WHITE COLLAR CRIME IN INDIAN CORPORATE

SECTOR: AN ANALYSIS OF LEGISLATIVE

FRAMEWORK

A DISSERTATION SUBMITTED IN PARTIAL

FULFILLMENT OF THE REQUIREMENT FORTHE
AWARD OF THE DEGREE OF

MASTER OF LAWS.

Submitted by
SUJATA
2216401006
LLM (Reg.)

GEETA GLOBAL LAW SCHOOL,

GEETA UNIVERSITY, PANIPAT, DELHI NCR

JUNE, 2023

i
WHITE COLLAR CRIME IN INDIAN CORPORATE
SECTOR: AN ANALYSIS OF LEGISLATIVE
FRAMEWORK

A DISSERTATION SUBMITTED IN PARTIAL

FULFILLMENT OF THE REQUIREMENT FORTHE
AWARD OF THE DEGREE OF

MASTER OF LAWS.

Submitted to
MS PARUL
ASSISTANT PROFESSOR
GEETA INSTITUTE OF LAW

GEETA GLOBAL LAW SCHOOL,

GEETA UNIVERSITY, PANIPAT, DELHI NCR

JUNE, 2023

i
 DECLARATION

I, hereby declare that this dissertation entitled “White Collar Crime in Indian Corporate
sector: An Analysis of Legislative Framework” was carried out by me for the degree of
Masters in Law under the guidance and supervision of Ms. Parul, Assistant Professor,
Geeta Institute of Law.

The Interpretation put forth are based on my own reading and understanding of the original
texts and they are not published anywhere in any forms. The other books, articles and
websites, which I have made use of are acknowledged at the respective place in the text.

For the present dissertation, which I am submitting to the University, no degree or diploma
or distinction has been conferred on me before, either in this or in any other University.
The plagiarism report has been duly submitted to the university along with the dissertation
and I will be solely responsible in case any question arises on my research work.

Place: Geeta University Sujata

Date: 14th June, 2023 (Research Student)

ii
 CERTIFICATE

This is to certify that the work incorporated in this dissertation “White Collar Crime in Indian
Corporate Sector: An Analysis of Legislative framework” Submitted by Ms SUJATA
(2216401006) was carried out by candidate under my guidance. Such materials as has been
obtained from other sources have been duly acknowledged in the dissertation.

Place: Geeta University MS PARUL

Date: 14th June 2023 (RESEARCH GUIDE)

iii
 ACKNOWLEDGEMENT

I wish to sincerely thank all those who have contributed in one way or another to this
dissertation on “White Collar crime in Indian Corporate Sector: An Analysis of
Legislative Framework” .Words can only inadequately express my deep gratitude to my
guide, Ms PARUL, for her meticulous care, kindness and generosity. Her fruitful
comments and insightful suggestions have been a crucial formative influence on the
present study. She has supported me in every possible way since beginning of my research.
Her critical and careful reading of my writing has saved me from a lot of errors. Without
her guidance and encouragement, my researchwould have never come out in the present
form. I have seen in her an unpretentious and devoted scholar. Furthermore, it has been a
memorable and enjoyable experience for me to work with her.

SUJATA
2216401006

iv
 TABLE OF CONTENTS

COVER PAGE i
DECLARATION ii
CERTIFICATE iii
ACKNOWLEDGEMENT iv
LIST OF ABBRIEVATIONS vii
LIST OF CASES viii
CHAPTER I: INTRODUCTION 1 -10
1.1 THE STUDY NATURE AND SCOPE
1.2 SIGNIFICANCE OF THE STUDY
1.3 REVIEW OF LITERATURE
1.4 STATEMENT OF THE PROBLEM
1.5 HYPOTHESIS
1.6 RESEARCH METHODOLOGY
1.7 RESEARCH OBJECTIVES

CHAPTER II: HISTORICAL EVOLUTION OF WHITE COLLAR CRIME AND ITS

DERIVATION IN CORPORATE SECTOR 11—23

2.1. THE CONCEPTION OF CRIME AND LAW

2.2. THE NOTION OF WHITE COLLAR CRIME

2.3 DEFINITION OF WHITE COLLAR CRIMES

2.4 WHITE COLLAR CRIME IN CORPORATION

2.5 WHITE COLLAR CRIME AND CONSITUTION OF INDIA- A CONTROL OF SOCIO-

ECONOMIC OFFENCES

2.6 EMERGENCE OF WHITE COLLAR IN CORPORATE SECTOR

CHAPTER III: LEGAL ENACTMENTS TO CONTROL WHITE COLLAR CRIME IN

CORPORATE SECTOR 24- 39
3.1 INTRODUCTION

v
 3.2 STATUTES RELATED WITH WHITE COLLAR CRIME IN CORPORATE SECTOR IN
INDIA

3.3 WHITE COLLAR CRIME AND CONSTITUTION OF INDIA

3.4 WHITE COLLAR CRIME AND COMPANIES ACT, 2013

3.5 WHITE COLLAR CRIME AND INDIAN PENAL CODE, 1860

3.6 LEGALPROVISION UNDER ESSENTIAL COMMODTIES ACT, 1955

3.7 THE PROVISION UNDER CUSTOM ACT, 1962

3.8 LEGAL PROVISION RELATWD WITH TAX LAW

3.9 PROVISION UNDER FOREIGN EXCHANGE ACT, 1999

3.10 LEGAL PROVISION UNDER COMPETITION ACT, 2002

3.11 LEGAL PROVISION UNDER INFORMATION TECHNOLOGY ACT, 2000

3.12 LEGAL PROVISION UNDER PRVENTION OF MONEY LAUNDERING ACT, 2002

3.13 LEGAL PROVISION UNDER WHISTLE BLOWERS PROTECTION ACT, 2011

CHAPTER IV: LIABILITIES AND THE NOTION OF WHITE COLLAR CRIME IN THE
CORPORATE SECTOR 40-- 55

4.1 INTRODUCTION

4.2 REASONS OF WHITE COLLAR CRIME

4.3 CATEGORIES OF WHITE COLLAR CRIME IN INDIA

4.4 CONCEPT OF CORPORATE CRIMINAL LIABILITY IN INDIA AND UNITED

KINGDOM

4.5 LIFTING OF CORPORATE VEIL AND MAJOR CORPORATE SCAMS

CHAPTER V: CONCLUSION AND SUGGESTIONS 56 -61

5.1 CONCLUSION

5.2 SUGGESTIONS

BIBLIOGRAPHY 62-63

vi
 LIST OF ABBRIEVATIONS

 AIR : All India Reporter

 WCC : White Collar Crime
 NGO : Non- Government Organization
 IPC : Indian Penal Code
 PMLA : Prevention of Money Laundering Act
 WP : Writ Petition
 IBR : Indian Bar Review
 UIK : United Kingdom
 PIL : Public Interest Litigation
 CBI : Central Bureau of Investigation
 RBI : Reserve Bank of India
 CIC : Central Information Commission
 CLP : Corporate Criminal Liability
 UOI : Union of India
 V. : versus
 SC : Supreme Court
 LTD : Limited
 LCR : Law Commission Report
 UN : United Nations
 ILJ : Indian Law Journal
 SIC : State Information Commission
 FAA : First Appellate Authority
 C&AG : Comptroller and Auditor General of India

vii
 LIST OF CASES

 K. Khosla v. S. Venkatesan, 1992 Cri.L.J. 1448.

 Gujarat v. Mohanlal Jitamalji Parwal AIR 1987SC 1321.

 Iridium India telecom Ltd v. Motorola Incorporated and Ors AIR 2011 SC 20.
 LIC v. Escorts (1986) 1 SCC 264.
 Motorola Inc. v. Union of India, (2004) Cri.L.J. 1576.

 MV Javali v. Mahajan Borewell & Co and Ors, AIR 1997 SC 396.

 Meridian Global Management sis Ltd. V. Security Commission [1995] 2 AC 500.
 Queen v. Great North of Railway Company [1891] 2 Q.B. 593.
 Regina v. Tyler, 173 Eng. Rep. 643.

 Ram Narain Poply v. CBI, 2003 In-law SC 51.

 Salomon v. Salomon (1897) AC 22.

 The Assistant Commissioner, Assessment-II, Bangalore & Ors. V. Velliappa Textiles, (2004) 1
Comp. L.J. 21.

 Telegram Newspaper v. Commonwealth, 1899.

 Tesco Supermarkets Ltd. v. Natrass [1972] A.C. 153.

 Standard Chartered Bank and Ors v. directorate of Enforcement [2005] 4 SCC 530.
 Vodafone International Holdings B.V. v. Union of India& Anr. S.L.P.(C) No. 26529of
2010.
 Zee Tele films Ltd. v. Sahara India Co. Corporation Ltd., 2001 (3) Recent Criminal Reports
(Criminal) 292; Motorola Inc. v. UOI, 2004 Cri LJ 1576.

viii
 CHAPTER I
INTRODUCTION

1
The government and privately owned businesses are the two components of the Indian corporate
sector. Government-run businesses are large and capital-intensive, while the private sector mostly
serves the consumer market directly. The basic difference in both the sector is that while
government sector accounts for two-third of the productive industrial capital whereas the purpose
of private sector is clear i.e. to function as a business corporation and business includes only profit
and monetary benefit and not communal service.

The corporate sector with an intention to gain profits commits crimes like, fraud, bribery, tax
evasion etc. The crime which is committed by businessman in corporations are called corporate
crimes. The crime committed by corporate are socio-economic offences and can be termed as white
collar crimes.

In 1941, White collar crime was defined by Edwin Sutherland, who also made the point that these
anti-social acts are carried out by upper class people as part of their business. Corruption in public
life is at peak whereas the white collar crime has also stretched the frightening dimensions. The
government officers are regularly reported to be involved in many bank scams, Hawala fraud,
corporate fraud, misappropriation of government funds, match fixing, counterfeiting coins and
currency etc. are the cases which are regularly reported in India 1.

India has a big name in the arena of information and technology but lost its brand after the
revelation of Ramalingam Raju of Satyam Infotech that how he fabricate the account books of the
company. It was a non-violent crime committed for illegal profits. These crimes affects the
economy of the nation and therefore, the remedial action must be taken immediately for preventing
and detecting economic crimes in order to diminish their consequence. The serious concern is that
the public is not ware of its seriousness and it is more important to wakefulness. The nation
legislature must be convinced in identifying that economic crimes have an unwanted effect on
society. Sometimes, it is difficult to detect white collar crimes because swindlers can manipulate
the situation as they are very shrewd.

As it already mentioned above that white collar crime are dominant in corporate sector and the
crimes committed by corporate persons effects the reputation and economy of the country2.

1
Giriraj Shah, White Collar Crimes, Vol.I, Chapter-1(Anmol publication, 1st edn, 2002).
2
S.M.A Qadri, Criminology and Penology 392 (Eastern Book Company, Lucknow, 6th Edn., 1997).

2
Corporate persons have political backing due to which crime perpetrated by them goes unseen.
Corporate use all possible steps to escape form the liability, they influence investigating agency
by bringing the political pressure. Only because of the corporate fraud, the people associated with
company also gets effected. The first one who gets affected are shareholders and investors. It is
known to everybody that when chit fund scam was exposed many people were bankrupted and
large number of people wanted to suicide and the accused persons roaming freely. The same is
with each and every corporate fraud and because of no fault, the innocent people have sacrifice
their lives. Upper class person’s commits fraud and then escape, innocent people have to repay for
such frauds.

This study deals with the various aspects of white collar crime in corporate sector such as meaning
and definition of crime, white collar crimes in corporate and the difference between corporate
crimes and white collar crime in corporate sector.

Definition of Crime

According to Terence Morris3, “Crime is what society says is crime by establishing that an act is
a violation of the criminal law. Crime and law are related with each other that is the reason that it
is very difficult to understand one without the knowledge of the other. Crime has always been
reliant on upon public opinion and the criminal law is the reflection of the public opinion.

In the definition of law, violation of any rules and regulations made by the Parliament may be
termed as a crime. Crime is an act which is prohibited by law and against the morality of the
society4. According to Blackstone, crime is an act committed in violation of public law either
prohibited or commanding it 5. Austin says that a wrong which is pursued by the sovereign or his
subordinates is a crime 6. Kenny says that crimes are wrong whose sanctions is punitive in nature
and no remissible by any private person but it remissible by crown alone 7.

Definition of White Collar crimes

3
Terence Morris, Crime and Criminal Justice since 1945 17 (Blacwell Publication, USA, 1st Edn., 1989).
4
Stephen M A, General View Of Criminal Law Of England 3 (Oxford University Press, London, 1st Edn., 1863).
5
William Blackstone, Commentaries on the Laws of England 4 (Oxford University Press, London, 1st Edn., 1765).
6
John Austin, The Province Of Jurisprudence Determined 44 (Cambridge University Press, UK, 5th Edn., 1861).
7
Kenny, Outlines Of Criminal Law 15-16 (Universal Law Publisher, New Delhi, 14th Edn., 2010).

3
Edwin H. Sutherland, defined white collar crime are “crimes committed by person of respectability
and high social status in the course of his occupation.8” White collar crimes are ethical violations
which follows ideals intrinsic within the principles of natural law and it is defined as wrong
because they violate the moral and ethical principles of culture or a group.

White collar crimes as the violation of criminal law and committed by upper class people during
the course of their business or occupation whereas white collar crimes as violation of civil law.
and high social status in the course of his occupation.9” White collar crimes are ethical violations
which follows ideals intrinsic within the principles of natural law and it is defined as wrong
because they violate the moral and ethical principles of culture or a group.

White collar crimes as the violation of criminal law and committed by upper class people during
the course of their business or occupation whereas white collar crimes as violation of civil law
which considers cases of corporate wrongdoings against consumers. White collar crime refers to
unethical behaviour that betrays public confidence in order to benefit an individual or an
organisation. White collar crime is defined by the Federal Bureau of Investigation as unlawful acts
that violate trust but do not include the danger of bodily harm. Businessman and other government
officials commit these crimes to obtain money and property to secure personal and business
benefit. In other words, white collar crimes can be defined as any violation of criminal, civil or
regulatory laws which includes harmful and unethical actions, committed in the course of the
employment.

1.1 THE STUDY’S NATURE AND SCOPE

The purpose of the study is to critically examine white collar crime in the business sector. The
research will concentrate on the government's and judiciary's roles in enforcing and putting various
laws and policies in place to combat white collar crime in India. This research is entirely focused
upon the various crime reports by law commission of India. The scope of the study is to examine
the hypothesis with respect to the legal provisions and policies on white collar crime and try to
understand the measures which are better or new approach should be required to reduce the

8
Dr. Krishna Pal Malik, Penology, Victimology and Correctional Administration in India 179 (All Law Publication,
Lucknow, 1st Edn., 2011).
9
Dr. Krishna Pal Malik, Penology, Victimology and Correctional Administration in India 179 (All Law Publication,
Lucknow, 1st Edn., 2011).

4
problem which is facing by not an individual but the whole of the society. Most of the time
businessman and government officials are involved in such type of white collar crime activities
because they are comparatively risk free than the individual. These crimes commits to obtain
money and property to secure the personal and business advantage. The Santham Committee report
gave an intense depiction of white collar crimes committed by persons of respectability such as
businessman, industrialist, government officials etc. The idea of ‘necessity is not always the sole
objective behind the commission of the crime’ evolved by Sociologist Edwin H. Sutherland in
1939, who defined the term ‘ white collar crime’ that it is such a “crime committed by a person of
respectability and high social status in the course of his occupation 10.” This means that crime is
often committed by persons functioning through powerful organization.

The notion of white collar crime is very broad in nature as it covers all socio-economic offences
but this study entirely focuses upon the white collar crime with reference to the corporate sector
only. White collar crime are committed by the people of elite class in contrast of the belief that
crime committed only by the people of lower class in the society. It is known to everyone that
white collar crimes exists in corporate sector and the corporate sector crime are deals with
company as legal entity. Corporate crimes are socially injurious which causes financial and
physical harm to the general Public. This research will be dealing with serious concerns faced by
the various law enforcement organizations in detecting the white collar crime in corporate sector
and the mens rea and punishment for criminals in white collar crimes will be the stressing point.

1.2 SIGNIFICANCE OF THE STUDY

This study is important in today’s world as the growth of monopolies which leads the violation of
high standard of moral behavior and authentic functioning of the law. This is important that as the
law made by the Parliament related to the white collar crimes are not properly enforced, therefore
it is difficult to detect and implement. These type of crimes are more dangerous because it causes
irreparable damage to the public trust.

The general public do not understand the outcome of these type of crimes which results the growth
of white collar crimes and in the present era, where people objective is to gain financial profit in

10
Dr. Manju Koolwal, White Collar Crimes (India & Abroad)49 (Kamal publisher, New Delhi Edn.. 2017).

5
short period of time, there are the possibilities of violations of rules and regulations which was
established by the government while gridding for profits and then they commit white collar crimes.
The same situation is with the corporate sector and the objective of a company is to make profits
for which they indulge in illegal activities.

There are various issues arises in the detection of the white collar crime in corporate sector as how
to punish a company which is not a natural person, whether the liability of company should be
civil or criminal. If it is criminal liability then what punishment should be given because the
company is not natural person then who should be punished? This study focuses upon the issue
that we have laws, enforcement agencies and courts to adjudicate crimes but still the white collar
crimes are unrestrained.

1.3 REVIEW OF LITERATURE

Gyanender kumar Sahu in his Book “White collar crime: A legal challenge on Indian Corporate
system” has talked that the white collar crimes have causing a more concern to the government as
well as society at large. The thousands of small investors have lost their crores of rupees in
government managed institutions like telecom agencies, bank and public sector undertakings. This
is emphasized particularly in the work of Gyanender kumar sahu and this paper initially focuses
upon the classification, causes and prevention of economic offences.

Sutherland in his book “From elite law breaking to financial crime: The evolution of concept of
white collar crime” has discussed that white collar crime has evolved in 1939 by Edwin Sutherland
in his presidential address. The paper represented the crime committed by people of elite class in
the course of their occupation but were not mentioned in criminal records. This is mentioned in
the work of Edwin Sutherland and the paper specifically focus upon the origin, social status aspect
and criminality of white collar crime.

Levi, M. and lord in his book “White Collar crime and Corporate crime” has talked that White
collar crime and corporate crimes exists in 21th century as well. This paper identified an analytical
aspects of white collar crime and corporate crimes that how the white collar crimes are organised
and circumstances that shapes over time. Dominant demonstrative and structures of the crime
frequently reflect common sense of delinquency associated with street or organised criminal who

6
is characterized by an inherent tendency to the offending and presented as external threat to moral
society.

Kritika Oberoi in her article “White Collar crimes” discussed that white collar crime committed
by businessman and government officials rather than by any public person. White-collar crimes
are not reliant upon the application of physical force. They are committed by individuals and
corporations by the well-planned conspiracy. The reduction in foreign direct investment in 2011
and the international financial institutions depletion of funds from stock markets are clear
indicators of the undesirable influence of fraud and dishonesty. This work is specifically measures
the classification and characteristics of white collar crime.

Petter Gottschalk in his article “White Collar crime in the shadow of economy” shows that how
white collar crime can be detected and recognized that half of the crimes detected by journalists
and only 5% of the criminals are detected by auditors. Crime at the topmost in private companies,
governmental figures, and administration assistances can be a greater problem in society than most
have assumed. The head of the Norwegian police unit for examining economic criminality believes
that three out of four financial offenders probably go free, and that the coincidental of being caught
should be larger than one to four. Estimates in this book recommend that the condition is much
inferior.

Dr. Minal H. Upadhyay in his book “White Collar crimes in India” shows that economic offences
are committed by people of high status in society such as politicians, legal professionals, and
government’s representatives and not by violent and blue collar criminals for instance, murder,
rape, decoity etc. are the crimes vary from the traditional crimes as fraud, misrepresentation,
loopholes etc. These crimes are committed by means of cautious and planned schemes without any
sensitivity and feelings. When socio-economic offences are committed people incline to endure
them because they themselves indulge in them and they themselves often recognised with persons
who do so.

Aroj Ali in his article “Impact of White Collar Crime and Essence of Special Enactment”
discussed that White Collar Crime is one of the major sins in the modern world. This study looks
into this terrible issue of White Collar Crime as it arisen unpleasantly in some of the third world
countries. It is not an inaccessible spectacle in itself but closely connected with various socio-

7
economic influences of some post-colonial countries. This study also shows the probable outcome
of numerous struggles which should be taken by Government so as to defend the people from the
obscenity of this crime. This is mentioned in the work of Edwin Sutherland initially evolving the
historical background of white collar crime. This article further shows that the root cause of
commitment of economic offence.

Tyler L. Bartels in his book “An Overview and Examination of the Prevention and Punishment
of white collar crimes” explained white collar crime in economic perspective. Economic
representations typically begin by presumptuous persons behave reasonably. By allowance,
economic representations of crime recommend that white-collar offenders may be acting more
realistically than a spontaneous observer may undertake. There residues absence of focus on
implementation of these economic crimes, and slight finance has been allocated to detain and
punish these criminals. Additionally, growing globalization of the economy offers more chances
for criminal while at the same time rises the difficulty of detecting these crimes.

Harshit Jain in his study “Case study on white collar crime” talked about the analysis of white
collar crime between individuals who is an out of occupational background and who commit
offences within business corporations. Further, analyses the liability of corporate sector. White
collar crime in corporate sector has increased substantially in the last few years because of the
economic pressure on employer.

1.4 STATEMENT OF THE PROBLEM

White Caller crimes have a direct consequence on the part of individual and the society at
large but recognition is needed in identifying the offence like White collar crimes have a
direct impact on the employees. When it comes to community attention, the murder,
decoity etc. are the offences who have the instant effect. There are the offences which take
time to be noticed for instance White collar crimes or corporate crimes. The rationale
behind is that when there is no direct interaction to the victim of the crime, then there less
interest is to be created. The victims of this crime are actually invited the harm by risking
their money in environmentally unsafe areas rather than placing it for safety scheme. The
study specially designed to identify the problem that there are several laws to prevent
corruption and white collar crime like. Companies act, Indian Penal Code etc. but still the

8
white collar criminals going unpunished. Corporate sector crimes are complex in nature
and not easy to come to notice as there is lack of prosecutions for white collar crimes.
Crimes in corporate sector are dealt with by tribunals and administrative boards and
commission of inquiry.

The white collar crimes in corporate sector has huge problems in the process of
investigation. There are some serious problems faced during an investigation of white
collar crime in corporate sector is the white collar crimes rises frequently from the absence
of the complaint. Secondly, difficulty in reporting of white collar crimes. Thirdly, White
collar crime related to criminal intention and liability of corporate as separate legal entity.
Fourthly, difficulty in investigation is the major concern of specialized knowledge and
experience. Lastly, difficulty in to the accessibility of bank accounts of suspect persons.
The crime is difficult to identify as it is committed in the course ordinary business
activities. It is very difficult to obtain evidence of such participation has two main adverse
impacts of the society. Firstly, it causes monetary losses to individuals, corporate and the
whole society. Secondly, it effects the entire fabric of the society as it violates the public
trust.

1.5 HYPOTHESIS

This research tested the certain assumptions which were made in the beginning of the
research. Firstly, the existing laws are sufficient to address the problem of white collar
crime in corporate sector or it requires some changes. Secondly, the Mens res is applicable
to white collar crimes committed by corporates. Thirdly, The liability of a corporate for
committing white collar crimes, both civil and criminal. Fourthly, the impact of white
collar crime on Indian society. Lastly, the law enforcement authorities in restriction the
white collar crime in corporate sectors in India.

1.6 RESEARCH METHODOLOGY

The research methodology to be followed for the research work is doctrinal and analytical,
in nature. The source of the knowledge for the research work will be including Primary

9
and Secondary resources such as text books, journals, web reference, Government reports
and newspapers. To comply with the critical research, the Primary and secondary data
should be used. The Primary source includes the legal frameworks of India, legislations,
policies and executing actions to specific issue discussed further in this paper. Whereas, the
secondary source includes, text books, commentaries, articles and government reports
which were published at national and international level. Furthermore, secondary source
includes expert’s opinions, in seminar and conferences and e-resources. Additionally, case
studies through various rulings shall also be incorporated so that the precedent viewpoint
can also be evaluated.

The researcher has collected relevant material and information from legal sources only and
relied upon secondary data.

1.7 RESEARCH OBJECTIVES

The objective of this research is to analyze the concept of white collar crimes in present
scenario. Secondly, to find various serious problems regarding the adjudication of the white
collar crime in corporate. Thirdly, Analysis of various legislations related to crime in
corporate meant for restricting the white collar crimes. Fourthly, to evaluate the role of
judiciary in detecting of socio-economic offences in India. Lastly, to critical analysis of
various provisions under civil and criminal procedure Act for the White collar crimes.

10
 CHAPTER II
HISTORICAL EVOLUTION OF
WHITE COLLAR CRIMES AND ITS
DERIVATION IN CORPORATE
SECTOR

11
Crime is existed in the society from the very beginning of humankind. In all over the world the
problem of criminality exists as there is no society without crime. Due to technology and
advancement, the crime has increased but its factors and reasons are changed. Edwin Sutherland
introduced the concept of white collar crime in 1939.

With respect to the Indian Position, White Collar Crimes has changed the structure of India socially
and economically. The old concept of Indian Penal laws failed to deal with such types of crimes.
There should be responsibility of government to protect the whole society from these white collar
criminals who are destroying the ethics of the society. If the people have no trust and faith on
government then it means that there is no democracy. In such society, sane voices of wise men and
women will remain unheard.

2.1 THE NATURE AND CONCEPT OF WHITE COLLAR CRIMES, AS

WELL AS THEIR ORIGIN
To understand the White collar crime, there is a need to understand the concept of crime and law,
nature and origin of White collar crime. Without law there can be no crime at all which results in
law being enacted.

2.1.1 The Conception of Crime and Law

Crime is the violation of rights and duties resulting injuries to persons, property or reputation 11.
The person who strong in the society by money powers due to which that the weaker section of
the society always has to suffer. There is need for some rules and regulations to regulate the
behavior of the members in the society and to curb such tendencies that leads to violation of the
rules. Every person in the society interested to maintain the law and order and security of life.
Crime can be said as the injury bodily and financially. In every society, where one person causes
injury to another and it can be compensated somewhere by monetary value to the individual who
suffered that loss or damage.

However, the question of what behaviour should be outlawed, chosen for punishment by the state,
and designated as crimes arises. According to Terrence Morris12, "Crime is what society says"
according to the idea that breaking the law is what constitutes criminal behaviour.

11
Dr. N.Maheshwara Swamy, Criminology and Criminal Justice System 13(Asia Law House, Hyderabad, 2013).
12
Terence Morris, Crime and Criminal Justice since 1945 17 (Blackwell Publication, USA, 1st Edn., 1989).

12
In words, “Without law there can be no crime at all”. The concept of crime has always been reliant
on People’s opinion. In order to understand the nature and severity of the crime, we must first look
into the law, because there are two questions arises that crime and law are related with each other
and the law is the cumulative of rules which is set by men who are politically sovereign. In other
words, law is the command of sovereign backed by sanction. The command may come from a
legal or constitutional body, a political superior to a political inferior, or both. Law is determined
by the political process as the law provides certain standards of conduct which should be observed
by the people in the society. These rules have the approval of the society and any deviation from
the rules fixed by the society will be punished. Therefore, it is very difficult to frame a proper
definition of crime, crime is not absolute like sins and that can have an existence beyond the limits
of what men say.

Crime is an act which is the violation of law and the criminal is the person who does that act.
Crime is a social phenomenon whereas law is which protects social and personal interest of the
person. According to Sutherland, “Crime is a symptom of social disorganization. 13” In other terms,
it means that crime is a social injury varying time to time and place to place. According to
Halsbury, Crime is unlawful act against the society for which the criminal is liable for the
punishment.”

Crime is an action that violates the law and can include wrongdoing on the social, moral, legal, or
administrative levels. As old as civilization itself, crime has existed. Crime is a dangerous act
which infringes the social, political and economic rights and security of the citizens. Crime is
socially injuries behavior which needs to be remedy in the present. Due to that the mens rea has
been replaced by strict or absolute liability in modern society.

2.1.2 The Notion of White Collar Crime

White Collar crime is as old as the civilization but it was not identified as crime or a social evil.
Few decades ago, Edwin Sutherland defines the term white collar crime as it attracted the attention
of the students of criminology. He defined White collar crime as crime committed by person of

13
Dr. N.Maheshwara Swamy, Criminology And Criminal Justice System 33 (Asia Law House,Hyderabad,1st
Edn., 2013).

13
respectability and high social status in the course of his occupation14. White collar crimes involved
breach of trust and greater threat to the society at large. The monetary and social losses by white
collar crimes are more as compare to other street crimes. In 1872 Edwin Hill read a paper before
the International congress on the ‘Prevention and Repression of crime 15’ at Landon, where he
called attention to social economic groups who exploited the economic system to the damage of
common people.

They are guilty in the eyes of law but still now they are not culpable in the eyes of general public,
due to which their spiritual attitude is not that of criminal 16. According to Sir Walter Reckless 17,
White Collar crime are the offence committed by business men who are in position to determine
the activities of the business.

In India, we have a social welfare state and various plans for the improvement of condition of
society but due to tax evasion by the people as those who put efforts in business want to enjoy
fruits in full. The misuse of the democratic value given to the people is the one factor to increase
of white collar crime. Every Crime is anti-social acts but in India, socio- economic offences
considered as white collar crimes due to the act of the corporation of causing harm to the society
and to barricade the economic development of the society. White collar crimes are punishable
under special laws which may be regarded as public welfare offences. As they are committed by
businessmen, industrialists, and members of the affluent class, white collar crimes are not a product
of the slums. In researcher words, white collar crime can be defined as the “White collar crimes is
an act against ethics and law. An illegal act which violates not only regulatory laws but responsible
for the violation of public trust and faith.” As there is a lack of sound definition of white collar
crime made difficult to identify the causes of such criminal acts.

14
Edwin H. Sutherland, White Collar Crime, 1949, p 1-12.
15
Karry Elmer Barnes and Negley Tectors, New Horizons in Criminology 41 (Prentice Hall, 3rd en., 1959).
16
Article On The Criminaloid, Edward A. Ross 44-45 (The Atlantic Monthly Jan.1907).
17
Dr.Krishna Pal Malik, Penology, Victimology and Correctional Administration in India 179 (ALL Law
Publication, Lucknow, 1st Edn., 2011).

14
2.1.3 Definitions of White Collar Crimes

Sutherland notes that in addition to typical crimes like assault, robbery, murder, rape, etc., persons
from upper socioeconomic strata also engage in a number of anti-social behaviours as part of their
jobs. These activities were accepted as a part of their usual business tactics as such tactics often
went unpunished. Sutherland was aware of the dangers to the society and he called them as
capitalist criminals. Sir Walter Reckless, an American Criminologists says that white collar crimes
represents the offences of business persons who are in position to deal with the activities of the
business18. According to Hartung, white collar crime as a violation of law regulating business
which is committed for a firm by the members in the conduct of its business 19.

 The Definition of White Collar Crimes by Edwin H. Sutherland

Sutherland focused attention upon the conventional theories of the criminal behavior emphasis
on poverty as the cause of crime and personal traits which are associated with the poverty. He
suggested that the general theories of criminal behavior which take the data from poverty
related to is inadequate. The traditional definitions of criminal behavior are invalid because the
upper class people may be criminals as the high class people are politically and financially
more powerful in compare to poor people and escape arrest. Persons who violates the laws
which applies to business and profession i.e. law regulating to trade are not tried in criminal
courts.

Sutherland also contended that the persons of elite class engage in criminal behavior. Also, he
stresses that his definition of white collar crime has five elements.

a. It is a crime,
b. Committed by a person of respectability
c. Of high social status
d. In the course of his occupation
e. It is usually a violation of trust

18
Walter Reckless, the Crime Problem, 1967, p 345.
19
Frank E Hartung, “White Collar Offences in the wholesale Meat industry in Detroit” 1950, p 25.

15
According to him, the offender must be person of high social status and as a matter of fact it is
usually a violation of trust. Don C Gibbons, Walter C. Reckless20 and Gilbert Geis, restricts the
term ‘white collar crime’ only to the violation of business regulation. The law commission while
examining the various social and legal issues classified the white collar crime into categories and
accompanying them with new provisions21.

 Criticism of Sutherland’s Definition of White Collar Crime

Even Geis is a critical of Sutherland definition rejected the contention on the ground that the legal
offences of corporate are not crimes. Burgess22 contended that the definition of criminals should
be limited to persons who conceive of themselves as criminals. It has been said that the violation
of law are either committed in the course of an occupation or profession are not necessary the
person of upper strata. Tax evasion is also the violation of law and committed by the tax payer of
any strata, which means that it is not concerned with particular occupation.

The second criticism of white collar crimes is based on the traditional understanding of mens rea.
To preserve the social and economic interests of the society, which call for strict respect to such
rules, it has been held in numerous judgements that the notion of mens rea does not apply in
statutory crimes. The liability for white collar criminals should be made absolute that if a person
has violated a provision of the law should be held liable whether there was intention or not in such
act.

White collar crime are the crimes which are socially harmful and legal sanction should be imposed
in the form of punishment to deal with them. Hartung contended that white collar crime must be
considered sociologically as crime.

 Herbert Edelhertz’s Definition of White Collar Crime

White collar crime is an illegal act committed by person of high social status to avoid the payment
or loss of money or to obtain business as personal advantage. White collar crimes are:-

 Purposeful concealment.

20
Walter C. Reckless, the Crime Problem 1967, p 344.
21
Govt. Of India, Report Of Law Commission, On Prevention Of Corruption, 1964, p 11.
22
Ahmad Siddique’s criminology and penology, 442(Estern Book Company, lucknow6th edn.2009).

16
  Intent to do an illegal act or attain a goal.
 Keeping a crime hidden by preventing the victim.

Socio- economic crimes are committed almost in every occupation or economic activity. But these
socio- economic crimes are not committed by the poor and it is natural that economic crimes
normally committed by rich people and white collar crimes promotes unfair competitions.

2.1.4 White Collar Crime in Corporation

White collar crimes are those committed by corporate power for the advantage of the organisation
in the corporate sector. These offences include tax evasion and financial fraud. Because of their
dominance, status, and influence, white collar crime in the corporate sector is typically not
detected. These type of crimes causes more injury to the public rather than the street crimes. White
collar crimes incorporate sector are increasing due to the advancement of technology which is
creating serious problem in the society. These crimes have become more dangerous today for the
development of society and the role of corporate sector in individual’s life is very important as
worker, or an employee or society. Due to which it is important to give new interpretation about
the concept of white collar crime in corporate sector. White collar crime in corporate sector
includes those crimes committed for the benefit of the corporate and excludes which are committed
against the corporate. Corporate sector crimes are socially injurious which causes financial or
environmental harm in corporation against Public government institution and other corporations.
Enrich Goode, defines white collar crime in corporate sector as where administrators engage in
illegal actions for the profit of the corporation and it is form of organizational crime which causes
harm to the society23.

If we take the position of corporate sector crime in India in which the Viven Bose commission
dealt with the Dalmia-Jain group and Mundra Case. According to the commission reports, the
Dalmia-Jain group of companies are responsible in various corporate sector crimes includes fraud,
manipulation of account, destruction of records, for person benefit for the corporation at the cost
of violation of trust24.

23
Prakash Talwar, Corporate Crime 7 (Isha Book, New Delhi 1st Edn, 2006).
24
Ahmad Siddique`S Criminology and Penology 458-459 (Eastern Book Company, 6th Edn, 2009).

17
Difference between White collar crime in corporate sector and traditional crimes

There is a lot of difference between corporate crimes, occupational crimes and organized crimes
and all organized crimes are not the corporate sector crimes but it can be done in organized manner.
For instance, Decoity, kidnapping, robbery can be termed as organized crimes but not corporate
crimes. In corporate sector crimes, there is the involvement of the directors and mangers for the
benefit of the corporation and in occupational crimes, the individual only thinks about his personal
profit and not for the benefit of the corporate.

The below mentioned table shows that the difference in corporate sector crimes and traditional
crimes.

White Collar crime in Corporate sector Traditional Crimes

Corporate sector crimes are branch of white Is also called as street crimes such as murder,
collar crimes. decoity etc.
Occurred due to greed and financial gain to the Occurred due to poverty.
corporation
These crimes are committed due to the wants These crimes are done due to the fulfillment of
of the elite class people basic needs
These crimes is committed by the reputed These crime is committed due to poverty,
person influential people anger and narcissism.
Actus rea and mens rea is not necessary Actus rea and mens rea is necessary
These crimes includes tax evasion, price fixing These crimes includes Murder, rape, decoity
and competition etc.

The researchers shows that the enemy of the community is corporations and the government
agencies also fails to protect the society from them. The poor people suffers a lot from these illegal
activities of corporate sector.

2.1.5 White Collar Crime and Constitution of India- A Control of Socio-

Economic Offences

 Public Interest Litigation as the indirect method for controlling the White collar crime

18
 Public interest litigation is a powerful tool for exposing corruption frauds. Through public
interest litigation, the Hawala Scam, Uria Scam, and Fodder Scam in Bihar, the Ayurvedic
Medicine Scam, the Petrol Pump Scam, and the Commonwealth Games Scam have all been
exposed. Through Public Interest litigation, social organisations petitioned the Supreme Court
and the High Courts for an investigation and punishment of persons found guilty of abusing
their social status.

In Indian Common Cause a Registered Society v. Union of India25, Supreme Court has
directed the three ministers of Former Prime Minister’s Mr. Narshima Rao ministry namely,
Smt. Sheela Kaul, Captain Satish Sharma and Mr. Sukhram, to pay compensation of Rs. 50,
00,000 to the Government of India as punishment for misusing their discretionary power.
Although it is the function of the executive to deal with such type of problems but the judiciary
has taken this in its hand because under the constitution of India the courts are bound to provide
justice. In Shiv Sagar Tiwari v. Union of India26, it was challenged by way of public interest
litigation the validity of the allotment of 52 shops made by the minister Smt. Sheela Kaul. The
Supreme Court held that the allotment of shops was arbitrary and mala fide as directed to pay
Rs. 60, 00,000 as a damage to the Government of India. It was also held that the amount if not
paid shall be recover from the land revenue and the material records showed that the 6 shops
were allotted to her own relatives, employees and family friends.

2.2 EMERGENCE OF WHITE COLLAR CRIME IN CORPORATE

SECTOR

Michel Foucault 27 says that before industrial revolution, individuals had not given the
importance to commercialize and industrial value. The stress in people's lives increased as
more factories arose. The law of crime is altered by sociological and technological
advancements made for the benefit of society. The motto was to convert the state to a welfare
state and these changes had the effect on the penal laws as well28. The idea of criminal

25
AIR 1997 SC 1886.
26
AIR 1997 SC 83.
27
Steven Vago, Law and Society 141 (Prentice Hall, New Jersey, 3rd edn, 1991).
28
Mahesh Chandra, Socio Economic Offences 24 (Tripathi Publication, 1st Edn, 1979).

19
 legislation has evolved over the past several centuries, and new forms of criminal liability are
now accepted on a global scale. This did not happen quickly.

2.2.1 Occurrence of White Collar Crime in Europe

 Ancient Period

According to dicey, no one is above the law and the guilty should always be punished 29. The
Anglo-Saxons law of England was more concerned with the compensation of victim of crimes
rather than to punish them. The Roam law pronounced warning and action against those
businessman who exploit the people were very natural in ancient Christian society.

 Middle Ages

There were many changes started appearing particularly in Europe and England especially in the
period of new era of Renaissance. In this era, people started questioning everything related with
the life and society which led to the growth of new inventions and discoveries. But in this course
of time, it led to the rivalries, jealousy and conflicts.

 Reformation Period

In this period, the people led an open challenge to the theory of the divine rights of kings and laid
down the basis of new political thought. This affected the faith of people in with reverence to the
supreme power. In 14th century, the corporation was established as a form of organization in
England and according to crown, it has given privilege. In 16th and 17th century, the importance of
corporates grows as it also included hospital, university and joint stock Company as a form of
corporation. Due to a rise in foreign trade in the middle of the century, merchants had a sort of
monopoly. The Carrier’s Case was the one in which the law of fraud was emerged as a decision in
which the three was theft of appropriation of goods. The new middle class people involved wool
and textile products which was the significant exports and gave rise to the commercial fraud.

 Industrial Revolution- 18th Century

29
John Hostettler, A History Of Criminal Justice In England And Wales 18 (Waterside Press UK, 1st edn,2009).

20
There was revolutionary changes occurred during the 18th century and the development resulted
in the rise of industrial economy. Large scale factory systеm brought as it’s accompanied a shift
from the villages to the cities because of the facilities of transportation and marketing. The
industrial revolution declined the system of home handicraft and in 1948, British Monopolies and
Restrictive practices Act under which it was consider that restrictive competition were in the
contravention of the public attention.

The economic crime was increase when society adopted laissez faire to a regulated one which led
to the criminality of action. The whole world had shrunk due to technological advancement. The
industrialization and urbanization has become the ground of malpractices in industrial and
commercial sector. White collar crime such as corruption, tax evasion etc. had come into picture
and affected the entire socio- economic fabric of the society.

2.2.2 Beginning of White Collar Crime in India

 Ancient age

White collar crime is old as civilization itself. There crimes are found various reference from the
Vedic period itself. Manu, it was of view that the there was an age when ‘dharma’ prevailed in
perfection which permits man to realize his destiny. The law of Manusmriti30 is the social
obligation of individual.

According to Manu, every person is to have self- control to control the sins31. Manu laid down the
norm that the person who carry on the profession or business with self -interest but not exploit the
others, they are good.

Ahimsa, Satya, Astey are the way of life. Smritikars were much interested in creating the rules for
the welfare of the state. When Men had dharma as their sole purpose and there is no legal procedure
at that time. Kautilya in his arthsastra, referred to various form of corruption. The loyal officer was
appointed to protect the people and when the evil business minded men extort money from people,
the king should seize all the property and send them to exile. The levy taxes should also be applied

30
Patrick Olivelle, Manu`S Code of Law 18 (Oxford University Press, New Delhi, 2006)
31
Justice Rama Jois, Dharma the Global Ethics 8 (Bhartiya Vidya Bhavan, 1st Edn.1992).

21
on traders32. Manu Smriti law was composed 18 principals which covers both civil and criminal
branches33.

The Arthshastra deals with the every characteristic of life by making rules and regulations and its
role was in labour, employment, consumer protection, life and livelihood etc. the kings should
follow the Arthshastra to keep the control trade and that should also be prevented from coercing
the people by excessive profits which was punishable.

 Middle age

In medieval society, it was based on justice, equity and good conscience. The king should not use
their position for his personal benefit. In 1717, a Royal Farman was issued to East India Company
to import or export of goods without paying taxes. But it led to the misuse of the power to evade
tax, corruption, bribery.

 Reformatory Period

When the Mughal Empire declined, the British officials were got with the opportunity to hold over
the Indian Territory. The East India Company adopted land revenue policies to keep control over
poor farmers. The poor farmer got the loan amount taken form money lender to give revenue.
British Rule affected the lives of people of India and changed it economically and commercially.

 Industrial Revolution- 18th century

The 18th century saw the establishment of cotton textile and jute mills in India but this did not alter
the things because the British government had adopted the policy of toleration towards the labour
which was the motive of preservation of textile industry of Manchester in the view of the
competition between these two of them. Rapid industrialization started with First World War in
India even the policy of the British Government was to restrict the same for the minimum which
was needed. This limited industrial development invasions the urban area to make its beginning.
This resulted in disassociation of workers from village life and extreme competition in business
and in search for monopolistic advantage along with criminalistics behavior. This criminalistics
behaviour, which is evident in fierce commercial competition, is what caused white collar crime

32
Patrik Olivelle, Manu`S Code of Law 161 (Oxford University Press, New Delhi, 2nd Edn, 2006).
33
K I Vibhute, Criminal Law Butterworth Wadhwa Nagpur, 10th Edn, 2008.

22
to increase in India. White collar crime has been virtually nonexistent in India up until this point,
despite all the provisions of the Indian Penal Code, 1860. A white collar crime causes the
community as a whole irreparable harm.. According to Dr. RadhaKrishna, the practitioner of evils
and the black marketers are the worst enemies of the society and they should be deal with sternly 34.

34
Krishna Pal Malik, Penology, victimology and correctional administration in India, All law publisher 1st
Edn 2011, p 178.

23
 CHAPTER III
LEGAL ENACTMENTS TO CONTROL
WHITE COLLAR CRIME IN
CORPORATE SECTOR

24
3.1 INTRODUCTION

India is the world's fastest growing country. The fast-growing economy is attracting massive
investments from foreign corporations and businesses. Despite India's excellent economic growth,
a large portion of the population remains impoverished and lacks access to essential services such
as health care and education. These issues obstruct a country's development. Handicraft artisans in
India enjoyed the gratification of making and distributing handcrafted things to society prior to the
industrial revolution. A society has grown in size, complexity, and heterogeneity. Villagers came
to cities as a consequence of industrialization. Problems in society were caused by social and
economic evils. Law is the only mechanism for society to maintain social control over human
behavior, and it is completely reliant on it. Traditional crimes, such as murder, assault, and robbery,
are governed by laws and are subject to societal and legal scrutiny. White-Collar Crimes, on the
other hand, do not have an unique statute, but a special legislative is used for certain offences. The
scope of law's application has widened.

Because white-collar crime relates to illegal and destructive action, it is neither a street crime nor
a traditional crime. White-collar crimes are dependent on new or modern advances in technology
or thinking, and they can be viewed as both a product of failed social control and a product of
extremely successful social control35. The high level of control used to prevent or deter
organizations and individuals from engaging in socially destructive activity may be reflected in
corporate and other organizational forms of White Collar Crime. White-collar crime committed
by corporations and other organization’s may necessitate a high level of control over individual
human behavior.

This chapter specifically deals with the rules and regulations to control the corporate sector crime
and the legal framework of Indian and United Kingdom.

3.2STATUTES RELATED WITH WHITE COLLAR CRIME IN

CORPORATE SECTOR IN INDIA

White collar crime is not specifically outlawed by criminal law, but rather by some civil and
administrative laws seeking to limit some types of illicit corporate operations, which elites can

35
David O Friedrichs, Trusted criminals ,white collar crimes in society 252 (Wadsworth publication, 4th Edn.,1996)

25
influence. For example, tax evasion has been successfully renamed tax avoidance. Various laws,
including as criminal law, civil law, tax law, and administration law, have been enacted in response
to perceived damaging business and professional behavior.

Economic crimes (white-collar crimes) are on the rise in emerging countries like India. Indian laws
have been codified by India's legislators. In the country of India. The Indian penal code, which
was enacted in 1860, codified the majority of Indian law. It featured a chapter dealing with public
servants' corrupt practices, and later a separate statute, the Prevention of Corruption Act 1988, was
adopted to deal with the problem of corruption in public life. The United Nations Convention
Against Corruption has been signed by India (UNCAC). A quick summary of the provisions
relevant to Control White Collar Crime under the Indian Constitution is provided in this chapter.

3.2.1 White Collar Crime and Constitution of India

 WRITS

There are five types of writs36.

 Writ of Habeas corpus (to produce a body)

 Mandamus ( Writ of command)
 Writ of Prohibition (to forbid)
 Writ of Certiorari (judicial review0
 Writ of Quo-warranto ( by what warrant or authority)

All of these works have their own impact and force in various areas. A judicial remedy in the form
of an order issued by a court to a public authority ordering it to discharge a public responsibility
is known as a Writ of Mandamus. The Supreme Court, under article 32, has the power to provide
instructions or orders writs, as appropriate, for the implementation of public rights. The Supreme
Court has the power to offer redress and compensation for violations of basic rights.

 Committee on Public Accounts37

36
H. M. Servai, The Indian Constitution 2027 (Universal Publication, 4th Edn , 2002).
37 37
H. M. Servai, The Indian Constitution 2027( Universal Publication, 4th Edn,2002)

26
The Public Account Committee (PAC) is a committee of designated members of parliament
appointed by the Indian parliament under rule 308 and the Lok-conduct Sabha's of business for the
persistence of auditing the government's revenue and expenditure. Every year, a PAC comprised
of no more than 22 members is constituted. The role of the PCA is to hold the executive
accountable for its use of public funds; it is to maintain a close eye on the government's
expenditures and performance, wasteful spending, and timely and cost-effective policy execution.

 India's Comptroller and Auditor General (CAG).

Through high-quality auditing and accounting, CAG promotes accountability, openness, and good
governance. It gives the public confidence that public monies are being spent wisely and for the
intended purpose. The CAG examines all reports and expenditures of the Indian government and
state governments, as well as those organization’s and agencies that get major funding from the
government. Under Article 77 of the Indian constitution, the CAG of India is also the external
auditor of government-owned corporations. The CAG of India is nominated by the president of
India. A comptroller auditor general has the capability to issue inflated tax demands on significant
corporations. The CAG had the power to report recurring anomalies in business evaluations38. In
the financial year 2016, the four public sector units in Uttar Pradesh lost Rs 18,000 crores. 17 CAG
audited six private telecom service providers in 2016 based on a license agreement. The CAG
stated in a 77-page report that due diligence was not done. According to A.RAJA, the allotment of
2G spectrum resulted in a revenue loss of 1.76 lakh crore39. Although the Comptroller and Auditor
General is a constitutional body, its work is critical in the investigation and reporting of economic
crimes and tax evasion.

3.2.2 White Collar Crime and Companies Act, 2013

White collar crimes in corporate sectors are crimes perpetrated by corporations 40, and the company
act of 2013 has provisions that apply to wrongdoers. For example, tax eviction, food adulteration,
price rigging, and illicit firm trading. Who is then held accountable for societal harm? Traditional
punishments are ineffectual because a business has neither a physical body on which punishment

38
The Hindu Business line, Sept. 19, 2017.
39
The Economic Times, May 20, 2017.
40
An Incorporated Company Registered Under Company Act 1956 Or 2013 Or Other Body Corporate And Includes
A Firm And Other Association Of Individuals.

27
can be administered nor a mind that can be guilty of criminal intent 41. The true cost of a company
is the loss of respectability, which is known as the stigma. The director or management who acts
on behalf of the corporation should be held accountable. It's also appropriate for the company It
should be sanctioned. To dissuade corporate crime, every acquisitive criminal should be denied
the fruits of their illicit behavior. Property confiscation and a fine are imposed on the guilty person,
who is a corporation.

The burden of proof is with the prosecution to establish if any director, manager, secretary, or other
corporate officer participated in the offence with the corporation's knowledge or consent.. Officers
are also liable for carelessness or reckless disregard of duty. Unless he proves that the offence was
committed without his consent or connivance and that he exercised all diligence to prevent the
commission of the offence, every person who was a director or responsible officer of the corporate
body at the time of the commission of the offence is deemed guilty of that offence.

Relevant Provisions under Companies Act

i) Section 34 – Criminal liability for mis-statement prospectus issued, circulated or

distributed, every person is liable who authorizes to issue prospectus, and person will
get imprisonment for a term six months to ten years and fine three times amount.
ii) Section 35 – civil liability for mis-statement in prospectus, liability is of company and
every person like director, promoter, expert), and the person without any limitation
liable for losses or damages.
iii) Section 36 - Fraudulently inducing person to invest money And the person who makes
any statement is liable.
iv) Section 38 - Personation for acquiring of securities of company, and Any person who
abets or make application is liable.
v) Section 73 & 74 - Ban on acceptance of deposits from public subject to provision,
company and every defaulter officer of company is liable.
vi) Section 75 – damage for Fraud, And the person who is responsible to accept deposit
from depositors is held to be liable.

41
Government of India, Report : 47th Law Commission Report, p.9 ( Ministry of Home Affairs,1972).

28
 vii) Section 127 – Failure to distribute dividend, and the every director of the company is
held to be liable.
viii) Section 155 & 159 - Prohibition to obtain more than one director identification number
(DIN) Intimate to company and the company inform DIN to registrar, Company or
director is held to be liable.
ix) Section 184 – Disclosure of interest by director and the director of the company should
be held provision.
x) Section 194 – Prohibition on dealing in securities of company, and the director or
managerial personnel.
xi) Section 195 – prohibition on insider trading of securities, and the director or managerial
personnel, principal or agent held liable.
xii) Section 447 - Guilty of fraud (companies amendment) act 2017 No.1 of 2018) Any
person found guilty of fraud faces a five-year sentence in prison, a fine that can reach
20 lakh rupees, or both if the amount involved in the fraud is less than ten lakh rupees
or one percent of the company's annual revenue, whichever is lower. Anyone connected
to the company is responsible.
xiii) Section 448 & 449 – It talks about false statement and false evidence, and in this case
any person is held liable who commit this crime.
xiv) Section 452 – this section is talk about wrongful withholding of property and any
officer of the company or employee of the company held liable.

Contributions to Politics

Government corporations and companies that have been in operation for less than three years are
not permitted to make political contributions, according to Section 182 of the Companies Act of
2013. According to Section 182 (2) of the Companies Act, a donation, subscription, or payment
that a company causes to be made on its behalf or on its account to a person who, to its knowledge,
is engaging in any activity that can be regarded as reasonably likely to affect public support for a
political party is also regarded as a contribution.

29
The Companies Act, Section 177 (9) mandates the creation of a vigil mechanism for directors and
workers to report serious concerns. This whistleblowing mechanism applies to every listed
company or such class or classes of companies as listed companies, companies that have borrowed
money from banks and public financial institutions in excess of fifty crore rupees, and businesses
that have taken out loans from banks and other public financial institutions totaling more than 50
crore rupees. In accordance with Rule 7(4), the vigil mechanism must offer sufficient protections
against misuse by workers and directors. The Public Procurement Bill, 2012 (the "Procurement
Bill") was presented to parliament by the Indian government.

3.2.3 White Collar Crime and Indian Penal Code, 1860.

The Indian penal code was enacted in 1860, and its basic framework has remained unchanged for
almost a century. The substantive criminal law, as well as the majority of its regulations, are no
longer appropriate. India's social and economic systems have evolved after 60 years of
independence. In many ways, the code does not accurately reflect current needs. Major crimes
include offences against a person, property, or the state; yet, the penal law does not adequately
address acts that could be classified as social offences, given the unique conditions in which they
all occurred42.

The offence was roughly classified by the Santhanam Committee 43 as follows:

Offenses intended to thwart or block the country's economic progress and put its economic health
at risk.

• Avoidance and evasion of legally imposed taxes.

• Public servants abusing their position in contracting and disposing of property

• Individuals, businesses, and industrial and commercial enterprises are not allowed to deliver
items in conformity with an agreement reached with government officials;

• Black – marketing and stockpiling profiteering

• Adulteration of foods and pharmaceuticals;

42
Government of India, 29th Report of Law commission of India ( Ministry of Home Affairs, 1966)
43
Government of India, 29th Report of Law Commission of India.

30
• Theft and misappropriation of public funds and property; and

• Human trafficking

The Indian Penal Code is a legislation that enumerates and specifies a number of offences against
the state, society in general, the human body, and property. The code does not grant the government
any legislative ability to change the definitions of these offences through rule-making powers. In
our country, economic crime is not a different occurrence. When the Indian penal code of 1860
was enacted, criminal breach of trust, defrauding, producing and selling of adulterated drugs,
fraudulent use of weights and measures, and counterfeiting government stamps and their sale were
all punishable offences.

Under the Indian Penal Code Offences, there are statutory provisions that punish white-
collar crimes involving the misuse of a public servant's position.

The laws against corruption in India were first enacted in the Indian penal code (Sec. 161- 171) in
186044. These provisions prohibit a public officer from accepting anything (in cash) other than his
or her legal compensation under obligation to do or not do anything. Because the penal code does
not adequately deal with social offences, the Indian parliament later adopted the Prevention of
Corruption Act 1988. The sections 161 to 165 A of the Indian Penal Code of 1866 have been
omitted45. Anyone is a public servant and deliberately disobeys any order of the law as he is to
behave himself as such public servant and causes injury to any person as a result of such
disobedience46.

Provisions under IPC to Curb White Collar Crimes

1. Accounts falsification47: If an employee willfully and with the intent to defraud destroys
or falsifies any book, electronic record, paper, writing, valuable security, or account that
belongs to or is in the possession of his employer, or has been received by him for or on
behalf of his employer, he is guilty of falsification of accounts.

44
Government of India, Report of the committee on prevention corruption, 1962.
45
Report of the Santhanam Committee, Page 9, para 2.9
46
Indian penal Code (Act No. 45 of Year 1860)1860 Sec – 166
47
S.477-A of Indian Penal Code, 1860.

31
 2. Criminal breach of trust 48 : is a more serious offence. The director misappropriates the
property or disposes of it dishonestly. A "criminal breach of trust" occurs when someone
who has been entrusted with property or who has control over property dishonestly
misappropriates, converts, uses, or disposes of that property for their own benefit, in
violation of any law defining how that trust is to be discharged, or in violation of any
express or implied legal agreement he has made regarding that discharge, or willfully
permits another person to do so.
3. Cheating49: In Section 415, the term "cheating" is defined. In which the deluded must be
induced to give property, consent to the detention of property, or do or omit anything he
would not generally do by means of fraud or deception. Finally, the transfer of the property
or the conduct or omission must cause or be likely to inflict bodily harm, mental harm, or
property harm to the person deceived.
4. Forgery50: means falsified documents are covered by the Penal Code. Making a false
document with the intent to: (a) cause damage or injury to the public or any person; (b)
support any claim or title; (c) force any person to part with property; (d) engage into any
express or implied contract; or (c) commit fraud or cause fraud to be perpetrated is defined
as forgery.
5. Adulteration of Drugs51 : Pharmaceutical product falsification If someone tampers with
any medication or medical preparation with the intent or knowledge that it is likely to be
sold or used for any medical clinical purpose similar to what it would have been if it hadn't
been tampered with, they may be punished with imprisonment of either kind for a term that
may extend to six months, with a fine that may extend to six months, or with both.
6. Counterfeiting currency 52: Whoever counterfeits a currency note or a bank note, or
intentionally participates in any aspect of the counterfeiting process, shall be punished with
2[life imprisonment], or imprisonment of either sort for a duration up to 10 years, as well
as a fine. Explanation.- For the purposes of this section and sections 489B, 3[489C, 489D,
and 489E], a promissory note or engagement for the payment of money to the bearer on

48
S.409 of Indian Penal Code, 1860.
49
S.415 and S.420 of Indian Penal code,1860.
50
S.463 of Indian Penal Code, 1860
51
Section 274 of Indian Penal code,1860.
52
Section 489-A of Indian Penal Code, 1860.

32
 demand that has been issued by a person conducting banking business anywhere in the
world or that has been issued by or with the authority of a State or Sovereign Power and is
meant to be used as a check's replacement or equivalent.
7. Fraudulent use of weight and measure 53: Whoever fraudulently employs a false weight
or a false measure of length or capacity, or who fraudulently uses a weight or a measure of
length or capacity as follows: a different weight or measure than what it is, will be
penalized by imprisonment of any kind for at least one year, with or without a fine, or both.

Corporate crime is diverse, ranging from minor infractions of the law to business fraud,
environmental damage, the selling of tainted or defective goods, and tax evasion. Measures, as
well as offences involving adulteration of food and medications, dishonest theft of property,
criminal breach of trust, cheating, forgery, and document and currency counterfeiting, etc. The
term "white collar crime" is not stated in the Code, but the scope of white collar crime is so broad
that some provisions of the India Penal Code, 1960, are closely linked to white collar crimes,
according to the research.

3.2.4 Legal Provision under Essential Commodities Act, 1955

The Act regulates and controls the production, distribution, and pricing of commodities that have
been designated as necessary for sustaining or expanding supplies, as well as ensuring their
equitable distribution and availability at reasonable rates. According to section 3, the central
government has the authority to regulate production, supply, and distribution of vital commodities
in order to sustain, enhance supply, and manage pricing. It is governed by permits and licenses. If
the corporation commits the above offence, Section 10 applies. If the individual acts in violation
of section 3 of the order. A person is a business. In that firm, the owner of the company will be
held liable and punished under the Act 54.

53
S. 265 of Indian Penal code, 1860.
54
The prevention of black-marketing and maintenance of supply of essential commodity (7 of 1980) Act 1980.

33
3.2.5 The Provision under Custom Act, 1962

Sections 111 through 127 of the Customs Act of 1962 impose civil and criminal liability. It deals
with the seizure of goods and conveyances, in addition to the enforcement of penalties.

The goods that are illegally imported and exported are seized. Because the items are imported
without necessary official permission, they are considered smuggled commodities. If commodities
are imported without fulfilling the statutory provisions of this act, they are smuggled goods, and
liability for such acts will emerge. Dutiable or forbidden items, as well as goods imported by the
bay, gulf, tidal rivers, or any other channel. Any illegal commodities removed or attempted to be
removed without proper clearance from the customs area or warehouse. If an offence is committed
by a firm that is accountable under Sec 140, everyone in charge of the company's affairs will be
held liable. It is, nonetheless, It was decided that in the lack of any explicit statutes, the director of
a corporation is liable. The duty cannot be collected from the assets of the company's directors.
Director of a company, The Company is not individually liable for the company's liabilities. In
Spectec’s Director of Research and Development Building Product Pvt. Ltd, is a private
limited company based in India. A customs tax of Rs 33.5 lakh was imposed in 2008, with
penalties. The absence of any express provision in the constitution, according to the Supreme
Court, According to the law, a company's obligation or penalty liability cannot be recovered from
its assets.

3.2.6 Legal Provision related with Tax Law

Tax evasion is a type of white collar crime that can be perpetrated by both natural and legal people.
Following registration under the Companies Act, the company becomes a legal entity. As a result,
it becomes a legal entity. As a result, it is your responsibility to pay taxes in accordance with the
law provisions. Taxation is legal if it is enforced by the government. However, there is a tax.
Income tax, wealth tax, estate duty, and sales tax are all examples of tax infractions in India. The
financial costs of breaking such regulations are enormous. India's tax regulations are also
complicated. It's complicated because it's not easy to administer. The majority of people strive to
avoid paying taxes. Tax Authorities have a difficult time estimating businessmen's earnings. The

34
Wanchoo Committee was established by the Indian government in 1970 to combat black money
and tax evasion, both of which are costly to the country.

a) Under section 59 of the Estate Duty Act 1953 (34 of 1953), The controller may require the
person accountable to submit an account as required under this section and under section 60
of the penalty for default or concealment of property or company fails to pay amount of estate
if the controller has reason to believe that property is escaping assessment as a result of a
person's failure to submit an account of the deceased's estate or undervaluation of the
property..
b) The Income Tax Act of 1961-Corporate Tax governs the taxation of businesses in India.
Profits, gains from business, income from property, capital gain, and revenue from other
sources are all examples of corporate income. Foreign company, local company a corporation,
whether private or public, a subsidiary corporation, or any other legal entity any institution,
incorporated by or under the laws of a nation other than India, An association or body that can
be assessed as a company or has been assessed as one any year of assessment The Central
Board of Direct Taxes proclaimed the country to be a tax haven company. The corporation is
liable to pay security tax, wealth tax, excise tax, and other.

Companies' transgressions. When a company commits an infraction, it is subject to Section 278B

of the Income Tax Act 1961 (43 of 1961). Every person who, at the time the act was committed,
was in control of and responsible to the company for the conduct of the company's business, as
well as the company, shall be regarded guilty of the offence and subject to prosecution and
punishment. When an act is conducted with the approval of such a director, manager, or secretary,
they are held guilty of the crime.

3.2.7 Provision under Foreign Exchange Act, 1999

After the Foreign Exchange Statute was amended, it was agreed that the act would be renamed the
Foreign Exchange Management Act of 1999. To maintain control over multinational corporations,
it regulates the buying and selling of foreign currency debt. Middlemen, who earn large
commissions for brokering deals involving purchases from foreign suppliers, frequently transfer
such funds in foreign currencies, claiming they are the proceeds of some foreign business. This

35
Act gives the Directorate of Enforcement, India, the authority to investigate and prosecute violators
of the law. Section 42 regulates if a firm violates the law.

3.2.8 Legal Provision under Competition Act, 2002

The Competition Commission of India (CCI) is constituted under section 7 of this act to defend
consumer interests, restrict activities that harm competition, and ensure trade freedom. The
Competition Authority has the option of filing a criminal complaint or pursuing the matter in civil
court.

Companies that act in violation of the act are subject to legal action and punishment under section
48. The Cartel Immunity Program, run jointly by the Competition Authority and the Office,
encourages offenders to self-report illegal cartels in their individual or corporate abilities.

3.2.9 Legal Provision under Information Technology Act, 2000

In today's technology age, all business transactions are conducted via electronic devices. Sect 84A
gives the federal government the authority to impose encryption methods. Section 43A of the
modified legislation incorporates corporate responsibility for data protection for corporate bodies
handling sensitive personal information or data. Computer sources are required to follow
reasonable security standards in order to retain their confidentiality, failing which they may be
held accountable for damages.

Section 85 of the Information Technology Act of 2000 states that anyone who is accountable for
a corporation's commercial behavior is liable if the company commits an offence.

3.2.10 Legal Provision under Prevention of Money Laundering Act, 2002

Companies that violate Section 70. Every person who, at the time of the violation, is a director,
officer, or employee of the company is also accountable for the violation at the time it was
committed for the purpose of managing the company's business as well as the violation at the time
it was committed when a person violates any of the provisions of this Act or any rule, direction,
or order made thereunder. When a person violates any of the provisions of this Act or any rule,
direction, or order made thereunder is a company, every person who, at the time of the violation,

36
is a director, officer, or employee of the company is also a person who, at the time of the violation,
is a director, officer, or employee of the company was in charge of and liable for the infraction at
the time it was committed company, for the purpose of conducting the company's business as well
as the company, shall be liable. The money is then cleaned and reintroduced into the legal financial
system. Many public officials are able to hide their ill-gotten gains in foreign countries, which they
then transfer back to their homeland via money laundering, disguised as monies from a seemingly
legitimate source. This Act authorizes the Directorate of Enforcement, India, and the Financial
Intelligence Unit, India, both government of India agencies, to investigate and prosecute such
individuals in accordance with the Act.

Its goal is to prevent and control money laundering, as well as seize assets acquired through money
laundering.

3.2.11 Legal Provision under Whistle Blowers Protection Act, 2011

The Whistle Blower Act of 2011 was enacted to track down alleged acts of corruption and abuse
of power by public officials, as well as to safeguard those who report such actions to the
appropriate authorities. The regional vigilance commission may receive such information from
any public official or other person, including a non-government organization.

The Commission's jurisdiction in this matter should be limited to any employee of the central
government or any corporation founded by or under a central legislation, government companies,
or local governments owned or controlled by the central government. Section 211 of the Act
authorizes the central government to establish a Serious Crime Investigation Office to investigate
corporate fraud. This act is particularly helpful in preventing or reducing corporate crimes in
businesses.

3.3STATUTES RELATED WITH WHITE COLLAR CRIME IN

CORPORATE SECTOR IN UNITED KINGDOM

The landmark carrier case 1473 laid the groundwork for today's theft law. Instead of transferring
wool bales from one location to another, the carrier, the department in charge in this case, smashed
open bales and ate the contents. The use of commodities already legally in one's possession for
one's personal purposes was not expressly prohibited by English law. The court ruled against the

37
carrier, establishing a legal distinction between ownership and possession, which laid the
foundation for the enactment of a broad embezzlement statute in England. The East India
Company, a powerful trade organization that emerged in the 16th century, is a good example of
17th-century corporate dominance.

The case of the "South Sea-bubbles55," in which the South Sea Company was chartered in London.
Capitalist corporations grew in the 18th and 19th centuries as a result of industrialization. The
English national debt was a concern in 1719, and parliament and the crown of England were unable
to control it. The Royal Assurance Corporation and the London Assurance Corporation were
granted charters under the Bubble Act 1720, which was an act of parliament of Great Britain. It
was the legislature's attempt to deal with unethical individuals. In England, white collar crime has
gained specific attention, such as share pushing, which involves the victimization of the public
through fraudulent stock and share dealing. In 19398, legislation criminalizing these practices was
enacted. Another piece of legislation was the Price of Items Act of 1939, which made it illegal to
sell any goods whose price was regulated at a price higher than the permitted price. "Tax evasion"
and "tax avoidance" are two types of tax fraud. The former is illegal, while the latter just raises
ethical concerns. Ten pieces of legislation to curb anti-competitive trade behavior The Monopolies
and Restrictive Practices (Inquiry and Control) Act of 1948 was enacted to investigate and control
monopolies and restrictive practices 56.

The European Union (Anti-Money Laundering Beneficial Ownership of Corporate Entities)

Regulations 2016 went into effect in November of that year. According to the Beneficial
Ownership Regulations, non-listed Irish companies and other entities are required to maintain
adequate, accurate, and up-to-date information on their beneficial owners in their own beneficial
ownership register. The next stage will be for these businesses and corporations to register their
beneficial ownership information with a single database. It's unclear whether the public will have
access to the information held in the central registry, either under the expected new legislation or
in the future.

55
David O Friedrichs, Trusted Criminals ,White Collar Crimes In Society 60 (Wadsworth publication, 4th
Edn.,2010).
56
Dr. Manju Koolwal, White Collar Crimes 213(Kamal Publisher, 1st Edn ,New Delhi, 20170.

38
The UK Bribery Act of 2010 ("UK Act") includes measures to prohibit bribe-giving and to
prosecute companies for violations of the Prevention of Corruption Act (POCA). The European
Union's Drugs Strategy, which runs from 2005 to 2012, attempts to prevent and reduce drug usage.
The EU Drugs Action Plan 2009-2012 is the strategy's second action plan, and its goal is to
guarantee that all Member States adhere to the same set of fundamental principles. The Action
Plan focuses on two primary areas of drug policy: drug demand reduction and co–ordination,
international cooperation, and information, as well as research and evaluation. The White Collar
Crime Package will push Irish businesses to be more accountable and legally compliant. Ireland's
corporate governance will be strengthened as a result of these initiatives. The Criminal Justice
(Corruption Offences) Bill 2017 is intended to modernize Ireland's anti-corruption and anti-bribery
laws. In certain cases, the Corruption Offenses law will also bring additional punishments, such as
up to ten years in prison and limitless fines. The Corruption Offenses bill refers to the criminal
culpability of companies. A body corporate will be presumed guilty of an offence if some
representatives of the body corporate engage in corrupt acts on its behalf with the goal of getting
or retaining business or gaining an advantage, according to the law. Managers, employees, agents,
or directors, as well as subsidiaries of that corporation, are examples of these representations.

Multinational Companies have made it possible to undertake sophisticated economic transactions

thanks to technology and globalization. As a result, global flows of cash, goods, services,
technological communication, and information are progressively displacing governmental
authority. The variety, volume, and complexity of cross-border transactions are significant
challenges in police international drug trafficking and money laundering. Only a few countries
have the technical and administrative capacity to govern international trade. According to Roscoe
Pound, law is a social institution that satisfies social needs. In today's society, there are claims and
demands. The various laws must take into account human interests. Law is increasingly being used
to promote the common good and to meet societal needs. The law considers social engineering to
be a sort of social engineering aimed at establishing societal harmony. The goal of law is to protect
and preserve the values and needs that are vital to social order. The laws are in place to keep
interests in check and to promote social harmony and integration. Rather than unanimity and
stability, society is defined by diversity, conflict, and change. The activity of interest produces
law. It is rarely the result of a collective effort.

39
 CHAPTER IV
LIABILITIES AND THE NOTION OF
WHITE COLLAR CRIME IN THE
CORPORATE SECTOR

40
4.1 INTRODUCTION

This chapter deals with the causes and various types of white collar crime and their liabilities in
corporate sector. White collar crimes includes fraud, bribery and corruption, Money laundering,
planned bankruptcy, Tax evasion and insider trading.

Social Justice is an essential part of our society and democracy and to build up the society with a
healthy social structure, the purity of every grain has to be protected57. The healthy society can be
achieved by social, economic and political equality which is the goal of the constitution. There is
a transition from rural society to an industrialized society which emerges the malpractices for
instance white collar crime. According to new report by Ernst and Young, between 2004- 2016,
the fraud investigation office probed 469 cases and out of which 184 companies were probed only
in 2015-16. Then there is a report titled “The changing dynamic of white collar crime in India”
discovers that the central bureau of investigation has probed 6,533 corruption cases in the last 10
years. Recently, it was revealed that the card data of 3.2 million customers were stolen from YES
bank ATMs which was managed by Hitachi Payment Services. On the other part, government has
launched various initiatives to tackle fraud, corruption, bribery and other types of white collar
crime such as imposition of Tax Act, Black money and the Income declaration scheme.

The Governments “Make in India” initiative to liberalize 25 sectors under foreign direct
investment putting India for future investments. This project increases transparency in obtaining
licenses and approvals.

After Vijay Mallya, Nirav Modi, Mehul choksi, PNB fraud etc. The government of India and the
corporate world has to think to address the issue and due to which the Fugitive Economic Offenders
Bill, 2018 was proposed in the Lok Sabha.

57
Government of India, 47th report Law commission of India, 1972 para 1.11.

41
4.2 REASONS OF WHITE COLLAR CRIME

People of the elite class conduct white collar crimes in the course of their employment, and they
do so out of an overwhelming desire to increase their own financial security. There are various
causes for white collar crimes. They are as follows:

 Greed: It is the essential in the commission of white collar crime. Among rich people, the
needs should be satisfied and when needs are satisfied then the focus tends to shift to greed.
The perception of success is to have more wealth.
 Necessity: People commits these type of crimes to satisfy their family needs and to support
the family.
 Lack of awareness: General public does not know the seriousness or the result of the
economic offences and the nature of the crime of white collar crime is different from
traditional crimes and people understand it rarely.
 Psychological Factor: The reason behind the commission of these crime can be
personality traits as well.

White collar crimes acted by people of having high level position with respect to corporate
sector, the position means directors, official representative, corporate’s owner.

4.3 CATEGORIES OF WHITE COLLAR CRIME IN INDIA

White collar crimes are the one which causes irreparable damages to the society at large and which
are very common to Indian trade and business world. The types of white collar crime in India as
follows:

 Bank fraud: to engage in any activity where the objective is to defraud the bank funds.
 Bribery: When money or any services offered with the intention to influence the
decision of others, then you will be charged for the bribery.
 Computer fraud: When the hackers steal information contained on computers such as
bank and credit cards etc.
 Counterfeiting: When someone copying an item which he is not authorized to do so.
 Credit Card fraud: The unauthorized use of cards to obtain goods.

42
  Educational Institution: white collar crimes are also there in the educational
institution and the intuitional bodies managed to secure large sums by submitting fake
details about their institution.
 Embezzlement: Where a person has been entrusted with the property or money and
the person use it for personal benefit.
 Extortion: It occurs when the person illegally obtains property from the other person
by threatened force.
 Fake Employment Placement Rackets: when the employment agencies companies
which deceives the youth with false promising of jibs on payment of huge amount in
lakhs.
 Forgery: When a person passes a false instrument with the intention to defraud the
recipient.
 Insider Trading: When a person uses confidential information for trading in shares of
publicly held corporations.
 Money laundering: the transfer of money from embezzlement schemes so that the
original sources cannot be traced.
 Medical Profession: This include the issuance of false medical certificate, illegal
abortions and selling drug medicine to patients in India.
 Tax evasion: This means that where a person commits fraud in paying taxes and the
main problem before the income tax department is to know the exact income of the
professionals.

In 47th report of Law commission on “The trial and punishment of Social and Economic
offences58” defines white collar crimes that the “crime committed in the course of occupation by
the upper class of the society.” In Ram Narain Poply v. CBI59, the Supreme Court has observed
that the white collar crimes of personal profit at the cost of the public.

58
Government of India, 47th report of The Law Commission, 1972.
59
Ram Narain Poply v. CBI, 2003 In-law SC 51.

43
4.4 CONCEPT OF CORPORATE CRIMINAL LIABILITY

The companies Act, 2013 makes statutory provisions mandating that public companies to have at
least one-third of its board strength as independent directors. The directors will have the special
duty such as fiduciary duties etc. While dealing with the corporate sector crimes, it includes that
the crime committed on the behalf of corporate in order to increase benefit.

In 2013, the companies Act, a key provision was amended for governing the incorporation and
running of a company and the emphasis was only on the private companies that they will be held
responsible for their actions.

It has been seen that white collar crime in corporate sector do not have any criminal record because
of the belief that their act will not be detected. In corporate sector, the liability is very difficult to
found because the person who does an illegal act for the benefit of the corporation, then he will be
liable for both corporate and a person.

Origin of White Collar Crime in India

In the early 1700 centuries, the general assumption was that corporations cannot be held liable
criminally. There were many obstacles for consideration that corporations can also be held liable
for their acts. They are as follows:

1. During 18th century, court approached corporate liability on theories of corporate

personality.
2. The courts and legal thinkers did not believe that corporations has the necessary intention
to commit these crimes.
3. The third one is ultra vires the doctrine in which it mentions that courts cannot held
corporations liable for acts which they were not provided in their charters.
4. The judges required that accused should be brought physically before the court but
corporations cannot be brought physically as it is a legal entity.

The activities of the corporations has a strong impact on the society as it also helped in the
development to a large extent but it has also been proved that it is dangerous to the society
which later falls under the corporate sector crime. Despite of the fact that corporations does

44
 malpractices but the law cannot enforce criminal liability upon corporations because 60-
Corporations cannot be imprisoned and cannot have the mens rea to commit an offence.

Even common law did not impose any criminal liability on corporation but it is a belief that
mens rea is the essential element of the crime and it has been recognized by various courts
after 20th century.

Theories of Corporate Criminal Liability

 Vicarious Liability: This means that a person is bound to answer for the acts of the other.
Same is in the case of corporations, the company shall be held liable for the acts of its
employees or its agents. The vicarious liability theory holds the master liable for the acts
of his servant.
 Theory of Identification: This means that the corporations are held criminally liable for
true regulatory offences committed by corporations. The acts of senior officers in a
corporations are considered as the directive minds of the corporations and it deemed to be
the acts of the corporation itself.
 Theory of Aggregation: Under this theory, the corporate aggregates the knowledge of
different officers for the determination of liability. The company aggregates all the acts
and mental element within the company to establish whether the company would be
amount to a crime if they had been committed by one person.
 Strict Liability Principle: This can be defined that any act which is held liable without
mens rea. Because it mentions in criminal law that the respondent is strictly convicted if
they have no guilty mind. The strong stigma attached to it because this strict liability
principle should be applied in these socio-economic offences where society is also
concerned with the prevention of the crime.

60
Zee Tele films Ltd. v. Sahara India Co. Corporation Ltd., 2001 (3) Recent Criminal Reports (Criminal) 292;
Motorola Inc. v. UOI, 2004 Cri LJ 1576.

45
4.4.1 Corporation and its Civil Liability

Civil liability is the compensation for injury caused, an injury can be tangible or intangible caused
to third party by the company. It can be contract liability or can be tort liability and the authorized
person such as directors, are liable for personal benefit. If the act is done for the corporate then the
corporation should be held liable. In USA, the Racketeer Influenced and corrupt organization Act
was enacted which allows to injured parties to file civil cause of action to recover damages and
the cost of the suit. This include the crime such as securities fraud, bribery etc. In United States vs
Rubin61, Rubin was convicted of 103 counts and charged him with tax fraud and RICO violation.
The court sentenced him for 5 years of imprisonment and pay $50,000 in fines. The civil RICO is
for damages.

In India, there are special laws related to the white collar crime in corporate sector and the remedy
would be to pay damages and the forfeiture of the property. For instance, if a company consist
civil liability under corporate governance so that the company and every person shall be held liable
for losses. The corporations shall be held civil liable for the civil wrong and there are some laws
which contains mixed remedy for both civil and criminal liability.

4.4.2 Corporation and its Criminal Liability

Corporations can be considered to be an integral part of the democracy and the society. The
development of the society has a direct influence on the functions of the corporations. For instance,
the multinational companies like Nesle SA food company, its parent country situated in
Switzerland and it means that the multinational company are controls the production of goods
facilities from outside the country in which it is placed. It is very helpful for exporting and imports
of goods and services and it has both effects- beneficial and evil effects.

The multinational company that is parent carbide corporation Bhopal Gas tragedy case. Those
industries made lot of profit but failure to protect the individual’s safety and to invest in safety
equipment62. Corporation has no strictly meaning rather it may be described as the association of

61
Kathleen F Birckey, Corporate And White Collar Crime Cases And Materials 463 (Aspwm Publisher,New
Delhi,1 st Inidan Revision 4th Edn, 2006).
62
Balakrishnan. K; Corporate Criminal Liability – Evolution of the concept, Cochin University Law Review, 1998.

46
person for some common object. The corporate crime committed not by people of crime oriented
personality but rather it is committed by the eminent members of the business community who
breaks the rules and regulations in their personal and corporation interest.

In India, corporate crimes are invisible as they are committed by full planning and meticulous
execution and lenient laws which are full of loopholes which gives the advantage to the
perpetrators. Corporate crime is the act of the corporations or of its employees on behalf of the
corporation for which they shall be criminally held liable and punishable by law. The basic rule of
criminal liability is the maxim “Actus non facit reum, nisi mens sit rea” which means that to make
a person criminally liable then it is required to establish that an act committed which is prohibited
by law and does with the wrongful intention or guilty mind 63.

Corporations play essential role in regulating the business activities and the criminal sanction is
appropriate mechanism for controlling the misconduct in corporations. Under the Sherman Act,
1890, criminal penalties and bans to corporations. In New York central and Hudson river
Railroad v. united states of America, in this, the New York central its general manager and its
assistant traffic manager were convicted and sentenced to pay fines of $102,000 for paying rebates
to sugar refiners which is the violation of the Elkins Act. Because the Act provides that anything
done by the corporations then the director and the employees shall be held to be liable.

Corporation cannot be held criminally liable as the corporation could not commit crime, the
members of it can be held liable. And it can be done in the individual capacity of every member
of the corporation. In Telegram Newspaper v. Commonwealth64, it was held that corporations can
be held criminally liable for criminal attempt and corporations cannot be arrested and imprisoned
but in civil or criminal proceeding, the corporation property can be taken for the use to pay
compensation for either public or private wrong. In Queen Vs Great north of Railway Company,
it was held that corporation may be held criminally liable for the acts of misfeasance.

The corporates or the individuals should be the object of the criminal sanctions and there are
various statutory schemes which provides about liability of both- individual and the entity.
According to Jhon S Martin, the individual offender means the lower grade employees who never

63
Russell, W.O., Russell on Crime 17-51(Universal Law Publishing Pvt., New Delhi, 4th Edn,2001).
64
6 Kathleen F Bruckey, Corporate and White Collar Crime, Cases And Materials 41 (Aspem Publisher, 4th Edn,
2006).

47
commits the act for their own personal benefits and the superior was responsible of commission
of that offence because he gave approval of the crime and the indictment against individual cannot
be justified but the indictment against the corporation can be justified. In areas like white collar
crime, the enforcement of the criminal laws against corporate criminals should be what which
gives benefit to the public and it should be deterrent for protection of people if the public from
such type of dangerous conduct. In 2013, the company law of India has come up with fruitful
amendment i.e. the threat of criminal prosecution can serve a positive change in the corporate
world.

4.4.3 Principles of Legality

There are some characteristics of a crime which makes any act which is forbidden by law and
punishable under law. They are as follows:

 Actus rea: The physical involvement should be there in the commission of the crime,
because the mens rea alone cannot constitute an offence.
 Mens rea: It is the essential element of the crime and it can be express or implied.
 Prohibited Act: The act should be prohibited under penal law.
 Punishment: The act which is forbidden by law and punishable under law.

4.5 CORPORATE CRIMINAL LIABILITY IN INDIA AND UNITED

KINGDOM

Criminal liability requires a criminal intention for the prosecution. But the companies cannot be
prosecuted as the companies cannot be arrested and imprisoned. This chapter deals with legal
provision of liability of corporate in India and some other country.

4.5.1 Corporate Criminal Liability in India

Courts in India were reticent to charge a firm with a crime that needs criminal intent, and they
were unable to bring charges against corporations because they are not allowed to be imprisoned.

48
In A.K. Khosla v. S. Venkatesan, 65Supreme court observed that in order to prosecute corporations,
the two requisites should be filled i.e. the first is mens rea and the second one is ability to impose
mandatory sentence of imprisonment.

In Zee Tele films Ltd. Sahara India Co. Corporation Ltd66., it was purported that the Zee had
telecasted a program which was falsely based and defamed Sahara India. The court held that mens
rea is the essential requirement of the offence of defamation and the company could not have the
mens rea.

In Motorola Inc. v. Union of India67, the Bombay high court held that the it was impossible for
a corporation to form mens rea and so that the corporation could not be prosecuted for cheating
under section 420 of IPC.

In the case of The Assistant Commissioner, Assessment-II, Bangalore & Ors. V. Velliappa
Textiles68, the private company was prosecuted for the violation of some provisions of the Income
Tax Act and section 276 C and Section 277 of the Income Tax Act provides a sentence of
imprisonment as well as the fine. The Supreme Court held that the respondent company could not
be prosecuted under Income tax Act because each of the sections required the imprisonment and
fine as well so that the court could not impose fine and the corporation is not a physical body to
be imprisoned.

In MV Javali v. Mahajan Borewell & Co and Ors69, the Supreme Court held that the mandatory
sentence of imprisonment and dines cannot be imposed on a company and the fine will be the only
punishment that can be provided.

The legal difficulty was observed by the 41st report of law of commission of India and suggested
for the amendment in section 62 of Indian Penal Code, 1860. By adding such definition:

 In every case, if the offence is punishable with imprisonment or with fine and the offender
is the company then in that case the court shall be competent to sentence such offender
with fine only.

65
A. K. Khosla v. S. Venkatesan, 1992 Cri.L.J. 1448.
66
2004 Cri LJ 1576.
67
Motorola Inc. v. Union of India, (2004) Cri.L.J. 1576.
68
The Assistant Commissioner, Assessment-II, Bangalore & Ors. V. Velliappa Textiles, (2004) 1 Comp. L.J. 21.
69
AIR 1997 SC 3964

49
  Corporation means an incorporated company and it also includes a firm and other
association of individuals.

This bill was prepared but did not become law. However, few of the suggestions were consider by
the Parliament and amended some of the provision in the Taxation Statutes.

In Standard Chartered Bank and Ors v. directorate of Enforcement70, this was the landmark
judgement and the courts view has been charged with respect to the corporate criminal liability. In
this case, the Standard chartered bank was prosecuted for the violation of some provisions of
Foreign Exchange Act, 1973 and the Supreme court did not applied the literal and strict rule of
interpretation and held that corporation should be punished with the fines instead of the mandatory
punishment.

In Iridium India telecom Ltd v. Motorola Incorporated and Ors71.in this case, the court held that
the corporation is in the same position as an individual and can be convicted under common law.
Further, it was held that corporations cannot claim immunity from criminal prosecution on the
ground of inability of possessing mens rea or guilty mind for the commission of the crime.

This has been always a controversial issue that corporation cannot be sentenced to imprisonment
because of no express provision. But Supreme Court in various cases, held that the better way of
punishing corporation is to impose fine as form of punishment. And the provision regarding fines
provides under the provision of the Indian Penal Code. S.357 deals with the same and empowers
a court to impose a punishment for fine or imprisonment in order to pay the compensation for any
loss caused to the injured party.

The corporation cannot be deterred because it is a financial legal entity but the main motive is to
deter the individuals or corporation’s agent from doing the unlawful acts or the omissions 72.

70
[2005] 4 SCC 530
71
AIR 2011 SC 20
72
Lewis A. Kornhauser , An Economic Analysis of the Choice Between Enterprise and Personal Liability for
Accidents, 70 CAL. L. REV. 1345 passim (1982).

50
4.5.2 Corporate Criminal Liability in United Kingdom

When Common laws overtook the Roma law system, the tribes came together and created a
common legal system which is different from the Roma concepts. The common law created on
judicial decisions as its base of operation and also it based upon the legislative enactments. In the
beginning, there was no existence of concept of corporate criminal liability in English law due to
belief that the business entities were considered to be fiction that is it exists only in the eyes of law
and it is based upon the ultra- vires theory. Jurist Chief Justice Holt in 1864, decided that
corporation could not be held criminally liable but the members of the corporations could be held
liable73.

 Advancement as Vicarious Liability

In English Law, the growth of corporate criminal liability was acknowledged first in the year of
1840, when courts started imposing strict liabilities on companies and Lord Bowen held that the
effectual way of forcing a corporation to be held accountable by introducing the concept of
criminal liability under English Law 74, where it also he said that it can be done by borrowing the
theory of vicarious liability from the tort law in which companies can be punished. In 1944, the
High court of Justice defined the criteria to impose criminal liability on companies through three
landmark cases. As those decisions were helped for the growth of criminal liability on corporations
but the punishment were still undiscussed and undefined because the element of mens rea could
not be easily attributed.

 Doctrine of Alter Ego

The important issues were discussed in the case of Tesco Supermarkets Ltd v. Natrass, 197275, in
which court used the alter ego principle to impose criminal liability on corporations. The concept
of this doctrine is where the shareholders could be held liable as the alter ego of the corporation
and the corporation would be identified with the actions of the shareholders because the will power

73
Anca Iulia Pop, Criminal Liability of Corporations-Comparative Jurisprudence (dissertation) Michigan State
University College of Law, 2006.
74
Regina v. Tyler, 173 Eng. Rep. 643
75
Tesco Supermarkets Ltd. v. Natrass [1972] A.C. 153

51
of the company managers is same as the will power of the corporations. This theory has some
critics but the decision still remains the landmark precedent in English law.

 Doctrine of Identification theory

In England, the corporate criminal liability dealt on the basis of the doctrine of identification. In
Tesco Supermarkets Ltd v. Nattrass76, it was held that corporations would be directly liable for
the actions of their members on the basis that actions and guilty mind set of such individual were
the action of the company itself. In Meridian Global Management Asia Ltd v. Security
Commission77, it was held that it is necessary to find out that whether the individual has a status
or authority to commits these unlawful acts of the company.

 Latest Laws with respect to Corporate criminal liability in UK

In 2007, the Corporate Manslaughter and corporate homicide Act, 2007 was passed with
relation to the offence of manslaughter. The corporate liability for Manslaughter requires the
identification of an individual who has the requisite form of mens rea or guilty mind. Since,
1992 only 34 prosecutions have been done for the manslaughter and only 7 had been successful
because of the reason that companies were of size and structure though it was easy to identify
the direct mind and will.

4.6 LIFTING OF CORPORATE VEIL AND MAJOR CORPORATE SCAMS

The corporate has its own separate entity from that of its shareholders and it can sue or can be sued
in his own name. It is not dependent upon shareholders and it remains in existence if there is any
change in its members until the company is dissolved by liquidation. The shareholders cannot be
held liable personally for the acts of the company. In Salomon v. Salomon78, it was held that
corporate is a separate legal entity and has a distinct personality from its members. This is a fiction
which is created by law and enables an association of multiple owners to function as single identity.
This fiction is integral functioning of the companies and it is rationale for incorporation. The veil
in the between corporate legal personality and the shareholders, it cannot be lifted except in some

76
[1972] 1 AC 153
77
[1995] 2 AC 500
78
(1897) AC 22

52
serious circumstances. When there separate legal entity is used as illegal ends to conceal the person
in real control of the company. These are the exceptions which were laid down in statutes.

CORPORATE SCAMS

1. LIC V. ESCORTS79

This case dealt with portfolio- investment scheme which was existed under the Foreign Exchange
Regulation Act, 1973. This scheme allowed non- resident companies to invest in shares of the
Indian companies. Investments were allowed to the extent of 1% paid up capital of such Indian
company and could not exceed it to 5%. In this case, 13 companies were invested in Escorts
Limited which is an Indian Company. Subsequently, 60% of shares of Caparo Group Ltd were
hold by trust and that 13 investments by Caparo Group was challenged.

The Supreme Court considers the judgement in Solemon and established that a company has an
independent and separate legal entity distinct from the members of the company. It also noted that
corporate veil can be lifted in some exceptional circumstances otherwise, the individual members
can be recognized for who they are and corporate personality can be ignored.

Further, the Supreme Court held that for ascertainment of the ownership in the investment, the
lifting of corporate veil would be necessary but for a limited extent. It noted that it is not necessary
to ascertain the individual identity because 60% of the shares of foreign investors were held by a
trust of which the Mr. Swaraj Paul and the family members were beneficiary. Court ignored the
identity of individual by recognizing that each company was an independent legal entity.

2. VODAFONE INTERNATIONAL HOLDINGS B. V. v. UNION OF INDIA & ANR80.

This is one of the recent landmark judgement of the Supreme Court. This judgment overruled the
+Bombay high court judgment directing Vodafone to pay INR 110 billion as withholding tax in a
transaction. The facts of this case are, a company incorporated in Cayman Islands, which
controlled 67% interest in Hutchison- Essar Limited, an Indian mobile business. The taxation
authorities contended that capital gains were received by Hutchison in India and therefore,

79
(1986) 1 SCC 264
80
S.L.P. (C) No. 26529 of 2010

53
Vodafone is liable to pay withholding tax upon. Vodafone challenged the same in the Bombay
High court and the court gave the judgement in the favour of income tax authorities and noted that
a company is a separate person.

There are some factors which needs to be considered in which corporate veil may be lifted.

 Participation in investment
 Duration of time in which the holding structure exists
 Period of business operation in India
 Taxable revenue in India
 Timing of the exit
 Continuity of business on such exit.

The Supreme Court over ruled the judgement and stated that the fiscal statutes should be strictly
interpreted. Since, the Income tax act clearly deals with a difference regime for tax withholding
on a transaction between the non- resident companies. So, there was requirement of reading law
differently and there was no case was made for lifting the corporate veil.

3. SATYAM COMPUTER SCAM

This was the India’s greatest story of white collar crime in corporate sector. On 7 January, 2009,
Ramalinga Raju who was the founder of Satyam Computer services left a confessional letter which
stated that he had falsified the accounts of thousands of crores.

The facts of the case are Satyam computer services was large and profitable company which had
500 clients and legitimate business. Raju had been inflating accounts for years with the help of the
other accused. Since all the profits came from exports, it was also exempted from the income tax.
The inflated profits raised the company’s valuation and share price. This fraud was in the
continuation and worked well but by the end of the 2008, the US subprime crisis hit profitability.
It was shown that the non- existent cash reserves amounted to 5,000 crores. Raju was borrowing
to meet the dues of a hundred of crore. And that would be difficult to explain to the investors that
why satyam computer services was borrowing if they had cash reserves.

The Raju family controlled and Construction Company named “Maytas” and it was also profitable
and had been used to make an ambitious real estate play. Maytas had offered to build the

54
Hyderabad metro and it could be assumed that value of that prime real estate would multiply
several times. Further, Raju proposed that satyam would use its reserves to buy Maytas and the
cash (non-existent) would be handed over to buying the controlling stakes of Maytas. The Raju
family continue in control both the companies- Satyam and Maytas. Now, the satyam computer
services reserves were also be resolved because the money was shown as paid to the Raju family.
This was the planned sequence of events.

The board cleared this proposal despite the concept of an IT company taking over a construction
firm. Raju realized that he could not force his deal in this matter then he attempted to find a buyer
for satyam itself. He called up the Hemendra Kothari and told him about the true situation and
asked him to condone the fraud. Kothari refused to do so and went to SEBI. At that stage, Raju
wrote his confession letter.

Then the authorities acted very promptly and it was considered a shocker and a blow to India’s
prestige. The case went to the trial and it involved 216 examination of witnesses and then the
verdict was announced. Ten accused were convicted under Indian section 120B, section 409,
Section 420, Section 467, section 468, section 471 and 477-A of Indian Penal code, 1860.

After that auction was held in April 2009. Tech Mahindra took over the satyam.

55
 CHAPTER V
CONCLUSION AND SUGGESATIONS

56
It is evident from the analysis of the study of white collar crime in the business sector that crime
is not a recent phenomenon in society; it predates civilization itself, and society cannot exist
without both crime and the rule of law. White collar crime is difficult to define and identify since
it is not an absolute.

5.1 CONCLUSION

White collar crime in corporate sector is increasing day by day and these crimes directly affected
the еconomy and public trust. White collar crime in corporate sector is more dangerous to the
society in comparison with the traditional crimes. The court have taken a serious notes of the
growth of such socio-economic offences. The Supreme Court in Gujarat v. Mohanlal Jitamalji
Parwal81 held that the white collar crime has affected the fiber of economic structure of the
economy. This is the time when white collar crime should be given new dimensions that affects
the nation’s economy, health on large scale. These types of acts involves defrauding public belief,
the government make some provision so that the public can save themselves form these greedy
people who are destroying the morality of the society.

The law should change as the crime changes as the existing laws are sufficient enough to deal with
the problem of white collar crime and satisfy the demand of the people. But if any corporation
commits any fraud outside India then the existing laws may not have the jurisdiction to decide on
such matters. The Indian Courts unable to provide justice because of the reason that heavy backlog
of the cases. Even the enforcement agencies are also not adequate enough to tackle the corporate
sector crimes. They do not have any professional trained investigators for the detection and
investigation of crimes.

On the other hand, it has been concluded that the corporation is a separate legal entity which cannot
be charged of any offence. If it is charged, then the only remedy is fine because it has no mind or
bodily punished. There are some special enactments has been done to modify the mens rea in
socio-economic offences. Under Strict liability, statute prohibits certain acts for the commission
of crime and it replaces the presumption of mens rea. Further, the white collar crime in corporate
sector is liable criminally and civil. The motive behind this that the person should be punished
rigorously. Corporation violate the law for economic factor means they want to make profit. To

81
AIR 1987 SC 1321

57
prevent these crimes, there are number of agencies which are dealing with the white collar crime
such as SEBI, Tax department agencies. But they are not enough to investigate the crime. The
government of India, constituted a committee with respect to the reform in criminal justice system
and the committee suggested that most important role is given to the judges for the investigation
and prosecution.

The damages caused by white collar crime in corporate sector is extra hazardous activity and it
also against national welfare and the difficulty relating to the sentencing process is that there is
lack of uniformity by different courts to decide the quantum of punishment. And the purpose of
criminal justice system is to award punishment to the guilty and provide justice to the victim and
this is the method of protecting the society.

White collar crime committed by corporation which has no existence and there is no mind which
can be guilty of criminal intent. The retention of unlawful profits is not tolerated under criminal
law. If a corporation obtains illicit gain, it should be stripped of all the benefits of criminal action.
When an offence is punishable by either imprisonment or imprisonment and a fine, and the
perpetrator is a corporation, the court has the authority to sentence the offender to a fine alone. The
corporate and principal officer's liability If any director manager or secretary or other authorized
officer of the company with whose consent or connivance the offence is committed is declared to
be implicated then being officer of corporate was asserting to act in such capacity shall be deemed
to be guilty of an offence. A corporation can be convicted and the intention of the director shall be
identified that who commit the crime on behalf of the company and who can be accused and
prosecute. To prove the liability of the company’s director, the provision of the special laws must
undergo.

The usual theory is replaced that only poor people commits crime as the white collar crime is
committed by the people of respectability and high social status in the society. The corporations
commits these crimes in greed and for the profit. The corporate sector crimes are the irreparable
loss which caused to the society. There are honest tax payer in the society which helps in the
growth and development of the society but tax evasion is also done by the white collar criminals
which destroys the nation’s wealth. The government of India have not taken any steps towards
the control of these crime as it is necessary to punish criminals equally before law irrespective of
the fact that they have money power. For the better development in the society, a public is

58
necessary for public welfares but if it is misused then the person should be liable for criminal
liability. Corporations that profit greatly from the deal and can only act through their agents and
officers will be fined. Because the act was done with the knowledge and intent of its agent, who
had authority to act in the subject matter, and because the majority of business transactions in
modern day are conducted through corporate bodies, granting them immunity from all
punishments based on the old concept that a corporation cannot commit a crime would remove
effective corporate control and result in the criminal justice system failing.

The corporation should be held criminally liable because there is an individual who act on the
behalf of the corporation then that individual should be held criminally liable. But the corporates
takes the benefit of corporate veil and it is highly advanced technological fraud which is planned
by the master minds. To protect the society at large, it is necessary to bring uniformity in the law
and procedure.

5.2 SUGGESTIONS

 The trial should be speedy and harsh punishment should be given to the white collar
criminals and the intention of the legislation should be interpreted properly and wrongdoer
should be punished accordingly. No leniency should be there for the punishment in
corporate criminals as it is harm to the society as whole.
 Stricter and more severe penalty, in light of the seriousness of the harm done to society as
a result of these offences. If the victim receives a light or lenient sentence, it is considered
egregious injustice. Many innocent people are being harmed. If the legal system ignores
the tremendous harm that these corporate criminals cause to society, the social justice
system will be hampered, which will have an impact on democracy.
 Due to a large backlog of cases and pending cases, it is suggested that exclusive courts be
established and judges be appointed so that a larger number of courts can be established to
promptly bring offenders to justice.
 The technique must be basic and straightforward. Judges make decisions based on fairness,
equity, and good conscience rather than technicalities, while legal professionals, including
economically educated lawyers and legally literate economists, develop legal regimes to
interpret and apply legislation for societal welfare.

59
 Changes to the criminal procedure code are required, as enforcement agencies constitute
an integral part of the criminal justice system's administration.
 It is necessary to improve the image of police and investigating organizations and ensure
their reliability. Law and order should be separated from the investigating wing. At the
state and national levels, there should be a security commission.
 Financial Regulators must be established to oversee the regulation of all financial services
transactions conducted by the company. It has the authority to refuse to grant or renew
licenses under its regulatory authority.
 There should be establishment of office of director of corporate enforcement for securing
obedience with the provision of the company’s acts.
 Improving sentencing skills should be a priority, with the goal of increasing consistency in
sentencing methods. All alternative sentences and their use in appropriate situations should
be taught to the trial judge.
 To provide corporate trial, only special judges of a senior cadre should be assigned, and it
should be assigned only to one judge so that he can develop the expertise required and
become familiar with the special features of these offences, as well as to ensure uniformity
in the interpretation of relevant laws.
 Corporate crimes are conducted against the higher strata of society, and members of such
classes are only deterred by the danger of losing their jobs. In such circumstances, public
disapproval has been deemed an effective punishment. A specific publication of the
punishment in an unofficial periodical in the area where the business sector offences were
committed or where the condemned person resides and all those publications should be
made at the cost of the accused person
 The judiciary has failed to award sentences which is proportionate to gravity of offences.
 Public must be aware about the occurrence of these crimes and the social sanction is
necessary to control these crimes.
 Failure to comply with legal obligations with "purpose to evade" even without criminal
intent or negligence, failure to pay tax on time, and evasion of tax must all be deemed
"economic crimes." The culprit should be sentenced to 2 to 7 years in prison and fined.
And property ossification.

60
 The administrative legislation should be modified to safeguard against administrative
harassment, and the CVC should be empowered to protect against such harassment as well
as physical violence. Whistleblowers should have the option of releasing material to the
public as a last resort. When the authority's action to progress is insufficient. SEBI and CCI
must be given the authority to regulate whistleblowers and provide provisions for honest
recompense.
 Existing legislation is sufficient to combat corporate criminality. However, according to
the NCRB research, economic and corporate crime are on the rise. Companies like Satyam,
Vijay Malyya bank, and coal scams have shown that present rules are insufficient and that
reformative measures are required. Changes in the form of punishment, procedure, and trial
should be made. The trial should be completed quickly and without delay, and it should be
a summary trial. It is critical to understand the intent of statutory legislation in order to take
action against wrongdoers under specific statutes. It needs to be correctly interpreted and
sanctioned.
 There is a proposal of adding some provision in Indian Penal code which includes five
types of fraud such as Bank fraud, corporate fraud, tax fraud, insurance fraud, financial
fraud and consumer fraud. Because of this, the perpetrators will be held criminally liable
for the acts they have committed as they are also the category of white collar crime.

61
 BIBLIOGRAPHY

ACTS:
 The Companies Act, 2013 (Act No. 18 of 2013)
 The Prevention of money Laundering Act, 2002.
 The industrial (Development and regulation) Act, 1951 (Act No. 65 of 1951)
 The Indian Penal Code, 1860 (Act no 45 of 1860).
 The Custom Act, 1962 (Act No. 52 of 1962).
 The Income Tax Act, 1961 (Act No. 43 of 1961).
 The Foreign Exchange Act, 1999 (Act No. 42 of 1999).
 Information and Technology Act, 2000 (Act No. 21 of 2000).
 The Constitution of India, 1950.

BOOKS:
 Sutherland Edwin: White collar crimes, Praegers publishers 1983.
 Kumar Dr. Shailesh singh: White collar crimes, Regal Publications, 1st edn, 2014.
 Koolwal Manju: White Collar crimes (Indian and Abroad), Kamal Publishers January
2017.
 Gaur K.D: Criminology and Penology, Deep and Deep Publication, New Delhi, 2003.

ARTICLES:

 Anand, Atul; Dimensions of White collar crime in India- A legal study, 6 IJRAR
(2019).
 Ali, Aroj; Impact of White Collar Crime and Essence of Special Enactment, 6
IJHSSE, (February 2019).
 Sutherland, Edwin; Crime and Business, 217 AAPSS 300 (1941).

 Singh, Deepa; An analysis of White collar crime in India- A Study, 7 IJTC 117
(2018).

62
  Upadhyay, Dr. Minal H; White collar crime in India, 2 IJRHSS 22, (2014).
 D. Norris; White-collar crime: corporate and securities and commodities fraud, 4
JAAPL (2009).
 Kumar Sahu, Gyanender; White collar crime: A legal challenge on Indian Corporate
system, The International Journal of legal Research, vol.7, No.8 (August 2015).
 L. Bartels, Tyler; An Overview and Examination of the Prevention and Punishment of
white collar crimes, University of Florida 245 (2014).

REPORTS:
 47th report Law commission of India, Government of India, 1972.
 Report of the committee on prevention corruption, Government of India – 1962
 Report of the Santhanam Committee, 1972.
 The Organization of Economic Cooperation and Development, Report on ‘Effective
Interagency Cooperation in Fighting Tax Crimes and other Financial Crimes (2013)

WEB SOURCES:
 http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?id=826.
 http://www.unafei.or.jp/english/pdf/PDF_ThirdGGSeminar/Third_GGSeminar
_P3-9.pdf.

 www.ncjrs.gov/pdffiles1/nij/grants/208135.pdf.

63