‘ROLE OF LEGAL AUTHORITIES IN COMBATING WHITE COLLAR CRIME’

By Medha Varshney 1

ABSTRACT
In present paper, we will be talking about basic concept of White Collar Crime, how the legal authorities
doing their best for reducing it, various committees which has been enacted in high profile cases to
understand the gravity of case and punish accordingly and also look upto current situation. The aim
behind this paper is to aware people that WCC is highly prevalent and legal agencies have set up different
mechanism to redress such cases like enacting Electorate board in serious case and other case should be
investigate by general officer so that every case investigate with due course of time.

1
A50801820103, LLM Cr. Law, Batch 2020-2021, Amity Law School
INTRODUCTION

White collar crime is such non-violent crime which is done by socio-economic class of society for
financial gain during the course of their occupation [1]. After Edwin Sutherland recognition on white
collar crime, Indian government to protect society from such crime enacted various committees like
Santhanam committee, Malimath committee etc and ordered them to do research and give
recommendation on combating these crimes. On committees recommendation many acts/ amendments
was enacted include Prevention of Corruption Act, Prevention of Money Laundering Act, Sec 447
companies (amendment) act 2018. Whether the crime in both cases is done by individual or by any body-
corporate, specific or universal redressal should be enacted. For e.g. - for high profile corporate crime,
administrative body is SFIO whereas in other general nature case i.e. other individual crime, they are
administered by ED, CID, police department etc. When the offence is of same nature but the offenders
hold different position in society the concept of POCA / PMLA is applicable but the arresting agency is
different so that no person can went unpunished. In today’s paper, we will be dealing with different
authorities and what principle they have for combating the WCC.
Keywords: White Collar Crime [WCC], Prevention of Money Laundering Act [PMLA], Prevention of
Corruption Act [POCA], Society, Section.

I. ROLE PLAYED BY GOVERNMENT FOR ENACTING DIFFERENT COMMITTEES/

COMMISSION

a. Santhanam Committee, 1962 was headed by Shri K. Santhanam which gave major
recommendation on Prevention of Corruption [2]. AVD, CBI, Domestic Vigilance Units in the
Ministries/ Departments/Public Undertakings/Nationalized Banks & CVC were setup [3]. Central
Vigilance Commission is an apex institution for vigilance & independent of any executive
authority. The role that the Central Vigilance Commission plays is: To address corruption in
government offices and to monitor all vigilance under the Central Government; To supervise the
work of Delhi Special Police Establishment in matters relate under the Prevention of Corruption
Act, 1988; To direct the Delhi Special Police Establishment in discharging their responsibility
given to them u/s 4(1) Delhi Special Police Establishment Act 1964.

b. 47th report of Law Commission 1972- The committee made the following observation, ‘lower
court should realize the seriousness of socio- economic offences’. For which, some method
should be adopted that make judiciary realize the damage such crime cause to countries economy
and health. We hope that the higher courts are aware of such situation and in any judicial
conference the subject will receive attention. Commission examine this crime and said that ‘since
 a corporation doesn‘t have any physical body & guilty mind that’s why no pain can be inflicted &
new penalties should be impose respectively for restraining their illegal and wrongful acts. The
Commission found that the real penalty for the corporation is the harm to its reputation called as
disgrace. Further the punishment u/s 276B, 276C, 276E, 277 and 278 should be increased,
minimum imprisonment and fine provision should be imposed. By way of Taxation Laws
(Amendment) Act, 1975 All these recommendations were implemented. [4]

c. ‘Ethics in Governance’ is the 4th report of Administrative Reforms Commission [5] in 2007 which
made amendment and included new provisions that support in reducing the number of white
collar crimes in India. Like-
- Introduction of new provision which says, there should be partial funding by the state in
elections so to avoid illegitimate and unnecessary expenditures by political parties.
- In Section 8 of Representation of the People Act, 1951 amendment was suggested to charge
people who are involve in cases of heinous crimes & corruption out of participating in
elections. On the basis of report on election, the CEC & EC form a collegium[6] in order to
identify those people involve, this would prevent the wrongful exercise of power and
prevent manipulation by the authorities who is enjoying the dominance. The office of
commissioner is regulated by speaker/ chairman of each house of parliament which follow
the code of ethics by advising the body and maintaining the records. 
- Commission says u/s 7 of the Prevention of Corruption Act; collusive bribery should be
included through an amendment because this would leads to restraining public servants
from performing the acts which caused loss to public and also protects the whistleblowers
by keeping their identity confidential & punishes those who harass them.
- The Commission asks authorities to immediately implement the Benami Transactions
(Prohibition) Act, 1988.
- It considers that these corrupt offences should disclose to media that may spread their illicit
work which leads to harming their reputation and it prevents the offenders to commit such
crime. The only obligation media should consider is that they work as per their Code of
Conduct and self-regulating mechanism. Additionally this media is also supporting to fight
against corruption in the country. 
As per my view, the media house and offenders fall under the same class and starts favoring them
instead of showing their reality to the people. Moreover, media person genuinely want to bring the
doing of these offenders and during such time the high class people who commit such crimes buy
media persons or threaten them stating that ‘they will close their channel’ and if they don’t want
that to happen media coverage of the wrongful or illegal acts shouldn’t be telecasted.
There are different natures of crime and accordingly different punishment is imposed. Let’s see what
laws and policies are given in this regard

Bank related crimes- IPC provide punishment for Bank Fraud, Insurance fraud, credit card fraud etc. In
crime relate to banks, RBI has issued specific directions to the banks under Know Your Customer
guidelines i.e. all the banks and financial institutions are required to maintain the records of transactions
for a period of ten years after closing the account of customer.

Fraud related crime- in order to tackle such crimes Sec 447 of companies act 2013 provides punishment
for committing fraud which says that if a person is found guilty of a crime whose loss was above 10 lakh
or 1% of total turnover whichever is less will be imprisoned for a term of not less than six months,
expanding to ten years or fine (the amount of fraud or 3 times the amount of fraud) or both. When the
offence causes harm to public interest then minimum punishment shall be 3yr. If loss cause is below 10
lakh or 1% of total turnover whichever is less then imprisonment can be upto 5yr and fine can be upto
50,000rs. In case of public loss min. imprisonment shall be 3yr. [7]

Computer related crimes- With the development in IT world WCC grew. Information Technology Act,
2000 has been enacted to protect such crimes and it provide legal recognition to the authentication of
information exchanged in respect of commercial transactions but still there are many issues[8] which are
unresolved due to lack of focus. Though the focus of Information Technology Act is not only on
cybercrime but it has certain provisions that deal with white collar crimes i.e. Chapter XI which deals
with the offence of cybercrime and chapter IX deals with penalties and adjudication of crime.

Focusing the recommendations of committees, govt. have enacted some other legislations for protecting
the offence of WCC, those are Essential Commodities Act 1955, the Industrial (Development and
Regulation) Act, 1951, Companies Act, 1956, Prevention of Money Laundering Act, 2002, The Income
Tax Act, 1961, Indian Penal Code, 1860, The Prevention of Corruption Act, 1988, The Negotiable
Instrument Act, 1881, The Information Technology Act, 2005, The Special Court (Trial of offences
relation to Transactions in Securities) Act, 1992, The Central Vigilance Commission Act, 2003, Fugitive
offenders Act 2018[9] etc.
II. JUDICIARY ROLE

Priorly, the punishment of WCC given by trial court to the criminal was less subject to grievousness of
crime but whenever appeal has been made to H.C. or S.C. they both constantly upheld the adequate
punishment subject to the seriousness of offence. Courts generally use different treatment to punish or
reduce white-collar criminals [10]. It is seen that trial courts in India awards the lighter penalty which
shows that they fails to realize the gravity of white-collar crimes. The practicality of this aspect can be
seen in a case-
A person was found guilty to use his power to provide fake degree certificates of the Karnataka
University to students. Court of Session awarded him a single day imprisonment with the opinion that the
offender has learnt from this punishment & have no criminal tendencies to get involved in any such crime
in near future. State files an appeal in high court where H.C. increases the imprisonment period to three
years. Supreme Court considers that the sentence awarded by the session court as incredibly indiscrete
and warned the session court for awarding the wrong sentences [11]. Courts in India have given strict
interpretation to socio-economic offences which state that penalty shall be imposing on offender without
considering any mens-rea (either in the form of intention or knowledge for committing an offence [12].

III. SPECIAL COMMISSION IN SERIOUS CASES

Different commissions are enacted by court/ govt. for understanding the nature of case, identifying the
crime and give adequate report on punishment that should be imposed as per court power. Such are-

- Report focusing the Administration of Dalmia Jain Companies, 1963- After listening to the
facts[13], the Vivian Bose Commission which was enacted to inquire on this says- seeing
the collection of black money, undisclosed assets and undetermined income tax liabilities, it
could not be officially said that the group had split because it’s dissolution become so
complicated. This Commission was headed by Justice S.R. Tendulkar and later by Justice
Vivian Bose who in 1962 sentenced Ramkrishna Damia on charges of tax evasion, perjury
and criminal misappropriation of funds.

- The Report on L.I.C. Mundra affairs- Focusing on the facts[14] a Chagla committee was set
up which was headed by retired Bombay HC judge Justice M.C. Chagla who concluded that
Mundhra shall be sent to jail on the ground that 124 prosecutions was against him and 113
of them resulting in convictions.
CURRENT SITUATION

Even during Covid-19 situation black marketing and hoarding of vaccines, medicines were is hike,
CEO/ other high class group also committed money laundering or bank fraud etc. People at this
time regardless of present need where humanity should be in hike continuously working on their
illicit motive to gain undue advantage. The central special agencies & many police department
even at this time have taken the cognizance not only upon the individual WC criminals but the
corporates who also committed many offences on which the enforcement directorate(ED) took
cognizance.
In France there is assets worth 1.6 million euro belongs to fugitive Indian businessman which was
recently seized by ED. Further he arrested the promoter of a bankrupt travel company, in
connection with its money laundering probe. In another recent case ED arresting high class people
like former ICICI Bank MD-CEO's husband (in connection with ICICI -Videocon money
laundering case) and Yes Bank former CEO (in connection with the YES Bank fraud case). ED
approximately conducted 430 raids & investigated 170 Prevention of Money-laundering Act, 2002
("PMLA") cases. Recently, an FIR has been filed against MD of Real Estate Investment
Company and other officials for cheating a public sector bank for approx. INR 200 crores.
Moreover, a Hyderabad based firm was booked by CBI for cheating a consortium of eight banks
of INR 4,736.57 crores.
Income Tax (IT), Department of Vigilance, DFS of Ministry of Finance, SEBI, RBI and IRDA are
duly motivated to improve their capabilities to meet the challenges of the changing scenario.
When we talk about individual WCC like hoarding or black marketing which we are presently
witnessing in COVID era, the police personnel of different states are doing good job by
identifying & arresting the people who are involve in hoarding or black marketing of medicines/
vaccines[15]. Therefore, these agencies very well aware that nation needs them more thereby to
the best of its capacity consistently working on it without dropping their guard.

MY ANALYSIS
After researching on this concept researcher analyzed that eventhough there are many laws in India but
still there is no proper implementation on WCC the major lacuna I found is that mannier time the policy
makers/holder themselves indulge in such activities. For better understanding let’s take the case of
Harshad Mehta [16], the money of fake receipt was used by Harshad Mehta for personal gain and to
increase the shares price of stock market with the support of small bank officials but it should also be
consider that Swamiji [17] who was also the advisor of N.V. Narsimha Rao was involve in such conducts
who were supporting Mr Harshad Mehta in all endeavors. It was also in news that Harshad Mehta death
was a murder because if we saw the videography in series or news we witness that in the end he was died
in police station. The doubt goes on the point that why can’t any police personnel on the order of any
minister give any unidentified poison & doctor of such hospital where his treatment going to happen may
give wrong report in exchange of money (That’s why we also say that WCC occur at different
professional level[18]). This wasn’t completely proved may be because both (Swamiji & Narsimha) of
them misuse their power and escape from it. On the basis of this case all I want to highlight is that it is
correct that by making such legislations the less powerful people will be punished but what about those
people who are in top most level and to keep their reputation intact they escape from the liabilities
without getting questioned.

CONCLUSION
This crime flourishes everywhere and now people are scared of virtual and physical world. Virtual world
was initiated for helping people to avoid tiring jobs, standing in the long bank queue, physical labour but
now it has become the biggest platform for the commission of white collar crimes. As we discussed
above, all legal authorities try their best to protect the country by performing various activities like
enacting acts for punishing the offender, judiciary give the strict interpretation etc. After several
enchantments against the white collar crimes the government has been able to do much, but not much for
the victims of the white collar crime. This crime is very much complicated and another reason of its
growth is that it is difficult for the authority to find evidence, as a result criminal’s remains unidentified
and move freely to commits the crime as and when they want.
India is a developing economy so white-collar crimes are not only harmful to our country's economic
development but are also devastating to the reputation of our people. WCC has been for decades now
thereby reducing it is not at all simple but is our combine duty to eradicate such severe nature of crime.
Acc. to me what more the legal authorities can do to eliminate this crime has been share below.

SUGGESTIONS
1. Creating public awareness of crimes through media or other audio-visual aids and spread legal
literacy programs so that people can’t become prey of such crimes.
2. In order for faster disposal of WC cases it is important to enact fast track courts and tribunals with
power to sentence the offenders for at least 5 years and conviction which should result in heavy
fines rather than arrest and detention of criminals and when the case would be decided by them that
decision should be binding on the parties and the principle of res judicata will be applicable.
3. If there is any suspicion on any person then there should be proper investigation without giving
them any benefit because there is principle of equity, justice and good conscience.
4. Unified code/ act for WCC should be enacted, which should also include the protection of White
Collar victims because we always talked about punishment to offender but never transparently
provide adequate compensation to victims.
REFERENCES

1. By  Subodh Asthana, White Collar Crimes in India, July 31’2019, ipleaders

2. scr_rpt_cvc.pdf
3. By Smruti Sikha, Prevention of Corruption in India, Yourarticlelibrary
4. Law Commission Report No. 47- The Trial and Punishment of Social and Economic Offences
(latestlaws.com)
5. ethics4.pdf (darpg.gov.in)
6. Collegium would consist of the Prime Minister of India, the Speaker of Lok Sabha, the Law
Minister and the Deputy Chairman of the Rajya Sabha as its members.
7. As per companies amendment act 2018
8. Issues like inapplicability, qualification for appointment as adjudicating officer not prescribed,
definition of hacking, no steps to curb internet piracy, lack of international cooperation, power of
police to enter and search limited to public places, absence of guidelines for investigation of
cybercrime etc.
9. Economic offenders who commit white collar crime in India and flee to other country in order to
escape from their provision which empowers the Government to confiscate any property of
economic offender in India who flees to other country.
10. By Amirdha Varshini, White-Collar Crime, Legal Service Authority
11. M.H. Hoskat vs. The State of Maharashtra 1978
12. Muralidhar Megharaj Loya vs. The State of Maharashtra 1976
13. Dalmia Group was run by Ramkrishna Dalmia and Jaidayal Dalmia who is 1930 merged with
Sahu Jain Family to form Dalmia-Jain Group. Later in 1948 the business was split between two
families and between these two brothers. The allegation of corruption was imposed against the
group, inquiry into the companies affair was done by the Vivian Bose Commission.
14. Haridas Mundhra, a stock speculator in 1950 was arrested and imprisoned for doing first big
financial scandal of newly independent India.
15. Remdesivir hoarding: 19 held across India for alleged black-marketing of COVID-19 drug- The
New Indian Express : Maharashtra; Delhi: Four persons arrested for ‘black marketing’ of
Remdesivir | The Indian Express : Delhi.
16. Harshad S. Mehta & Ors vs The State Of Maharashtra on 6 September, 2001 (indiankanoon.org)
17. 'Chandraswami': The swami and Harshad Mehta connection | F - Newshub (fnewshub.com)
18. Medical, legal, engineering, political or likewise