GITARATTAN INTERNATIONAL BUSINESS SCHOOL

DELHI-110085

Batch (2016-2021)

Research paper of Socio-economic offences

Submitted by: Abhishek Sharma

Roll No: 00119103516

Submitted to: Mrs Chippy G krishnan

 CRTICAL ANALYSIS OF WHITE COLLAR CRIMES IN INDIA

White-collar crime is a nonviolent crime committed for financial gain. According to the FBI,
a key agency that investigates these offenses, "these crimes are characterized by deceit,
concealment, or violation of trust." The motivation for these crimes is to obtain or avoid losing
money, property, or services, or to secure a personal or business advantage. Examples of white-
collar crimes include securities fraud, embezzlement, corporate fraud, and money laundering.

White-collar crime has been associated with the educated and affluent ever since the term was
first coined in 1949 by sociologist Edwin Sutherland, who defined it as "crime committed by a
person of respectability and high social status in the course of their occupation.“

The harm caused by white collar crimes is, in most cases, palpable. For example, tax evasion
leads to reduce revenue for the treasury, bribery lead to biased governmental decision making,
inside trading lead to loss of investments in investors. There are moral complexity and
uncertainty in white collar crimes which is not visible in other offenses. The identification of
victims is very difficult, and victims are unaware of victimization. These white collar crimes
by nature are such that the injury or the damage caused as a consequence of them is so widely
diffused in the large body of citizens that their enormity as regards personage victim is almost
trifling.1

DEFINITION OF WHITE COLLAR CRIME BY SUTHERLAND

The most influential criminologist of the 20th century and also a sociologist, Edwin Hardin
Sutherland, for the first time in 1939, defined white collar crimes as “crimes committed by
people who enjoy the high social status, great repute, and respectability in their occupation”.
2
The five attributes of the given definition are:

 It is a crime.

 That is committed by an important person of the company.

 Who enjoys a high social status in the company.

 And has committed it in the course of his profession or occupation.

1
https://onlinecourses.swayam2.ac.in/cec20_hs19/preview
2
https://onlinecourses.swayam2.ac.in/cec20_hs19/preview
 There may be a violation of trust.

LIMITATION OF SUTHERLAND’S DEFINITION

1. It has not laid down any criteria for who these ‘persons of responsibility and status’ would
be.

2. Also ‘person of high social status’ is not clear. It is perplexing as the meaning of the phrase
in law could be different from its general definition.

3. Sutherland’s definition did not take the socio-economic condition of the person into
consideration. It only showed the dependency of white collar crimes on its type and the
circumstances in which it was committed.

4. Mens rea, i.e. guilty mind and actus reus, i.e., wrongful conduct are two essential elements
to constitute a crime. However, Sutherland’s definition implies that according to him white
collar crimes does not necessarily require mens rea.

For instance: A manufacturer of drugs who deliberately supplies substandard drugs is a

white-collar criminals. But in a case where there is no connection between the crime and
the occupation, for example, a doctor evades tax, is not a white-collar criminal, a director
of a company who smuggles foreign goods is not a white-collar offender 3

REASON FOR GROWTH OF WHITE COLLAR CRIME IN INDIA

1. The white collar crimes are committed by people who are financially secure and
perform such illegal acts for satisfying their wants. These crimes are generally moved
by the greed of the people.

2. Poverty is considered as a major cause for underdevelopment in India. Poverty is a

cause for financial and physical duress among the major chunk of population. Since
people are so much in need of money, they easily get attracted by the false
representations made to them. They forget to look into the veracity of the
representations being made to them.

3
https://www.ncjrs.gov/App/Publications/abstract.aspx?ID=80538
 3. The gravity of white collar crimes are more intense than other traditional crimes. White
collar crimes causes one great loss at all levels, i.e. financial, emotional, etc. Corporate
mishaps, like false pharmaceutical tests, costs more lives than the crime of murder.

4. With the introduction of the people to the internet and digital world, where big
transactions takes place within seconds and where reaching out people from all over
the world is a matter of few minutes, criminals have got an incentive to commit more
crimes and hide anywhere in the world.

5. Our law enforcement agency also become reluctant to deal with such crimes as these
cases are very complicated and tracing a suspect is a difficult job. The investigation in
case of white collar crimes is much more consuming than that in traditional crimes.

6. The most common type of white-collar crime is fraud. Fraud involves the intentional
misrepresentation or omission of a material fact. That misrepresentation must be
reasonably relied on, and someone must suffer a monetary loss as a result. The most
prevalent types of fraud include: 4

TYPES OF WHITE COLLAR CRIMES

 COMPUTER FRAUD: The act of stealing a bank, credit card, or proprietary information
from a computer.
 BANKRUPTCY FRAUD: The concealment of assets, misleading creditors, or illegally
pressuring debtors.
 HEALTH CARE FRAUD: The acceptance of kickbacks or billing for services not
performed, unnecessary equipment, and/or services performed by a less qualified
person. This type of fraud applies to all areas of health care, including hospitals, home
health care, ambulance services, doctors, chiropractors, psychiatric hospitals,
laboratories, pharmacies, and nursing homes.

 Securities fraud: The act of manipulating the market and stealing from securities
accounts.

4
http://www.meerutcollege.org/mcm_admin/upload/1587633550.pdf
  Counterfeiting: The act of printing counterfeit money or manufacturing counterfeit
designer apparel or accessories.

 Financial fraud: The act of engaging in fraudulent activities relating to commercial

loans, check forgery, counterfeit negotiable instruments, mortgage fraud, check-kiting,
and false applications.

 Credit card fraud: The use of someone’s credit card information to make unauthorized
purchases.

 Insurance fraud: The falsification, inflation, or “padding” of insurance claims.

 Government fraud: The act of engaging in fraudulent activities with public housing,
agricultural programs, defence procurement, educational programs, or other
government activities, including bribery in contracts, collusion among contractors, false
or double billing, false certification of the quality of parts, and substitution of bogus
parts.

 Telemarketing fraud: The use of the telephone as the primary means of communicating
with potential victims.

PENALTIES FOR WHITE COLLAR CRIMES IN INDIA

• Punishment for fraud: Section 447 of the Companies Act, 2013 provides punishment
against the commission of fraud. It states that in case a person is found guilty of an
offence of fraud he would be imprisoned for a period not less than 6 months and which
extend to 10 years. And he will also be subject to fine which should not in any case be
less than the amount involved in fraud and which may extend to 3 times the amount
involved in the fraud.5

• Bribery: Section 171-B of Indian penal code 1860 defines bribery as giving or
acceptance of a gratification either as a motive or reward to any person, to induce him
to stand or not to stand as a candidate or to withdraw from the contest or to vote or not
to vote at an election. It also includes offer or agreement to give an offer and attempt to

5
Section 447 of the Companies Act, 2013
 procure a gratification, as explained in Section 7 of the Prevention of Corruption Act,
1988.6

• Counterfeiting of Currency: Section 489-A, 489-B, 489-C, 489-D were introduced so

as to provide additional adequacy for the protection of currency note and bank notes
from forgery under the Indian Penal Code, 1860 that was passed before existence of
paper currency in India, currency notes weren't protected by any special provisions
however just by the general provisions, applying to forgery of valuable securities.

• Adulteration of Food and Drugs: Section 272 to 276 of the Indian Penal Code that are
associated with the adulteration of food and drugs. It is interesting to notice that the
penalization does not exceed six months and fine of only one thousand rupees that is
7
provided under these sections looks to be entirely inadequate within the present day.

• Public Servant Unlawfully Buying or Bidding for Property: Section 169 provides that
“Whoever, being a public servant and being legally bound as such public servant, not
to purchase or bid for certain property, purchase or bids for that property either in his
own name or in the name of another, or jointly, or in shares with others shall be
punished with simple imprisonment for a term which may extend to two years, or with
fine or with both and the property, if purchased, shall be confiscated.

• Offences related to Public Servant under Prevention of Corruption Act, 1988: Section
7– Public servant taking gratification other than legal remuneration in respect of an
official act shall be punishable with imprisonment, which shall be not led than six
months out which may extend to five years and shall also be liable to fine.

Recent white collar crime cases in India

CASE: ABHAY SINGH CHAUTALA V. C.B.I.8

There were two appellants in the present case against whom a charge sheet was filed
for committing an offence under Section 13(1)(e) and 13(2) of the Prevention of

6
Section 171-B of Indian penal code 1860
7
Section 272 to 276 of the Indian Penal Code
8
(2011) 7 SCC 141
 Corruption Act, 1988 read with Section 109 of the Indian Penal Code, 1860 in separate
trials. It was alleged that both the accused had accumulated disproportionate wealth as
per their income when they were they members of the Legislative Assembly.

When the Central Bureau of Investigation (CBI) initiated its investigation it was found
that the father of the appellant had acquired huge properties and same as the case with
the appellants. The High Court held that the appellant had provided a totally different
office(s) of the accused than they were actually holding at that time. Thus the sanction
under Section 19 of the Prevention of Corruption Act, 1988 was held to be without any
merit.

CASE: Binod Kumar v. State of Jharkhand & Others 9

This case was filed against several ministers of the State of Jharkhand along with the
Chief Minister for having the possession of unaccountable money. The High Court had
requested the Central Government to transfer the case from Enforcement Directorate to
CBI by way of power given to it under Section 45 (1A).

It was alleged that the ministers were in possession of hefty amounts of money and
though no evidence was found to charge them with money laundering case, a strict
investigation was proposed. The ministers were said to be the owners of property not
only in India but abroad as well. Therefore, the court asked for an investigation to
determine this wealth was acquired by making use of the official position. It was to be
clarified if a white crime has been committed under the Prevention of Corruption Act,
1988 and under the Indian Penal Code, 1860.

The CBI started its investigation under Prevention of Corruption Act, 1988 and the
Indian Penal Code, 1860 as the power to carry on investigation under Prevention of
Money Laundering Act was only with the Enforcement Directorate, which is of course
subjected to the power given to the Central Government under Section 45 (1-A) of the
Prevention of Money-laundering act.

9
Cr.M.P. No. 1555 of 2019
 Measures to curb white collar crimes

• The top investigating agencies of the country like the Central Bureau of Investigation,
the Enforcement Directorate, the Income-tax Department, The Directorate of Revenue
Intelligence and the Customs Department, needs strengthening, by way of
implementing strong regulating policies. The Central Vigilance Commission should
monitor the working of the officials sitting at top positions and also cross-check their
works, so as to ensure transparency in the system.

• As the method of commission of such white collar crimes is advancing, so should the
training of the investigating officials. It often happens that ageing officers are well
experienced to understand the nature and techniques, but are not able to utilise the
technology for tracking the suspect. This happens due to lack of training. So, every
investigating officer must be trained in such a manner that, no matter how complicated
the case is, they would be able to easily resolve it.

• To uproot the existence of such crimes, it is very important to include strict laws into
the system. Less amount of fine and shorter period of imprisonment makes it very
casual for the offenders to commit such crimes.

• Fast track courts and tribunals should be set in all the parts of the country for the early
disposal of these cases. The tribunal should be provided with the power to fine or
imprison someone who has been held guilty. Such measures would lower the rates of
occurrence of white collar crimes.

• The electronic and print media should be utilized in the right way to spread awareness
about white collar crimes. The general people need to be aware of such crimes and that
they are taking place everywhere, from a small cafe to big multinational companies.
Also, they need to be aware of the remedies they could seek in case they become victim
to such crimes.

CONCLUSION

As our society is growing towards modernity and the world is experiencing new
technological advancement, the rate of crime is also increasing at a faster rate.
Particularly the growth in white collar crimes has been enormous. From the medical
profession to educational institutions, these crimes are being committed everywhere.
The investigating officials are in need of training where they could acquire the skill to
trace these criminals, otherwise tracking of whom is difficult, complicated and
tiresome job. The investigating officials’s work should be scrutinized to ensure
transparency in the work as the white collar crimes are committed by people enjoying
higher social status in their occupation.

The government must make laws that are strict enough to reduce the commission of
such crimes. And the system should be such that not only there exist laws giving strict
punishment to the accused but also dispose off maximum cases in a short while. If not
done so then people will soon lose complete faith in the system, as these crimes are
committed by people who should act as a role model for the society.