugs and cosmetics often had little or no positive effect; more likely having a
significant negative effect on the health safety of consumers. The Sarbanes-Oxley
Act of 2002 is a more recent attempt to respond to corporate criminal wrongdoing,
requiring greater disclosure and accountability for corporate boards-of-trustees for
the unethical and illegal behaviours of their executives and corporations. The
academic study of white-collar crime did not begin until Sutherland used the term
white-collar crime in his presidential address before the American Sociological
Society in 1939. In his 1949 book, White-Collar Crime, Sutherland presented the
results of a study of white-collar crimes/ offenses. During the next decade, a very
limited amount of research on white-collar crime existed, primarily involving the
definitional issues discussed previously. It was not until the publication of studies
of the descriptions of behaviours defined as white-collar or corporate crimes, or
Modus Operandi Studies as John Braithwaite (1985) has called them, that
academic researchers renewed their interest in the topic. These included studies
such as Geis’s research on the heavy electrical equipment scandal of the late 1950s
and early 1960s; Quinney’s (1963) study of prescription violations among
pharmacists, and Diane Vaughan’s (1983) investigation of the Revco prescription

[23]
 fraud scandal. These and similar research probes have given us a basic description
of diverse white-collar and corporate crimes.22”

22
Information available at, LAWRENCE M. SALINGER, ARKANSAS STATE UNIVERSITY GENERAL
EDITOR JUNE 2004(pdfformat)

[24]
CONCEPT AND DEFINITIONS

Concern about traditional and conventional criminality has received the attention of the
criminologists, sociologists, members of the law enforcement agencies and others right
from the earlier times. Most of the research that has taken place in the area of crimes has
placed its thrust on the causation, extent and impact of traditional crimes and very little
attention seems to have been paid to the class of criminality which is mostly undertaken
by the members of middle and upper strata of the society for the purposes of economic
gain. These criminal activities which are undertaken just for economic gain are more costly
and more dangerous and can have highly deleterious and disastrous effect on the economic
development of the state. Such criminogenic behaviour indulged in by the rich and
powerful members of society has been termed by Prof. Sutherland as white-collar crime.23
There are certain anti-social activities which the persons of upper strata carry on in course
of their occupation or business. These anti-social activities are called white collar crime.
These activities for a long time were accepted as a part of usual business tactics necessary
for a shrewd professional man for his success in profession or business. E. H. Sutherland
defined a white-collar criminal as a person of the upper socio-economic class who violates
the criminal law in the course of his occupational or professional activities. White-collar
crime was more dangerous to society than ordinary crimes because of greater financial
losses and because of the damage inflicted on public morals. White-collar crimes account
for enough violations of law. By comparison, the instances of white-collar crimes are more
than the conventional type of crimes such as theft, burglary, and arson. The loss incurred
through white-collar crimes is far higher than that of the conventional type. In the
American Context, it has been estimated that losses from such crime may be as high as
200 billion dollars every year. In India also, such type of crimes are increasing day by day
in view of rampant corruption. This crime and its consequences are recognized from
centuries which categorize number of crimes. Mostly business and government
professionals are involved in series of frauds termed as white-collar crime because these
are lucrative, comparatively risk-free, and nearly socially up to standard. These activities
for a long time were accepted as a part of usual business tactics necessary for a shrewd

23
See, Abdul LatifWani, “White Collar Crime : Its Concept” Kashmir University Law Review, Vol.6,1999,
Pg. 31

[25]
professional man for his success in profession or business. Due to high occurrence of these
crimes, security officials plan modem technique to fight back through prevention,
investigation, and prosecution. When the term white-collar crime is conversed, people are
encouraged to think decisively about the nature of crime, law, and criminal justice. In the
criminal justice system, the focal point of the investigative efforts on the crimes of the
poor. If it is viewed from same legal eye of the state, the crimes of the powerful are hidden.
White-collar crime is defined 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.” 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. Generally the white collar criminals commit
range of frauds to get personal financial gain. White collar crimes do not show any vicious
activity, but the extent of these crimes are intense and it can bring about great economic
loss for companies, investors. This crime is pervasive in almost all the professions and
occupations in our society. The problem is quite acute, both in terms of variety and the
extent of white-collar criminality. The report of Santhanam Committee in its findings gave
a vivid picture of white-collar crimes committed by persons of respectability such as
businessmen, industrialist, contractors and suppliers as also the corrupt public officials11.
Necessity is not always the motive behind the commission of a crime. This idea evolved
with the Criminologist and Sociologist Edwin H. Sutherland, in the year 1939, who
popularized the term ‘white collar crimes’ by defining such a crime as one “committed
by a person of respectability and high social status in the course of his occupation.”
Sutherland also included crimes committed by corporations and other legal entities within
his definition.24 Sutherland’s study of white collar crime was prompted by the view that
criminology had incorrectly focused on social and economic determinants of crime, such
as family background and level of wealth. Sutherland was of a view that, crime is
committed at every level of society and by persons of widely divergent socio-economic
backgrounds. In particular, according to Sutherland, crime is often committed by persons
operating through large and powerful organizations. White collar crime, as Sutherland
concluded, have a greatly underestimated impact upon our society.25 It is true to the
common knowledge that there are certain professions which offer lucrative opportunities

24
See, Santhanam Committee Report, pp 251-53.
25
See, Edwin Sutherland- “Is White Collar Crime a Crime?” (American Sociological Review April 1945),
pp. 132-137

[26]
for criminal acts and unethical practices which is very often overlooked by the general
mass of the society. There have been crooks and unethical persons in business, various
other professions, who tend to become unscrupulous because of no reason apart from the
thirst of gaining more and more for themselves. These deviants have least regard for
ethical and moral human values. Therefore, they carry on their illegal activities with
impunity without the fear of loss of respect and prestige. These crimes are of the nature of
‘white collar crimes’ which is the essential outcome of the development of the competent
economy of the twenty-first century26. White-collar crime is pervasive in almost all the
professions and occupations in our society. The problem is quite acute, both in terms of
variety and the extent of white collar criminality. The report of Santhanam Committee in
its findings gave a vivid picture of white-collar crimes committed by persons of
respectability such as businessmen, industrialist, contractors and suppliers as also the
corrupt public officials. The white-collar crimes which are common to-Indian trade and
business world are hoardings profiteering and black marketing. Violation of foreign
exchange regulations (i e. FERA) and import and export laws are frequently resorted to
for the sake of huge profits. Further, adulteration of foodstuffs, edibles and drugs which
causes irreparable damage to public health is yet another white-collar crime common in
India. The complexity of tax-laws in India has provided sufficient scope for the tax-payers
to evade taxes. It is to be noted that tax-evasion is illegal, but tax-avoidance not. Tax
evasion implies non-payment of tax due to be paid, the tax-avoidance signifies arranging
the spread over of one’s income in such a way that it does not incur tax liability legally
and lawfully. In the profession of medicine, most common instances of white-collar
criminality are illegal abortions, false medical certificates and unnecessary prolonged
treatment in many cases. The usual legal and professional violations committed by lawyers
are: advising organized criminals, aiding in performing false claims, engaging
professional witness, fabricating false evidence etc. In the engineering profession,
understand dealing with contractors and suppliers, passing of sub-standard works and
materials and maintenance of bogus records of work. Charged labour are some of the
common examples of white-collar crime. Corruption is also a well known white-collar
crime. It is not limited to the concept of bribes of illegal gratification taken by public
servants. In its wider sense, corruption includes all forms of dishonest gains in cash, kind
or position by persons in government and those associated with public and political affairs.

26
See, N.V. Paranjape, “Criminology and Penology”, 14th ed., central law publication.

[27]
The two government departments which have been traditionally notorious for corruptions
in the country are those of police and public works.27

12 Steps Path to White Collar Crime

Viewed circumstantially appears to be, there is a 12 Step path to white collar crime that
involves:
• Step 1 occurs when the individual is given a position of power.
• Step 2 happens when the person realizes he has power that he can use for their own
financial benefit.
• Step 3 occurs when other powerful people in the organization (referred to as drivers) turn
a blind eye or condone the abuse of power.
• In step 4 other passive observers become caught up in the activity because they realize
that it offers them an opportunity.
• Other more reluctant participants are drawn in by their superior at step 5.
• Step 6 is when distrust of those involved in the activity starts to arise,
• The perpetrator recognizes his ability to exploit those in a vulnerable position within the
company -this is step 7.
• The group uses bullying tactics in step 8 in order to protect their illegal activities.
• By step 9 the perpetrator is addicted to the illegality ofhis activities. He starts taking
bigger and bigger risks.
• At step 10 participants in the illegal activity begin to have ethical doubts about their
behaviour.
• Step 11 is reached when a whistleblower has the courage to reveal what has been going
on. The perpetrator loses his control over the situation.
• The final step is reached with the perpetrator either admitting to his illegal actions, and
asking for forgiveness, or trying to deny his involvement despite mounting evidence.
Not only can participants of white collar crime become addicted to the excitement of their
illegal activity, but it can also be addiction to alcohol or drugs that drives them to such
crime in the first place.28 There are plethoras of opinions and findings vis-a-vis the
definition of white-collar crimes, which is not only an intricate task but also an evolving

27
Information available at, http://www.publishyourarticles.net/ “ Essay on White Collar Crime in India,”.
28
Information available at, http://www.alcoholrehab.com/(“Addiction and White Collar Crime”)

[28]
and non-static concept. The definitions which are offered by legal scholars vary both
across and within disciplines and linguistic practices. Right from 1939 when Sutherland
introduced the concept of white-collar crime into the field of criminology, a great debate
and controversy with regard to the meaning and the nature of white- collar crime has been
generated amongst the writers in this field. Sutherland’s definition of white-collar crime
has been vehemently criticized and some writers have even entertained a doubt as to the
whether white-collar crime is a crime in real sense of the term. By analyzing Sutherland’s
definition of white-collar crime in the light of criticism levelled against the same and to
see whether the same and to see whether the same holds good in the face of present day
challenges or needs to be modified or expanded to meet these challenges and to make it
clear that white collar crime is a crime which is more dangerous than traditional crime.29
Professor Sutherland names such violations of law in upper socio-economic class as
“white-collar crime” and broadly defined a white-collar crime as: “A Crime committed
by a person of responsibility and high social status in the course of his occupation.”
The term white collar is in reference to the dress shirts that are commonly worn by office
workers. It is used as a contrast to blue collar/workers who are involved in manual labour
and will usually come from the working classes. The above definition of white-collar
crime has five attributes, namely:
a) It is a crime;
b) Committed by a person of respectability;
c) Of high social status;
d) In the course of his profession or occupation, and
e) It is usually a violation of trusts.30

i) Restrictive Nature of Sutherland’s Definition: The definition of white-collar

crime as propounded by Sutherland has been vehemently criticized on the ground
that the same is restrictive. This definition includes within its boundaries such
behaviours only which are indulged in during the course of one’s occupational
activities and it fails to recognize that there are many such behaviours (which, no
doubt, can be placed within the category of white-collar crimes) but they bear no
relation to the offender’s occupations. Edelhertz, for example strongly objected to

29
See, Abdul LatifWani Kashmir University Law Review, “White Collar Crime -His concept” Vol.6, 1999
30
See, K.D. Gaur, “White-Collar Crime and its Impact on Society”, Criminal Law and Criminology, 2002
Pg.No.281

[29]
 Sutherland’s stipulation that white-collar crime must occur in the course of
offender’s occupation. He argued that such a definition excludes crimes such as
filing false income tax returns, making false claims for social security benefits,
buying on credit with no intention or capability of paying and variety of other
offences that he felt should be included under the white-collar crime. These and
similar criminal behaviours are now studied under the white-collar crimes
although these are not committed during the course of occupational activities.
Therefore, Sutherland’s requirement that the crime must occur in the course of
one’s occupation limits the boundaries of white-collar criminality and the
definition as given by Sutherland needs to be expanded to bring all similar
activities with the scope of concept.

ii) Respectability and High Social Status: The two important components of
Sutherland’s definitions are that white-collar criminal must be a person of
respectability and at the same time he must be enjoying high social status. These
elements seem to be more doubtful. What does ‘respectability’ mean for the
purpose of definition? Is it that the person to be called as a white-collar criminal
must be enjoying respect from other members of the society or that he shall be
treated as respectable because he has money and power? Mannheim says that
probably it means the absence of previous conviction or only absence of
convictions for offences of the traditional type such as stealing. The ‘high social
status’ and the element of ‘respectability’ taken together also has led to more
confusion. It has been argued that it is entirely possible to be highly respectable
and illiterate on the one hand, or a member of the upper-class, yet held in contempt
by the general society on the other. There can, indeed, be person of a high social
status indulging in white-collar criminality who are not respectable or vice-versa.
The element of ‘high social status’ has also been questioned by Susan Shapiro in
the following words: Does one want to discriminate, for example, between
Medicaid fraud by doctors and that engaged in by patients; between the business
executive who does not disclose perks in his tax returns and the waitress who fails
to disclose tips on her return? Does one take a single illegal activity reflecting the
conspiracy of assorted individuals and label the activities of the wealthier
participants white-collar crime and those of the less wealthy traditional crime?....
These queries which have been raised regarding the element of high social status
[30]
 definitely lead to situations which may provide a biased methodology for
examining criminal behaviour if the definition of white-collar crime is premised
upon the class or social status is quite misleading. As such, Sutherland’s concept
of ‘high social status’ is far too vague to be of much use within a social system
as complicated as that of the modern society. If very legitimately, we wish to relate
crime to the various social classes we have to give a clear account of how we
intend to draw the lines between them. This having been done, we should try to
show how the characteristics of certain types of crimes differ according to social
class. Sutherland, by indiscriminately lumping together offenders of very different
social classes, failed to reach this objective.

iii) Redefining White-Collar Crime From Offender to Offence:

The restrictive nature of Sutherland’s definition of white-collar crime and the
inherent ambiguities has necessitated the modification and expansion of that definition in
order to bring within its ambit and scope the behaviours which fall within the concept but
which stand excluded if Sutherland’s definition is accepted. Today some disagreement
exists over the precise definition of white-collar crime. Modem criminologists have
broadened their definition of white collar crime so that is embraces a wide variety of
situations. Sutherland’s approach to the definition of white-collar crime was offender-
related. He had paid so much attention on the nature of the offender that actual criminal
behaviour had gone unexamined. So, Sutherland’s offender-related approach had to make
way for offence-related approach and the first important shift away from the legacy of
Sutherland was accomplished when Herbert Edelhertz made the offence itself as the
principal object of inquiry. Edelhertz proposed to define white-collar crime as: "an illegal
act or series of illegal acts committed by non-physical means and by concealment or
guile, to obtain money or property, to avoid payment or loss of money or property or
to obtain business or personal advantage. ’’ The offence-related approach taken by
Edelhertz seems to have taken care of the inadequacies that were present in Sutherland’s
approach. Edelhertz has concentrated on the crime itself and the means that are employed
to commit that crime e.g., concealment and deceit. The basic purpose and objective in the
commission of the crime, no doubt, remains the same i.e., economic gain. This approach
has excluded the elements that the crime must be committed during the course of one’s
occupational activities and by respectable person who also enjoys a high social status. The
offence related approach taken by Edelhertz seems to be comprehensive and concentrates
[31]
on the modus-operandi and the objectives of the crimes. However, the approach adopted
by Edelhertz has been criticized on the ground that it does not include offences such as
forgery that entails a physical act. Also, by expanding the concept of white-collar crime,
Edelhertz would include so many crimes of the poor that his approach misses the whole
point behind the concern criminologists have expressed about the problem of white-collar
crime and the abuse of privilege that it entails. An important feature of Edelhertz definition
of white-collar crime is that the illegal act is committed non-physical means and by
concealment and deceit. This position of Edelhertz has come under attack from sociologist
who regretted his slighting of the idea of abuse of power as the key aspect of white-collar
offences and his expansive extension of the term to such a variegated range of behaviours.
They were puzzled by the excision of violence from the realm of white-collar crime, noting
that crimes such as unnecessary surgical operations, the manufacture of unsafe
automobiles, and the failure to label poisonous substances at the work place could be
regarded as white collar crimes with a strong component of violence. If we make a
comparative study of Sutherland’s and Edelhertz’s approach, we observe that Sutherland’s
definition is fundamentally altered by bringing within the scope of white-collar crime the
criminal acts of the non-elite persons. The present approach makes a departure from the
traditional view held by many sociologists who have in the past stressed the social
characteristics of the offender or the relationship between offenders and their occupations.
Experience has demonstrated that white collar offences are regularly committed by
members of all social classes and are not exclusively the domain of rich and powerful.
This approach if adopted fully seems to deflect attention away from the destructive crimes
of the wealthy and powerful.31 As Caldwell has pointed out:
1) White collar crime is a non legal term which refers to certain criminal acts, such as
embezzlement and bribery, but does not specifically name the criminal acts to which it has
reference;
2) It refers to a certain type of person, namely, a member of the upper socioeconomic class,
but does not provide us with specific criteria by which to determine the social class of the
person involved; and
3) The criminal law in defining acts that are usually referred to by the term “white collar
crime,” with a few exceptions, does not make any distinction regarding the social class of

31
8 See, Abdul LatifWani Kashmir University Law Review, “White Collar Crime -Its concept” Vol 6, 1999

[32]
offenders. It should be clear, therefore, why there are no official sources of criminal
statistics by which to estimate the amount of white collar crime.32
§ Black’s Law Dictionary defines white-collar crime as “a non-violent crime
usually involving cheating or dishonesty in commercial matters.”
§ The Oxford English Dictionary defines the white-collar criminal as "a person
who takes advantage of the special knowledge or responsibility ofhis position
to commit non-violent, often financial, crimes."
§ The American Dictionary of Criminal Justice more specifically defines white
collar crime as "nonviolent crime for financial gain committed by means of
deception by persons whose occupational status is entrepreneurial,
professional or semi-professional and utilizing their special occupational
skills and opportunities."33
Sir Walter Reckless, an eminent American criminologist suggests that white
collar crime represents the offences of businessmen who are in a position to
determine the policies and activities of business. Some authorities suggest that
white collar crimes are committed by persons of status not for need but for greed.
Referring to this variety of the upper world of crime, Barnes and Teaters quoted
Lord Acton who said, “Power tends to corrupt and absolute power tends to
corrupt absolutely”. Wherever citizens of a particular community become
apathetic to the working of their Government, grafts, corruption and alliances
between public servants and the criminal world are common phenomenon’s
resulting into breach of trust, fraud and other malpractices. During the Truman
administration in U.S.A. the well known “Fine presenters” and “Friendship
Racket” operated between the high ups close to President and contractors who
procured war contracts. Bruce Catton’s “The War Lords of Washington”, best
reveals the story of the callousness of some businessmen during World War II. It
indicates the indifference, greed, inaptness and arrogance of many of those
responsible for conducting a war and how they shelved of the democratic ideals
for their personal gain while performing their official duties. The reasons for such
deals remaining undetected as pointed out by Sutherland was that “the fine line
between criminal activity and immorality either in business or in

32
See, E.H. Sutherland, “White Collar Crime”, 1961
33
information available at, http://www.publishyourarticles.org/knowlege-hub/essay-on-whitecollar-crimes-
in-india.html

[33]
 government is often difficult to discern”. In the Administration Improvement
Act (AIA) of 1979 the U.S. Congress defined white collar crime as “an illegal
act or series of illegal acts committed by non-physical means and by
concealment or guile, to obtain money or property or to obtain business or
personal advantage.”34 Hartung defines a white-collar offense as a violation of
law regulating business, which is committed for a firm by the firm or its agents
in the conduct of its business. Cressey seems implicitly to be using a wider
concept in accordance with Sutherland’s explicit definition-a concept broad
enough to include also embezzlement. Moreover there are some who argue that
differentials of power and influence are the keys to identify, satisfactorily frame,
and unravel fundamental questions about crime and crime control. For example,
investigations of sexual harassment have shown there the offender has always
been of a superior status than that of the victim. Therefore the principle reason
propounded behind the commission of a white collar crime is that of greed and
arrogance and not of necessity or any compulsion. White collar crimes throw light
on the diverse criminal behaviour generally. The status-based definition of white
collar crime draws on and reaffirms criminological ties to macro level analyses
of social and political processes. However, there are others who refuse to give
much emphasis on offender’s social position and repute as the only basis of
classifying white collar crimes. They advocate that collaring should be done not
of the criminals but of the crimes. The concept of abuse oftrust, for example, can
be considered to be a white collar crime. Abuse of trust means exploitation of
fiduciary position of the agent responsible for the safe custody, discretion,
information or for property rights. Here since the trust crime is being committed
by citizens wearing both blue collars and white collars. Similar instance can be
done as that of adulteration of food, where this type of offence is committed not
only by the upper class people but also by middle class businessmen involved in
the food business. Therefore we should not always peep into the offender’s
wardrobe and his official position but consider the modus operandi of his
misdeeds and the ways he exploit. Whatever the merits of the position, they hold

34
This definition focuses on characteristics of the offence as opposed to Sutherland’s focus on the offender
as a high-status person. Although avoiding the problem of social status, the AIA definition fails to
differentiate between persons who commit for personal gain and those who do so primarily on behalf of an
employer.

[34]
 strong that in white collar crimes the offenders are not always powerful and the
victims are ordinary citizens.35 Therefore, by above all elaborations, we can say
that White-collar crime is a broad term that encompasses many types of
nonviolent criminal offenses involving fraud and illegal financial transactions.
White-collar crimes include bank fraud, bribery, blackmail, counterfeiting,
embezzlement, forgery, insider trading, money laundering, tax evasion, and
antitrust violations. Though white-collar crime is a major problem, it is difficult
to document the extent of these crimes because the Federal Bureau of
Investigation's (FBI) crime statistics collect information on only three categories:
fraud, counterfeiting and forgery, and embezzlement. All other white-collar
crimes are listed in an "other" category. Nevertheless, law enforcement officials
agree that white-collar crime is a major problem.36 White collar crimes advert to
that category of crime that tends to be committed by professionals. Securities
Fraud, Insider Trading, Bank Fraud, Tax Fraud, and Money Laundering are all
examples of white-collar crime.37 White collar violations are those violations of
law to which penalties are attached that involve the use of significant power,
influence or trust in the legitimate economic or political institutional order for the
purpose of illegal gain or to commit an illegal act for personal or organizational
gain — Albert Reiss and Albert Biderman... White Collar Crime falls under the
purview of Criminal law. White collar crime began to capture the attention of the
prosecutors and the public in the mid-1970’s. The FBI defines it very simply as
“lying, cheating, and stealing” and it is classified by the Department of Justice
as “non violent illegal activities which principally involve traditional notions
of deceit, deception, concealment, manipulation, breach of trust, subterfuge
or illegal circumvention.” Commercial fraud, consumer/internet scams, E-
scams & warnings, identity theft, credit card fraud, phone/telemarketing fraud,
adoption scams, work at home scams, jury duty scams, healthcare fraud,
insurance fraud, Medicare fraud, bankruptcy fraud, mail fraud, stages auto
accidents, government fraud, pump and dump stock scams and securities fraud
are all examples of fraud-based white collar crime. There are many other crimes,

35
“Schmalleger Frank, “Criminology Today”, Prentice Hall, Englewood Cliffs, New Jersy.
36
http://www.lawbrain.com/ Find Law Resources
37
Information available at, http://www.drt.co.in /, DRT, SARFAESI Act, “White Collar Crime and its
changing dimensions”, Dec 30th ,2011

[35]
 however, that are predominantly identified as white collar crime as well,
including the following:
public corruption, tax evasion, bribery, counterfeiting, money laundering,
embezzlement, kickbacks, environmental law violations, economic espionage,
trade secret theft, insider trading on the stock market, illegal pharmaceuticals,
antitrust violations, and other forms of dishonest business schemes.38 As an
alternative to the socio-economic definition, many define “white-collar crime”
based instead upon the manner in which the crime is committed. In 1981, the
United States Department of Justice described white-collar crime as: Non-violent
crime for financial gain committed by means of deception by persons whose
occupational status is entrepreneurial, professional or semi professional and
utilizing their special occupational skills and opportunities; also, nonviolent
crime for financial gain utilizing deception and committed by anyone having
special technical and professional knowledge of business and government,
irrespective of the person’s occupation. This definition focuses on the use of
deception as the criminal means. The defendant, however, still must be at least
“semi-professional” or have “special technical and professional knowledge.
“Thus, in some ways, this definition is still too narrow. Not all defendants in white
collar cases have professional or semi-professional status, nor do they necessarily
possess special skills. A defendant in a tax fraud or false claims case, for example,
might have neither of these characteristics. Perhaps a better way to look at white
collar crime is to focus on the ways that practitioners and judges distinguish white
collar crime from common or street crime. A “white collar” prosecutor or
defence attorney, for example, would more likely define “white collar crime” as
crime that does not:
a) Necessarily involve force against a person or property;
b) Directly relate to the possession, sale, or distribution of narcotics;
c) Directly relate to organized activities;
d) Directly relate to such national policies as immigration, civil rights, and
national security; or
e) directly involve “vice crimes” or the common theft of property. Sometimes
the criminal statute itself will render almost all crimes charged under that statue

38
See,ibid

[36]
 “white collar” by definition. For example, charges brought under the securities
fraud and antitrust criminal statutes are generally “white collar” crimes under the
above definition. On the other hand, under some criminal statutes charges can be
brought for both white collar and non-white collar offences depending on the
nature of the defendant’s conduct. For example, conspiracy, extortion, and
obstruction of justice are charges often brought in both white collar and non-white
collar cases. The most common and notable white collar crimes include crimes
committed both in the corporate and governmental; settings, and crimes
committed by individuals.39That white collar crime is essentially connected with
social status has been brought out in the following description given by a writer
on Criminology. “White-collar crime is most distinctively defined in terms of
attitudes toward those who commit it. White-collar crime is definitely made
punishable by law. It is convictable behaviour. However, it is generally
regarded by courts and by sections of the general public as much as less
reprehensible than crimes usually punished by our courts, which may be
designated “blue-collar crime Blue-Collar crime is the crime of the under-
privileged; white-collar crime is upper or middle-class crime”. Just what
proportion or section of the population must condone this type of behaviour to
constitute it as white-collar is not, and perhaps cannot be clear. Many courts and
other authorities clearly distinguish between a man who illegally misrepresents
the qualities of his products and a burglar or robber. Yet the very existence of the
law penalizing the former type of act indicates an adverse attitude toward it,
though ordinarily not of the same degree. The fact that white-collar crime is
punished in less degrading ways than “ordinary crime” does not imply that the
former is petty. Actually the society loses huge sums through white-collar crime.
Some of the rackets we described in an earlier chapter are white collar crimes;
some are not. As Sutherland defines the term, most racketeering by officers of a
labour union would not be white-collar crime; nor, apparently would the vice
racket be so defined. Thus neither in terms of class status, business activity,
attitudes, nor degree of seriousness can white collar crime be wholly separated
from other crime. Nevertheless, it is the somewhat distinctive attitudes and

39
See, J. Kelly Strader, “ Understanding White Collar Crime” LexisNexis, South western University School
of Law, 2Q02 (www.lexis.com)

[37]
polices towards the offender in such cases which have been given significance in
discussions of white-collar crime. It appears that even outside of business of
circles, white-collar crime is less reprehensible than ordinary crime, because low-
class people often aspire to be white-collar criminals. Or if not, they at least accept
the same individualism and the same value of materialism which the middle and
upper classes accept. White-collar crime is attractive because it brings material
rewards with little or no loss of status.

[38]
 CHAPTER – III
NATURE AND SCOPE OF WHITE COLLAR CRIMES

“From the discussion in another part of the Santhanam Committee Report, it

would appear, that the Committee attached great importance to the emergence of
offences and mal-practices known as “white-collar” crime. We quote the relevant
portion:40 “The advantage of technological and scientific development is
contributing to the emergence of “mass society”, with a large rank and file
and small controlling elite, encouraging the growth of monopolies, the rise
of a managerial class and intricate institutional mechanisms. Strict
adherence to a high standard of ethical behaviour is necessary for, even and
honest functioning of the law social, political and economic processes. The
inability of all sections of society to appreciate in foil this need results in the
emergence and growth of white-collar and economic crimes, renders
enforcements of the laws, themselves not sufficiently deterrent, more
difficult. This type of crime is more dangerous not only because the financial
stakes are higher but also because they cause irreparable damage to public
morals. Tax-evasion and avoidance, share-pushing, mal-practices in the
share market and administration of companies, monopolistic control, usury,
under-invoicing or over-invoicing, hoarding, profiteering, sub-standard
performance of contracts of construction and supply, evasion of economic
laws, bribery and corruption, election offences and mal-practices are some
examples of white-collar crimes.” Such sorts of crimes are not apparent of
visible on the surface but act remains underneath, deep rooted not being
disastrous to the individuals but to the society at large specially having much
pressure on the exchequer, In the fifties just after independence of our country,
the term “White Collar Crime was generally understood to be the crimes related
to tax evasion which are not necessarily being committed either in connection
with an occupation or by persons of high social status but rather as a general
matter committed by the relatively well-todo. The definition of White Collar
crime excludes the so called street crimes such as burglary, robbery or aggravated
assault which are occasionally but not generally committed by the persons of

40
See, 29th Law Commission Report, Pg.3 ’’White Collar Crimes”

[39]
means but by the go of the day such crimes are not now restricted to crimes of
monetary concealment or aspects towards tax evasion. The scope of White Collar
criminality is being expanded day to day. It has now reached its peak. Until late
19th Century the economic life of a country was largely unregulated, but over the
years it became clear that the business enterprises had to be regulated in order to
protect both the public and business itself to maintain the standards of health and
safety to assist the poor and the ignorant to obtain the decent housing and other
necessities of life and to maintain the economy at a high level production. Today,
virtually every aspect of business life is attempted to be regulated in one of the
other way, keeping in view the public welfare. Consequently various enactments
have been passed by the Legislature which includes Food and Drug Laws. Safety
and Health Laws, Licensing system in different kinds of business, Housing Codes
and multiple of other regulatory statutes. To minimize exploitation, many of these
regulatory laws are enforced if not in maximum but in part by criminal sanctions.
Unlike, other types of offenders, white collar offenders by definitions are
enjoying a variety of social and economic advantages. They have received better
education and are better equipped to earn their livelihood through skilled and
other means in the language of Sutherland. “It is very clear that the criminal
behaviour of businessmen cannot be explained by poverty. In the usual sense
or by bad housing or lack of recreational facilities, or feeble mindness or
emotional instability. The business leaders are capable of being emotionally
balanced and in a sense pathological.” The street crimes as mentioned already
may be expanded of its modus operandi or mens rea or the intention behind it
regarding existence or bringing up in a society of feeble mindedness., poverty
stricken or emotional instability but white collar crimes cannot be expanded in
that way. Its expansion can be said although not fully but partly depending on
growing moral degradation., individualistic selfishness and high aspirations
towards reaching of infinite and limitless and so called earthly happiness and total
bankruptcy of moral ethos and ethics and forgetfulness and shutting eyes towards
the traditional and legendary values of life not only of a community but of the
country as a whole. It is important to recognize the impact of white collar crime
label both as applied to offender and offences. Crimes such as employee theft
range from pilfering by the 56 truck drivers to embezzlement by the top
executives. Cheating the Govt, may include failure to report tips, or other cash
[40]
recipients and major income of Govt, fraud. And just as burglars range from
relatively successful professional in his 30’s or 40’s to the 13 yrs. Old amateur
from the slums, white collar offenders include very different types of people. Tax
evasions, taking of bribe by the top executives in granting contract for the
department or the organization are known white collar crimes. Suppression of
income by the business executives in papers to a negligible amount while giving
the black amount by cash, that too through black money are also known offences
of white collar crime. In many of the Engineering departments either in the State
or in the Centre, 4th grade employees or the Mazdoors or the Technicians are
being engaged either as a Muster roll or as daily wages earner and by taking
advantage of section 25(f) of the Industrial Disputes Act, after 240 days of such
daily wage earners or Mazdoors or Muster rolls, their services are being
regularized when the Govt, sanctioned posts are limited. In a recent case, in such
an office there were only 240 recognized sanctioned posts of 4th grade employees
but by the process as mentioned above in total 3200 employees had been engaged
and they were found to be working for last 16-18 years. When this came to the
notice of the higher authorities then order was passed to sack them. Those poor
employees had knocked the doors of the High Court and ultimately to the
Supreme Court. The Apex Court held that such back door method of employment
is against the constitutional obligation and those employees being illegally
appointed cannot be regularized nor they can remain in service but when those
employees had served for more than one and half decade then the Apex Court
taking a humane approach asked the State Govt, to make some scheme so that in
phased manner those employees could be regularized. The Apex Court could find
that throwing away of those employees from the service would not only means
loss of service to the employees but making the family members starve when
those employees after losing their prime of age shall be devoid of getting any
employment elsewhere. This is the civil aspect of the matter but behind it acted
the white collar crime. Engineers or the Executives had given such 57
employment at the initial stage taking advantage of the unemployment of the
persons and knowing full well that those employees shall have to face termination
on one day but still did so definitely with some underhand dealings. The employer
used to take half of the salary of those employees for at least 3-5 years on contract
basis for giving such employment. Does it not make white collar crime with
[41]
 exploitation of unemployment and that too, giving pressure on the exchequer
making the public at large to suffer as the development works from the exchequer
are being deprived of due to such payment of illegal salaries to the illegal
employees? These are the pre-planned motivated white collar - crimes being
committed by the highly educated even technical experts, executives or the
Engineers keeping in view that the law is insufficient and criminal sanction is
almost impossible in doing such crimes for illegal gains. There are instances
where school teachers are shown to be appointed by issuance of only transfer
order/letters by the department. These crimes are committed with the connivance
of the highly placed authorities and also the persons who are at the receiving end
and exploitation is there taking the advantage of the unemployment in the
society.41Since, the activities of white-collar criminal are so designed that their
impact is not obvious and visible on any particular individual at any specific point
of time it becomes difficult for any public resentment to grow or materialize.
Since no particular person suffers much at any particular time hence no one feels
the pinch directly. Barring one or two instances most of the white-collar crime
investigations are highly complex and foil of technicalities which are mostly
handled by experts. The theme as such does not make for any good media story
nor has a populist appeal. Accordingly, they are mostly ignored by the media in
few cases where media does show interest, the people handling the case deterred
in pursing and publicizing such crimes frequently. Another reason why media
appears to avoid coverage of white collar crime could be attributed to, exceptions
apart, class similarities between a white-collar criminal and magnates controlling
the media. White-collar crime is markedly different both legally and
sociologically from more conventional crime, and the controversy over its
criminological appropriateness centres around three major issues:
1) Are the law violations in question really crimes?
2) Can the behaviour of the offenders involved be equated with conceptual
meanings of criminal behaviour, popularly since violators neither think of
themselves nor are commonly thought of as criminals?

41
See, Justice Prasun Kumar Deb, “White Collar Crime” and High Social Status in course of his occupation.”
Criminal Law Journal, 2000, Vol. 2 April-June Pg.No,60- 61.

[42]
3) What is to be gained, other than confusion and imprecision, by the
reformulation of definitions of crime to include behaviour customarily
“punished” civilly or by administrative action rather than by the conventional,
and probably more precise, criminal procedures? However these questions are
answered, no one can deny that every single recent textbook in criminology
includes a comprehensive discussion of white-collar crime. Included also, as
inevitable as the concept itself, are the arguments, pro and con, about the criminal
nature of this form of lawbreaking. The majority opinion of these sociological
writers seems to be although it is customarily set apart as a special type or
“behaviour system” of crime. While many of the criticism of such inclusion
remain essentially unanswered and all writers recognize the theoretical import
and research problems of broadening the concept of crime, none can ignore the
numerous research studies and monographs which have appeared in recent years.
The studies of Sutherland, Clinard, Hartung, Lane, Cressey, and Newman, the
cases described by Irey and Slocum, and various papers on the frequency of
lawbreaking among “respectable” segments of the population have supported the
general thesis of white collar criminality. The relative recency of this interest in
what Morris calls ‘Tipper world” crime is the result of the convergence of many
cultural factors in our time and place: In the first place, contemporary society has
necessarily created legislation specifically designed to control economic and
political activities and, therefore, particularly aimed at the more powerful social
classes. Rapid industrialization, urbanization, the replacement of the entrepreneur
by the corporation, and the development of labour unions and cooperatives have
all combined to give us a new world requiring new means of social control. We
have come to realize that the conventional laws regarding theft and other socially-
injurious conduct are inapplicable or ineffective today in many very important
relationships. Some cherished common-law principles-e.g., caveat emptor, the
fellow-servant doctrine, and so on-have been necessarily reversed or revised by
the demands of industrial society. From the late nineteenth century to the present
day, a major legal trend has been the development of administrative or regulatory
laws designed to control commercial dealings and to codify industrial obligations.
Deviations from these laws form the basis of white-collar crime. In addition to
this legal trend, the interest in white-collar crime is a result of a maturity, of both
theory and method, within the field of sociology. Early criminologists oriented
[43]
themselves to the “pathologies” of the social system, taking conventional
definitions of societal “diseases” and offering conventional cures. Criminals were
“convicts”, and cause lay in personal pathologies or individual environmental
defects. In this, these writers reflected their own class values and their training,
as well as the spirit of the times. It is probably a truism that the more any type of
behaviour is studied, the less clear cut, the less distinct, it becomes. So it is with
crime. Criticism of inmate samples, rejection of personal pathology theories, the
blending of data from social psychological research all aided, even forced the
criminologist to revise some of his postulates. The conception of “degrees” of
“deviation” from legal norms took the place of a criminal, non criminal
dichotomy. A broadening interest was generated, too, by the sociological concern
with institutions and the structural functional theories of social systems. Crime
came to be viewed as normative within various contexts. Merton said “certain
phases of social structure generate the circumstances in which infringement
of social codes constitutes a normal response” and elaborated the thesis of
illegality as a regulatory laws during the depression of the ‘thirties’ and the war
years of the forties merged with changing sociological concepts to form the
context from which interest in white-collar criminality developed. The chief
criterion for a crime to be white-collar is that it occurs as a part of, or a deviation
from, the violator’s occupational role. Technically, this is more critical than the
type of law violated or the relative prestige of the violator, although these factors
have necessarily come to be major issues in the white-collar controversy, first,
because most of the laws involved are not part of the traditional criminal code,
and 60 second, because most of the violators are a cut above the ordinary criminal
in social standing. Such crimes as embezzlement, larceny by bailee, certain
forgeries, and the like, however, are essentially occupational and thus white-
collar crimes, and yet are tried under the penal code. Likewise farmers, repairmen,
and others in essentially non white-collar occupations could, through such
illegalities as watching milk for public consumption, making unnecessary
“repairs” on television sets, and so forth, be classified as white white-collar
violators............................ The vast bulk of white-collar legislation is regulatory
rather than penal in philosophy, is administrative in procedure, and by its
qualifications is directed chiefly toward the business and professional classes of
our society. This is apparent in the widely accepted definition by Sutherland that
[44]
 a white-collar crime is “a crime committed by a person of respectability and
high social status in the course of his occupation.” These crimes are usually
violations of trust, either “duplicities” “misrepresentations.” Placed in the
person (or the corporation, for that matters ) by virtue of his occupational norms
and high position it the society. Of Course, these violations of trust must also be
violations of law, and not merely unethical practices or non criminal deviations
from informal conduct norms within a business or profession. And around the
legal status of such violations has arisen a theoretical conflict that continues to
the present day. Are such trust violations really crimes? Must theories be revised
to include these law breakers? If these questions are answered affirmatively, then,
indeed, the science of criminology must revise its postulates and reformulate
many of its theories. Thus, E. H. Sutherland has presented a brief and general
description of white-collar criminality on a framework of argument regarding
theories of criminal behaviour. That argument, stripped of the description, may
be stated in the following propositions:
1. White-collar criminality is real criminality, being in all cases in violation of the
criminal law.
2. White-collar criminality differs from lower-class criminality principally in an
implementation of the criminal law, which segregates white-collar criminals
administratively from other criminals.
3. The theories of the criminologists that crime is due to poverty or to
psychopathic and sociopathic conditions statistically associated with poverty are
invalid because, first, they are derived from samples which are grossly biased
with respect to socioeconomic status; second, they do not apply to the white-
collar criminals; and third, they do not even explain the criminality of the lower
class, since the factors are not related to a general process characteristic of all
criminality.
4. A theory of criminal behaviour which will explain both white-collar
criminality and lower-class criminality is needed.
5. A hypothesis of this nature is suggested in terms of differential association and
social disorganization.42 “

42
See for details, Gilbert Geis & Robert F. Meier, “White Collar Crimes” 1977, Chapter - 2, “White Collar
Criminality -Edwin Sutherland” p.38-39

[45]
THE LEGAL BASIS OF WHITE-COLLAR CRIMES AND THEIR
CLASSIFICATION

The majority of laws underlying white-collar crime differ from conventional criminal
laws in five ways:
(1) in origin,
(2) indetermination of responsibility, or intent,
(3) in philosophy,
(4) in enforcement and trial procedure, and
(5) in sanctions used to punish violators. In the first place, most white-collar laws have
been legislatively created as of a given date, and some of them are in derogation of
common-law principles. These, then, are a mala prohibita, crimes created by legislative
bodies, in contrast to most of the conventional criminal code, which is viewed as merely
a legislative expression of “natural” crimes, mala in se. Secondly, and most regulatory
laws define their violations as misdemeanors rather than the implicitly more serious
felonies of penal law. Furthermore, the question of intent, so prominent in the criminal
code, is irrelevant to conviction under many regulatory laws, although intentional
violations, if proved, many increase the punishment. In these respects, white-collar
violations are legally much more like traffic laws and municipal ordinances than statues
of the criminal code. The legal distinctiveness of white-collar legislation is seen even more
clearly in procedural variations from those more commonly used in conventional criminal
cases. Most of the federal regulatory legislation and much of its counterpart on state levels
rely for enforcement not on the police and public prosecutors, but on specially-created
investigatory and enforcement bodies. Probably the most familiar of these is the Bureau
of Internal Revenue, but many similar agencies exist within the framework of other
legislation. Of course, in the final analysis, police and the criminal court can be used, but
in general, the enforcement of such law is not a common police activity. In white-collar
legislation, the same agency or commission which directs investigation also conducts
hearings on cases and administers numerous punishments or sanctions short of prison
terms or the other conventional penal sanctions. In a strict sense, these hearings are not
trials, and, therefore, the formal criminal procedures are often absent, as, indeed are the
many protections given defendants in criminal proceedings. Of course, the findings of
such hearings may be appealed to conventional courts, and here the precise, if more
[46]
cumbersome, formal procedural rules apply. This administrative process of investigation
and hearing parallels more closely the practices in juvenile court than those in its criminal
counterpart. Since laws proscribing mala prohibita are remedial in nature, they are liberally
construed, so that the goal remains prevention or correction of existing illegalities rather
than the repression or punishment of violations. In this respect, various sanctions other
than the criminal punishments of imprisonment, probation, and fines are used by the
enforcing agencies. Violators of such laws may be subjected to warnings; injunctions;
consent decrees; seizure and destruction of products; civil suits for damages, like the
treble-damage suits sanctioned in the case of OPA violations during the wartime
emergency; license revocation; where applicable; and similar informal or civil processes.
Legislation also provides for the use of more traditional sanctions by criminal courts,
however, in cases warranting such action. The discretion to press criminal charges rather
than civil action is another function of the enforcing agency. Sutherland’s survey of the
records of seventy large corporations showed a total of 980 adverse decisions against these
companies, 158 of which were criminal proceeding 298 made by civil courts, 129 by
equity courts, while the remainder were administrative actions discussed
above..................................................................... The relatively infrequent use of criminal
sanctions is undoubtedly reflection of many factors including the high social status of
many violators and the lack of consensus about the “criminal nature” of their behaviour,
but it is also consistent with the remedial philosophy of the laws in question. Since the
purported aim of enforcement is to correct economic wrongs, prevent public injury, and
the like, cases are more likely “settled” or wrongs prevented from continuing in contrast
to the eye-for-eye philosophy implicit in conventional criminal actions. Certainly, burglar
and bank robbers are not merely “warned” nor issued cease-and-diesis orders. Then, too,
the conventional criminal law is based on the theory of individual responsibility and guilt,
the men rea nature of intent, that inconsistent with and difficult to apply in many white-
collar cases. Quite often, white-collar violators are corporations, cooperatives, or labour
unions and while legal responsibility may fix to a corporation as it does to a person, the
use of the criminal sanctions of imprisonment or probation virtually impossible in such
cases. The diffuse nature of the perpetrators (the corporate body), as well as the diffuse
nature of the victim, does not fit many white-collar cases to the usual criminal formation.
Then, too, the virtual absence of the necessity of intent, of men rea or the part of violators
makes criminal sanctions seem inappropriate. Of course, in any behavioural definition of
crime, the focus is not on behaviour tried, but on behaviour triable. Sutherland puts it “An
[47]
unlawful act is not defined as criminal by the fact that is punished, but by the fact
that it is punishable.” This means that while one person may be tried in a criminal court
for behaviour remarkably similar to that of another which, at the discretion of the
investigating agency, results only in a civil suit or a warning, both would be “criminals,”
since the emphasis is on the behaviour in question rather than the formality of legal
process...43 Hence, the origin of the “white-collar crime” concept derives from a socialist,
anti business viewpoint that defines the term by the class of those it stigmatizes. In coining
the phrase, Sutherland initiated a political movement within the legal system. This
meddling in law perverts the justice system into a mere tool for achieving narrow political
ends. As the movement expands today, those who champion it would be wise to recall its
origins. For those origins reflect contemporary misuses made of criminal law—the
criminalization of productive social and economic conduct, not because of its wrongful
nature but, ultimately, because of fidelity to a long- discredited class based view of
society.44 It is peculiar phenomenon that those indulge in white-collar crime develop some
amount of immunity to criminal action. The subject of white-collar crime is of immediate
interest to the criminologist in arriving at a workable theory of crime. This technological
and scientific development is contributing to the emergence of “mass society” with a large
rank and file and small controlling elite; encouraging the growth monopolies, strict
adherence to high standard of ethical behaviour is necessary for the true and honest
functioning of the new social and political processes. The inability of all sections of society
appreciate in full this need, results in the emergence and growth of white-collar and
economic crimes, renders enforcement of the laws, themselves not sufficiently deterrent,
more difficult. This type of crime is more dangerous not only because irreparable damage
to public morals. Tax evasion and avoidance, share pushing, malpractices controls, usury,
under voicing or over voicing, boarding, profiteering, sub-standard performance of
contracts of construction and supply, evasive of economic laws, bribery and corruption,
election offences and malpractices are some examples of white-collar crime.45

CLASSIFICATION:

43
See, Gilbert Geis , Donald J. Newman, “ White-Collar Crime: An overview and Analysis, 1977, Pg.No.
51
44
See, John S.Baker, “The Sociological origins of“ White collar crime” October 4, 2004, Louisiana state
University Law Centre
45
See, Giriraj Shah, “White Collar Crimes” 1st Edition, 2002, Pg. No. 16.

[48]
According to Edelhertz, ever the legalist in the best sense of that increasingly derogatory
term, presents a four-category classificatory system of economic crime-a term he prefers
to white-collar crime. These categories are:46
1. Crimes by persons operating on an individual, ad hoc basis (tax violations, credit-card
fraud, charity frauds, unemployment insurance, and welfare fraud.)
2. Crimes committed in the course of their occupations by those operating inside business,
government, or other establishments in violation of their duty or loyalty and fidelity to
employer or client (computer frauds, commercial bribery, kickbacks, “sweetheart”
contracts, embezzlement, expense-account padding, and conflicts of interest.)
3. Crimes incidental to, and in furtherance of, business operations, but not the central
purpose of the business (fraud against the government, food and drug violations, check
kiting, housing-code violations, and other forms of misrepresentation).
4. White-collar crime as a business or as the central activity (bankruptcy), land, home
improvement, merchandising, insurance, pyramid, vanity, stocks and bonds, and related
frauds and schemes.
The Government of India appointed in 1962 a Committee to review the problem of
corruption and to make suggestions on various matters connected therewith. One of the
terms of reference of the Committee was, to suggest changes in the law which would
ensure speedy trial of cases of bribery, corruption and criminal misconduct and make the
law otherwise more effective. The substantive law relating to bribery, corruption and
criminal misconduct is contained in the Indian Penal Code and the Prevention of
Corruption Act, 1947, the procedural law in the Criminal Procedure Code, Criminal Law
Amendment Act, 1958 and some special rules of evidence relating to such cases in the
prevention of Corruption Act. The working of relevant provisions of these enactments in
prosecution in courts and also at the stage of investigation have disclosed that certain
changes in the law are required in order to ensure speedy trials and more effective results.
We have examined the existing provisions in the light of experience gained in numerous
cases, and also in the context of social changes and economic objectives which have
created new problems. The Indian Penal Code was enacted in 1860, and thought it has
been amended here and there, its main structure has continued intact during the last 100
years and more. It is an admirable compilation of substantive criminal law, and most of its

46
See, 29,h Law Commission Report, 1966, Pg.No.10,11

[49]
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, especially during the
last 17 years of freedom that in many respects the Code does not truly reflect the needs of
the present day. It is dominated by the notion that almost all major crimes consists 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 social offences having regard to
the special circumstances under which they are committed and which have now become a
dominated feature of certain powerful sections of modern society.
§ Categories of crimes -As per Santhanam Committee report are as follows:
1) “Offences calculated to prevent or obstruct the economic development of
the country and endanger its economic health;
2) Evasion and avoidance of taxes lawfully imposed;
3) Misuse of their position by public property, issue of licenses and permits
and similar other matters;
4) Delivery by individuals and industrial and commercial undertaking of
goods not in accordance with agreed specifications in fulfilment of contracts
entered into with public authorities;
5) Profiteering, black-marketing and hoarding;
6) Adulteration of foodstuffs and drugs;
7) Theft and misappropriation of public property and funds; and
8) Trafficking in licences, permits, etc.”

§ Corporate crimes as put by Sutherland- In his book “White-collar crime”

Sutherland examined the criminal activities of 70 of the biggest corporations in
America, and focused attention on the following types of law-breaking by them:-
1) Restraint of trade.
§ 2) Misrepresentation in advertising.
§ 3) Infringement of patents, trademarks and copyrights.
§ 4) Unfair labour practices.
§ 5) Frauds in business.
§ Crimes classified by others,47 thereafter, several other studies and reports have
come out in U.S.A. on the subject. The main crimes that have attracted attention

47
See, ibid

[50]
 in the U.S.A. under the head of white-collar crimes may be summarized as
follows:-
a) Frauds in business, in relation to sale of bonds and investments;
b) Adulteration of food and drugs, and misleading advertisements;
c) Mal-practices in the medical profession, such as illegal sale of alcohol and
narcotics, abortion, illegal services to underworld criminals, fraudulent reports
and testimony accident cases, extreme cases of unnecessary, fake specialists,
restriction of competition and fee-splitting
d) Crimes by lawyers, such as guiding the criminal or quasi-criminal activities of
corporations, twist of testimony to give false picture, fake claims (bogus liability
in accidents), etc;
e) Trusts, cartels, combines and syndicates, etc., formed to combat competition,
or to raise prices or otherwise to interfere with the freedom of trade to the
detriment of honest businessmen or the consuming public. This is now become of
the law by itself and is usually dealt with under the topic of “Anti-trust
legislation”;
f) Bribery and graft by public officers.48
§ According to Sayre, white-collar crimes can be called “public welfare
offences”. He has classified such offences into eight categories which may
be noted here:
(1) Illegal sale of intoxicating liquor,
(2) Sale of impure or adulterated food or drugs,
(3) Sale of misbranded articles
(4) Violation of anti-narcotic acts,
(5) Criminal nuisances,
(6) Violation of traffic regulations,
(7)Violation of motor vehicles laws, and
(8) Violation of general regulations passed for safety, health or well-being
of the community.
§ The Santhanam Committee Report adopts a rather comprehensive
approach of the term “white-collar crime” is used to mean “socio-

48
See, 29th Law commission report, 1966.

[51]
 economic crimes”. As such; according to The Santhanam Committee,
such crimes include the following:
(1) Tax evasion and avoidance;
(2)Share pushing malpractices in share market and administration of
companies;
(3) Monopolistic controls and usury;
(4) Under-invoicing or over-invoicing;
(5) Hoarding, profiteering and smuggling;
(6) Violation of foreign exchange regulations;
(7) Election offences and malpractices;
(8) Theft and misappropriation of public property and funds;
(9) Misuse of their positions by public servants in making contracts and
disposal of public property.
(10) Offences relating to guest control orders and rationing;
(11) Violation of standards, weights and measure;
(12) Frauds in corporate bodies; and
(13) Professional misconduct.49
§ The National Police Commission50 in its third report in January 1980 has
recommended the placing of economic offences wing under the state CID
para 23.9 of the report is quoted below:
The National police commission in its report categorized the economic
offences which the special units under the state police would deal with: (1)
Hoarding, smuggling and black marketing in essential commodities. (2)
Contravention of controls and regulatory measures imposed by the state
government regarding movement of essential commodities.
(3) Dealing with spurious drugs.
(4) Adulteration of food grains and other essential commodities.
(5) Defalcation and misappropriation of funds in cooperative societies. (6)
Misappropriation of agricultural and industrial subsidies.
(7) Theft of power and water, particularly organized cases involving large
scale and continued pilferage.

49
Information available at, http://www.publishyourarticles .net/publish-Article.html, Essay on White-Collar
Crimes in India,
50
As per Giriraj shah, “white collar crime”, 2002,1st edition, pg. no. 42

[52]
 (8) Evasion of taxes, in which organized activity is suspected.
(9) Any other offence calculated to prevent or obstruct the economic
\ development of the country and endanger its economic health.
§ Modern criminology generally rejects a limitation of the term by reference,
rather classifies the type of crime and the topic as for examples:
• 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 FBI 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).
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, the FBI and the Association of Certified Fraud Examiners
estimate the annual cost to the United States to fall between $300 and $660
billion.
• 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 offer a twofold
definition:
[53]
 § Occupational crime which occurs when crimes are committed to promote
personal interests, say, by altering records and overcharging, or by the
cheating of clients by professionals.
§ Organizational or corporate crime which occurs when corporate executive
commit criminal acts to benefit their company by overcharging or price
fixing, false advertising, etc.51 The economic offences which are often
referred as white collar crimes are masterminded and carried out in a
planned manner by technocrats, highly qualified persons well to do
businessmen, corporate officials in the form of scams, frauds etc.
facilitated by technological advancements. In these offences, often damage
the economy and the national defence. The 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. A Table listing the various
economic offences, the relevant legislation and the enforcing authorities is
laid below to give an bird’s-eye view about the wide range over which
these offences are operating52

§ Economic offences may either be cognizable or non-cognizable in nature.

In view of their prevalence, Various Types of White Collar Crime In India
are:53

• Bank Fraud: To engage in an act or pattern of activity where the purpose

is to defraud a bank of funds.
• 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.
• 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.

51
Information available at, http://www.enWikipedia.com, “White Collar Crime”.
52
See, N.V. Pranjape, 15th Edition, 2011, Chapter-9 Pg.No. 140-141
53
Information available at, http://www.legalservicesindia.com/article/profile.php?author_id=1450 “White
Collar Crime and its changing dimensions in India”.

[54]
• 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 an actor signs up for service under false
identification or where the actor 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: Occurs 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.
• Credit Card Fraud: The unauthorized use of a credit card to obtain goods
of value.
• Currency Schemes: The practice of speculating on the future value of
currencies.
• Educational Institutions: Yet another field where collar criminals operate
with impunity are the privately run educational institutional in this
country. 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.
• Environmental Schemes: The overbilling and fraudulent practices
exercised by corporations which purport to clean up the environment.
• Extortion: Occurs when one person illegally obtains property from
another by actual or threatened force, fear, or violence, or under cover of
official right.
• Engineering: In the engineering profession underhand dealing with
contractors and suppliers, passing of sub-standard works and materials and
[55]
maintenance of bogus records of work-charged labour are some of the
common examples of white collar crime. Scandals of this kind are reported
in newspapers and magazines almost every day in our country.
• Fake Employment Placement Rackets: A number of cheating cases are
reported in various parts of the country 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.
• 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
actor who promises to provide a large return on a small investment.
• Kickback: Occurs when a person who sells an item pays back a portion
ofthe 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.
[56]
 • Money Laundering: The investment or transfer of money from
racketeering, drug transactions or other embezzlement schemes so that it
appears that its original source either cannot be traced or is legitimate.
• 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 India
• 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 has provided sufficient scope for the taxpayers 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.
• 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 Medicaid) 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.
§ Hence, White Collar Crimes can be classified, inter alia,54 in the following broad
categories:
(a) Commercial, banking and insurance fraud.
(b) Foreign exchange violations including hawala transactions, under-invoicing
exports or over-invoicing of imports and exports.

54
See, Giriraj Shah, “White Collar Crimes”, First Edition, 2002, Vol.l,Chapter-4, pg.25,26.

[57]
(c) Violations of industrial, labour and environmental regulations.
(d) Tax and duty evasion and smuggling. Duty evasion can be of customs of
excise. Misuse of advance license is an offences in this category.
(e) Adulteration of food and drugs.
(f) Hoarding and black-marketing. This will be an offence only if the commodity
is a statutorily controlled item.
(g) Counterfeiting currency notes and coins.
(h) Criminal misappropriation and criminal breach of trust, which generally
involve also forgery of documents and falsification of accounts. Many directors
and senior executives of companies commit these offences.
(i) Cheating.
(j) Illegal antique deals.
(k) Trafficking in drugs and money laundering ofthe proceeds.
(l) Smuggling.
(m) Chit fund frauds.
(n) Bribery and other modes of corruption.

[58]
 “WHITE COLLAR CRIMES VIS-A-VIS OTHER CRIMES

It must be noted white collar criminality has a close affinity to the attitudes and
values of culture in a particular society.55 This is evident from the fact that white
collar criminals are intelligent, stable & successful and men of high social status
as compared with the ordinary criminals. They are foresighted persons belonging
to the prestigious group of society. White Collar crimes which are committed in
commercial world are indirect, anonymous, impersonal and difficult to detect, As
against this, ordinary criminal commit crimes which are direct and involve
physical action such as beating, removal of property of use of force, etc. which
can be easily identified and detected. It is often said that ordinary crimes which
are otherwise called ‘blue collar crimes’ are more common with the under-
privileged class while the white collar crimes are committed by the members of
privileged group who belong to upper strata of society. Edwin Sutherland,
however, suggests that status alone is not determinant of white collar or blue collar
crime. This is evident from the fact that even the most privileged and prestiged
persons may commit heinous crime such as assault, murder, rape or kidnapping
for which they can be severely punished, while, on the other hand, most under-
privileged persons may be involved in a white collar crime like tax evasion,
corruption or misrepresentation which may not be looked as serious offence. This
however, does not mean that white collar crimes are petty offences because they
do not carry major punishment. Undoubtedly, the penologist hitherto confined
their attention to ordinary predatory crimes but the recent penal programmers
sufficiently indicate that emphasis has now shifted to suppression of white collar
criminality with equal vigour and strength. The amendments introduced in the
Indian Companies Act in 2000, Monopolies and Restrictive Trade Practices Act
in 1992, Insurance and Banking laws, the appointed of Lokpal, Lokayukta and
tightening of governmental control over private business groups sufficiently
reflect upon the Government’s determination to suppress white collar criminality
in India. There is much resemblance between white collar and the blue-collar

55
7See, N.V. Pranjape, “Criminology & Penology with Victimology, 15th Edition 2011, Chapter- 9 Pg.No.
136-138

[59]
crime. Both owe their origin to common law and are adaptations of principles of
theft fraud etc. to modern socio-economic institutions and in fact there is no basic
difference between the two. The only peculiarity of white collar crime is that it is
committed by the persons of relatively high status of society. The criminal content
in both the types is more or less common. It must, however, be noted that mens
rea or guilty mind is an essential ingredients of every blue collar crime but many
statutes dealing with white 78 collar crime do not require mens rea in strict sense
of the term. The doctrine of constructive mens rea applies in such cases. It must
be stated that besides being a social problem, white collar crime is also a legal
problem. As E.H. Sutherland rightly puts it, no distinction in terms of social status,
occupational activity, attitude or gravity of consequences can separate white collar
crime from those of traditional crime. The only distinguishing feature of this type
of crime is the temptation for considerable material gain with little or no loss of
status. This again, gives a misleading material impression that the executive and
judicial authorities who are concerned with the prevention of crime react
favourably to the upper and middle class society and dispose of white collar
criminals with mere censure or admonition while other criminals are subjected to
severe penal sanctions under the law without being given any pre-warning. But
that the reason for this soft attitude of law-makers and prosecutors towards white
collar criminals is perhaps the latter’s closer contact with agencies of social
control on account of their social status and privileged position. More often than
not, these criminals are friendly with the top ranking public officials. That apart,
the impact of white collar crime is so widely diffused in a large number of people
that it does not aggravate the feelings of one single individual. Therefore, the
public cry against white collar criminality is far less than for the predatory crimes.
Commenting on the preponderance of white collar crime in the modem time
Edwin Sutherland rightly comments that, “social disorganization on account of
individualistic policies and competitive economy are the root causes for this
type of criminality.” It is rather a reflection on society’s attitude different types
of crimes and the accepted values of its culture. This financial cost of white collar
crime is probably several times greater than that of all the crimes taken together.
In a recent study is has been concluded that the financial loss to society from white
collar crime is far greater than the financial loss from the predatory crimes
committed by persons of lower socio-economic status. It has been further
[60]
concluded that the average loss per burglary is less than ten thousand rupees and
a burglary which yields as much as one lakh of rupees is exceedingly rare. On the
other hand, there may be several crores rupees embezzlements reported in one
year. Notably, these embezzlements are nothing as compared with the large scale
crimes committed by corporations, investment trusts and public utility concerns.
It can, therefore, be inferred that white collar criminals violate trust and create
distrust which lowers social morale and results into social disorganization to a
large extent while other crimes produce relatively little effect on social
institutions. By way of generalization it may be stated that like other criminal
behaviour, white collar criminality can best be explained through the process of
differential association. It is a generic explanation for both white collars as also
the blue collar criminality. Those who become white collar criminals generally
star their career in good neighbourhoods and good homes, well educated with
some idealism and get into peculiar business situations in which criminality is
practically a routine way of life. Another explanation for white collar criminality
is to be found in the process of social disorganization in the community. Thus,
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 white collar crime will tend to be more
technical in nature, e.g. in the manipulation of accountancy or inventory records.
In victimology, blue-collar crime attacks more obvious victims who report the
crime, whereas in this, reporting is complicated by a culture of commercial
confidentiality to protect shareholder value. It is estimated that a great deal of

[61]
 white collar crime is undetected or, if detected, it is not reported. Corporate world,
the identification of a victim is less obvious and the issue56 “

56
. Information available at, http:// www.tribuneindia.com

[62]
DIFFERENCE BETWEEN WHITE COLLAR CRIMES AND
CORPORATE CRIMES

The distinction is that white-collar crime is likely to be a crime against the

corporation, whereas corporate crime is crime committed by the corporation,
although the distinction blurs when the given crime promotes the interests ofthe
corporation and its senior employees because a business entity can only act
through the agency of the natural persons whom it employs. Corporate crime has
become politically sensitive in some countries. In the United Kingdom, for
example, following a number of fatal disasters on the rail network and at sea, the
term is commonly used in reference to corporate manslaughter and to involve a
more general discussion about the technological hazards posed by business
enterprises. Similar incidents of corporate crime, such as the 1985 Union Carbide
accident in Bhopal, India (Pearce & Tombs: 1993) and the behaviour of the
pharmaceutical industry (Braithwaite: 1984). The Law Reform Commission of
New South Wales offers an explanation of such criminal activities: "Corporate
crime poses a significant threat to the welfare of the community. Given the
pervasive presence of corporations in a wide range of activities in our society,
and the impact of their actions on a much wider group of people than are
affected by individual action, the potential for both economic and physical
harm caused by a corporation is great." Similarly, Russell Mokhiber and Robert
Weissman (1999) assert: "At one level, corporations develop new technologies
and economies of scale. These may serve the economic interests of mass
consumers by introducing new products and more efficient methods of mass
production. On another level, given the absence of political control today,
corporations serve to destroy the foundations of the civic community and the
lives of people who reside in them."

[63]
DIFFERENCE BETWEEN WHITE COLLAR CRIMES AND STATE
CRIMES

In terms of social class and status, those employed by the state, whether directly
or indirectly, are more likely to be white-collar and so more state crime will be
committed through the agency of white-collar employees.

[64]
DIFFERENCE BETWEEN WHITE COLLAR CRIMES AND STATE
CORPORATE CRIMES

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 organized crime at a global level and
complex, undetected arrangements between international private parties and
national jurisdictions: 'incorporated governance' within public-private
partnerships like the world's biggest, Gasunie of 1963, where Exxon Mobil forced
the Netherlands to join the Iraq coalition.

[65]
 DIFFERENCE BETWEEN WHITE COLLAR CRIME AND ECONOMIC
CRIME

The terms ‘Economic Crime’ and ‘White Collar Crimes’ are more often than
not, used as synonyms In fact, both the terms need to be used to define different
categories of crime. While white collar crimes can be said to be crimes committed
by professionals like chartered accountants, public servants, private employees in
the course of their occupation, economic offences are crimes committed by
intelligent but devious individuals involving huge sums of public or government
money.
§ White-collar or socio-economic crimes are radically different from ordinary or
conventional type of crimes in several respects:57
1. These crimes are committed by statused people in society such as — doctors,
advocates, chartered accountants, government officials, repairers of mechanical
goods [such as T.V.s, radios, refrigerators, etc.] and not the traditional criminals
such as — robbers, thieves, dacoits, murderers, rapists, etc.
2. These crimes are normally committed by means of fraud, deceit,
misappropriation, misrepresentation, adulteration, malpractices, irregularities and
so on.
3. These crimes are committed by means of deliberate and planned conspiracies
without any feelings and sentiments.
4. When socio-economic crimes are committed people tend to tolerate them
because they themselves indulge in them and they themselves often identify with
those who do them.
5. Originally white-collar crime meant to describe middle and upper class
business persons who committed crime in the normal course of their work. But
now it refers to a wide variety of occupationally oriented violations committed by
persons in any class.
6. The victim of socio-economic crimes is normally the entire community, society
or even the entire nation besides the individuals.

57
Information available at, Pranav Dua, “Essay on Organized Crime & White Collar Crime"
http://www.shareyouressay.com/86737/essay-on-difference

[66]
7. These crimes do not involve or carry with them any stigma while the ‘traditional
crimes carry a stigma involving disgrace and immorality.
8. These crimes constitute a separate category because the control of such crimes
“involves the protection and preservation ofthe general health and economic
system of the entire society against exploitation and waste...”

[67]
DIFFERENCE BETWEEN WHITE COLLAR CRIME & ORGANISED
CRIME

1. In organized crime there is a group of persons of considerable size which

engages itself in continuous crime over a long, usually indefinite period of time.
2. It has a tendency to dominate, through political clout or corruption, the law
enforcement agencies.
3. The organization is generally high centralized; the authority is vested in one or
just a few members of the group.
4. Functioning of the mafia in the U.S.A. has been likened to the working of
corporations and big business houses. There is division of labour, delegation of
duties and responsibility and specialization of functions. Like any modem
business, organized crimes also involve careful planning, risk insurance and have
expansive and monopolistic tendencies.
5. The criminal organizations adopt measures to protect the group and to guard
against the prevention of their activities. To this end, arrangements are made with
doctors lawyers, policemen, judges, politicians and governmental officials
whereas White Collar Crime having not such features as organized crimes.

[68]
 CHAPTER IV
“ PROBLEM OF WHITE COLLAR CRIMES IN INDIA

It is not easy to assess the true extent of white-collar criminality in a community. Some
of the reasons like complexity and impersonality of the offences and frequent lack of
prosecutions and punishments for white-collar crimes often pose problems. Moreover, the
usual sources of crime statistics do not give such information of the extent of white-collar
crimes since they confine their interest to the cases tried in ordinary criminal courts and
many white-collar crimes are dealt with by tribunals, administrative boards and
commissions of inquiry. In the U.S.A., for Example, there are no consolidated statistics of
white-collar crimes comparable to the FBI’s Uniform Crime Reports in the area of
traditional crime. Many white- collar crime are of relatively recent origin. Moreover, it is
very difficult to obtain statistics about some types of white-collar crime- Violations and
tax frauds. In India, the crime statistics given in Crime in India, compiled by the Bureau
of Police Research and Development, Ministry of Home Affairs, provide hardly and
information regarding the extent of white-collar criminality in the country. The only
possible sources, therefore, are the reports of the Government of India and the findings of
the various tribunals and commissions dealing with white-collar crimes. An early attempt
in this direction appears to be the Vivian Bose Commission (1963), appointed to probe
into the working often companies in the Dalmia-Jain group, found that there was a loss of
an estimated 3.5 crores of rupees as a result of fraud and improper use of funds of the
concerned companies by the management. The Santhanam Committee appointed to report
on the corruption in the country found that during the five-year period from 1958 to 1962,
licences valued at seventy million rupees were obtained or wrongfully utilized by nearly
700 firms through misrepresentation, forgery or other breaches of the export/import
control regulations. Illegal accumulation of foreign exchange through just one type of
fraud-through under-invoicing of exports and over-invoicing of imports-is calculated to
be between Rs. 40 to 50 crores every year. In 1956, the amount of income tax lost through
tax evasion was estimated at Rs 300 crore per year.58 The conventional explanations of
criminal behaviour are invalid in that they are based on biased statistics. These statistics
are biased in two respects:

58
See,Ahmad Siddique, “Criminology” 2001, Eastern Book Co., Lucknow. Chapter-XH, Pg. No. 389-391

[69]
(a) Persons of the upper socio economic class are more powerful politically and
financially and escape arrest and conviction to a greater extent than persons who lack such
power, even when equally guilty of crimes. Wealthy persons can employ skilled attorneys
and in other ways influence the administration of justice in their own favour more
effectively than can persons of the lower socio-economic class. Even professional
criminals, who have financial and political power, escape arrest and conviction more
effectively than amateur and occasional criminals who have little financial or political
power. This bias, while indubitable, is not of great importance from the point of view of
criminological theory.
(b) Much more important is the bias involved in the administration of criminal justice
under laws which therefore involve only the upper socio-economic class. Persons who
violate laws regarding restraint of trade, advertising, pure food and drugs are not arrested
by uniformed policemen, are not often tried in criminal courts, and are not committed to
prisons; their illegal behaviour generally receives the attention of administrative
commissions and of courts operating under civil or equity jurisdiction. For this reason such
violation of law are not included in the criminal statistics nor are individual cases brought
to the attention of the scholars who write the theories of criminal behaviour. The sample
of criminal behaviour on which the theories are founded is biased as to socio-economic
status, since it excludes these business and professional men. This bias is quite as certain
as it would be if the scholars selected only red-haired criminals for study and reached the
conclusion that redness of hair was the cause of crime. Persons of the upper socio-
economic class engage in much criminal behaviour; that this criminal behaviour differs
from the criminal behaviour of the lower socio-economic class principally in the
administrative procedures which are used in dealing with the offenders; and that variations
in administrative procedures are not significant from the point of view of causation of
crime. Today tuberculosis is treated by streptomycin; but poultices and blood-letting.
These violations of law by persons in the upper socio-economic class are, for convenience,
called “white-collar crimes.” This concept is not intended to be definitive, but merely to
call attention to crimes which are not ordinarily included within the scope of criminology.
White collar crime may be defined approximately as a crime committed by a person of
respectability and high social status in the course of his occupation. Consequently, it
excludes many crimes of the upper class, such as most of their cases of murder, adultery,
and intoxication, since these are not customarily a part of their occupational procedures.
Also, it excludes the confidence games of wealthy members of the underworld, since they
[70]
are not persons of respectability and high social status. The significant thing about white
collar crime is that it is not associated with poverty or with social and personal pathologies
which accompany poverty. If it can be shown that white collar crimes are frequent, a
general theory that crime is due to poverty and its related pathologies is shown to be
invalid. Furthermore, the study of white collar crime may assist in locating those factors
which, being common to the crime of the rich and the poor, are most significant for a
general theory of criminal behaviour. A great deal of scattered and unorganized material
lying in the libraries indicates that white collar crimes are very much prevalent in our
Indian society, polity and governance almost at every level since long. The present-day
white collar criminals are more suave and less forthright but not less criminal. Criminality
has been demonstrated again and again in investigations of land offices, railways,
insurance, munitions, banking, public utilities, stock exchanges, the petroleum industry,
the real estate industry, receiverships, bankruptcies, and politics. The white-collar crime
has always presented enormous problems to the investigate in all the aspects of the
investigation and a brief reference to these problems would be order. Some broader issues
which include the question of priority in the application limited police resources the
problem of detection with regard to the ‘dark area’ unreported economic crime,
difficulties in relation to the judicial sentence to be passed upon the white-collar criminal
and difficulties of international co-operation in the field of white-collar crime/economic
crime are being deliberately avoided mention here as they are too well known.
(a) The first difficulty in white-collar crime investigation arises often from the absence of
a complainant. In a number of frauds cases the investigation is commenced following a
complaint made to the police by a victim; potential victim or other organization which has
reason to suspect fraudulent activity. However, in a large number of white-
collar/economic crimes there may be no readily identifiable loser and the loss may be
evenly distributed in the community. The task of identifying losers in such cases can be
very taxing and time-consuming particularly when they are spread throughout the country
or even overseas.
(a) The first task of the Investigating Officer, therefore, is to trace the complainant and
trace the exact dimensions of the crime committed which is extremely arduous.
(b) The second difficulty in investigation relates to reporting of white collar/economic
crime. Either the crime goes unreported because it may involve police security which may
unfold unknown but graver dimensions of connected criminality which may be
uncomfortable to the complainant or the organization or the reporting of such crimes gives
[71]
an adverse publicity which can have disastrous effect on commercial reputation, share
values, economic viability, of a company or even a Government and all this could be
motivated by jealousy and international rivalry. Disguised motive for making a criminal
complaint in such cases must, therefore, be meticulously examined.
(c) The third problem in investigation of white-collar crime relates to establishing criminal
intent. The crime may be disguised within the framework of an otherwise legitimate
business. Therefore, investigators working in this field, unlike those occupied with
robberies, burglaries, assault, forgery etc, must be troubled from the very outset with
determining whether a crime has in fact been committed. This in contrast to the ordinary
crime may take several months or years in case of white-collar crime, before prima facie
criminal offences can be established. Mostly strongly worded complaints and great scandal
exposing frauds frequently dissolve later in explainable situations reflecting no illegality
whatever. On the other hand, schemes grounded solidly in fraud may ultimately provoke
only mild complaints or even none at all under the prevailing laws.
(d) The fourth aspect relating to difficulty in investigation is the question of specialized
knowledge, training and experience. It is necessary to stress that because highly diverse
areas of commercial activity upon which mostly white collar crime is somewhat
misleading. The officer who can confidently examine assets of company accounts but
probably be no better equipped than his colleague without such training or experience to
deal with an airline ticket 17 fraud or philatelic fraud. The question then arises of the extent
to which police investigators are to deal with what may be highly technical matters.
(e) The fifth difficulty which relates to accessibility of Bank accounts of suspect persons
and secrecy thereof. Multi-national and private Banks or bank abroad are often found to
be extremely jealous of their customers right to secrecy and this leads to a great deal of
hindrance in investigation. Even in certain important cases the information that the
enforcement agencies are on the look-out for accounts is often passed on to credible
evidence against such criminals.
(f) Last but not the least the greatest problem is that of the “Front Man”, probably one of
the most worrying aspects of white-collar crime investigation is that even when
investigator has detected the persons responsible for perpetration of the majority of
criminal acts, he has no idea of the identity of the individual who formulated the fraud,
supervised it from a distance and then slid away into oblivion when police started taking
interest in the case. The man who is put as “The Front Man” is mostly prepared to accept
responsibility for the operation and to be punished for it which in any case are not very
[72]
stringent. The king-pin always eludes the dragnet of the police. He mostly remains
unblemished with free and clear mind to engineer even greater crimes correcting upon the
mistakes of his previous criminal act. Thus, Money and social status have made criminals
of this category politically powerful and given economic offences shape of strong
organized crime, with its own sub-culture. They influence departmental workings, without
sub- culture. Particularly its enforcement wings, its internal administrative is set-up by
bribing for postings influencing levels of decision-making and policy framing.
Expenditures involved in the process are in nature of ‘business expenses’ and therefore,
unhesitatingly incurred as investments for managing favours and goodwill of power
centres in bureaucracy and in government. 18 In the labyrinth of the laws and rules of
socio-economic orders of modem society, the businessman, is inclined to feel that he is
not to be hindered by norms to get choked, and is prepared to equate honesty with
cowardice or lack of business sense, if honesty hinders his process. Business tactics are
planned with well calculated anticipations, close surveys and studies, often pre-bargained
dealings with purchased centres of powers in bureaucracy and politics, and government
machineries are placed in a situation to play a subdued role. The strangle hold of economic
offences which, till a few years back, was limited mostly to the lower levels, has dug its
tentacles into the higher levels. The casualty is not only the implementing machinery in
field but also its administrative controls a further still, the policy-framing and decision-
level stages. Not that all businessmen industrialist, are dishonest but if more profits can be
cornered though dishonest way growing faith gets attached to such means. To do anything
and get away with it added wealth, social prestige and political power is the objective,
notwithstanding being at the cost of society and whoever is the sufferer. In major
government departments and corporations, where public expenditures huge, scope for
offences is also correspondingly high.59 The study of white-collar presents unique
challenges to those who undertake it. There are problems both of definition and of date
availability and interpretation. Compared with other areas of criminological inquiry, this
is a new field, which only began to be seriously cultivated after Sutherland captured
researcher attention through the force of his presentation and analysis of the issues in 1940.
There was a long period of dead time between 1940 and the early 1970s, during which
only limited thought and attention was given in criminological community. Another
complicating factor has been, and continues to be, that different disciplines and interest

59
See, Giriraj Shah, “White Collar crimes”, 1st Edition 2002, Chapter-1,2, Pg. No. 8-12

[73]
groups examine white-collar-crime issued through their own lenses, with little or no
awareness of the relevance and importance of other perspectives. Legal scholars have
analyzed white-collar-crime issues as part of their studies of criminal law, administrative
law, government regulation, and consumer law. The accounting profession has studied
these issues in narrow terms of internal auditing and investigative-accounting theory and
practice, although the recent vulnerability of accountants to civil and criminal liability for
the manner in which they conduct their practices has now caused them to adopt broader
perspectives. A policy analysis, as an emerging discipline, is only now making its presence
felt in this field. Enforcement agencies have engaged in applied research, including studies
of patterns of violations as bases for deterring potential violators or zeroing in on likely
candidates for audit or investigation by the Internal Revenue Service (IRS), and analyses
by the U.S. Department of Health, Education and Welfare (HEW) of payments to
Medicaid providers as a guide to targeting of fraud violators. Research on white-collar-
crime issues has proved resistant to organization in a clear conceptual framework because
those who work in the field have been unable to agree on the character and nature of
behaviour to be studied. Political and ideological currents have broad and deep influences
here. There is strong disagreement, for example, as to whether wrongful behaviour is to
be defined in terms of the states of the offender, the characteristics of his or her behaviour,
or the harm (actual or potential) inflicted on the victims.60With regard to the use of
criminal sanctions, there is practical obstacle in the enforcement of laws relating to white-
collar crimes because of factors peculiar to this kind of criminality. It is often extremely
difficult even to discover the existence of white-collar crimes; it is criminal guilt. It may
involve acts of omission rather than commission which are less likely to be observed or
noticed. It is often committed under the privacy of business or of the Govt, and non
Governmental organizations/corporations and hence not visible to nascent public eye.
There may not be a single victim or group of victims to complain to the law enforcement
authorities of victims may be unaware at the time of offences that they have been
victimised and even the victims are also because of their position in the society having
some connivance with the crime, and as such, not ready to make a complaint. The crime
itself may be difficult to identify as stated it is committed mostly in the course of ordinary
business activities and may not be significantly distinguishable from non-criminal

60
See, Herbert Edelherte, Thomas D. Ouescast, “White-CoUar Crime: An Agenda for Research” 1982,
Lexington Books

[74]
business conduct. There are also serious practical problems in imposing sanctions upon
the corporate employees. It is very difficult to obtain the conviction of the true policy
formulators in large complex, corporations. The top executives do not ordinarily carry out
the overt criminal act. It is the lower or the middle functionaries in the official hierarchy
who are generally involved in such crimes. Under the traditional doctrines of compliance
to hold superior responsible, he must be shown actually to have participated in his
subordinate’s criminal activities as by ordering the compliance of a conduct or
encouraging or aiding in its performance. It is very difficult to obtain evidence of such
participation. Difficulties of proof 1S prevent the prosecution oftop management in many
cases.61 Thus, white-collar crimes carry three main adverse impacts on society as a whole:
a) It causes enormous financial losses to individuals, corporate groups and the entire
consumer community. Sutherland points out that the financial loss from white collar
crimes is probably greater than the financial loss from robberies and burglaries.
b) White-collar crime may result in death or serious injury, arising out of counterfeit
products, drugs etc.
c) It affects entire fabric of the society. Besides, the loss of money it damages the healthy
social relations by discriminating public morale and creating distrust and
disorganization.62
Therefore, the burning problem remains as to how to tackle with such fast growing white-
collar crimes in various fields although at every walk of life on every day at every hour
we feel frustrated of not getting such offenders to book. Such frustrations, as humane in
the present day artificial mock society, are leading to attract more people to white collar
crimes. What a tragedy? 63”

61
See, Justice Pasun Kumar Deb, “White-Collar Crime- Crime Committed by A person of Respectability
and High Social Status in Course ofHis Occupation”, Criminal Law Journal, Vol. 2,2000, April- June, Pg.
No.63
62
See, Vijay Pratap Singh, “Fake Drugs a White Collar Crimes” Calcutta High Court Notes, vol. 1, 2008,
p.9
63
See, Justice Pasun Kumar Deb, “White-Collar Crime- Crime Committed by A person of Respectability
and High Social Status in Course ofHis Occupation”, Criminal Law Journal, Vol. 2,2000, April- June, Pg.
No.63

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 CHAPTER-V
"CAUSATIVE FACTORS OF WHITE COLLAR CRIMES

Number of causative factors keeps working side by side as a result of which any or many
of the white collar crime are committed in our Indian society or elsewhere. What motivates
people to commit them?64 As has already been pointed out, those who indulge in such
crimes belong neither to deprived strata of the society nor are they uneducated and
influenced by the company of undesirable people. They are neither unemployed nor
oppressed and humiliated to such an extent that they should resort to crimes to attempt
destruction of the existing society and socio-economic relations. On the contrary, they are
well-off, suave and formally well-educated and they have every reason to refrain from
destablising the existing pattern of society. Among the earliest explanations for crimes of
the rich and influential is the one given by Aristotle: “Men may desire superfluities in
order to enjoy pleasure unaccompanied with pain and, therefore, they commit
crimes.” He was of the view that “the greatest crimes are caused by excess and not by
necessity.” This, however, needs to be qualified because the mere aspiration for
superfluities cannot by itself lead a corporate executive to indulge in embezzlement or
evasion of personal income from taxation or some such white-collar crimes. There are
other options too before him. He may give up his desire for superfluities or may satisfy
them by cutting expenses on other items. Or he may try to increase his income by working
on weekends or taking some other assignments. However, it needs to be stressed that t his
desire for superfluities is only an indispensable condition not the cause for inducing people
to commit white-collar crimes. Hence, Aristotle’s explanation needs to be qualified and
supplemented rather than totally discarded. R.H. Tawney tries to search the motive for
criminality of the rise of industrial capitalism which has given birth to acquisitive society
which, in turn has thrown “an invitation to men to use the powers with which they have
been endowed by nature or society, by skill or energy or relentless egotism or mere good
fortune, without enquiring whether there is any principle by which their exercise should
be limited to organization which determines the opportunities which different classes shall
in fact possess and concentrates attention upon the right of those who possess or can

64
For much ofthe description as to causative factors, See, Girish Mishra, Brij Kumar Pandey, “White Collar
Crimes”, 1998, Chapter-1

[76]
acquire power to make the fullest use of it for their own self-advancement. By fixing men’s
minds, not upon the discharge of social obligations, which restricts their energy, because
it defines the goal to which it should be directed; but upon the exercise of the right to
pursue their own self-interest, it offers unlimited scope for the acquisition of riches as
regards the means and methods used. “It assures men that there are no ends other than
their ends, no law other than their desires, no limit other than that which they think
advisable. Thus, it makes the individual the centre of his own universe and dissolves
moral principles into a choice of expediencies. ” Consequently, people do not
discriminate between different sources of wealth and do not bother whether property has
been earned legitimately or not. This is the way most of our rich and influential people
have emerged. The criminality of the rich and influential is witnessed almost everywhere
in present day society, be it in business or the professions or politics. It may, however, be
added here that white-collar crimes do not include murder, rape, arson and kidnapping for
ransom by the rich and influential. Generally, among these crimes; we include acts such
as embezzlement, bribe-taking, stock fraud, misleading advertisements in order to dupe
the people, falsification of accounts, misrepresentation of asset values, insider trading and
so on. “Since modem business and professional relationships are largely based on
trust, white-collar crimes can be further defined as breaches of trust within business
and professional communities or between those communities and the general public.
Trust enables people to turn over their hard-earned savings to banks or stock
brokers rather than burying it in basements or stuffing it in mattresses. Trust enables
the directors of large corporations to rely on the honesty of their employees rather
than tallying every penny themselves.” The cases of white-collar crimes mentioned in
course of our discussion mostly underline the breach of delegated or implied trust. Many
of them involve duplicity. Hence, a person indulging in white-collar crime holds two
antagonistic positions, one 85 of which is a position of trust that is violated... generally in
the interest of the other position. This may well be illustrated by citing the example of a
cricket player who is trusted to play with all his energy and devotion for the victory of his
own team, but betrays his team by accepting bribes from the other side and “misses” the
chances to make runs or “drops” the catch. Another important fact to be noted about white-
collar crimes is that it is deliberate, pre-planned and, in most cases, organized. The
organization may be formal or informal. For example, there may exist a formal
organization for selling spurious drugs or vending country liquor under the label of some
Ayurvedic tonic. Similarly, many registered and formally organized firms operating in
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business, industry or finance defraud their customers. But the racketeers who comer
cinema tickets or railway seat/berth reservations to resell them at a premium may be
organized, yet not formally. Similarly, as has been revealed, officials, businessmen and
politicians involved in various scams were organized but only informally. Mafia all over
the world is well-organized but without any formal basis. It is neither registered nor does
it have a written constitution or set of guidelines. That is why, when a don was about his
mafia connection, he pretended complete ignorance and, when further pressed, e shot
back: “What is mafia? I do not know.” A Cursory look at the smuggling network shows
that it does not have any formal organization while in actuality it is the opposite. The rise
of white-collar criminality in many countries has coincided with the progress made in the
economic and industrial area. Friedman has explained various causes which have
contributed to the white collar criminality as under:
The industrial revolution had initiated great social changes of far reaching consequences.
The changes in the economic and social structure of property, comprising the
transformation of an increasing proportion of wealth from property intangible, visible and
mainly immovable goods into' ownership in intangible and visible powers and rights such
as share, trademarks, patents and copyrights, coincided with the growth of large sized
corporations replacing individual entrepreneurs. This development, inter alia, led to
concentration of economic and consequent political power in a few hands, absentee and
decline in the sense of social responsibility on the part of owners of large property. The
law commission of India in its 29th Report pointed out various factors responsible for the
rise in white collar criminality. It observes- The advance of technological and scientific
development is contributing to the emergence of mass society, with a large range and file
and a small controlling elite, encouraging the growth of monopolies, the rise of managerial
class and intricate institutional mechanisms. Strict adherence to a high standard of ethical
behaviour is necessary for the even and honest functioning of the law new social, political
and economic processes. The inability of all sections of society to appreciate in full this
need results in the emergence of growth of white collar crime and economic crimes.... The
rapid industrialization has led us to discover new modes of economic offences. Now
groups of individuals are engaged themselves in manipulation of accounts and misuse of
government permits and licenses to make illegal financial gains. Thus, the very structure
of industrial capitalism was rooted in crimes and criminality. Industrial capitalism brought
about a sea change in the values and attitudes ofpeople. Its high priest Adam Smith
extolled the virtues of self-interest. Now, amassing money became the sole aim of the
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members of the newly emerged capitalist class because money meant power, prestige and
status. There, thus, began a rat race to grab as much money as possible by hook or by
crook. This ideal gave to the strong and powerful unfettered freedom to use their skills and
position to enrich themselves without bothering about the impact of their actions on the
society at large or on their fellow beings. Why should an industrialist care for the impact
of effluents being drained into the river, flowing nearby so long as it reduces his costs an
increases his profits and why should he bother about morality of his methods and means
to achieve his ends? If somebody has some qualms of conscience, there was always
church, saints and priests in the West to take care of it. In India, there have always been
ways to get rid of one’s sins and there have been Chandraswamis, Rajneeshs, Murari
Bapus and so on to relieve one of mental problems and provide spiritual peace. So far as
the weaks are concerned, they always nurture the hope that they too may one day be in a
position now occupied by the strong and powerful to enrich themselves. It is what is called
the “bandwagon effect”—follow the leader. Ttawney rightly remarks: Before the eyes of
both it suspends a golden prize, which not all can attain, but for which each may strive,
the enchanting vision of infinite expansion. It assures men that there are no ends other than
their ends, no law other than their desires, no limit other than that which they think
advisable. Thus, it makes the individual the centre of his own universe, and dissolves
moral principles into a choice of expediencies. And it immensely simplifies the problems
of social life in complex communities. For it relieves them of the necessity of
discriminating between different types of economic activity and different sources of
wealth, between enterprise and avarice, energy and unscrupulous greed, property which is
legitimate and property which is theft, the just enjoyment of the fruits of labour and the
idle parasitism of birth or fortune, because its treats all economic activities as standing
upon the same level and suggests that excess or defect, waste or superfluity, require no
conscious effort of social will to avert them, but are corrected almost automatically by the
mechanical play of economic forces. Modem capitalism not only changed the values,
attitudes and outlook, but brought into existence enormous possibilities to realize the goal
of acquisitive society. New techniques of production developed, modem factory system
came into existence and mass production of goods became the order of the day. Production
was not only for local or national market, but to be sold in far-off lands. There came about
a revolution in the field of transport and communications which enormously increased the
total volume of goods entering world trade. Even perishable commodities could be
transported from one continent to another. Refrigeration facilities kept such goods fresh
[79]
for weeks and even months. Faster means of transportation eliminated the danger of piracy
on high seas. Metalled roads made transportation of goods possible throughout the year
irrespective of weather. Railways and airways brought certainty and speed in
transportation. In the political sphere, there were changes establishing law and order in
most parts of the world. The forms of business organization changed and joint-stock firms
came to be adopted to overcome the shortage of capital, infinite liability and legally
impermanence of existence. Alongside, the role of finance increased tremendously. Both
capital as well as money market developed and banking and insurance became important
constituents of these markets. These developments gave rise to professionals like brokers,
financiers, bankers, insurance agents, forwarding and clearing agents, chartered
accountants and so on. Lawyers saw their activities expanding to these new areas of
business, finance and commerce. The entire gamut of mercantile law came into being.
Since the role of the government and its agencies also became increasingly vital in the
course of time, liaison people emerged, whose role was to take care of bureaucratic and
political hurdles. With these developments, there opened a great scope for fraud, bungling,
swindling, deceit and so on. This scope went on expanding its base and new innovations
are witnessed almost everyday to circumvent the new laws and rules. They are not limited
to one country but to many countries and in some cases, to the world. Take, for example,
the fodder scam of a backward State like Bihar; its proliferation is limited not only to
various parts of the country to far-off Switzerland, Britain, Ukraine and also to the USA.
Similarly, the urea scam is alleged to have the involvement of a company of Turkey and
the banks of Switzerland and the USA. Thus, not only the geographical scope has widened
but complexity has also deepened. Thus, Mihir Bose and Cathy Gunn are not wrong when
they assert that fraud has become the growth industry in the present-day world. With
accelerated changes in technology and growing complications in different spheres of
economy, white-collar crimes or what we say the crimes of the rich and influential have
too become more subtle, sophisticated and full of complexities and it is not very easy to
detect them. With fast changes in information technology, it is beyond the capacity of most
of the Third World countries to detect them, not to speak of forewarning. Among these
crimes, those committed in the sphere of the corporate sector account for a fairly large
proportion.65 Another reason for the increase in the white collar crime in India is the
emergence of the concept of the welfare State after the independence of the country. In a

65
See,Girish Mishra, Brij Kumar Pandey, “White Collar Crimes”, 1998, Chapter-1

[80]
welfare State, the government tends to control a vast number of means of production and
distribution 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. Three quotations from more modem
writers show the almost uniform acceptance of this fact of the economic factor and its
socio-psychological implications. Ploscoever wrote:
“On the one hand, there is relentless pressure exerted by modem industries towards
the stimulation of new needs, through the countless forms which advertising may
take. On the other hand, there is the example of leisure class openly enjoying all the
advantages of modem society. It must be remembered too, that the spread of
democracy has broken down the caste line which formally cut an individual off from
the privileges of the class above him. The modem individual does not wish to be
simply a spectator at the feast of others, he wishes to participate. He interprets the
democratic theory to mean that all men are born with an equal rights to enjoy the
good things of life. What cuts him off is no inherit inferiority but merely the lack of
money.”66 Thus, lastly of all the factors, the economical industrial growth throughout the
world has, perhaps been the most potential cause of increase in white collar crimes in
recent years. The changing socio economic scenario of the society coupled with increase
in wealth and prosperity has famished, opportunities for such crimes. Commenting on the
growing incidence of white collar crime in India, the Law Commission in its Twenty ninth
Report observed, that modem scientific and technological developments and, monopolistic
trends in business world have led to enormous increase in white collar crimes. The post
War Independence period in India ushered an era of welfare activities which necessitated
regulatory measure on the part of government to control means of production and
distribution so as to sub serve the common good . The contraventions of such regulatory
measures generally give rise to white collar criminality. Marshal B. Clinard asserted that
the problem of white collar criminality has its root in, competitive business community
which tries to oust their rival competitors in order to earn huge profits. Sometimes such
Crimes may also be committed merely for the sake of retaining existence in the
competitive business. To illustrate, though there is a prescribed code of ethics for the
practicing lawyers but since the very nature of their profession involves the spirit of

66
For details, see, J.P.H. Sirohi, “Criminology and Penology”, 6th Edition, 2004, Chapter-6 Pg.No. 90-92

[81]
combat and competition, they often resort unlawful tactics such as concealment or
misrepresentation of facts, Which if detected, is punishable under the Law. To take another
example, the private educational institutions in India which receive public aid or grants
furnish false accounts simply for the sake of retaining their existence. Likewise, the
members of industrial and business class who enjoy high status in the society have a
tendency to suppress their real profits by furnishing false and fabricated accounts of their
income and property in order to claim tax exemptions or avoid payment of heavy taxes.
One more reason for the multiplicity of white collar crime is relatively high socio
economic status of white collar criminals. They belong to an influential group which is
powerful enough to handle their occupation tactfully and persons affected thereby hardly
know that they are being victimized. Moreover, the public in general is also somewhat
apathetic to such crimes thug causing obstruction in prosecution and punishment of white
collar criminals. It is often alleged that criminal law administrators and Judges being
members of upper strata of the society, are generally sympathetic towards white collar
criminals while dealing with them. But there seems no justification in this assertion. If this
allegation is based on the large number of acquittals of white collar criminals, it may be
pointed out that it is not because of the sympathy of Judges for those criminals but because
of the thin line of demarcation between criminality and immorality involved in white collar
crimes. The recent developments in information technology, particularly during the
closing years of the twentieth century, have added new dimensions to while collar
criminality. There has been unprecedented growth of a new variety of computer dominated
white collar crimes which are commonly called as cyber crimes. These in crimes have
become a matter of global concern and a challenge for the law enforcement agencies in
the new millennium. Because of the specific nature of these crimes, they can be committed
anonymously and far away from the victim without physical presence. Further, cyber
criminals have a major advantage: they, can use computer technology to inflict damage
without the risk of being apprehended or caught. It has been predicted that there would be
simultaneous increase in cyber crimes with the increase in new internet web sites. The
areas affected by cyber crimes are banking and 91 financial institutions, energy and
telecommunication services, transportation, business, industries etc.67 “

67
Information available at, http://Lawprojectsforfree.blogspot.in/,Friday,September 3, 2010 “White Collar
Crimes in India”

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REASONS FOR THE GROWTH OF WHITE COLLAR CRIMES IN INDIA

Obviously, inefficacy of law, and its enforcement agencies, ensuring diversity of public
opinion leads to growing with variety of economic offences/offenders. There are
‘Imperfect Sympathies’ for the offenders. When a person is caught for theft, robbery of
murder, the society feels outraged and desires laws to come down upon him with all its
severity. There is sometimes even an implied approval of third degree methods against the
suspect and the criminal. He is discarded as a member of respectable society and is looked
down upon as an object of pity and condescending sympathy. Humanists step in with pleas
and programmes for his being reformed and reclaimed to society In case of economic
offences, despite their seriousness and cruelty, reactions by people is dissimilar. The gains
to the thief and robber are nothing as compared to those obtained from crime by the
economic offenders. When substandard of fake medicines are received by the medical
officer, the amount of physical harm and deaths being caused by the racketeers, due to
mass deprivations to the needy, is many times more than the harm which the traditional
murderer of violent criminal does. When controlled sugar passes into the hands of the
black marketers and is subsequently purchased by consumer at many times higher rates,
there is as good as a theft being committed in every such purchase. It is because our minds
are not adequately aware of the implication of criminality in this area. These crimes are
done so stealthily that very few people come to know of them or of their magnitude and
that too after long lapse of time. Bad debts are written off quietly. Thefts of electricity are
connived at by restoring connections, and very few people come to know of the
motivations behind this deviation from the rules. Not only have the hands of the economic
offenders but the offences themselves remained largely invisible. The offenders, being
bigger names, who live in an insulated area of influence, power and purchasing capacity.
A network of power centers, who have been obliged to them in the past, and who can be
further paid their price, start operating and there are months to speak that these are only
deviation from rules, and there is no evidence of direct corruption. The give-and-take
among the higher levels of economic offenders is bound to be only in laying sown and
operating rules and policies. The economic offences being comparatively invisible, not
immediately detectable, newer, and often having not directly identifiable individual
victims, keep out of the focus. It is a bit overdue to appreciate the real picture of economic
offenders, to tear the mask of social respectability, of high status, and of invulnerability to
[83]
law, and show them as culprits of the most heinous and dangerous types, as ones who are
not just indulging individual derelictions from the moral and legal norms, but they are the
base and the worst, types who are enemies of society and pose serious dangers to national
security. The civilised society has to mutely looking them as such. These imperfect
sympathies must be shed away and not only the economic offenders but those who support
them must be exposed to public so that they can see for themselves what they really are.
The popular urge for more stringent and severe laws is the result of wide spread, intensive
suffering and the visible potential threats posed by economic offences but mere enhancing
of punishments would not be enough often. Harsh laws can be an instrument of
prosecution and a fillip to economic offenders if they are not sacked by an honest and
efficient machinery to handle that power of law. Two examples may be sufficient. Laws
regarding prohibition have been known to lead to higher profit for the boot leggers and the
vast number of excise and police officers. Price Control on sugar has led to more profit
having gone into the pockets of premium-earners and black marketers. It is necessary for
government to have for the more affected departments units which may keep close
intelligence about the tie-up in the economic spheres, and be able to reach their fingers to
the necks of those elements in planning the policies and implementation of programmes,
who sabotage public interests. These are persons seated often at high pedestal of political
and bureaucratic places in the Government and command the resources of the business
world. It is those people who need to be identified, and to be nabbed, and effectively
demonstrated to the people so that they understand these enemies. The cells functioning
in Food, Hydel and Cooperative deptts are doing some job but, what is relevant in the
present context is, whether they are in a position to deliver the goods. The tasks are:
(i) to collect intelligence about economic offences through its own offices, and
through a network and others, about the firms their accomplices, their agents etc.
and collate, sift and compare intelligence received from various sources,
disseminate ripe information’s of make use of it itself for effective action against
economic offenders. This intelligence collection has to be in sufficiently
comprehensive and in depth so that proper perspectives are constantly maintained.
The fabric of intelligence so made out should provide the necessary background
to deal with individual complaints and to deal with the longer and more important
area in which there may be no individual complaints but interests of the people
and that of the slate are involved and need to be and safeguard.
(ii) To effectively use penal actions against the economic offenders:
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(a) By furnishing timely intelligence to government so that it may keep aware of
the anti-people plans and activities and keep its policies and programmes adjusted
accordingly.
(b) By taking action against the offenders, and be able to lodge more of economic
offences who have a mushroom activity in economic world, in their proper place,
uninfluenced by the mask of social respectability and bureaucratic and political
support. One reason for these economic crimes being made non-cognizable is that
there are specific departments of the Government of India to dial with them and it
is not, therefore considered necessary to vest such powers to deal with these
crimes in police. This is also worth considering that with limited manpower and
increasing responsibilities in the fields of law and order, conventional crimes, VIP
security and so no, the police are ill-equipped to deal with white-collar crimes.
Another reason is that the policy on implementation of these laws would be known
fully only to the departments concerned and its enforcement is, therefore, best left
to them. Even the Central Bureau of Investigation takes up the investigation of
only those cases of economic offences which are referred to it for investigation by
the department concerned. Suo motu exercise of power by the CBI in respect of
violation of fiscal laws is rare. Another distinguishing feature of most of the
economic offences is that for prosecuting the accused complaints have to be filed
by the designated authorities. The police, including the CBI cannot file charge-
sheets. Notable exceptions are property offences under the IPC, offences of
bribery and corruption and trafficking in narcotics. In India, Keeping in view the
dangerous portents of white-collar crime, the CBI which is the premier
investigating agency for white-collar crimes in addition to anti-corruption crimes
has through a major recent reorganization and restructuring and restructuring
aimed at achieving highest levels of specialization in economic crime/white-collar
crime investigation formed a separate Economic Offences Division in 1994. This
Economic Offences division which includes Banking Securities Cell set up by the
Government is specifically meant for investigation and prosecution of Bank Scam
Cases, along with all other major financial frauds committed on Nationalised
Banks throughout the country. The next factor in the differential implementation
of the law in the area of white collar crimes is the relatively unorganized
resentment of the public towards white collar crimes. Three reasons for this are:

[85]
 (a) The violation of law by business persons are complex and their effect are
diffused they are not simple and direct attacks by one person on another person,
as is assault, theft and so on. Many white collar crimes can be detected only by or
with the help of persons who are experts in the relevant field. The effects of these
crimes, however, are diffused over a long period of time and perhaps among
millions of people, with no particular person suffering much at a particular time.
(b) More often than not, the media do not express the moral sentiments of society
regarding white collar crime, in part because the crimes are complicated and not
easily presented as news, but probably in greater part because many of these
agencies of communication are owned of controlled by business persons or
concerned. They are like people living in glass houses.
(c) The laws for the regulation of business belong to a relatively new and
specialized part of statutes. The old common law crimes which have continued in
the regular penal codes were generally limited to person-to95 person attacks which
might have been committed by any person in any society Economic crimes of
large magnitude are of relatively recent origin, the laws relating to them still
remain to be fully appreciated by the judge, administrator and the public large.
The Law Commission of India its 29th report (1966) has noted the various factors
responsible for the growth of economic crimes and white collar criminal in the
following words:
“The advance of technological and scientific development is contribution to
the emergence of mass society, with a large rank and file and a small
controlling elite encouraging the growth of monopolies, the rise of a
managerial class intricate institutional mechanisms. Strict adherence to a
high standard of ethical behaviour is necessary for the honest functioning of
the new social, political and economic processes. The Inability of all sections
of society to appreciate in full this need results in the emergence and growth
of white collar and economic crimes”68.While considering the question of
improvement to the legal hardware to deal with economic offences the Law
Commission observed in their 29th report the such offences were better left to be
dealt with by special self-contained enactments instead of being incorporated in
the Indian Penal Code. In their forty seventh reports (1972) the Law Commission

68
See,29th Law Commission Report, 1966

[86]
 had made recommendations regarding the trial and punishment of social and
economic offenders to enable swift and drastic penal action in proved cases so that
it might act as a deterrent against the commission of such offences. Following
their recommendations some important enactments dealing with social and
economic offences like Essential Commodities Act, Foreign Exchange Regulation
Act, Central Excise and salt Act, Customs Act and Prevention of Food
Adulteration Act, were suitably amended to shift the burden of proof on the
accused in certain matters of evidence and prescribe minimum punishment for
certain offences. It has been observed by the investigating agencies that many of
the economic offences go o unpunished because of the following reasons: 69
Firstly, the accused persons involved in most of these economic offences wield a
lot of influence in administrative and political circles because of their financial
power and this caused delays and ultimately defeated the progress of the
connected criminal cases whenever they were instituted. Secondly, the public is
not only indifferent and apathetic towards such violations of law but quite often
the members of the community themselves contributed to the commission of these
crimes that is the victims of the crimes are to blame for the causation of crime. In
fact many such crimes cannot be committed unless is a demand for illegal goods
and serviced in a communists illegal gratification to public servants and black
marketing in scarce goods are some of the common examples. Can the investigator
get evidence from people who sponsor the black marketer of bribe the public
servant for an illegal favour? Thirdly, the economic offenders belong to the upper
strata of the society and they have money power to buy witnesses and sometimes
the investigator with offers which are too tempting to refuse. Fourthly, officer’s
investigation these crimes do not get cooperation and assistance from departments
to which the offender may belong or whose laxity has facilitated the commission
of the crime. Not only there is great delay in obtaining records, documents etc,
sometimes they are suppressed of destroyed purposely to help the offender.
Important witnesses are at times sent away on foreign assignment before their
testimony is recorded. Fifthly, these crime have a poor public visibility and no
information is lodged with the law enforcement authorities as a matter of course
and the enforcement departments source of information being their own

69
See,Giriraj Shah, “White collar crime”, Vol.l, 1st Edition, 2002, chapter-3, Pg. No. 12-13

[87]
intelligence system and casual petition submitted by come inside people who have
some personal to settle. As the intelligence wing of any enforcement organisation
cannot ensure complete coverage of all infractions at all times, a large number of
infraction go unnoticed and unpunished. Sixthly, in many public sector units like
banks hospitals etc, there is hardly any system of monitoring and reporting on
manipulations of figures and stocks with the result that economic offences relating
there go undetected for a long-time and come to light only on the report of an
honest auditor or when there is a public clamors about something going wrong
there false sense of institutional prestige sometime motivate even high ranking
persons to cover up the so called “financial scandal.” Seventhly, the
organizations and business houses and commercial establishments being far too
many scatter all over country and the law enforcement organisations are
inadequately manned and concentrated at Central or State Headquarters, proper
coverage of all illegal economic activities is not possible which results in a large
number of infraction going unnoticed. Eighthly, the enforcement organization
which are supposed to monitor certain financial activities do not operation
efficiently and financial irregularities go unnoticed and unpunished for example it
is now being reported in the press that hundreds of industries all over the country
have embezzled provident fund of worker without deposition them in due time.
Obviously, those who were supposed to monitor timely deposit of the employees
provident fund were in deep slumber for a long-time which facilitated this
misappropriation on a large-scale.

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 CHAPTER - VI
EMERGING TRENDS IN INDIA

Discussed as above white collar crimes and the prevailing public feelings thereon
do work on as an index ofand towards social and legal change at the right earnest.

Modified Definition of Crime

From the foregoing discussion, it is evident that ‘White Collar Crimes’ and ‘social and
economic crimes’ have spread in Indian society at an alarming rate in every exchequer
and the public in general compared with the traditional and conventional crimes, they-
cause more injury to the public health and create a general apathy towards the a law and
enforcement machinery of the State. At the same time persons involved in these crimes
are neither treated as ordinary criminals nor punished adequately, instead they move about
in society freely as respectable and good citizens. It may be because of some defect in the
procedural as well as substantive law and the enforcement machinery, lack of social
consciousness towards such type of crimes and class bias of the judicial tribunals, because
such persons come from the well to do section of society. Its consequences are grave and
far reaching. It has shattered the nations’ economy, retarded its development, adversely
affected the nation’s health and happiness, demoralised people, and has created disrespect
towards the law and the enforcement machinery. Hence, it is high time to modify our
traditional and conventional concept of crime. The definition of ‘crime’ should no longer
be limited to offences against the human body, property and state, generally committed by
the persons of lower socio-economic class, but should be wide enough to include: “all
those anti-social and illegal acts which are committed by persons of middle and upper
socio-economic class irrespective of whether the penalty is criminal civil or
administrative.”

Codification of White Collar, Social and Economic Crimes

In order to remove the obscurity in the existing law relating to social and economic
offences, which is found at a number of places in various statutes and to bring about
uniformity in the law, procedure and their application, it is suggested to codify all 310
[89]
these such offences on a scientific basis under the heading ‘White collar and Socio
Economic Offences’, without detriment either to the national interest or to the interest of
the accused and the people in general, so that such criminals may be dealt with sternly. At
present, there are approximately hundred Central Acts, besides a number of State
enactments dealing with such anti-social offences. But there is hardly any uniformity in
punishment, and procedure and the provisions are too complicated to understand. With
this end in view, crimes may be classified in two parts, viz., First, conventional and
traditional crimes against the person, property and the state etc., which are punishable
under the general criminal law of the land. Secondly, white collar crimes and social and
economic crimes which are not usually punishable under the general criminal law of the
land but under the regulatory legislations enacted by the legislature from time to time. As
stated above the offences falling under the second category may be codified under the
headings “White Collar and Socio-economic Crimes” punishable under a Central Act.
The pattern of codification might be on the lines suggested by the study group on Labour
Legislation for a uniform labour code. Such a codification will have the added advantage
over the recommendation of the ‘commission on the Prevention of Corruption(1964)’
to include such offences under the Penal Code, inasmuch as the structure of the Penal Code
will not be marred, it would remain unchanged on the one hand; and the codification the
changing needs of society on the other hand.

Nature of Punishment

The purpose of punishment besides being reformative is deterrent as well, so that it may
deter the accused from repeating the crime in future and may be a warning to those who
are like-minded. Accordingly, the law should not take a lenient attitude in fixing
punishment to a white collar or a socio-economic criminal. The law would fail in its
objective and duty, if it gives shelter or shows a soft attitude to such criminals. Only the
other day at Varanasi, hundreds of persons died after drinking country made liquor which
was contaminated with some poisonous material. The punishment for such and offence
under the Indian Excise Act is nominal. There is no dearth of such examples. It would be
appropriate to quote the learned view of Dr, Radhakrishnan, the Second President of India,
in this context. He said:
“The practitioners of this evil, the hoarders, the profiteers, the black marketers, and
speculators are the worst enemies of our society. They have to be dealt with sternly,
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however, well placed, important and influential they may be; if we acquiesce in
wrong-doing, people will lose faith in us.” Accordingly, the penalty imposed for white
collar, social and economic criminals should be more punitive and be determined
according to the gravity of the offence committed and the social harm caused. The harsh
punishments till now reserved for a man committing traditional and conventional offences
prescribed in the Indian Penal Code should be extended to a with collar and social and
economic criminals as well. For instance, in case of offences like adulteration of food,
drinks and drugs, or offences which affect the economy of the state, such as smuggling,
evasion of taxes, hoarding, black-marketing, etc. The quantum of penalty should be
deterrent enough to stop such grave offences. The penalty might e extended up to sentence
of death of life imprisonment, if the circumstances so demand.

Modification of the Doctrine of Mens Rea

The time has come when the century old common law doctrine of actus non facit reum
nisi mens sit rea, (viz., there can be no crime without a guilty mind) should be excluded
so as to preserve and protect social and economic interests of the community, which
require strict adherence to such laws. The criminal liability for socio-economic offences
should be made absolute. In other words, if a person has violated a provision of the law
and caused injury, he should be held liable for that wrong the act was intentional or not.

Burden of Proof

The law of evidence should also be modified so as to shift the burden of proof of
innocence in cases of with collar, social and economic crimes from the prosecution to that
of the accused. The accused should be held liable for the violations of such laws, unless
he proves his innocence.

Public Censure

A provision should be made of public censure by publishing the names of white collar
and social and economic offenders in local as well as national newspapers, etc. This will
have an added advantage over the sentence of imprisonment and fine. The following are
some of the Statutes dealing with White Collar and Social Economic Offences:
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 i. The Customs Act, 1962 (52 of 1962).
ii. The Atomic Energy Act, 1962 (33 of 1962).
iii. The Coffee Act, 1942 (7 of 1942)
iv. The Imports and Exports (Control) Act, 1947 (18 of 1947)
v. The Essential Commodities Act, 1953 (10 of 1953)
vi. The Indian Standards Institution (Certification Marks) Act, 1952 (35 of 1952).
vii. The Tea Act, 1953.
viii. The Coir Industry Act, 1953
ix. The Foreign Exchange Regulation Act. 1947
x. The Oil fields (Regulation and Development) Act, 1948 (53 of 1948)
xi. The Reserve Bank ofIndia Act, 1934
xii. The Forward Contracts (Regulation) Act, 1952 (14 at 1952)
xiii. The Mines and Minerals Act, 1956 (67 of 1956)
xiv. The Securities Contracts etc. Act, 1965 (42 of 1965)
xv. The Drugs and Magic Remedies (Objectionable advertisements) Act, 1954 (21
of1954)
xvi. The Prize Competitions Act, 1955 (42 of 1955) 313
xvii. The Dowry Prohibition Act, 1961 (28ofl961)70
All Crimes are Anti-social and affect the material welfare of the community as a
whole, Several categories of traditional crimes such as, Theft, Embezzlement and
Robbery, Stem from Economic Deprivation or Disparity, and are, by and large,
economically motivated. Could they not, therefore, be termed Economic
Offences? Then in what respect Import-Export Frauds Differ from traditional
Property Offences. Well, Economic Offences are perceived to affect the country’s
Economy, and not merely the wealth of an individual victim.

Current and Emerging Trends

Different Individuals carry different perceptions on the Subject of Current and

Emerging Trends. One perception is that Acute Financial difficulties forced the
country to ‘undertake a programme of structural changes in the economic Setup

70
See, K.D. Gaur, “Criminal Law And Criminology” 2002 Chapter-21 White Collar Crime and its impact
on society. Pg. No 287-290

[92]
that had been existing process, there was not only active participation of economic
Thinkers within the country but there was also more than active participation and
interaction with International thinkers particularly those in world Bodies like IMF,
SAARC and various other Economic Forums. Consequently, the custodians of
nation’s destiny decided to undertake structural re-organisation through what can
be described in simplest terms as LPG (Liberalisation, Privatisation and
Globalisation). Existing policies of License Raj, Governmental permissions etc.
Was found admittedly to be a constraint. Accordingly, it was felt that Surgical
treatment was required for carrying out the process of restructuring to cite only
two examples, it was decided to axe the powerful Offices of D.G.T.D. and C.C.I.E
this signalled the relaxation of earlier policy of close government supervision,
control and monitoring. Liberalisation resulted in suitable Amendments being
brought about in various Statutes including FERA, Income Tax etc. In the last 5
year so as to give a boost to International trade. Customs and Excise Tariffs were
also rationalised to achieve the goal of promotional of International Trade. The
Privatisation of some Sectors, which hitherto were not available to the private
Sector, was done and this was yet another signal. It’s a matter of common
knowledge that even in our Missiles and Rocket Technology, scores of Industrial
Houses in the Private Sector were invited to participate in the exercise of making
different Components etc. Privatisation was nothing but facit admission of the fact
that the Government lacked not only the desired efficiency level and the expertise
but also the enormous resources necessary to invest in various sectors of economy.
Therefore, the only way out was to invite participation of Private Entrepreneurs.
However, the mind boggling figures of resources necessary for developing our
core-Sector and Infrastructure led to the speedy realisation that the Private Sector
within the country would not be able to raise by itself the resources required.
Therefore, it become inevitable to take the third step in the direction of re-
structuring by invoking the concept of Globalisation. It simply meant inviting
Wealth available in other nations to our country in various Sectors particularly
Infrastructure and Core Sector. Friends, LPG, therefore, confronted the Nation
with the unprecedented economic scenario in which speed Decisions, which
sometimes turned out to be hasty, became unavoidable to facilitate the flow of
enormous resources into the country from all nook and comers of the world. To
invite the attention of the Foreign Entrepreneurs including Multinationals, a lot of
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publicity had to be undertaken about the positive features of India, One such
feature that really caught the attention of the World was the estimated size of the
Middle and Higher Income Group in India. Despite the high poverty ratio, in
absolute terms the World came to realise that there was sufficient point of
attention. Money knows no boundaries and the changed governmental stance
resulted in virtual economic revolution during the last 5 years. In the Anti
Corruption Conference held in Beijing, all Delegates from emerging nations
clearly admitted that Liberalisation & Globalisation in its wake had increased the
corruption level in their can afford to turn a blind eye towards economic offences.
They unleash too many unruly forces and have too many serious implications to
be bypassed as marginal economic and political foundations. In India, the criminal
Justice system has been am ply responsive toward combating them; and social
intervention has also not lagged behind. But how far unprecedented resources in
the economic spheres has thrown up a fresh scenario. Yes, the world has indeed
become a Village. As in a Village there is ready availability of information about
the various goings on in every part of the world. As in Village, the consumer has
access to all the options available to him. In would become possible due to
Production being carried out only in those areas of the become a ‘Village’.
However, till that level is attained, there are going to be moments of concentration
and anguish not only for Political Leaders but also for Public Servants engaged in
the task of protecting the Consumer thereby ensuring public good. Hardly any
Crime these days is not related to Economic Offences. As always happens, L.P.G.
brings in its wake ‘Transparency’ because the Investors demand a level playing
field. The business rivalries and enormous economic opportunities further
strengthen the sources of information available to the Fourth Estate.
Consequently, we have Bank SCAMs, we have Fodder SCAM, we have ITC
SCAM, we have Shaw Wallace SCAM, we have Fertilizer SCAM. So far as
individuals Parties are concerned even Titan of Titans like ex-Ministers has not
been spared. Not that the guilts have been established or will be established in
these cases, but the vital point sought to be made is that Corruption is no longer
easily swept able under the carpet. In this scenario what we have also to accept is
that while there is abundance of other resources yet there is acute shortage of one
resource namely ‘Time’. Those engaged in curbing Economic Offences must
realise that Speed is the Essence of Investigation. Computer Crimes, SCAMs do
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 not take very long in being given effect to. By one wrong Programming in a
computer, a Bank can lose hundreds of crores before such mischief can be.
Following are the agencies engaged in curbing Economic Offences :
1) Central Bureau of Investigation
2) Intelligence Bureau
3) Research & Analysis Wing (R&AW)
4) A.V.D. in Department of Personnel
5) State Anti Corruption bureau
6) Directorate general of Income Tax (Enforcement of Search and Seizures Cases)
7) Central Economic Intelligence Bureau (Coordinates information/action
between all Agencies plus Enforcement of all Income Tax, Customs, Central Excise
Cases)
8) Directorate of Enforcement (FERA Violation Cases)
9) Directorate of Revenue(Enforeement in Customs plus Search & Seizure Cases)
10) Directorate of Anti-Evasion (Central Excise, Enforcement i.e. Search &
Seizures Cases)
11) ChiefVigilance Officers in various Public Sector Undertakings.
12) Border Security Force (Smuggling form across Borders)
13) Central Vigilance Commission.

Tacking the white collar crime

It is important to realise that frauds cannot be eliminated but the risks of it occurring can
be substantially reduced. Banks and financial institutions are increasingly exploring ways
to take tools and techniques used in fraud investigation and apply them proactively to help
prevent and detect corporate fraud before it does serious damage. An organisation can set
up the best of the fraud risk management framework to mitigate fraud risk, however the
most important or greatest asset its employees can also be its biggest theat. It is important
to remember that an organisation my implement one or more fraud detection techniques,
but to gain out of such systems one needs to implement it in total, end to end. As the old
saying goes “prevention is better than cure” and this is certainly true when considering
how to manage the risk of fraud. In a country like India where large scale starvation, mass
illiteracy and ignorance affect the life of the people white collar crimes are bound to
multiply in large proportion. Control of these crimes is a crucial problem from the criminal
[95]
justice administration in this country. However, some of the remedial measures for
combating white collar criminality may be stated as follows:-
1. Creating public awareness against these crimes through the media of press, platform
and other audio-visual aids. Intensive legal literacy programmers may, perhaps help in
reducing the incidence of white collar criminality to a considerable extent.
2. Special tribunals should be constituted with power to award sentence of imprisonment
upto ten years for white collar criminals.
3. Stringent regulator 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. Radhakrishan, the Second 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 marketers, and speculators are 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 we acquiesce in wrongdoing, people
will lose faith in us”
4. A 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 no escape punishment because of their high social status.
5. 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 Super
court, in M.H. Haskot v. State of Maharashtra, in this context observed, “Soft sentencing
justice is gross injustice where many innocents are the potential victims”.
6. There is an urgent need for a National Crime Commission which may squarely tackle
the problem of crime and criminality in all its facets.
7. Above all, public vigilance seems to be the cornerstone of anti-white collar crime
strategy. Unless white collar crimes become abhorrent to public mind, it will not be
possible to contain this growing menace. In order to attain this objective, there is 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 group-norms and services ethics based on the concept of absolute honesty and
integrity for the sake of national welfare. This is possible through character building at
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.
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Finally, it must be stated that a developing country like India where populations 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 and have added
new chapter to criminal jurisprudence, to a great extent, they are an outcome of industrial
and commercial developments and progress of science and new technology. With the
growing materialism all around the world, acquisition of more and more wealth has
become the final end of human activity. Consequently, moral values have either changed
or thrown to winds and frauds, misappropriation, misrepresentation, corruption,
adulteration, evasion of tax etc. Have become the techniques oftrade, commerce and
profession, It is for the criminal law administrators to contain this tendency by stringent
legislative measures. It is rather disappointing to not that though white collar crimes such
as black market activities, evasive price violations, rent-ceiling violations, rationing-law
violations, illegal financial maneuvering etc. By businessmen are widespread in society,
no effective programs for repressing them has so far been launched by the law enforcement
agencies. Perhaps the reason for white collar crimes being carried on unabated is that these
crimes are committed generally by influential person who are shrewd enough to resist the
efforts of law enforcement against them.4 It is in this context that the recent enactment, or
amendments, in India of statutes prescribing deterrent punishment against economic
offenders have come as a pleasant surprise. The recent amendment (in 1993) of the
Consumer Protection Act. 1986 is a step in the right direction. There has been a sudden
awakening to the fact that the country can progress economically with legally correct
distribution of wealth only if business and industry are made to behave. The recent
liberalisation of the economy to rid business and industry are made to behave. The recent
liberalisation of the economy to rid business and industry of the permit-licence raj at least
to some extent is a step in the right direction. If, in spite of such liberalisation, large-scale
economic offences are committed, such offenders should be dealt with sternly and
severely. The strengthening of enforcement agencies such as the Central Bureau of
Investigation, the Enforcement Directorate, the Directorate of Revenue Intelligence, the
Income Tax Department, the Customs and Excise Department and all the other agencies
concerned with the enforcement of fiscal laws is an imperative. There should be
coordination among the various authorities without any of them stepping on the toes of
others. Avoiding delays in investigation, prosecution and trial in cases involving white
collar crimes is important. Such delays are notorious. The indiscriminate issue at times of
stay orders by the higher courts is no less responsible. Public support, including support
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from the media, is all important in the fight against white collar crime and corruption. This
is more so in the area of political corruption. There is often a misconception in India, even
among the well-educated classes, that the acceptance by politicians in power of large
amounts of unaccounted cash for so-called election expense is legal. It is not so. Imagine
a CBI officer obtaining, while in service earlier, of Rs. 5 lacks from an industrialist against
whom there was not even a CBI enquiry, for the “marriage expenses” of his daughter. It
would clearly have been an offence under Section 7 and/or section 13 (1) (a) of the
Prevention of Corruption act, 1988. Getting elected as an MP or MLA is purely for the
personal benefit of the politician though be may clothe it under the misnomer “public
service”. Therefore his accepting money as explained above is clearly and unambiguously
an offence. People at large also do to understand another important aspect of this racket.
A minister who is a candidate in a parliamentary constituency may need about Rs. 1 crore
to contest the election, depending upon his popularity. Under the pretext of election
expenses, he collects in cash from various persons many cores of rupees, left with the
politician after the election is his o hers for keeps. Even if one of the receipts by the
politician comes to light, it will look like an isolated incident and therefore appear
“reasonable” to the public.71 The economic offences which are often referred as white
collar crimes are masterminded and carried out in a planned manner by technocrats, highly
qualified persons, well to do businessmen, corporate officials in the form of scams, frauds
etc. In these offences, often damage the economy and the national defence. The offences
such as smuggling of narcotic substances, counterfeiting of currency, financial scams,
frauds etc. are some to the white collar crimes which evoke serious concern and impact on
national security and governance. Economic offences may either be cognizable or non-
cognizable in nature.

71
Giriraj Shah, “White Collar Crimes” Vol. 1, 1st Edition, 2002, Chapter-4, Pg. No.24

[98]
 “CONCLUSIONS AND SUGGESTIONS

These White Collar Criminal activities because of widespread corruption in our offices
& every walk of life are not likely to be done away with so soon unless each of our laws
is properly enforced in their lathers & Spirit by the law enforcing agencies & officials
concerned with full honesty & integrity. Though the anti corruption law & have analysed
in the last chapter of my thesis. It is this law which needs much of its proper enforcement
especially against those who are Sheldon prosecuted should be punished to the max. So
also each of the laws which & have analysed in other chapters need their proper
enforcement by all those who are in the balm of affairs. Be it the Food Adulteration
commodities Act, The Essential Commodities Act, Prevention of Corruption Act, Tax
evasion laws etc. With this end in view, crimes may be classified in two parts VIZ.
1. Connectional & traditional crimes against the person, property & the state etc. which
punishable under the general, criminal law are of land i.e. IPC, 1860.
2. WCC & social & economic crimes which are not usually punishable under general
criminal law of the land but under. The regulatory legislations enacted by the legislature
from time to time.
Following Are The Statutes Dealing With White collar crime:
1. The customs Act, 1962.
2. The Atomic Energy Act, 1962.
3. The Coffee Act, 1942.
4. The Imports & Exports (control) Act, 1947.
5. The Essential Commodities Act, 1953.
6. The Indian Standards Institution (Certification Marks) Act, 1952.
7. The Industries (Development & Regulation) Act, 1951.
8. The Tea Act, 1953.
9. The Coir Industry Act, 1953.

Suggestions:

• The purpose of punishment besides reformative is different as well, So that it may deter
the accused from repeating the crime in future & may be a washing to those who are like-
minded. Accordingly, the law should not take a lenient attitude in fixing punishment to a
[99]
white collar or socio- economic criminal. E.g. hundreds of persons died after disking
country made liquor which contaminated with some poisonous material. The punishment
for such an offence is nominal.
Thus, the harsh punishments should also be extended to WCC.The penalty might be
extended up to sentence of death or life imprisonment. The circumstances so demand,
(grew) The criminal liability for Socio -economic offences should be made absolute. (Thus
menerea should be excluded) i.e. actus non facit reum, nissi mens sit rea. The IEA(Indian
Evidence Act) should also be modified so as to shift the burden of proof of innocence’s in
case of White Collar, Social & etc. The accused should be held liable for the violation of
such laws, unless pre proves innocence.
• A Provision should be made of public censure by publishing the names of white collar
& social & economic offenders in local as well as national newspapers etc. This will have
an added advantage ours.
• Creating public awareness against these crimes through media of press, platform & other
audio- visual aids.
• Special tribunals should be constituted with power to award sentence of imprisonment
up to 10 yrs for WCC criminals.
• Stringent regularity laws & drastic punishment for WCC criminals
• A separate chapter on WCC should be incorporated in & PC by awarding the code. So
that WCC criminals connected by the court & do not escape punishment because of high
social status.
• Above all, public vigilance will always be required to have a positive change in the
longer run. “

[100]
BIBLIOGRAPHY/WEBLIOGRAPHY PRIMARY & SECONDARY SOURCES

LAW COMMISSIONS REPORTS:

• Administrative Reforms commission on Reports;

• Audit Of Fraud Detection Techniques &Forensic Audit
• Das Commission Report 1964.
• Law commission of India, 47th report
• Law commission Report, No. 29 (1966) observed that modem Scientific and
technological developments & monopolistic trends in business world have led to
enormous increase in WCC.
• Report of the West Bengal Drags Inquiry Commission on 1964.
• Santhanam Committee Report in its findings gave a vivid picture of WCC Committed
by persons of respectability such as businessman, Industrialists, contractors & Supplies as
also the Corrupt- public officials.
• The Report on L.I.C. Mundra affairs;
• The Report on the Commission of Inquiry on the Administration of Dalmia Jam
Companies 1963;
• The Report on the Commission on the prevention of corruption, 1964.

ACTS AND MANUAL

Statutes Having Some Bearing On Or In Relation To White Collar Crimes :

• Central Excise and salt Act, 1944
• Companies Act, 1956
• Drags and Cosmetics Act, 1940 349 Emblems and Names (Prevention of Improper Use)
Act, 1950 Essential Commodities Act, 1955 Foreign Corrupt Practices Act Foreign
Exchange Regulations Forward contracts (Regulation Act, 1952). Immoral Traffic
(Prevention) Act, 1956 Imports & Exports (Control) Act, 1950 Income Tax Act, 1961
Indian Medical Central Council Act, 1970. Indian Medical Council Act,1954 Indian Penal
Code, 1860 Indian Telegraph Act, 1885 Narcotic Drugs & Psychotropic substances Act,
1985 OECD Anti Bribery Convention Patents and Designs Act, 1965 Prevention of
Corruption Act, 1988 Prevention of Food Adulteration Act, 1954 Special court (Trial of
[101]
offences Relating to Transactions in securities) Rules, 1992 The Ancient Monuments and
Archaeological sites and Remains Act, 1958 The Ancient Monuments Preservation Act,
1904 The Andhra Pradesh Lokayukta And Upa-Lokayukta Act,1983 350 The Anti-
Corruption laws (Amendment) Act, 1964 The Anti-Corruption laws (Amendment) Act,
1967 The antiquities and Art Treasures Act, 1972 The Benami transactions (prohibition)
Act, 1988 The Central Vigilance Commission Act 2003 The Code of Criminal Procedure
(Act 11 of 1974) The Consecration of Foreign Exchange and prevention of smuggling
Actiuities Act, 1974 The Copyright Act, 1957 The Customs Act, 1962 The Delhi Special
Police Establishment Act, 1946 The Dentists Act, 1948 The Dowry Prohibition Act, 1961
The Drugs (Control) Act, 1950 The Drags And Magical Remedies (Objectionable
Advertisements) Act, 1954 The Foreign Exchange Management Act 1999 The Indian
Electricity Act, 1910 The Prevention of Corruption Act, (Samuat) 2006 The Prevention of
Corruption Act,1947 The Prevention of Money Laundering Act,2002 The Right To
Information Act 2005 The Special Court (Trial of offences relation to Transactions in
Securities) Act, 1992 351 The Supply and Prices of Goods Act, 1950
• The Telegraph Wires (Unlawful possession) Act, 1950
• United Nations Convention Against Corruption

JOURNALS & PERIODICALS

• All India Criminal Law Reporter

• All India Reporter
• American Sociological Review
• Apex Criminal Judgements
• Banaras Law Journal
• Calcutta High Court Notes
• CBI Bulletin
• Criminal law Journal
• Delhi Law Times
• ILI Law Review
• International Journal of Social Science and Interdisciplinary Research (IRJC)
• Karnataka Law Journal
• Kashmir University Law Review
• Orissa law Review
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• Supreme Court Cases
• The Indian Journal of Legal Studies

BOOKS:

A.Ranga Reddy , “Dimensions Of Crime And Corruption In India”, 2005, Serial

Publications, New Delhi Ahmad Siddique, “Criminology”, 2001,Eastern Book
Company, Lucknow E.H.Sutherland, “White Collar Crimes”,1961 Gilbert Gets &
Robert F. Meier, “White Collar Crimes”, 1977 Giriraj Shah, “White Collar
Crimes”,1st edition,2002,volume 1, Girish Mishra, BrajKumar Pandey, “White
Collar Crimes”,1998 Herbert Edelherte,Thomas D.Ouescast, “White Collar
Crime:An Agenda For Research”, 1982, Lexington Books J.Kelly Strader,
“Understanding White Collar Crimes”, 2002, Lexis Nexis J. P.H.Sirohi,
“Criminology And Penology”, 6th Edition, 2004 Janak Raj Jai, “White Collar
Crimes-Naked Exposures”,1st edition,1987 Jay S. Albanese , “Criminal Justice”
2005,Pearson K. D. Gaur, “Criminal Law And Criminology”,2002, New Delhi M.
L.Singhal, “Indian Penal Code”, 2003,Premier Publishing Co., Allahabad N.
VPranjape, “Criminology & Penology With Victimology”, 15th edition,2011 ♦li
N. VPranjape, “Criminology & Penology”, 14 edition,central law publication
P.K.Das, “The Food Safety & Standards Act,2006”, Universal Publication,2006
R.CMishra, “Crime Trends And Criminal Justice”, 1st edition,2001, Schmalleger
Frank, “Criminology Today”,Prentice Hall, Englewood Cliffs, New Jersy
Surrender Sahai Srivastava, “Criminology And Criminal Administrative”, 3rd
Edition, 2007, Central Law Agency,Allahabad

ARTICLES

A. V. Kotesurararao, “what ails the enforcement of The Essential Commodities

Act, 1955 and The Functioning of the Public Distribution System?” Karnataka
Law Journal, 1987 (2), Vol.2 Abdul Latif Wani, Kashmir University Law
Review, “White Collar Crime -His concept” Vol.6,1999 Anup Kumar Biswas,
“Food Adulteration : Needs immediate attention”, Law & Our Rights-The
Daily Star, Issue no. 291, October 13, 2012. Edwin Sutherland- “Is White
Collar Crime a Crime?” American Sociological Review, April, 1945, F. V.
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 Arul, “ Some thoughts on economic offences” CBI Bulletin, Vol.9, June 2001
G. Nagarjan & Khaja Sheriff, “White Collar Crimes in India”, International
Journal ofSocial Science and Interdisciplinary Research (IRJC), Vol.l Issue 9,
September 2012. ILILawReview, “Laws on Food Adulteration: A Critical
Study with Special reference to the food Safety and Standards Act, 2006”, 2010
Vol.l :1 John S.Baker, “The Sociological origins of “ White collar crime”
October 4, 2004, Louisiana state University Law Centre. Justice Pasun Kumar
Deb, “White-Collar Crime- Crime Committed by A person ofRespectability
and High Social Status in Course ofHis Occupation”, Criminal Law Journal,
Vol. 2, 2000, April- June, KMadhavan, “6 Features ofWhite Collar Crimes in
India”, Frontline, July 30, 1993 Kalyan Bagchi, “Prevention offood
Adulteration: Some thoughts”, Health and Population-Perspectivess and Issues
7(3): 167-175, 1984 Mahesh C.Bijawat, “Economic Crimes(Tax Evasion) By
People in Film Industry: Its impact on national economy” The Indian Journal
ofLegal Studies, 1991,vol. XI 354 Prabhat Chandra Tripathy, “The Menance
of WCC and need for a new code.” Criminal Law Journal, 1997, Vol. I, January
to March Pradyot kumar sengupta, “A few thoughts on the Essential
Commodities (special provision) Act,1981(No.l8 of 1981)” ,Criminal law
Journal,1984 Rajesh Gupta & Gunjan Gupta, “ Law Against Tax Evasion-
Confrontation or compromise?”, Delhi Law Times, 1994, vol. LV Rajesh
Gupta & Gunjan Gupta, “ Tax Evasion and Avoidance-Concept and Percept”,
Delhi Law Times, 1995, vol. LVII, Ranjeet Mahonty, “The Essential
Commodities law and its Enforcement in India”, Orissa law Review,
September - October 2011 Umesh Kumar Singh, “The Role offood Inspectors
in managing quality offood articles under the Prevention ofFood Adulteration
Act, 1954: A Critical Appraisal” Banaras Law Journal, 2002, Vol. 31 Vijay
Pratap Singh, “Fake Drugs a White Collar Crimes” Calcutta High Court Notes,
vol. 1, 2008,

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NEWSPAPERS AND MAZAZINES:

• Frontline, July30,1993
• Times ofIndia, 15-11-2010
• The Hindu,March 2012
• The Economic Times, May 2012
• Chronicle IAS, Updated 25 dec.2012 357

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