INTRODUCTION
White-collar crime refers to financially motivated nonviolent crime committed by
business and government professionals. The concept of white collar crime was first
given by E.H. Sunderland in the year 1939 who pointed out that besides traditional
crimes like theft, robbery, rape, murder etc., there are certain anti-social activities
which the person of upper strata do in course of their occupation or business. Typical
white-collar crimes include fraud, bribery, insider trading, cybercrime, copyright
infringement, money laundering identity theft and forgery. As per 47 th Law
Commission of India Report on Trials and Punishment of Socio-Economic
Offences,1972, white collar crime means “ a crime committed in the course of one’s
occupation by a member of the upper class of society”.
Earlier these activities were accepted as a part of usual business tactics that are
necessary for a shrewd professional man for his success. In white-collar crime a
person’s desires and aspirations is regarded as a triggering factor. Today people
involved in white collar crimes has spread in all fields. With the advent of technology
and growth of education, white collar crimes are on the rise. In India, white collar
crimes are spreading like a rapid fire in almost every sphere of the society. This
thought was popularized by Edwin H. Sutherland, in the year 1939 by defining such a
crime as one committed by a person of high social status in the course of his
occupation or business. He also included crimes committed by corporations within his
definition. He is the one who made white collar crimes a crime. He defined a white
collar criminal as “a person of the upper socio-economic class who violates the
criminal law in the course of his occupational or professional activities.” He was also
of the opinion that white collar crimes are more dangerous to society than ordinary or
traditional crimes because of greater financial losses and because of the damage
inflicted on public morals.
These crime are committed by people of high status in society such as doctors,
advocates, chartered accountants, governments officials and not by hardcore criminals
for e.g. Thieves robbers, dacoits, murders, rapists, etc. means of crimes differ from the
traditional crimes as fraud, misrepresentation, adulteration, malpractices, irregularities
etc. These crimes are committed by means of deliberate and planned conspiracies
without any feeling and sentiments. When socio-economic crimes are committed
people tend to tolerate them because they themselves indulge in them and they
themselves often identified with those who do so. Originally white-collar crimes
meant to describe middle and upper class, business persons who committed crimes in
normal course of their work. But now bit refers to a wide variety occupationally
oriented violations committed by persons in any class. The victims of socio economic
offences are normally the entire community, society or even the entire nation besides
the individuals. These crimes do not involve or carry with them any stigma while the
traditional crimes carry a stigma with them involving disgrace and immorality. These
crimes constitute a separate category because the control of such crime ‘involves the
protection and preservation of the general health and economic system of the entire
society against the exploitation and waste.’
In Indian as well as in international perspective the whole legal frameworks to hold
the corporations and multinational companies accountable are systematically being
dismantled, even as corporations and other agents of globalization dictate policies of
nations. The corporate sector enjoys far more rights than the common people. With
the onset of the new trade regime, national laws are being changed to empower
corporations with the right to hire and fire at will, to get the first right over natural and
community resources. But now the time has come to put a check over their arbitrary
acts. There has been a debate as to whether a Corporation can be held criminally
liable.
It is true to the common knowledge that there are certain professions which offer
lucrative opportunities for criminal acts and unethical practices which is very often
overlooked by the general mass of the society. There have unethical persons in
business from various other professions, who tend to become unscrupulous because of
no reason apart from the thirst of gaining more and more for themselves. Therefore,
they do these illegal activities with impunity without the fear of loss of prestige and
respect. In a paper entitled Criminal Capitalist, in 1872, Edwin C. Hill noted the
significance of crime as an organized business requiring the cooperation of real estate
owners, investors, manufacturers and other honest people.
The earliest documented case of white-collar crime law goes back to 15th century is
England. The case is popularly known as the Carrier‘s case of 1473, where the agent
was entrusted to transport wool and he attempted to steal some of it for him. Therefore
the Star Chamber and Exchequer Chamber of the English Court of Law adopted the
breaking bulk doctrine as it constituted the crime of larceny. The cases of white collar
crimes mainly started gaining momentum during capitalism. Therefore, the Dutch
Marxist, William Bonger contended that criminal attitude develops among the
working class under capitalism due to conditions of misery and at the same time the
criminal attitude develops among the bourgeoisie when capitalism strives. It
succeeded in United States of America in 1890, when Congress passed the Sherman
Antitrust Act which took the initiative to make the monopolistic trade illegal.In India,
most of the white collar crimes are defined and made punishable under the general
criminal law i.e. Indian Penal Code, example cheating, forgery, bribery, violation of
trademarks, food adulteration etc.. Special enactments have also been passed to deal
with white collar crimes example FERA, COFEPOSA, Trade and Merchandise Marks
Act, etc.
White collar crimes is prevalent in almost all occupations and professions in our
society. The report of Vivin Bose Commission of Inquiry into the affairs of Dalmia-
Jain group of companies in 1963 highlights how these industrialists indulge in white
collar crimes such as fraud, falsification of accounts, tax evasions, etc.. There was a
similar case about the big business magnate Mundhara who wanted to “build up an
industrial empire of dubious means”. There were as many 124 prosecutions against
this business tycoon and companies owned and controlled by him and most of them
resulted into conviction.
Corruption and white collar crimes: In India, corruption exists in various forms like
bribery, illegal gratification etc. The well-known episodes of corruption are various
scams relating to Bofors guns, fodder, sugar imports, Sukh Ram affair, Hawala deals,
illegal allotment of shops and petrol pumps etc.
The main problem lies with the judiciary as there have been various instances where
the judicial system is not able to convict the white collar criminals. The Supreme
Court has prescribed stiffer punishments for white collar criminals but the attitude of
lower judiciary remains unchanged towards white collar offenders.
The Public Interest Litigation has proved to be a strong and powerful weapon in the
hands of the Court enabling it to unearth many scams and corruption cases in public
life and to punish the guilty involved. Hawala scam, Fodder scam, Urea scam and
illegal allotments of government houses and petrol pumps etc. have come to light
through the PIL.
Public outcry can be seen these days, specially, against the socio-economic offences,
like, food adulteration, wide spread corruption, huge scams of billions of rupees and
unaccounted black money of the few people stashed in foreign banks etc. India has
become a fertile land for the corruption. New scam is coming to light every day.
Newspapers and news channels are full of the stories related to the corruption in high
ranked officials. The representatives of the people and the ministers in the state and
the central Governments are involved in the huge scams. The reasons for the failure of
the governments to check corruption are, therefore, not far to seek. Whatever attempts
are made of the investigation, it appears, they are made half-heartedly and to cover up
the scams.
In the recent past, the entire session of the parliament has been wasted by the
government and the opposition only in confrontation over the refusal of the ruling
party to appoint Joint Parliamentary Committee (JPC) on 2G scam which later on it
agreed to set up but having caused colossal loss to the nation by way of depriving it of
a full debate on burning issues in the Parliament. Sincere attempts are not being made
to deal effectively with massive corruption. Doubts have been raised without much
basis by the government functionaries on the correctness of the CAG report on the 2G
scam and the intention behind this seems to be to nullify the scathing observations
made against the government in the CAG report. People are expressing serious doubts
as to whether finally anyone will be held guilty for the economic offences which have
been committed. Judicial process is cumbersome and long delays in deciding such
matters become inevitable because of dilatory tactics of the parties. Further, laws are
not adequately stringent against the socio-economic offences. It is important,
therefore, to critically examine the law relating to corruption in India as in vogue, and
see whether in its present form its continuance can be allowed and what measures
need to be taken to make it robust and deterrent if the menace of corruption is to be
eradicated from the Indian public life.
The concept of white collar crimes has been given by E.H. Sutherland, a noted
criminologist. He studied in United States in late 1930s the business crimes,
professional crimes and crimes by the medical practitioners in the course of their
occupation which he classified as white collar crimes i.e. crimes committed by well to
do members of the society to make riches at the cost of human deprivations in the
course of their occupation. This study will examine the applicability of the concept of
white collar crimes as stated by Sutherland in the Indian perspective.
Socio-economic offences are distinct from the traditional crimes such as murder, rape,
theft, dacoity, trespass, assault and like. The consequences which follow after the
commission of these offences impact the social and economic fabric of society as a
whole. As a result, the foundation of law on which the society and its economy stands
comes under direct threat. The victim in the case of socio economic offences is not an
individual or a select group but the society and the state as a whole. These crimes are
perceived differently in our society. It may be due to the reason that damage caused by
such crimes is not immediately noticed. Often, the reaction to such crimes is mild
unlike traditional crimes like murder or sexual crimes where the public expression of
disapproval is often strongly put across to the people administering justice.
Common human weakness viz. greed is seen as the motive behind socio economic
offences. Horace, the Roman poet once had remarked, ‘He who is greedy is always in
want.’(65 B.C. to 8 B.C.).Wisdom tells that avarice knows no bounds. It is the prime
motive in such offences. Traditional crimes were seen as deviant behavior of people
coming from lower strata of society. They carried stigma which is absent in the case
of socio economic offences. Socio economic offences are understood to be committed
by well heeled, rich or the elite people in the society. They are people with money,
who desire more money. They corrupt the functionaries of law to acquire more and
more wealth. As a result, they end up corrupting the social atmosphere which injures
the economy of a nation. It demoralizes honest official functionaries and induces
decay in the society. The legal redress machinery also suffers from it.
Edwin Sutherland coined the term white-collar crime in the 1930's as crime
'committed by a person of respectability and high social status in the course of his
occupation. The scope of study of these offences has continuously grown. As
urbanism and corporate culture appears to dominate the social setting of the Indian
society, the study of the concept of white collar crimes with an Indian perspective
acquires greater relevance. The fact that the subject receives scant attention in
academic and mainstream discourse in spite of the tremendous impact it has on our
economy and society has been the main reason for undertaking the present study.
It may be appropriate to state at this stage that Corporations at Eloor, Kodaikanal and
Gujarat have not only destroyed the water and land resources in these areas, but also
impoverished communities by degrading their livelihood resources and health. All
these communities suffer from disasters similar to Bhopal. Inaccessibility to clean and
safe drinking water was found to be a major problem in all these areas. There is a
sudden spurt of cases of employee's accused of fudging account books or cheating
customers. The Ernst and Young fraud survey finds that corporate India is
experiencing a wave of white-collar crime like never before.
The 29th Law Commission Report of India enumerated the following factors
responsible for the increase of white-collar criminality in India:
The advances of technological and scientific development are contributing to the
emergence of 'mass society'. With a large rank and file and a small controlling
elite, encouraging the growth of monopolies, the rise of managerial class and
intricate institutional mechanism. The inability of all sections of society to
appreciate in full, this need results in emergence and growth of white-collar and
economic crimes.
Various statutes have been passed to check the disease of white collar crimes, an
outline of which is given hereunder:
1. Offences under the Narcotic Drugs and Psychotropic Substances Act, 1985 -
e.g. Contravention in relation to opium poppy and opium.
2. Offences under India Penal Code (part B) - e.g. Counterfeiting currency notes
or bank notes.
3. Offences under the Wildlife (Protection) Act, 1972 - e.g. Contravention of
provisions of section 48 relating to purchase of animals etc by license.
4. Offences under the Prevention of Corruption Act, 1988 - e.g. taking
gratification for exercise of personal influence, with public servant.
In addition to the provisions of IPC/Cr.P.C., so many special laws are in force, which
aim to check the white-collar criminals. It is well known that white-collar criminals are
much more dangerous to society than ordinary or blue-collar criminals. The question then
arises as to why many white-collar criminals go unpunished.
The Supreme Court indicated its policy regarding the punishment of white-collar
crimes in the context of corruption by public servants in Som Prakashv. State of
Delhi1. Severe punishment must be prescribed to root out such social danger. It was said
that though all-intensive efforts to track down bigger criminals were needed; courts
could not slow down because bigger criminals were to be caught.
The Supreme Court in Vineet Narain and Others vs. Union of Indiaand Another 2, had
directed that the Central Vigilance Commission (CVC) be given statutory status.
Selection for the post of Central Vigilance Commissioner shall be made by a
Committee comprising the Prime Minister, Home Minister and the Leader of the
Opposition from a panel of outstanding civil servants and others with impeccable
integrity to be furnished by the Cabinet Secretary. The appointment shall be made by
the President on the basis of the recommendations made by the Committee. This shall
1
(1974) 4 SCC 84.
2
(1998) 1 SCC 226.
be done immediately. These directions were made so that the corruption in the high
ranked officers and the government servants should be able to deal with effectively.
Central Vigilance Commission Act of 2003 was passed with the said objectives. The
appointment of CVC came in great controversy before the Supreme Court in recent
“2G Spectrum scandal” case.
This study will highlight some of these biggest scandals in Indian history and will try
to find out why all the mechanisms so far have failed to deal with these scandals.
Attempt has been made to confine the present study in critically analysing the scheme
of CVC Act of 2003, the Prevention of Food Adulteration Act of 1954 and the
Prevention of Corruption Act of 1988, given the constraint of time to complete this
study.
Originally, white-collar crimes were seen as involving middle and upper class
businesspersons who committed crimes in normal course of their work. But now it
refers to a wide variety of occupationally oriented violations committed by persons of
any class. The victim of socio-economic offences is normally the entire society or
even the entire nation besides the individuals. Despite acknowledgement of the
problem the problem of white collar crimes has not received due attention. This study
will attempt to emphasize the need to give a streamlined legal treatment to the
problem besides highlighting the magnitude of the problem. It is necessary to confront
academically the enormous damage done to the Indian society as a result of white
collar offences.
The general impression that is gaining around is that these crimes do not involve or
carry with them any stigma while the traditional crimes carry a stigma with them
involving disgrace and immorality. These crimes constitute a separate category
because the control of such crime 'involves the protection and preservation of the
general health and economic system of the entire society against the exploitation and
waste.’ This impression will be explored fully to understand the nature of the
problem.
STATEMENT OF THE PROBLEM
In a country like India where large scale starvation, mass illiteracy and ignorance
affect the life of the people, white collar crimes are bound to multiply in large
proportion. Control of these crimes is a crucial problem for the criminal justice
administration in this country.
It must be stated that a developing country like India where population is fast
escalating, economic offences are increasing by leaps and bound besides the
traditional crimes. These are mostly associated with middle and upper class of society
and have added new chapter to criminal jurisprudence. To a great extent they are an
outcome of industrial and commercial development and progress of science and new
technology. With the growing materialism all around the world acquisition of more
and more wealth has become the final end of human, activity, consequently, moral
values have either changed or thrown, to winds and fraud, adulteration,
misappropriation, misrepresentation, corruption, evasion of tax etc. have become the
techniques of trade, commerce and profession. It is for the criminal law administrators
to contain the tendency by stringent legislative measures. It is rather disappointing to
note that though white collar crimes such as black market activities, evasive price
violations, rent-ceiling violations, rationing-law violations, illegal financial
manoeuvres etc. by the businessmen are widespread in society, no effective program
for repressing them so far been launched by the law enforcement agencies. Perhaps
the reason for white collar crimes being carried on unabated is that these crimes are
committed generally by influential persons who are shrewd enough to resist the efforts
of law, enforcement against them.
The first and foremost task of the wing is to track down economic offenders who have
fled the country after committing a crime and duping banks and other financial
institutions of crores of rupees. The wing has been tasked to gather intelligence and
also share and act on information being provided by organizations like Stock
Exchange Board of India and Intelligence Bureau.
OBJECTIVES OF THE STUDY
The objective of this study is to find out that we have specific legislations to trace out
white collar criminality offenders go unpunished.
To propose at this present juncture what we need is:
1. Strengthening of our enforcement agencies such as Central Bureau of Investigation,
the Enforcement Directorate, The Directorate of Revenue Intelligence, The Income-
tax Department and the Customs Department. Concentration and distribution of
national wealth must be done in a proper manner.
2. Speedy trial should be arranged by appointing more Judges.
3. Central Vigilance Commission must keep a constant vigil on the workings of the
top ranking officers.
4. General public must not avoid being engaged themselves in the prosecution of the
White-collar criminals as the offence in general is directed towards them.
5. Lastly if they are traced and proved guilty then Deterrent Theory of punishment is
an apt one.
HYPOTHESIS
The hypothesis for this research shall be:
1. Such crimesaffects not only to corporate world but also has adverse effects on the
society and also at the economy of the country at large.
2. Such crimes reduces the interest of the general public into corporate investment.
3. Legislature has played an important role to protect the interest of the society.
RESEARCH METHODOLOGY
The methodology of research for this dissertation that the researcher will adopt is
doctrinal so as to find out that we do have specific legislations in order to punish white
collar offenders then what is reason why the white collar criminals go unpunished and
also to gather relevant information from existing notable works on the topic in foreign
and Indian jurisdiction and then analyse the same in order to arrive at a better
understanding of important issues and finally come up with a solution.
BIBLOGRAPHY
Primary Sources:
Acts:
1. The Indian Penal Code
2. The Code of Criminal Procedure 1973
3. The Prevention of Corruption 1964.
4. The Chief Vigilance Commission Act, 2003
Reports:
1. Santhanam Committee Report on Prevention of Corruption, 1964
2. 29th Law Commission Report
3. 47th Law Commission
4. The Ministry's Department-Related Parliamentary Standing Committee, Thirty-
seventh Report
Secondary Sources:
Books:
1. Ratanlal and Dhirajlal, ‘The Indian Penal Code’, 30th edition 2006, Wadhwa.
2.Ahmad, Siddique, Criminology Problems perspectives, Eastern Book Co.,
Fourth edition.
3. K.D. Gaur, ‘Criminal law’, 3rd edition, 2015.
4. Ram Ahuja, ‘Criminology’, Rawat Publications, 2000.
5. Manju Koolwal, ‘White Collar Crimes in India and Abroad’, 2015.
6. Neeraj Kumar Gupta, ‘Criminology’, 2015.
7. S.M. Afzal Qudri, ‘Criminology Problems’, 2005.
1. Katherine S Williams, ‘Textbook on Criminology’, 2001.
Journals:
1. IRJC International Journal of Social Science & Interdisciplinary Research
Vol.1 Issue 9, September 2012.
2. International Journal of Research in Humanities and social sciences, vol.2
Issue: 2, February, 2014.
Articles:
1. Sutherland Edwin H, White Collar Criminality, Published by American
sociological Review, Vol. 5, No. 1. Feb. 1940. pp. 1-12. Published by
American Sociological Association.
2. K. P. Joseph. Lessons from Bihar Fodder Scam. Economic And
PoliticalWeekly, Vol. 32, No. 28 (Jul. 12-18 1997
3. “Seymour Martin Lipset Encyclopaedia of Democracy” ‘corruption’ Vol. 1, P.
310
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