Burhanuddin Patanwala A030 Economics Seminar Paper

Economics Seminar Paper
ECONOMIC OFFENCES – A THEORETICAL ANALYSIS
ECONOMICS SEMINAR PAPER
SUBMITTED BY -
PRESHIT PAWAR(ROLL NO – A049)
BURHANUDDIN PATANWALA (ROLL NO – A030)
BBA-LLB II-YEAR
SEMESTER- IV
UNDER THE GUIDANCE OF

PROF. VIKRAM VARMA
1
Kirit P. Mehta School of Law
INDEX
1) Preface…………..…………………………………………………….…….….……4
2) Acknowledgement…………………………………………………………………..5
3) Scope of Research……………………………………………….………….……….6
4) Literature Review…………………………………………………………………...7
5) Abstract…………………………………………………………………………….11
6) INTRODUCTION………………………………………………………………..12
7) CHAPTER I – Introduction to Economic Offences…………………………….13

1.1 – Economic Offences Definition……………………………………...14
1.2 – Types of Economic Offences…………………………………….....15
1.3 – Gary Becker’s Economic Model of Crime………………………...24
8) CHAPTER II –Impact of Economic Crimes on the Economy…………………26

2.1 – Impact on Developing Countries…………………………………..28
9) CHAPTER III – Legal Provisions and Judicial Pronouncements on Economic

Offences ……………………..……………………………………………………29
3.1 – Income Tax Act…………………………………………………….29
3.2 – Anti-Money laundering Laws in India……………………………32
3.3 – Anti-Corruption Laws in India……………………………………34
3.4 – Provisions in India Tackling Drug Trafficking…………………..36
3.5 – Fraud and Forgery………….……………………………………...39
10) CHAPTER IV – Case Studies…………..……………………………………....40

4.1 – The Fodder Scam………………………………………………….40
4.2 – The 2G Scam………………………………………………………42
2
11) CHAPTER V – Interview…………………………………. ………………….45
12) CONCLUSION...……………………………………………………………….48
13) Bibliography……………………………………………………………………..50
3
PREFACE
The present work is prepared for the research paper, being the students of law, semester
IV, to be submitted to Prof. Vikram Varma, Professor of BBA-LLB department, Kirit
P. Mehta School of Law, endeavoured the subject title as:
“ECONOMIC OFFENCES – A THEORETICAL ANALYSIS”
For this paper, the researchers have performed extensive research to use, collect, gather
information from various materials, as mentioned at footnotes & bibliography.
This paper work is the part of the subject, ‘Economics Seminar Paper’ & we hope that
the same shall be found useful for the users.
Kirit P. Mehta, School Law,
Navi Mumbai
Place: Kharghar, Navi

Mumbai
Date: 05/04/2021
Name of Students:
Mr. Preshit Pawar (Roll No.

A049)
Mr. Burhanuddin Patanwala (Roll

No. A030)
4
ACKNOWLEDGEMENT
By this acknowledgement, we desire to portray our extended gratitude to Prof. Vikram

Varma Sir, common friends and our brother to assist, guide, help us throughout the duration
of the research in respect to this topic. By this we have gained a deeper understanding about
this subject. The help and inspiration received from of each of you have enabled us (the
researchers) do justice to the topic as well as enlightened us to structure this research for the
larger cause of societal contribution.
We would also like to thank our prestigious university and our Hon’ble Dean Sir for giving
me the opportunity to complete this paper on, “Economic Offences” by which we have
gained an immense amount of knowledge.
Thankfulness to each of you, personally, is expressed here.
5
SCOPE OF RESEARCH
This seminar paper seeks to put light on the topic of Economic Offences, which is a part of
the broader subjects of Economics and Criminology. The nature of this paper is that of a
theoretical paper and is predominantly focused on the theory aspect of this area of study. The
scope is limited to India.
This study elaborates on the topic of Economic Offences, the types of Economic Offences,
and how it has an impact on the economy of a country in general. More importance is given
to the case of Developing Countries and emerging economies and how such offences have a
detrimental impact on them. The economic model of crime by Gary Becker has also been
analysed. The prevailing legal statues, relevant case laws, and economic laws and public
policies in India have also been reviewed and mentioned by the researchers. Finally, a few
notable case studies have been incorporated.
This paper has been structured for the larger cause of societal contribution.
RESEARCH METHODOLOGY
Methodology applied to conduct the research is of doctrinal analysis and descriptive method.
The information and data gathered is primarily of secondary nature. Collection of data has
been done from various state level and international level publications and other sources like
websites, books, journals, articles, etc.
For the following study some Primary Data was collected as well.
The Primary data was collected by a Telephonic interview of an Economics Professor who is
directly involved in the field of Economic studies. The interview was conducted in English.
Three questions relating to the subject were asked and his personal perspective was recorded.
RESEARCH GAP
Due to the global pandemic, the researchers were not able to collect sufficient primary data
and there is a lack of it in this paper. This paper is a theoretical analysis and hence there is no
practical application other than that of the few case studies mentioned. This paper lacks data
on a common man’s perspective on Economic Offences and its impact on a Microeconomic
level. Perhaps, more research can be done on this.
6
REVIEW OF LITERATURE
The scope of this study is limited to the theory of Economic Offences and its core concept.
For this purpose, the researchers have referred to a wide variety of literature. Due to the
unprecedented COVID-19 situation, it was very difficult to conduct and collect primary data
so the researchers have heavily relied on secondary sources. Journal Articles, Books, Online
sources, Dynamic Webpages, etc have been referred to for the making of this paper which
have been mentioned in the Bibliography section of this paper.
(Jain & Ohri, 2019) This book has maintained a distinctive edge over most existing texts on
economics in the market. The basics of economics and the core concepts are explained in this
book with suitable illustrations and numericals. Reference to the meaning and definition of
economics was taken from this book which is a concerted and sincere effort of the authors
who left no stone unturned in updating it, making it as simple as possible to understand and
reader friendly.
(NCRB, Crime in India - 2007, 2007) (NCRB, Crime in India - 2015, 2015) The National
Crime Records Bureau of India, every year publishes a comprehensive report of all the data
related to crimes which have taken place in the country in a year. This is a compilation of all
statistics and includes information such as the different types of crimes, how many times
crime took place, police cases reported, etc. This is done to analyse and survey so as to better
the crime situation in the country. Two reports of 2007 and 2015 are respectively referred to
by the researchers and data relating to economic/financial crimes is taken for analysis. Data
regarding five types of economic crimes is obtained from these sources published by the
Ministry of Home Affairs, India.
(Boivin, 2013) This paper acknowledges the international drug trafficking racquet and applies
the science of economics to it. Drugs are viewed as trade by the researcher who explains how
the drug market works in this world. The downside of it, how developing countries are
exploited, etc is discussed in this paper. This paper offers a test of the three main propositions
of the world-system perspective applied to transnational drug trafficking which is irrelevant
to this paper, however the crime of drug trafficking and knowledge was referred to for
research purposes.
(Naylor, 2003) The ultimate aim of the study is to provide a generic analytical context and
consistent vocabulary to help people perceive profit-driven crimes in economic terms rather
7
than social interaction terms. It indicates a typology that transfers the emphasis from actors to
actions in a way that varies from, but complements, "scripts and situational crime
approaches." It deconstructs a profit-driven crime into its underlying features, which vary
significantly depending on whether the offense is aggressive, market-based, or economic in
nature, rather than reflecting on it as a logical series of acts. Among the principle
characteristics are whether transfers of property occur by force, free-market exchange or
fraud; whether those transfers involve redistribution of wealth, distribution of income, or
redistribution of income; whether the crime occurs in a non-business, underground network
or legitimate business setting; and whether the optimal response is restitution, forfeiture or
compensation. This methodology also makes for a more reliable measurement of crime's
effect on national wealth and economic wellbeing. It assists in the distinction between
primary offences, for instance. "illegal possession of criminal proceeds" and secondary
offences, such as, "such as corruption, violence, tax evasion and money laundering."
(Coleman, 1987) This paper attempts to integrate etiological research on white-collar crime
under the hypothesis that criminal behavior results from the confluence of appropriate
motivation and opportunity. The starting point is the interactionist theory of motivation basic
to most of the social psychological research on white-collar crime. Interactionist theory helps
us understand white-collar crime in terms of the offenders' symbolic construction of their
social worlds but ultimately fails to explain its causes. Since, economic crimes fall under the
ambit of White-collar crimes, this paper has been referred to by the researches to gain a better
understanding about the psychology behind these crimes and has related to this in this paper.
(Vlados, Chatzinikolaou, & Deniozos, 2018) This conference paper has been published in the 3 rd
International Conference of Development and Economy which was held in Greece. This
paper provides insight as to on corruption is an alternative form of economic crime and how
different governments can be effective against it. Mentioned in this study is, “important
insights on the nexus of transnational organized crime (TOC) and corruption as major threats
to political stability, human security, democracy and economic development. Money
laundering, bribery, embezzlement, fraud, extortion, nepotism, cronyism and monopoly are
among its manifestations.”
(Merlo, 2004) This paper analyses the different Economic Models of Crime and carefully
reviews them and provides a brief review of the related publications and tries to contextualize
8
them in light of recent criminal economics analysis. Out of which, Gary Becker’s Economic
Model has been mentioned in this paper and the literature pertaining to it has been recorded
and observed for this paper.
(Engdahl, 2008) This article takes into consideration and examines how money can be used to
motivate violence, affect the incentive system that governs its prevalence, and function as a
tactical tool to facilitate it. Inference is also given to how money is the root of all economic
offences.
(Saddiq & Bakar, 2019) The study's aim is to examine how economic and financial crimes effect
the economies of developed and emerging countries. Methodology, approach, and design To
conduct a quantitative synthesis of empirical evidence on the impact of climate change, the
Preferred Reporting Items for Systematic Research and Meta-Analysis (PRISMA) guidelines
and the meta-analysis of economics study reporting parameters were used.
(Bentham, 1823) this book talks about author’s famous theory of utility and how the
legislation and law-making committees could refer to this theory while making laws and
sanctions. It shows how the economic aspect of crime should be included while deciding the
severity of a punishment. Bentham has wonderfully explained the psychology behind a
criminal committing a crime. The concept of forces influencing the criminal and ironically
putting him in the position of a victim trying to resist or allow the forces to influence him is a
work of art.
(Gaur, 1979) this article gives a complete analysis of the laws regarding taxation. Each and
every legislature and the instruments involved right from the tax payer to the government
agency who collects them have been elaborated. The statutes governing the sanctions and
penalties imposed on the defaulters have been stated along with case laws and historical facts
to support the case laws have been analysed by the author.
(Shekhawat, 2005) The entire scenario of corruption prevailing in India has been illustrated
and explained in this article. The author uses facts and sometimes even anecdotes to explain
the roots of corruption and how grave the problem really is. The problems faced by the
authorities tackling this menace as well as the antibodies in the form of statutes and policies
have been briefly stated in this journal article.
9
(Sharma, 2017) This article gives a detailed view on the problem of drug trafficking and
substance abuse which jeopardizes the health and wealth of the people. Making it a social
Evil. The NDPS act is broken down and each and every aspect of it has been stated along
with landmark judgements and recent amendments.
(ANANTH, 2013) This journal article focuses on the infamous Fodder Scam. The author
does not miss while describing the entire story of the scam right from Lalu’s appointment as
the CM of Bihar till the downfall of his political career because of his involvement in the
Scam.
Other than these, various sources were referred to by the researcher which have all
contributed towards the making of this paper. Different information has been collected from
different sources and proper citations and references are given.
10
ABSTRACT
Crimes in whatever form or category they may fall in, impact mankind in multifarious ways.
They damage democratic development, skew social development, inhibit industrial
development and endanger economic development. Overall crime is the antithesis of
development and is strongly pitted against it. Development is an innate urge nurtured by
nations. Economic development, a pre-requisite for development of any other kind, and
development is also intrinsically linked to mutual and international cooperation. The term
“economic and financial crime” refers broadly to any non-violent crime that results in a
financial loss, even though at times such losses may be hidden or not socially perceived as
such. Such crimes thus include a broad range of illegal activities. Corruption is a brutal
crime which leads to detrimental consequences to the economy and the development of a
country. The aim of this paper is to understand the nature and meaning of economic crimes
in general, to understand the Economic Model of Criminal Behaviour, and also is dedicated
to examine the economic crimes in India that not only erode the Nation’s economy but the
taxpayer’s money and take peoples trust off the institutions. It is a serious and growing threat
in India. The types of economic offences, their prevalence, data, statistics, has also been
incorporated in this paper. How economic offences have an impact on the economy of a
country is also discussed in this paper. Emphasis is given on how these offences are more
detrimental to developing countries and their economies. This paper also includes a review
of economic laws and public policies in India such as The Prevention of Corruption Act,
1988, The Income Tax Act, 1961, The Prevention of Money laundering Act, 2002, etc. In
addition to this, various landmark case studies of economic crimes such as frauds, tax
evasion, money laundering and corruption has also been included in this paper, out of which
one of the biggest scams to take place in India, referred to many as ‘2G-SCAM’ has been
highlighted in this paper. Finally, the researchers have included data from a interview given
by an esteemed economics professor, who is directly involved in the field, about this subject
pertaining to Economic Offences/Crimes. The goal of this paper is to create awareness and a
better overall understanding regarding the theory and concept of Economic Offences.
Especially, in India.
11
INTRODUCTION
The word crime has many roots such as the Hindu word “Karma” and the word “Crimen”
which originates from the Greek and Latin language. Just as there is no single definition of
law, Crime does not have a comprehensive definition. “An Act that makes punishable; the
breach of a legal duty treated as the subject matter of a criminal proceeding.” 1 This definition
calls crime a systematic sanction. “The profit of the crime is the force which urges man to
delinquency: the pain of the punishment is the force employed to restrain him from it. If the
first of these forces be the greater, the crime will be committed; if the second, the crime will
not be committed.”2 A simple illustration of the above would be: Y is a homeless man who is
unemployed and lives on a pavement across the office of X who is a businessman. X offers Y
four lakh INR if he assaults Z and breaks both of his legs. X informs Y that he will only go to
prison for 2 years and when he has served time, X will pay him the money offered. Y breaks
Z’s legs and serves 2 years in Prison. X pays him the money promised. In this case, Y is a
homeless man and him the profit was greater than the sanction. “Several types of economic
models of crime have been developed, all of which draw on the theory of supply and the
theory of behaviour towards risk. The simplest one is very similar to models of portfolio
choice, where a person’s wealth is allocated between various risky and non-risky projects.” 3
In economics, the activities which result into a crime are said to be of high risk. For example,
while committing fraud, the risk is associated with the victim finding out. The extent of
sanctions is set in a crime so as to create a sense of high risk in the minds of people who
intend on committing a crime.
AIMS AND OBJECTIVES:
i) To understand the theory of Economic Offences.

ii) To analyse the various types of Economic Offences in India.
iii) To study the impact of Economic Offences on the economy of a country.
1
8 Bryan A. Garner, Black’s Law Dictionary 399 (West Publishing Co 2004).
2
Bentham, J, An introduction to the principles of morals and legislation, 399, 399-410 (The Utilitarians, Garden
City NY, Anchor Books 1789).
3
Eide, Erling & Rubin, Paul & Shepherd, Joanna, Economics of Crime, Foundations and Trends in
Microeconomics. 2 (1978).
12
iv) To incorporate a legal perspective and analyse the various economic laws and
public policies prevailing in India.
v) To illustrate prominent economic offences case studies occurred in India.
CHAPTER I –
INTRODUCTION TO ECONOMIC OFFENCES
Before understanding the concept of Economic Offences, it is important to understand what is

the theory of Economics. Economics is the subject matter that deals with the rational
management of limited resources (in relation to unlimited wants) in a manner such that, at the
micro level, an individual consumer is able to maximize his satisfaction and in individual
producer is able to maximize his profit. At the macro level, a country is able to achieve the
highest possible GDP growth and highest possible social welfare. Briefly, we can say that
economics is the study of optimum utilization of the scarce resources in a manner such that
the individual gain is maximized at the micro level and social gain is maximized at the macro
level.4 It is clear that there is always going to be an endless number of wants but the
resources to provide them are going to be limited. This lack of resources is one of the prime
reasons for economic crimes to take place. The scope of economic offense is an immense
subject however for understanding the term it implies any offense or wrongdoing which
manages misrepresentation (chit reserves), fraud, beguiling (monetary organizations) or
duplicating of cash or cash counterparts. The monetary offense is otherwise called a Financial
Offense. “economic crime covers a wide range of offenses, from financial crimes committed
by banks, tax evasion, illicit capital heavens, money laundering, crimes committed by public
officials (like bribery, embezzlement, traffic of influences, etc.) among many others.” 5 The
motivation behind why it is known as a Financial Offense is that the wrongdoing (offense) is
identifying with cash and its comparability which thusly manages a country. Defilement is
likewise a piece of financial offenses. “Offenders under the Economic Offences are generally
not served with the required punishments for the acts done by them. Due to this, the crimes
under this Offence were increasing, but the Government of India made the appropriate
changes within the existing Acts through Amendments and also introduced new Acts as and
when required.”6
4
T.R. JAIN & V.K. OHRI, INTRODUCTORY MICROECONOMICS 4 (VK Global Publications Pvt. Ltd.
2019).
5
CIPCE (n.d.), What is economic crime? Centro de Investigación y Prevención de la Criminalidad Económica.
(Apr. 2, 2021, 10:30 PM), http://www.cipce.org.ar/en/what-is-economic-crime.
13
1.1 – Economic Offences Definition
According to the National Crime Records Bureau of India (From here on referred to as
NCRB), which is an economic wing under the control of the Ministry of Home Affairs,
Economic Offences are defined as, “Economic offences form a separate category of crimes
under Criminal offences. These are often referred as White/Blue Collar crimes. People
belonging generally to upper economic status are found involved in such crimes with the help
of some unscrupulous and corrupt Government functionaries and advanced technology.
Economic offences not only inflict pecuniary losses on individuals but also damage the
national economy and have security implications as well.” 7 Economic Offences is seldom
mistaken for another term, corruption. In fact, the latter is a part of the former. There are
various meanings of it. Every definition enlightens various elements of the marvel to be
examined, affecting the investigation and indictment undertakings to be executed. A first
definition centers around open morals. Here, defilement is characterized as a moral disarray
among public and private space. A subsequent vision relates the issue of defilement to the
absence of straightforwardness of the state, may that be it as boundaries to get to public data
or the pinpoint employing freedoms to specific organizations nearby goods and
administrations. Notwithstanding, there is a third definition, which is the one that we as an
association advance: defilement is one of the numerous pieces of a more mind boggling and
more exhaustive criminal marvel, which is financial offences. Consequently, the scope is not
restricted to violations submitted in the public area, yet additionally reaches out to those
executed by monetary fraudsters in the private realm. “Economic crime is regarded to
generate a considerable social damage. That’s because it doesn’t only affect democratic
institutions but also undermines the state treasure by cutting available resources for the
implementation of public policies. Those who are more vulnerable are those who need these
policies the most that is way they become one of the main victims of corruption and
economic crime. At the same time, the social damage generated by this criminal activity is
usually invisible: apart from the general indignation, is rather complex to have a precise
awareness about the true effects of these crimes.” 8 Economic offences are crimes which
6
Diganth Raj Sehgal, Economic offences in India, Depletion of the economic status of the nation, IBLOG
PLEADERS, (Jul. 22, 2020, 8:30 AM), https://blog.ipleaders.in/economic-offences-india-depletion-economic-
status-nation/#:~:text=What%20are%20the%20Economic%20Offences,of%20money%20or%20money
%20equivalents.
7
NATIONAL CRIME RECORDS BUREAU, CRIME IN INDIA – 2015, 123 ( (Ministry of Home Affairs,
Government of India, 2015).
8
Id at. 2.
14
affect the society on a large level as it has an impact on the general economy of a country.
These are deterrent to the growth and development of an economy, especially the developing
and underdeveloped countries.
1.2 – Types of Economic Offences
The NCRB has defined Economic Offences and has categorized them accordingly. Table 1
below lists the different kinds of economic offences, the various legislations under which
these offences fall and are dealt with and which law enforcement has the jurisdiction to tackle
them.
Table 1 – Types of Economic Offences/Crimes9
9
Id. at 4.
15
16
As seen in Table 1, there are around twenty-five types of economic offences recognized in
our country.
17
Various law enforcement agencies such as The Police, Central Bureau of Investigation (CBI),
Central Investigation Department (CID), Anti-Corruption Bureau of India, Vigilance
Bureaux, etc. All of which have been given powers under provisions of various respective
legislations to deal with such offences. The scope of authority is also determined by the
nature and type of economic offence.
The major types prevalent in India are discussed below,
1. Money Laundering – Money laundering is the illicit interaction of making a lot of

cash produced by a crime, for instance, drug dealing or psychological militant
financing, seem to have come from a real source. The cash from the crime is viewed
as grimy, and the cycle "launders" it to make it look clean and legit. “Money
laundering is a serious financial crime that is employed by white collar and street-
level criminals alike.”10 Table 2 below provides data for Money Laundering cases
recorded in India under the FEMA11 and FERA12 Act from 2003-2007
Table 213
In 2003, 242 raids/searches took place by the respective law enforcement in cases of
money laundering in contrast to 108 in 2007. Detailed information can be observed in
Table 2. Recoveries, seizures made under FEMA violations, yielded Rs. 11.16 crore
of Indian currency and Rs. 0.55 crore of Indian equivalent of foreign currency during
10
Financial Industry Regulatory Authority, Anti-Money Laundering (AML), FINRA (Mar. 28, 2021, 3:25 PM)
https://www.finra.org/rules-guidance/key-topics/aml.
11
The Foreign Exchange Management Act, 1999, No. 42, Acts of Parliament, 1999 (India).
12
The Foreign Exchange Regulation Act, 1973, No. 46, Acts of Parliament, 1973 (India).
13
18
2007. Only Rs. 18.15 crore could be realised as against the imposed fine of Rs. 158.43
crore during 2007.
2. Tax Evasion: Tax evasion in layman’s terms is simply the failure to pay taxes on
purpose. The definition of Tax evasion by Julia Kagan states, “Tax evasion is an
illegal activity in which a person or entity deliberately avoids paying a true tax
liability. Those caught evading taxes are generally subject to criminal charges and
substantial penalties. To willfully fail to pay taxes is a federal offense.” 14 According to
NCRB, Tax Evasion is a sinister problem in India and is one of the most common
illegal practices prevailing in the country. It is mostly done by hiding facts and or
misrepresenting them so as to escape the liability of paying taxes. Table 4 depicts the
data made available for the public by the CBDT (Central Board of Direct Taxes)
during the financial years 2008-09 to 2012-13.
Table 3
Table 315, shows how many searches were conducted in each financial year and the
worth of illegal assets were recovered by the Income Tax Department’s raids. In
2010-11, the raids conducted were 4,585 and the seized amount was 774.98 Crore
Rupees, In 2013-2014 there were less searches conducted but the amount recovered
was a massive 807.84 Crore Rupees. In respect to table 3, it can be observed that the
more searches are conducted, the more illegitimate assets are recovered, thus there is
14
Julia Kagan, Tax Evasion, INVESTOPEDIA (May. 29, 2020, 3:00 PM PST),
https://www.investopedia.com/terms/t/taxevasion.asp.
15
Id. at 4.
19
a proportional relationship. Tax evasion is indeed a serious concern for our country.
This is also the base of corruption.
3. Drug Trafficking- It is no wonder that drug trafficking is a major issue in our country.
The illicit drug market is very explosive in nature. It is a billion-dollar industry.
“Naylor proposed a definition of market-based offenses that is useful to understand
transnational drug trafficking.”16 Naylor explained how drug trafficking is related to
economics and makes it an economic offence in his research work. “drug trafficking
consists of multilateral exchanges of inherently illegal goods between producers,
distributors and consumers in a market-like context. First, drug trafficking involves
the movement of an illegal commodity from source to user. The chain between the
two comprises a given number of intermediaries. This could be referred to as the
‘economic’ element because it is centered on the commodity trade. Second, those
exchanges occur in specific social and political contexts; the commodity itself is
secondary.”17 The accompanying data presented in Table 4 18, gotten from Narcotics
Control Bureau (NCB) gives knowledge into different offenses identifying with
Opiates and other illegal drugs.
Table 4
16
R. Boivin, Drug Trafficking Networks in the World Economy, 182-194, In C. MORSELLI (Ed.), CRIME
AND NETWORKS (New York Routledge 2013).
17
R.T. Naylor, Towards a general theory of profit-driven crimes, 43 BRIT. J. CRIMINOL. 84, 81-101 (2003).
18
20
Table 4.119 presents the quantity of the aforementioned drugs seized by the
enforcement agency from 2011-15.
Table 4.1
Table 4.220 gives an insight on the value of illegal property held by the drug traffickers used
for the purpose of commencing such illicit trade which was seized.
Table 4.1
19
Id. at 15.
20
21
4. Bribery and Corruption: Bribery and Corruption is another economic offence which is
very persistent in India. It is embedded deep down in nearly every government
department and also in private sector. As discussed before economic offences are
those which are of a financial nature, when there is a bribe given, it induces and leads
to corruption, which in turn leads to generation of more illicit black money which
then is very catastrophic for our economy. “Corruption as form of economic crime is
a global security issue and has finally been recognized as a first-tier international
security challenge closely related to economic and social development.” 21 “Many
view corruption as a “victimless” crime and bribery only as a different way of doing
business, but today there is wide acknowledgement that corruption infringes on the
fundamental human right to equal treatment. Current studies yield important insights
on the nexus of transnational organized crime (TOC) and corruption as major threats
to political stability, human security, democracy and economic development. Money
laundering, bribery, embezzlement, fraud, extortion, nepotism, cronyism and
monopoly are among its manifestations.”22 As explained beautifully by Charis,
corruption is the base of other economic offences and they stem from it. This is
applicable in the local context too. Table 5 provides for the details of cases registered
and the number of persons arrested under the Prevention of Corruption Act during
2011-15.
Table 5
21
James William Coleman, Toward an Integrated Theory of White-Collar Crime, 93 AM. J. SOCIOL. 411, 411-
439 (1987).
22
Charis M. Vlados, et al., Corruption as form of economic crime and government effectiveness, 3
I.CO.D.ECON 101, 101-112 (2018).
22
In reference to Table 523, it can be interpreted that the cases on a National level were
registered very less in contrast to that on each individual state level. In 2012, CBI
recorded the most cases with 703 and made 166 arrests. This shows the turmoil which
is persisting in India.
Table 5.124 contains data released after the investigation by CBI about the public
servants who were involved in Corruption cases.
Table 5.1
Public Officials are most likely to engage in corruption practices because they hold
some power and authority. This becomes a system and then slowly this system starts
controlling the officials. It is a fact that many crimes have gone unreported or
evidence has been destroyed because there was some influence or pressure brought
upon, most of the times it is greed which plays the role of a catalyst. Table 5.1
consists of data recorded by the CBI. The table 5.2 below shows data on the
Information on cases registered under The Prevention of Corruption Act, 1988 during
2011 – 2015 recorded and disclosed by State/UT Vigilance Bureaux.
Table 5.2
23
24
Id.
23
The States/UTs Vigilance Bureaux have held onto assets worth ₹215.7 crore during 2015
regarding debasement cases contrasted with captures of ₹242.7 crore in 2014.
Preliminaries were finished in 2,100 cases (explored by State/UT Anti-Corruption
Bureaux) during 2015 of which 788 cases finished in conviction.
5. Major Frauds: Table 6 depicts data on major frauds reported and registered under the
criminal breach of trust cases and cheating cases from years 2012-2015.
Table 6
1.3 Economic Model of Criminal Behavior (Gary Becker)
24
The underlying foundations of wrongdoing are assorted and an order like financial matters,
predicated on levelheaded conduct, might be at something of a burden in clarifying a marvel
to a great extent saw as unreasonable. The attack by financial analysts into this territory is
generally later, tracing all the way back to Gary Becker's pathbreaking commitment in 1968.
“Crime and Punishment: An Economic Approach” by Gary Becker published in the Journal
of Political Economy in 1968, created a pathway and gave a fresh perspective towards this
subject and the research on economic crime literature has grown tremendously. “Becker’s
fundamental insight was to recognize that economic theory can provide important insights
into the analysis of criminal behavior. Modeling individual’s responses to incentives, for
example, can improve our understanding of the way in which certainty and severity of
punishment may affect individual’s decisions to engage in illegal activities. Theories of
individual’s interactions in market environments can provide useful insights into the analysis
of aggregate equilibrium effects of alternative crime control policies.” 25 Clarifying the
mainstream pattern in criminal cooperation rates in most industrialized economies is a
troublesome undertaking. Numerous social researchers contend that wrongdoing is firmly
identified with work, instruction, and neediness and that delinquency, youth joblessness, and
wrongdoing are results or even proportions of social avoidance. "Blue-collar" lawbreakers
frequently have restricted schooling and have restricted work market abilities. These
attributes halfway clarify the helpless business records and low genuine income of most
lawbreakers. Such an issues initially drove financial analysts to inspect the connection among
wages and joblessness rates on wrongdoing. All the more as of late financial analysts have
likewise thought to be the advantages and expenses of instructive projects to decrease
wrongdoing. “Gary Becker’s 1968 ‘Crime and Punishment: An Economic Approach’ is one
of the first papers using economics to address the questions of crime and law enforcement. To
Becker, crime generates costs to society, but fighting crime is also costly. There is, therefore,
an optimal amount of crime which minimizes society’s total loss and which can be attained
by setting the optimal levels of punishment and probability of apprehension and conviction.
From that analysis, Becker further claims that the role of criminal law and law enforcement
policies should be limited to the minimization of society’s loss. Crime is, therefore, framed as
an external effect, and criminal law’s purpose is redefined as the activity of assessing the
harm incurred by crime in order to enforce optimal compensation.” 26 Plainly, the division
25
Antonio Merlo, Introduction to Economic Models of Crime, 45 INT. ECON. REV. 677, 677-679 (2004).
26
Fleury JB. (2017) Crime and Punishment (Becker 1968). In: Marciano A., Ramello G. (eds) Encyclopedia of
Law and Economics. Springer, New York, NY.
25
between either crime or legitimate movement is a misrepresentation. Economists consider

criminal work to be as being like paid work in that it requires time and delivers a pay.
This helps us understand the relation between crime, law enforcement agencies and the
economy. Becker takes a utilitarian point of view: a given offense generates damages to the
victim and society but generates gains to offenders that have to be taken into account.
Following the general economic assumptions, the additional offense yields positive and
increasing harm to society and positive but decreasing gains to offenders. The production of
law enforcement is an activity which is costly. Thus, if more resources are invested in
increasing the probability of conviction p, the cost increases, and the marginal costs also
increase. If the number of offenses increases, the cost of law enforcement increases, as well
as its marginal costs. Finally, most forms of punishment (with the notable exception of fines)
generate costs to society: prisons need personnel and facilities, while imprisonment also
incurs costs to the offender depending on his opportunity cost of time.Since all the subparts
of the equation depend on the number of offenses, Becker’s central point is to assess the
optimal number of offenses in a given society. Clearly, crime not only generates costs to
society: apprehending and punishing offenders also generate costs, so zero crime appears
socially inefficient. “To Becker, crime becomes nothing more than an external effect which,
if negative, has to be taxed and reduced to an optimal level. But Becker even considers the
case of positive external effects, which should be regulated with subsidies, rewards, and other
forms of cash prizes, which magnitude and probability to award would be the social variables
to be controlled. Law enforcement, in this case, would have to spend resources to find and
award inventors and other producers of external benefits.”27
CHAPTER II –
IMPACT OF ECONOMIC CRIMES ON THE ECONOMY
27
Id.
26
Economic crimes have a wide range of consequences for the country as a whole, as shown by
the data presented in the previous chapter. Tax evasion, Money Laundering, corruption and
bribery, fraud, and other economic offences directly or implicitly drives the development of
our country ’s economic (often pushes towards the Deterioration of Economy). When we
look at the major kinds of economic crimes, we note that they all have one thing in common:
they are all about Cash, capital, assets, etc., and financial felonies. Many of these crimes cost
money or its alternatives in some manner. Money plays a very important role in economic
crimes. Everything revolves around this. “Money (1) fosters attitudes that reduce moral
questions to technical problems; (2) gives rise to feelings of self-sufficiency that cause people
to become detached from one another and from the webs of social obligation that counteract
crime; and (3) diminishes the risk of being caught and makes illegal transactions easier. In
addition, the argument also introduces the notion of money as a manoeuvre by which to
evade entanglement in emotionally straining and risky social relations in which openness can
negatively affect status and life project.”28 In other words, Money has the ability to incite
crime, influence the reward structure that governs its prevalence, and serve as a practical tool
for encouraging it. “Past studies conducted reveal that economic and ﬁnancial crimes have
continued to increase despite tough policy measures put in place in both developed and
developing countries. For instance, it was estimated that $1.5 trillion to $2 trillion (or around
2 per cent of global gross domestic product [GDP]) in bribes are paid annually in both
developing and developed countries.”29 According to The World Bank, “Developing
countries are at high risk of incidences of economic and ﬁnancial crimes. For example, the
poor in developing countries pay as high as 6.4 to 12.6 per cent of their incomes in bribe.” 30
Corruption and bribery are detrimental to the economy. This leads to the issue of Black
Money. Black money can be defined as money which is gained off the records in any illegal
manner or from an illegitimate business, or by performing any illicit job not recognized by
the law of the land. Even the money kept secretly by evading tax in termed as black money
and has its origins in corruption.
Most of this illegal money is kept in the infamous Swiss Bank. “The offenders open accounts
in this bank because of the privacy and anonymity which they maintain, thus making it a
reliable and legal source for keeping the money.” 31 The economic offences, especially
28
Oskar Engdahl, The Role of Money in Economic Crime, 48 BRIT. J. CRIMINOL. 154, 154-170 (2008).
29
Sani Abubakar Saddiq & Abu Sufian Abu Bakar, Impact of Economic and financial crimes on economic
growth in emerging and developing countries, 26 J. Financ. Crime 910, 910-920 (2019).
30
WORLD BANK GROUP, Doing Business 2017, (14th ed.) (2017).
31
Id. at 3.
27
corruption, affects an economy of a country on two-fold levels, (1) Nationally and (2)
Internationally.
1. Nationally, such illicit economic activities will interrupt the market and availability of
a wide variety of goods and services on a national scale; as demand grows, supply
decreases; as a consequence, rates escalate, which analysts point to as INFLATION;
and ultimately, this will affect the poor, increasing the national poverty line. It
decreases the country's GDP (Gross domestic product), compelling the country
towards seeking for loans and obtain loans from other financial establishments
(Financial Crisis), and it also undermines people's confidence (faith) in the structure
of economic public administration, leading to inner unrest within the country because
there is no legitimate authority to take care of it because they are not in a position to
regulate it. Eventually, recession takes place. So, when Offenders receive a
considerable amount of bank advances and borrowings and do not repay them,
interest upon this principal balance accumulates, which has a significant impact on the
banks' financial status. The banks would later have a difficult time recovering the
money from the perpetrators as they fled the region, resulting in an economic and
financial crisis. A lot of this money could have gone towards the development of
infrastructure, helping the poor, etc. However, it is all lost because of the greed of a
single person or a group of people. Development is seriously hindered. This also in a
way promotes unemployment, etc.
2. Internationally, this criminality has an effect on the country's financial circumstances,
and has an impact on the nation's international trade services, as there will be a
significant impact on the import and export market, resulting in the production of very
low levels of national income for the economy, and the country will become
economically vulnerable, with the nation's previous debt not being repaid. As a result,
no Multinational Corporations (MNCs) or other International Firms will invest in
developing, building, establishing, or starting a new division, and the country will not
grow further, negatively impacting modernization and globalization. As a
consequence, the country will become a “Living Dead Nation”.
2.1- Impact of economic and financial crimes on economic growth in emerging and
developing countries
In developing countries, economic and financial crimes, such as corruption, have been
designated as the number one public enemy. Corruption is seen as a major impediment to
28
meeting the twin aims of ending global poverty by 2030 and increasing mutual stability for
developed worlds' poorest 40% of citizens. As a consequence, corruption has a negative
impact on both the poor and economic development. A lot of this money could have gone
towards the development of infrastructure, helping the poor, education, health services etc.
However, it is all lost because of the greed of a single person or a group of people.
Development is seriously hindered. This also in a way promotes unemployment, etc.
The general concept of economic costs can be defined as, ‘the cost of the next best alternative
forgone’. This is also applied in the field of economics of crime and punishment. The
opportunity cost of crime can be defined as, “The opportunity cost of crime consists of the
net benefit of the legal activity forgone while planning, performing and concealing the
criminal act. The lower an individual's level of income, the lower is his or her opportunity
cost of engaging in illegal activity.” There are a lot of economic and social effects of crime
which are also accompanied by costs which occur after the commission of an offence in
general. The costs and consequences affect almost all to some extent. Costs and effects come
in a wide variety of shapes and sizes. Furthermore, some expenses are temporary, while
others last a lifetime. Of definition, the final price is death. Hospital expenses, intentional
torts, and lost wages are some of the other costs that victims can incur.
Crime has an adverse effect on economic growth as offenders skip jobs, but it also has a
negative impact on cities due to lost tourism and retail revenues. And the ostensibly
victimless offences of trafficking, opioid addiction, and gaming have significant social
ramifications. Drug misuse has a negative impact on workplace efficiency, necessitates the
use of federal money for drug addiction and emergency care, and contributes to illegal
behavior. Money laundering, Corruption, Tax Evasion, lead to hoarding of black money
which is the devil to a growing economy. This is another reason why the poor are getting
poorer while the rich are getting richer.
29
CHAPTER III
LEGAL PROVISIONS AND JUDICIAL PRONOUNCEMENTS ON ECONOMIC

OFFENCES.
3.1 INCOME TAX ACT
A very renowned author and poet named “Kalidasa” has metaphorically described the
concept of taxation as “It was only for the good of his subjects that he collected taxes from
them, just as the Sun draws moisture from the Earth to give it back a thousand-fold” 32 In this,
taxes are like moisture and the Sun and the Earth play the role of the Government and the
citizens of India respectively.
There are many provisions related taxes made by the Central government, State Government
and both of them respectively in the Union List, State List and the Concurrent list stated in
the Articles 246(1), 246(3) and 246(2) respectively.
Imposing Taxes does not violate the Constitution as there are articles explicitly allowing the
collection of taxes such as Article 265 of the Constitution which specifically states that only
the officials like the income tax department can collect taxes. 33 This can be further illustrated
by the following case.
There was a self-proclaimed mayor of the village who would arbitrarily collect 50 INR as it
was the village’s tradition, without any authorization from the government. The Manipur
High Court that this collection of 50 INR means collecting taxes which violates article 265 of
The Constitution.34
Sir James Wilson implemented this tax for the very first time in India in 1860 to compensate
the government for the disastrous damages incurred by the 1857 Military Mutiny. Following
that, many changes were made from time to time. In 1886, a completely new Income Tax Act
was enacted. This act remained in effect until some modifications were made. A new income
tax was enacted in 1918, but it was abolished in 1922. This Act remained in effect until the
assessment year 1961-62, with several changes. The Income Tax Act of 1961 35 went into
effect on April 1, 1962. It refers to the entire country of India as well as the state of Sikkim
32
Kalidas, Raghuvansh ( Tiger books 1990).
33
INDIA CONST. art. 265.
34
Ruiweinao Kahaosan Tangkhul v. Ruiweinao Simirei Shailei Khullakpa, AIR 1961 Manipur 1.
35
The Income Tax Act, 1961, No. 43, Acts of Parliament. 1961 (India).
30
(including Jammu and Kashmir). Since 1962, the Union Budget has made a number of
significant amendments to the Income Tax Act.36
The person who does not abide by the procedure laid out by the above stated act is called a
defaulter and such defaulters need to be penalised and sanction. These are stated under The
Income Tax Act, 1961 and the act also delegates the duty and authority of sanctioning the
defaulters to The Income Tax Department and The Criminal Courts. 37 The Income Tax
Department deals with the Civil Sanctions whereas the Courts deal with the criminal
sanctions.38
In this Act, the Sanction are stated in the 21 st Chapter of The Income Tax Act,1961. As per
the suggestions and reports made by the Law Commission in it’s 47 th Law report and as well
those made by the DTEC which also goes as the Wanchoo Committee, new sections were
added in addition to the previous 6 namely, Section 270-273 which dealt with the penalties
itself and the later with the process, etc.
The imposition of penalties is possible under the following instances within this chapter
1. “Concealing his/her income”39

2. “failure to furnish return of income” 40
3. “failure to produce accounts, documents, etc.”41
4. “failure to furnish information regarding securities and dividends”42
5. “failure to give notice of discontinuance of business, profession or vocation”43
6. “false estimate of tax and failure to pay tax in advance”44
7. “failure to keep, maintain or retain books of account, documents, etc”45
8. “failure to answer questions, sign statements, allow inspections”46
36
Income Tax Department, https://www.incometaxindia.gov.in/pages/about-us/history-of-direct-taxation.aspx
(Last Visited Apr. 01 2020)
37
The Income Tax Act, 1961, § 292, No. 43, Acts of Parliament. 1961 (India).
38
C.I.T., Calcutta v. Anwar Ali, A.I.R. 1968 Cal. 345, 3.
39
The Income Tax Act, 1961, § 271(c), No. 43, Acts of Parliament. 1961 (India).
40
The Income Tax Act, 1961, § 271(a), No. 43, Acts of Parliament. 1961 (India).
41
The Income Tax Act, 1961, § 271(b), No. 43, Acts of Parliament. 1961 (India).
42
43
44
45
The Income Tax Act, 1961, § 271(A), No. 43, Acts of Parliament. 1961 (India).
46
The Income Tax Act, 1961, § 272(a), No. 43, Acts of Parliament. 1961 (India).
31
9. “failure to comply with the provisions of section 139 A (perma- nent account
number)”47
In The Income Tax Act,1961, Section 271(1)(c) is a vital and for a fact the most crucial
statute as it deals with penalties for a person who conceals his income or is dishonest
regarding the same.
According to this act, only two authorities are allowed to impose penalties for concealment:
 Officials from the Income Tax called as Income Tax Officers

 Appellate Commissioners
Many changes were made to this act by the amendment of the Finance Act,1964. Mainly
related to the defaulters liabilities.
Concealment is a very ambiguous term and thus judicial pronouncements are needed to
clarify the meaning for the better comprehension of the statute. Justice Venkatadri in a case
has stated the following related to the same.
“The word conceal implies something more than mere failure to dis- close.... To constitute
concealment, it must appear that the statements, or act of the person was calculated and
designed to prevent discovery of the act with which he is charged.... All that it involves is the
principle that the act must be attributable to the person, that is, it must have been done
intentionally and not accidentally”48
Regarding Mens rea in Tax Evasion cases, Ex-Chief Justice Subba Rao has stated:
“It is not an inflexible rule of law that mens rea is a necessary ingredient of every default”49
A panoramic view of the tax offences for which fines are levied under the laws of Western
nations reveals that they vary significantly in terms of the criminal responsibility of payors
for such offences.
Taxpayers in the United Kingdom, Australia, Canada, New Zealand, and South Africa bear
complete responsibility for noncompliance with tax laws under statutes. Words like
"intentionally," "wittingly," "intentionally," or "just cause or excuse" are not permitted in
such clauses. In such cases, tribunals should not presume the accused's state of mind, as they
47
The Income Tax Act, 1961, § 272(B), No. 43, Acts of Parliament. 1961 (India).
48
A. V. Thomas & Company Ltd. v. C.I.T., Madras, I.L.R. (1967) 1 Mad. 255.
49
Mareddi Krishna Reddy, A.I.R. 1957 7 A.P. 368.
32
do in criminal cases, nor do they implicitly apply the principle of mens rea in their decisions.
In the United States, however, the taxpayer's criminal responsibility is not absolute.
An individual would not be liable for failure to pay tax, file a return, or provide details if they
were unwilling to do so. In other words, if no mens rea is required to establish these offences,
a person is excluded from the statutory obligation to obey clear legal instructions.
3.2 ANTI-MONEY LAUNDERING LAWS IN INDIA
Money-Laundering is not just a national problem but also an international problem as

terrorism lurks in the shadows of Money-Laundering. However, There are many Initiatives
taken by the Indian Government to tackle the nuisance of Money-Laundering. The Prevention
of Money-Laundering Act,2002 is a prominent. However, there are other provisions such as:
 The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,

197450 - “AN Act to provide for preventive detention in certain cases for the purposes
of conservation and augmentation of foreign exchange and prevention of smuggling
activities and for matters connected therewith.” 51 This act acts as an instrument for
the competent authorities to prevent individuals and arrest them if they are involved
in any smuggling.
 The Indian Penal Code, 186052- Being a part of any Criminal Conspiracy is
punishable under this act and most of money laundering cases involve large number
of individuals.
 The Benami Transactions (Prohibition) Act, 1988- Such transactions involves
transferring properties to another person and paying them a sum of money for the
same in order to hamper court proceedings involving attachment of properties
mentioned in The Code of Criminal Procedure.
On Aug 4th 1998 a bill meant to tackle the nuisance of money laundering was proposed and it
has been enacted since Jul 1 2005 followed by many amendments involving the one in 2012.
This bill is called Prevention of Money Laundering Act, 2002
50
The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, No. 52, Acts of
Parliament, 1974 (India).
51
Id.
52
The Indian Penal Code,1860, No. 45, Acts of Parliament, 1860 (India).
33
In this act, offences and penalty for the same is stated in Section 3-4. Section 5 to Section 11
deals with Attachment of properties, etc. Whereas, Offences by Companies, punishments is
stated in Section 62 to Section 75.
Sec 3 of the Act states: “Whosoever directly or indirectly attempts to indulge or knowingly
assists or knowingly is a party or is actually involved in any process or activity connected
with the 1[proceeds of crime including its concealment, possession, acquisition or use and
projecting or claiming] it as untainted property shall be guilty of offence of money-
laundering. (i) a person shall be guilty of offence of money-laundering if such person is found
to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a
party or is actually involved in one or more of the following processes or activities connected
with proceeds of crime, namely: --
(a) concealment or
(b) possession or
(c) acquisition or
(d) use or
(e) projecting as untainted property or
(f) claiming as untainted property
in any manner whatsoever
(ii) the process or activity connected with proceeds of crime is a continuing activity and
continues till such time a person is directly or indirectly enjoying the proceeds of crime by its
concealment or possession or acquisition or use or projecting it as untainted property or
claiming it as untainted property in any manner whatsoever.”53
Section 4 states the penalty which is 3-7 years with fine.54
Anosh Ekka Vs. Central Bureau of Investigation55
53
Prevention of Money Laundering Act, 2002, §3, No. 15, Acts of Parliament, 2003 (India).
54
Prevention of Money Laundering Act, 2002, §4, No. 15, Acts of Parliament, 2003 (India).
55
Anosh Ekka v. Central Bureau of Investigation, 2011 SCC OnLine Jhar 1184.
34
Ekka is a politician who within a few years of his election rounded many properties,
immovable and movable in his arsenal and these were on the name of his wife and a false
company called “Ekka Constructions” he could not justify how he gained the properties and
thus was charged under Section 4 of the PMLA Act, 2002. His bail was declined and he had
to pay fees up to 10 lakhs.
3.3 ANTI-CORRUPTION LAWS IN INDIA
Corruption is social and economical evil which devastates the country internally. Public
Servants are the spiders spinning the webs of corruption and thus, in order to stop corruption
and demolish it completely, they need to be sanctioned with utmost strictness and thus there
are many legislations for the same.
The Indian Penal Code,1860 used to have Section regarding corruption which included public
servants taking a bribe, abetment or illegal gratification. This was dealt by Sec 161-164. 56
Which was later nullified by the enactment of The Prevention of Corruption Act,1988
The Prevention of Corruption Act,1988 only talks about the practice of corruption by public
servants and the middleman who make it possible. Section 7-11 only talk about public
servants. This can be illustrated:
Sec 7 states- “Whoever, being, or expecting to be a public servant, accepts or obtains or

agrees to accept or attempts to obtain from any person, for himself or for any other person,
any gratification whatever, other than legal remuneration, as a motive or reward for doing or
forbearing to do any official act or for showing or forbearing to show, in the exercise of his
official functions, favour or disfavour to any person 5 or for rendering or attempting to render
any service or disservice to any person, with the Central Government or any State
Government or Parliament or the Legislature of any State or with any local authority,
corporation or Government company referred to in clause (c) of section 2, or with any public
servant, whether named or otherwise, shall be punishable with imprisonment which shall be
not less than 1 [three years] but which may extend to 2 [seven years] and shall also be liable
to fine.”57
56
The Indian Penal Code,1860, No. 45, Acts of Parliament, 1860 (India).
57
The Prevention of Corruption Act, 1988, §7, No. 49, Acts of Parliament, 1988 (India).
35
Illustration 1- A builder named Asmol approaches a government official named Shinpatil to

allow Asmol to build 10 extra floors above the legal limit as well as permission to make a
rooftop swimming pool without any inspection. Shinpatil asks for 8 crores for allowing the
floors and 2 extra crores for the latter. In this case, if the deal is exposed, the only person
liable for corruption will Shinpatil and not Asmol.
However, this act was amended in 2018 and Sec 24 was repealed.
Sec 8 states- “Whoever accepts or obtains, or agrees to accept, or attempts to obtain, from
any person, for himself or for any other person, any gratification whatever as a motive or
reward for inducing, by corrupt or illegal means, any public servant, whether named or
otherwise, to do or to forbear to do any official act, or in the exercise of the official functions
of such public servant to show favour or disfavour to any person, or to render or attempt to
render any service or disservice to any person with the Central Government or any State
Government or Parliament or the Legislature of any State or with any local authority,
corporation or Government company referred to in clause (c) of section 2, or with any public
servant, whether named or otherwise, shall be punishable with imprisonment for a term
which shall be not less than 1 [three years] but which may extend to 2 [seven years] and shall
also be liable to fine.”
Thus, if consider illustration 1 in this aspect, Asmol too will be liable under the above-
mentioned section of The Act.
Central Bureau Of Investigation, Bank Securities and Fraud Cell v. Ramesh Gelli 58
The judgement was delivered by Justice Prafulla C. Pant and the Concurring judgement was
passed by the Chief Justice of India Ranjan Gogoi.
In this case, wo employees of a bank fraudulently tried increasing the capital of the said bank
by procuring loans from a private entity and then increasing the credit to one of their
subsidiaries. The complaint was filed under the IPC Sections dealing with fraud and section
13(2) along with Sec 13(1)(d) of the Prevention of Corruption Act,1988 by the CBI and the
case regarding corruption was dismissed by the special judge as well the Bombay HC and
thus it was later appealed in the Supreme Court of India.
58
Central Bureau Of Investigation, Bank Securities and Fraud Cell v. Ramesh Gelli, (2016) 3 Supreme Court
Cases 788.
36
“The Supreme Court observed that the Statement of Object and Reasons for the Prevention of
Corruption Act demonstrates that the legislature intended to strengthen the anti-corruption
law by widening its coverage and broadening the definition of 'public servant' under the act.
The court in this respect referred to the observations made in State of Maharashtra v Modani,
(2) Trivedi v State of Rajasthan(3) and State of AP v Reddy(4) with regard to the
interpretation of the term 'public servant' under the Prevention of Corruption Act. In light of
the above observations, the Supreme Court held that the lower courts had erred in law in
holding that the two accused, who were the chair/managing director and the executive
director of GTB, respectively, were not public servants for the purposes of the Prevention of
Corruption Act.”59
3.4 PROVISIONS IN INDIA TACKLING DRUG TRAFFICKING
Drugs have been a part of the Indian Culture since centuries. They have been used in rituals
to worship certain deities. “One of these is using bhang a form of cannabis for celebrating
religious festival named as Shivaratri. “Soma” is a Sanskrit word which also means
intoxicating, a property induced by narcotic drugs, which have been used as “soma ras” since
centuries described in many literatures too. Apart from cannabis, opium is also offered at
akha teej, a ceremony, which is celebrated to strengthen family bonding.”60
It very necessary through curb the activities involving the sales and consumption of drugs as
both of them are hazardous to the atmosphere of the society as well as the economy of India.
The revenue resulted in these trades act as source of income and funds to terrorist activities
all throughout the world.
Through many international conventions and treaties, India has adopted anti-drug laws and
thus enacted The Narcotic Drugs and Psychotropic Substances Act, 1985. This act governs
everything related to narcotic drugs and psychotropic substance.
Art 47 of The Constitution States- “Duty of the State to raise the level of nutrition and the
standard of living and to improve public health The State shall regard the raising of the level
of nutrition and the standard of living of its people and the improvement of public health as
among its primary duties and, in particular, the State shall endeavour to bring about
59
Lexology, https://www.lexology.com/library/detail.aspx?g=2e80c8ec-9139-45e3-81b3-e4ee298554bc (Last
visted Apr.02 2020).
60
Molly Charles & Dave Bewley-Taylor, Drug Policy in India: Compounding Harm?, 10 BFDPP, 2 (2005)
37
prohibition of the consumption except for medicinal purposes of intoxicating drinks and of
drugs which are injurious to health.”61
The NDPS act is the result of the above-mentioned article and the conventions signed by
India.
The following table gives an overview of the drugs mentioned in this act, the quantities and
the punishments.
The offences stated in the Sections such as 21 and 27 of the Act are non-bailable. The
framework of this act makes practicing corruption by the investigating officers very easy as
these offences are non-bailable.62
In a recent judgement, The Apex Court has declared that the size of quantity won’t matter
when it comes to sanctions and penalising the offender. The court in this regard, gave the
following judgment.
“Therefore, what is harmful or injurious is the entire mixture/tablets with neutral substance
and narcotic drugs or psychotropic substances. Therefore, if it is accepted that it is only the
actual content by weight of offending drug which is relevant for the purpose of determining
whether it is small quantity or commercial quantity, in that case, the object and purpose of
enactment of NDPS Act would be frustrated”63
Capital punishment is a very serious offence and is a topic of debate almost everywhere. This
act facilitates the judiciary to award death penalty to the offenders who have repeatedly
defaulted under this act.
61
INDIA CONST. art. 47.
62
The Narcotic Drugs and Psychotropic Substances Act, 1985, No. 61, Acts of Parliament, 1985 (India).
63
Abraham Thomas, SC Makes Anti-Drug Law More Stringent, Hindustan Times
https://www.hindustantimes.com/india-news (Last Updated Apr 24, 2020, 03:42 AM).
38
The following Table gives an overview the departments responsible under this act for the
performance of certain tasks as well as their jurisdiction under law.
39
3.5 - Fraud and Forgery
The very basic example of fraud would be teenagers faking their identity by forging
documents to watch A rated movies in Cinemas. The next best example would be 18 years
old young adults buying liquor using false identities. All of this amount to fraud.
Fraud is defined under Section 17 of the Indian Contract Act, 1872 as: The Suggestion,
Concealment, misappropriation of facts which results into the consent and willingness of the
other party and in turn agreement to enter the contract.64
Fraud and cheating are synonymous under law.

64
The Indian Contract Act, 1872, § 17, No. 9, Acts of Parliament, 1872 (India).
40
Section 415 defines cheating under Indian law as- “Whoever, by deceiving any person,
fraudulently or dishonestly induces the person so deceived to deliver any property to any
person, or to consent that any person shall retain any property, or intentionally induces the
person so deceived to do or omit to do anything which he would not do or omit if he were not
so deceived, and which act or omission causes or is likely to cause damage or harm to that
person in body, mind, reputation or property, is said to ‘cheat’.”65
Section 420 Of the IPC declares cheating as a crime awarding a term of imprisonment up to 7
years plus fine.
Section 463 of the IPC deals with Forgery as a crime criminalizing all forms of forgery
including electronic documents or any instrument that causes damage or injury to any public
or person as well induces them into a contract.66
CHAPTER IV
CASE STUDIES
4.1 THE FODDER SCAM
Lalu Prasad Yadav is a political leader and lawyer who was born into the clan of a lower
caste farmers in Bihar. He graduated with a degree of LL.B from the University of Patna,
which in fact was the starting point of his political career. As a student, Lalu looked up to
another political leader and Anti-Indira Gandhi activist called “Jayaprakash Narayan”. After
being held behind the bars during the emergency, he emerged as a political leader.
As a freshly elected “karyakarta” he was elected as an MLA. In fact, one of the youngest at
the age of 29. He won the State Assembly against congress and rewon again as “Yadav by
65
The Indian Penal Code,1860, § 415, No. 45, Acts of Parliament, 1860 (India).
66
The Indian Penal Code,1860, § 463, No. 45, Acts of Parliament, 1860 (India).
41
then had developed a campaign platform that mobilized lower-caste Hindus and the minority
Muslim population and made him a champion of social justice.”67 He become the Chief
Minister of Bihar in 1990 as well as 1995. However, his political career is ruined because of
his involvement in the fodder scam.
“His imprisonment now is on specific charges under the Indian Penal Code (IPC) and the
Prevention of Corruption Act, 1988, though he pulled out all stops and used all the provisions
in the Code of Criminal Procedure (CRPC) to postpone it. In the 17 years after the Central
Bureau of Investigation (CBI) began its investigation into the case, Yadav not only managed
to stay afloat on the political scene, but also conducted the affairs of the state government
from inside jails and became a union minister.”68
There are certain sections one can use in the Code of Criminal Procedure act, 1973 where the
accused can dodge conviction. Even a small error made by any authority right from the FIR
to the Proclamation document can result into the postponement of trial or worse-case
scenario, acquittal. Yadav’s advocate used such loopholes to postpone the trial and thus even
with the inquiry on. He managed to continue his political activities.
It all started in 1977, when certain officials would remove money belonging to the
department of Animal Husbandry. They would forge bills and receipts which never existed
and would add the same to the record while removing the money. Such bills and receipts
were falsified as receipts of cost for medicines and animal fodder for cattle animals and some
even mentioned pigs. Thus this scam is called the Fodder Scam. This went on for years and
the amount of money reached nine hundred and fifty crores. The scope of this crime was
throughout Bihar, mostly the districts situated in the southern part.
Lalu was not involved in the scam when it commenced. The suspicion of the scam arose
when he became the CM of Bihar, which is in 1990.
“Rather than acting against it, Yadav let things continue, after ensuring that a share of the
spoils came to him. In the six years from 1990 to 1996, the quantum of money fraudulently
drawn from the treasury increased manifold. A big chunk of the Rs 950 crore was drawn
during Yadav's chief minister.”69
67
Britannica, https://www.britannica.com/biography/Lalu-Prasad-Yadav (Last Visited Apr. 04 2020).
68
V Krishna Ananth, Fodder Scam, Lalu, and the Conviction, 48 EPW. 12, 12 (2013).
69
Id.
42
That huge sum was the result of constant extraction of money which went on for almost 2
decades. The only reason the officials took cognisance, is cause of the politics played by
Nitish Kumar. He split from the main Janata Dal party and after doing so joined Samata
Party. He later on, pointed out the scam and filed a petition along with the documents and
after that the scammed halted as the departments were raided by Amit Khare. 70
A very smart move made by Lalu later on was to assume role in the investigation of the Scam
in order to remove suspicion from him. However, the split half filed a PIL and changed the
tide as the responsibility and jurisdiction was handed over to the CBI by the Apex Court who
had enough evidence against Lalu and thus he was arrested.71
Regardless of his detention, he ran the government while being in the gallows as his wife,
took the role of CM. The CBI was accused by some of his loyal ministers to be in bed with
the Bhartiya Janata Party and frame false charges against Lalu as they did not really fancy
him.
The final verdict was pronounced by the Hon’ble Supreme Court of India on Sep.30 2013.
This judgement awarded Lalu five years in prison and fine of Rs twenty five lakhs and his
political career was over as he cannot be considered a lawmaker anymore.
The Party that once ruled Bihar, led by Lalu, has very less chances of emerging as the ruling
party.
It is true that Bihar prospered under the reign of Lalu. However his involvement in the Scam
cannot be ignored as he let it go on without putting an end to it. He even took his share of loot
from the sum withdrawn.
4.2 2G SCAM
“Andimuthu Raja” or to call him by his short name A.Raja belongs to a family of Dalits.
Striving on his own, irrespective of poverty, he became a lawyer by graduating in B.L from
GLC in Madurai and M.L from GLC in Trichy.72 He was obsessed with Dravidian Politics.
“In 1996, when he went to seek a ticket for assembly elections from DMK president M
Karunanidhi, he saw in Raja a confident, articulate, English-speaking man with the politics
and background that marked him out for bigger things. And Raja was instead fielded in the
70
Id.
71
Id.
72
Parliament of India-Lok Sabha, http://164.100.47.194/Loksabha/Members/MemberBioprofile.aspx?
mpsno=344 (Last Visited, Apr. 4, 2021).
43
Lok Sabha elections. He won from Perambalur Lok Sabha constituency and became Union
minister of state in the United Front government. Later, he became Union telecom
minister.”73
When he became the Union Telecom Minister, the country saw the emergence of the most
massive scam after the “Watergate Scandal”. This Scam involved “irregularities in the
allocation of Second-Generation spectrum licenses for mobile communication and limited
data transmission”74
A report had been filed by Vinod Rai, who was the topmost person of the CAG, a body with
the highest authority in auditing. The report was regarding the Union Telecom Minister and
the DOT ( Department of Telecom) allocating 2G spectrum and the issuance of licenses of
the same.75
On 10th January, The Department of Telecom allotted the spectrum and licenses on a first to
first basis with the dates already advanced and this was done despite of the Finance Ministry
clearly stating not to. This act resulted into a loss of 1.76 lakh crore INR to the national
treasury.
The CBI filed a charge sheet against all the scammers involved, including A. Raja who was
allegedly took bribed up to 3000 crores.
This Scam resulted into a major loss for other telecommunication companies. One such
company is airtel. A research published in the journal of Pacific Business Review
International has conducted a research on the condition of stocks and share prices of Airtel
before and after the 2G scam.76
73
The Economic Times, 2G spectrum case: How ambition, oratory and fate went into the making of A Raja,
https://economictimes.indiatimes.com/news/politics-and-nation/2g-spectrum-case-how-ambition-oratory-and-
fate-went-into-the-making-of-a-raja/articleshow/62219771.cms (Last updated, Dec. 23, 2017, 05:15 PM IST).
74
Subhaji Sengupta & Suhas Munshi, 2G Scam explained, News 18
https://www.news18.com/news/immersive/2g-scam-explained.html (Last visted Apr.05 2020).
75
Id.
76
Ruchi Gupta, Effect of 2G Scam on Indian Telecom Companies, 7 PBR. 65, 66-67 (2014).
44
This Scam is second to the “Coalgate” Scam and no other scam. The bar-graph below gives
an idea of how it fares compared to other scams.
45
The figure below denotes the actual quantum of loss.
46
CHAPTER V
INTERVIEW
A total of six questions were asked in this interview to understand the subject of economic
crimes from the perspective of a professional. The interview is a telephonic interview. The
interviewee for this interview is Mr. Shashikant Mundhe who is currently a visiting faculty of
Economics at NMIMS University. He finished his Masters in Economics from the prestigious
University of Mumbai, Department of Economics. He appeared and passed the National
eligibility test in April 2007. Currently pursuing PHD in Economics, working on his thesis.
The answers given by him are followed after the (-).
Q 1 – According to you, what is an economic crime/offence?
- Any economic transaction which is not carried out legally is an economic offence. For
example, even the mere action of hiding your earnings or income is an economic
offence (Income Tax Evasion). Basically, off the record transactions, economic
activities with a malicious intent, can be said to be an economic offence from a legal
perspective.
Q 2 – Corruption, bribery, etc., generate a lot of black money, what is your view on this
statement and should we consider black money a serious threat?
- Indeed, I am in agreement with this statement. The funds which are acquired, or rather
any where any economic benefit takes place because of an economic offence, it
generates black money. The extent of these transactions is such that it is not recorded
and goes unnoticed. The worse thing is that this money creates another economy
known as the ‘black economy’ or a parallel economy in which this unaccounted black
money is circulated. These are unreported earnings and are not reflected in a country’s
GDP This causes our national economy to be undervalued as actual GDP is
underestimated. This money which is unaccounted for will definitely affect the
process of development because of non-availability of funds for the government.
According to many experts, as far as India is concerned, this parallel economy is
bigger than the national economy. So yes, black money is indeed a serious threat.
Q 3 – Unemployment and Poverty are already vicious crisis’ our country is dealing
with, do you think there is a relation between them and economic offences?
47
- There is definitely a relation between economic offences and the persisting

unemployment and poverty. Like I explained earlier, process of development is halted
which in a way has an effect on the employment status. However, there is another side
to it and we cannot say if the relation is always negative. For example, suppose B
opens up a grocery shop, and does not register it as per law, or does not establish it as
per the legal procedures. For the functioning of this shop, he hires 3 people to look
after it and take care of this business. Here, even thought this business is technically
illegal, employment is generated, income is generated. Even though it won’t
contribute in the national economy, income is generated. The money is not taken by
the Government but the money stays, it’s still in circulation, just in the parallel
economy. So, we cannot say, because taking the practical world into consideration
and not just the textbook perspective, we cannot say that unemployment is caused by
economic offences as sometimes, it might just generate it.
Q 4 – What is your stand on the current laws and public policies against economic
offences in India?
- I believe that no act, policy or law will ever be perfect. The times are fast and
changing and the laws need to be modified to deal with the crimes accordingly. There
is always room for improvement even in today’s laws against economic offences, or
any other laws, public policies etc.
Q 5 – Are Economic Offences only prevalent and likely to occur in Urban Areas?
- No, Economic Offences are not only prevalent in urban areas but also happen in rural
areas. However, that being said, there is a difference. The nature and extent of
economic crimes will be different in an urban environment as compared to a rural
environment. It can be said without a doubt that economic offences are on a larger
scale in the urban areas as there is more exposure to economic activities. For instance,
crimes related to banking. If you observe, almost every major bank will have atleast
one branch in an urban area(s) in contrast to rural area(s). So economic
offences/crimes will persist in both areas but the nature and extent (gravity) of the
offence will vary accordingly.
Q 6 – Is money the only reason for the commission of economic offences?

- Money is just a means. According to my understanding, economic offences, no doubt,
are monetary based, However, the real end goal is to have a better/improved standard
48
of living. In our society, there is a tough competition for everything. Improving your
financial position only results in one thing, improved living standards. There are many
factors to it, human greed for instance. Everybody wants more and no person is really
content. This is another field of psychology altogether; Nonetheless, I think the end
goal is to have a improved standard of living and money is just the means to achieve
it.
49
CONCLUSION / FINDINGS
To conclude, Economic crime has an everlasting impacting on all aspects of society –
citizens, governments and businesses. Fraud, money laundering, bribery and corruption and
terrorist financing often expose the most vulnerable in society to exploitation by organised
criminal gangs, through crimes such as drugs trafficking, modern slavery, and child sex
exploitation. An economic offence is called as or referred to as a white-collar crime. The
major types of economic offences prevalent in India are those of money laundering, tax
evasion, fraud, corruption and bribery, and drug trafficking. According to the data published
by NCRB in its 2007 and 2015 reports, it can be observed that tax evasion is the most
prevalent economic offence in India, followed by money laundering. However, the
researchers opine that corruption and bribery is the most detrimental to society. Infect
everything stems from this. It is often said that money is the main motivation behind the
commission of economic offences. However, money is just the means and is secondary, the
end goal to achieve is an improved standard of living and unfortunately, most people resort to
crime for this purpose. Corruption, Bribery, Tax evasion are all economic offences which
revolve around money. In our society, there is a competition, a competition for a certain
lifestyle, for jobs, etc all of which is to improve the standard of living. Money has the ability
to incite crime, influence the reward structure that governs its prevalence, and serve as a
practical tool for encouraging it.
Corruption and bribery are pernicious to the economy as well. According to United Nations,
Corruption is seen as a major impediment to meeting the twin aims of ending global poverty
by 2030 and increasing mutual stability for developed worlds' poorest 40% of citizens. As a
consequence, corruption has a negative impact on both the poor and economic development.
A lot of this money could have gone towards the development of infrastructure, helping the
poor, etc. but leaves the government underfunded and feeds the ‘parallel economy’.
Economic offences decrease the country's GDP (Gross domestic product), compelling the
country towards seeking for loans and obtain loans from other financial establishments
(Financial Crisis), and it also undermines people's confidence (faith) in the structure of
economic public administration and institutions, leading to inner unrest within the country.
These are unreported earnings and are not reflected in a country’s GDP This causes our
50
national economy to be undervalued as actual GDP is underestimated. This money which is

unaccounted for will definitely affect the process of development because of non-availability
of funds for the government. This vicious cycle continues on and on...
The White-Collar crimes in India are increasing and along with overburdened government
and the judiciary can only enact laws for people to find loopholes and scam the nation as well
as the country. Some people think that imposing taxes is sort of penalising one for the work
one does. The fact remains that the concept of taxation is backed by the Constitution of India.
Some are uneducated and evade taxes on the other hand. The educated evades taxes and
makes millions out of them. However, there are many statutes and acts to deal with the
defaulters and one such act is the Income Tax Act, 1961. Although, with the continuous
development and increase in trade. The Act needs frequent amendments. Money-Laundering
itself would not be a major problem to deal with, if the scope was limited Nationally.
However, many stringent laws are needed as it is an international problem which tends to
increase the cases nationally. Most of the money-laundering activities are performed to fund
Terrorist Activities and thus the laws need to be strict enough with enough jurisdiction and
powers handed over to the authorities directly involved in solving this menace. Corruption
can be best explained by the example of building a Dam at just the side where the water
seems to be higher and neglecting the course through which the water can flow and flood the
region. Anti-Corruption laws are not refined enough to solve the problems internally. The
concept of Quid-Pro-Quo is the best example of corruption and till there is no party left
which profits through bribes and gratifications. The menace of corruption will not dissolve.
Drug trafficking is not just hazardous to health but also hazardous to the economy. The
amount of money spent illegally on drugs and resources spent to tackle the problem
devastates the economy like an apple rotting. The NDPS Act needs to be reformed with the
creation of new drugs and the statutes should not in turn facilitate corruption rather solve the
problem of addiction with suitable sanctions. Fraud and Scams are interrelated. Dishonesty is
elementary when it comes to Scams. The level of Dishonesty is never truly known.
Sometimes, A Scam is a collection of all white-collar crimes. However, the element of fraud
is crucial for a Scam to be called a Scam.
The Law will safeguard the individual and protect the rights but it cannot be perfect. There is
always going to be a legal loophole, and sometimes the case might be that it was created on
purpose, however, this legal loophole is always going to be exploited by people and the
shortcomings will be taken advantage of.
51
Public policies should not be framed for personal gain or agenda but rather for the maximum
benefit of the society.
BIBLIOGRAPHY / REFERENCES
 Eide, Erling & Rubin, Economics of Crime, Foundations and Trends in

Microeconomics. 2 (1978).
 Bentham, J, An introduction to the principles of morals and legislation, 399, 399-410

(The Utilitarians, Garden City NY, Anchor Books 1789).
 CIPCE (n.d.), What is economic crime? Centro de Investigación y Prevención de la

Criminalidad Económica. (Apr. 2, 2021, 10:30 PM), http://www.cipce.org.ar/en/what-
is-economic-crime.
 Diganth Raj Sehgal, Economic offences in India, Depletion of the economic status of
the nation, IBLOG PLEADERS, (Jul. 22, 2020, 8:30 AM),
https://blog.ipleaders.in/economic-offences-india-depletion-economic-status-nation/
#:~:text=What%20are%20the%20Economic%20Offences,of%20money%20or
%20money%20equivalents.
 NATIONAL CRIME RECORDS BUREAU, CRIME IN INDIA – 2007 (Ministry of

Home Affairs, Government of India, 2007).
 NATIONAL CRIME RECORDS BUREAU, CRIME IN INDIA – 2015, (Ministry of

Home Affairs, Government of India, 2015).
 Financial Industry Regulatory Authority, Anti-Money Laundering (AML), FINRA

(Mar. 28, 2021, 3:25 PM) https://www.finra.org/rules-guidance/key-topics/aml.
 The Foreign Exchange Management Act, 1999, No. 42, Acts of Parliament, 1999
(India).
52
 The Foreign Exchange Regulation Act, 1973, No. 46, Acts of Parliament, 1973
(India).
 Julia Kagan, Tax Evasion, INVESTOPEDIA (May. 29, 2020, 3:00 PM PST),
https://www.investopedia.com/terms/t/taxevasion.asp.
 R. Boivin, Drug Trafficking Networks in the World Economy, 182-194, In C.

MORSELLI (Ed.), CRIME AND NETWORKS (New York Routledge 2013).
 R.T. Naylor, Towards a general theory of profit-driven crimes, 43 BRIT. J.

CRIMINOL. 84 (2003).
 James William Coleman, Toward an Integrated Theory of White-Collar Crime, 93

AM. J. SOCIOL. 411 (1987).
 Charis M. Vlados, et al., Corruption as form of economic crime and government

effectiveness, 3 I.CO.D.ECON. 101 (2018).
 Antonio Merlo, Introduction to Economic Models of Crime, 45 INT. ECON. REV.

677 (2004).
 Fleury JB. (2017) Crime and Punishment (Becker 1968). In: Marciano A., Ramello G.
(eds) Encyclopedia of Law and Economics. Springer, New York, NY.
 Oskar Engdahl, The Role of Money in Economic Crime, 48 BRIT. J. CRIMINOL. 154
(2008).
 Sani Abubakar Saddiq & Abu Sufian Abu Bakar, Impact of Economic and financial
crimes on economic growth in emerging and developing countries, 26 J. FINANC.
CRIME 910 (2019).
 WORLD BANK GROUP, Doing Business 2017, (14th ed.) (2017).
53
 Kalidas, Raghuvansh (Tiger books 1990).
 INDIA CONST.
 V Krishna Ananth, Fodder Scam, Lalu, and the Conviction, 48 Economic and
Political Weekly 12 (2013).
 Ruchi Gupta, Effect of 2G Scam on Indian Telecom Companies, 7 Pacific Business

Review International 65 (2014).
 Molly Charles & Dave Bewley-Taylor, Drug Policy in India: Compounding Harm?,
10 Beckley Foundation 1, 2 (2005).
 Ruiweinao Kahaosan Tangkhul Vs Ruiweinao Simirei Shailei Khullakpa, AIR 1961
Manipur 1
 The Income Tax Act, 1961, No. 43, Acts of Parliament. 1961 (India)
 C.I.T., Calcutta v. Anwar Ali , A.I.R. 1968 Cal. 345, 3.
 A. V. Thomas & Company Ltd . v. C.I.T., Madras, I.L.R. (1967) 1 Mad. 255.
 Mareddi Krishna Reddy, A.I.R. 1957 7 A.P. 368.
 The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,

1974, No. 52, Acts of Parliament, 1974 (India).
 The Indian Penal Code,1860, No. 45, Acts of Parliament, 1860 (India).
 Prevention of Money Laundering Act, 2002, No. 15, Acts of Parliament, 2003 (India)
54
 Anosh Ekka Vs. Central Bureau of Investigation, 2011 SCC OnLine Jhar 1184
 Central Bureau Of Investigation, Bank Securities and Fraud Cell v. Ramesh Gelli,
(2016) 3 Supreme Court Cases 788.
 The Narcotic Drugs and Psychotropic Substances Act, 1985, No. 61, Acts of
Parliament, 1985 (India).
 The Indian Contract Act, 1872, No. 9, Acts of Parliament, 1872 (India).
55

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Economics Seminar Paper

ECONOMIC OFFENCES – A THEORETICAL ANALYSIS

ECONOMICS SEMINAR PAPER

UNDER THE GUIDANCE OF

7) CHAPTER I – Introduction to Economic Offences…………………………….13

8) CHAPTER II –Impact of Economic Crimes on the Economy…………………26

9) CHAPTER III – Legal Provisions and Judicial Pronouncements on Economic

10) CHAPTER IV – Case Studies…………..……………………………………....40

11) CHAPTER V – Interview…………………………………. ………………….45

Kirit P. Mehta, School Law,

Place: Kharghar, Navi

Mr. Preshit Pawar (Roll No.

Mr. Burhanuddin Patanwala (Roll

By this acknowledgement, we desire to portray our extended gratitude to Prof. Vikram

Thankfulness to each of you, personally, is expressed here.

AIMS AND OBJECTIVES:

i) To understand the theory of Economic Offences.

INTRODUCTION TO ECONOMIC OFFENCES

Before understanding the concept of Economic Offences, it is important to understand what is

1.1 – Economic Offences Definition

1.2 – Types of Economic Offences

Table 1 – Types of Economic Offences/Crimes9

The major types prevalent in India are discussed below,

1. Money Laundering – Money laundering is the illicit interaction of making a lot of

1.3 Economic Model of Criminal Behavior (Gary Becker)

between either crime or legitimate movement is a misrepresentation. Economists consider

LEGAL PROVISIONS AND JUDICIAL PRONOUNCEMENTS ON ECONOMIC

3.1 INCOME TAX ACT

1. “Concealing his/her income”39

 Officials from the Income Tax called as Income Tax Officers

3.2 ANTI-MONEY LAUNDERING LAWS IN INDIA

Money-Laundering is not just a national problem but also an international problem as

 The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,

(e) projecting as untainted property or

(f) claiming as untainted property

in any manner whatsoever

Section 4 states the penalty which is 3-7 years with fine.54

Anosh Ekka Vs. Central Bureau of Investigation55

3.3 ANTI-CORRUPTION LAWS IN INDIA

Sec 7 states- “Whoever, being, or expecting to be a public servant, accepts or obtains or

Illustration 1- A builder named Asmol approaches a government official named Shinpatil to

3.4 PROVISIONS IN INDIA TACKLING DRUG TRAFFICKING

3.5 - Fraud and Forgery

Fraud and cheating are synonymous under law.

4.1 THE FODDER SCAM

The figure below denotes the actual quantum of loss.

Q 1 – According to you, what is an economic crime/offence?

- There is definitely a relation between economic offences and the persisting

Q 6 – Is money the only reason for the commission of economic offences?

national economy to be undervalued as actual GDP is underestimated. This money which is

 Eide, Erling & Rubin, Economics of Crime, Foundations and Trends in

 Bentham, J, An introduction to the principles of morals and legislation, 399, 399-410

 CIPCE (n.d.), What is economic crime? Centro de Investigación y Prevención de la

 NATIONAL CRIME RECORDS BUREAU, CRIME IN INDIA – 2007 (Ministry of

 NATIONAL CRIME RECORDS BUREAU, CRIME IN INDIA – 2015, (Ministry of

 Financial Industry Regulatory Authority, Anti-Money Laundering (AML), FINRA

 R. Boivin, Drug Trafficking Networks in the World Economy, 182-194, In C.

 R.T. Naylor, Towards a general theory of profit-driven crimes, 43 BRIT. J.

 James William Coleman, Toward an Integrated Theory of White-Collar Crime, 93

 Charis M. Vlados, et al., Corruption as form of economic crime and government

 Antonio Merlo, Introduction to Economic Models of Crime, 45 INT. ECON. REV.

 WORLD BANK GROUP, Doing Business 2017, (14th ed.) (2017).

 Kalidas, Raghuvansh (Tiger books 1990).

 Ruchi Gupta, Effect of 2G Scam on Indian Telecom Companies, 7 Pacific Business