SOCIO ECONOMIC OFFENCES
MODULE 1- INTRODUCTION TO SOCIO ECONOMIC OFFENCES
DR SATYAJIT MOHANTY, IPS, RETD.
OBJECTIVE OF THE COURSE
To expound the scope of socio-economic offences and explain how it is different from other kinds of
offences
To explore the relevant special laws and policy tools that are in place to combat such offences
To give students a comprehensive understanding of contemporary patterns and characteristics of
socio-economic offences
To enable the students to understand and appreciate causes of socio-economic offences
To appreciate the roles and responsibilities of the agencies responsible for investigation and
prosecution of such offences
To develop students' analytical skills in relation to socio-economic offences and operation of the
combating measures
COURSE OUTLINE
Module Description Duration
No
Module 1 Introduction to Socio-Economic offences 8 hrs
Module 2 Corruption and Economic Offences 12 hrs
Module 3 Trafficking of Persons and Contrabands 10 hrs
Module 4 Adulteration related Offences 6 hrs
Module 5 Money Laundering 10 hrs
Module 6 Laws relating to certain Social Offences 10 hrs
Module 7 Investigation and Prosecution Agencies 8 hrs
EVALUATION
End-term Examination – 60 marks
Project – 25 marks
Tutorial – 15 marks ( Monday 3.35 PM to 4.35 PM, LH 4 & 5) Attendance
Compulsory
Google Classroom Code: ogc6wjw
MODULE -1
Module 1: Introduction to Socio-Economic Offences
Nature and Extent of Socio-Economic Offences.
Distinction among Socio-Economic Offences, White Collar Crimes and Traditional Crimes
Mens Rea, Nature of Liability and Burden of Proof
The Socio-Economic Offences in India: The Santhanam Committee Report, 1964, the 29th Report of
the Law Commission of India, 1966, the 47th Report of the Law Commission of India, 1972.
MODULE – 2 & 3
Module 2: Corruption and Economic Offences
Prevention of Corruption Act, 1988
Benami Transaction Prohibition Amendment Act, 2016
Essential Commodities Act, 1955
Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980
Module 3:Trafficking of Persons and Contrabands
Immoral Traffic (Prevention) Act, 1956
Bonded Labour System (Abolition) Act, 1976
Narcotic Drugs and Psychotropic Substance Act, 1988
MODULE 4 & 5
Module 4: Adulteration related Offences
Drugs and Cosmetic Act, 1940
Food Safety and Standards Act 2006
Module 5: Money Laundering
The Foreign Exchange Management Act, 1999 (FEMA)
Prevention of Money Laundering Act, 2002
The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)
Fugitive Economic Offenders Act, 2018
MODULE 6 & 7
Module 6: Laws relating to certain Social Offences
Dowry Prohibition Act, 1961
Pre-Conception and Pre-Natal Diagnostic Techniques Act, 1994
Prohibition of Child Marriage Act, 2006
Module 7: Specialised Investigation and Prosecution Agencies
Central Bureau of Investigation
Central Vigilance Commission
Enforcement Directorate
Narcotics Control Bureau
Lokpal and Lokayukta
SOCIO-ECONOMIC OFFENCE - CONCEPTS
The term “socio-economic offence” traces its origin to the Indian criminal jurisprudence
The Santhanam Committee ( Committee on Prevention of Corruption 1964) while in its report dealt
extensively on corruption in public life mentioned the term “social offences” for the following offences
“The India Penal Code does not deal in any satisfactory manner with acts which may be described as social
offences having regard to the special circumstances under which they are committed and which have now
become a dominant feature of certain powerful section of the modern society. Such offences may be
broadly classified into:
Offences calculated to prevent or obstruct the economic development of the country and endanger its
economic development
Evasion and avoidance of tax lawfully imposed
Misuse of their position by the public servants in making of contract and disposal of public property, issue of
licenses and permits
SOCIO-ECONOMIC OFFENCE - CONCEPTS
Delivery by individuals, commercial and industrial undertakings of goods not in accordance with the
agreed specifications in fulfilment of contracts entered with public authorities,
Profiteering, black-marketing and hoarding,
Adulteration of food stuff and drugs
Theft and misappropriation of public property and funds
Trafficking in license and permit etc.
The Committee was of the opinion that “it is desirable to add a new chapter to the Indian Penal Code
so that all the social offences find a prominent place in the general criminal law of the country.”
The Committee extensively dealt with the “white collar crimes” in the Indian context and categorised
most of such “social offences” under its broad sweep
SOCIO-ECONOMIC OFFENCE - CONCEPTS
The government decided to refer the recommendation to the Law Commission (29th Law Commission Report,
Proposal to include certain Social and Economic Offences in the Indian Penal Code, 1966) to examine the
desirability of adding a new chapter on such offences in the Indian Penal Code
The Law Commission while arguing that the special laws should continue as such without being part of the IPC,
termed some of the offences dealt by Santhanam Committee as “public welfare offences” , “quasi-criminal
offences”, “anti-social offences” – applicability of “strict liability” or “vicarious liability” in place of “mens rea”
Under Appendix – 10, the Law Commission listed out nine Acts which it captioned under “Anti-social Offences”
other than offences listed by Santhanam Committee:
Child Marriage Restraint Act 1929
The Untouchability (Offences) Act 1955
The Young Persons (Harmful Publication) Act 1956
The Dowry Prohibition Act 1961 etc.
RECOMMENDATIONS OF 47TH LAW COMMISSION REPORT
Objective: Desirability of dealing with adequately and swiftly such “anti-social and economic offences”
While dealing with the salient features of such offences the Commission records the following:
1. ‘Motive’ of the criminal is avarice or rapaciousness (not lust or hate).
2. ‘Background’ of the crime is non-emotional.
3. ‘Victim’ is usually the State or ‘consuming public’.
4. Mode of operation is fraud, not force.
5. Act is deliberate and wilful.
Social interest to be protected by the state in the preservation of property, wealth and health of
individual members and national resources, and of the general economic system from exploitation by
individuals or group
RECOMMENDATIONS OF 47TH LAW COMMISSION REPORT
The 47th Law Commission while dealing with the nature of such offences describe them as “public welfare
offences”(the term ‘public welfare offences’ was coined by Prof Francis Sayre of Harvard Law School in a classic
article. He used it to denote a group of offences and public nuisances punishable irrespective of the actor’s state
of mind), “regulatory offences” or “civil offences” while some can be akin to “traditional crimes”
Illustrating the distinction of such offences from “white collar crimes” (loosely defined as crime committed by
upper class of the society in course of their occupation - Edward Sutherland) the Commission states:
“A manufacturer of drugs who deliberately supplies substandard drugs is, for example, a while collar criminal, so is
a big corporation is guilty of fraudulent evasion of tax; But a person who illegally smuggles a costly television set
for personal use is not a white collar criminal in the above sense. Nor a pensioner who submits a false return on
income tax.”
But all of them are guilty of “social and economic offence”
“In short, social offences affect the health or material of the community as a whole, and not merely of individual
victims. Similarly economic offences are those which affect the country’s economy, not merely the wealth of an
individual”
THE INTERSECTING CIRCLES
▪ Socio-economic offences and
White-collar crimes could be
intersecting circles.
SOCIO-
▪ Again, socio-economic offences ECONOMIC
OFFENCES
and public welfare offences/crime
with strict liability
could be represented by PW WHITE
OFFENCES/ COLLAR
STRICT CRIMES
intersecting circles LIABILITY
OFFENCES
IS IT AN INTERSECTING CIRCLE OR A SUBSET ?
TYPES OF WHITE COLLAR CRIMES
But, could we tag
Cybercrime & IP
Theft under
socio-economic
offences ? If yes,
the subset theory
may be validated.
IS A BROAD DEFINITION POSSIBLE ?
Based on these observations, if we attempt to define a socio-economic offence, it can be broadly
termed as an activity that harms the allocation and organization of resources in a society.
A purely social evil like sati or atrocities towards members of scheduled caste/ scheduled tribe
(creating lack of opportunity for those involved to access the resources) and a purely economic
conduct like tax evasion find a justifiable place in such a list
But, consider the counter-argument that even murder deprives the society of a valuable human
resource and so, all offences are essentially anti-social.
What differentiates these offences then from those penalised as offences against property or person
in the Indian Penal Code?
In the case of socio-economic offences, the injury to the society is predominant, unlike other offences,
where injury can be traced to a particular individual.
THE 47TH LAW COMMISSION DEFINITION
“In short, social offences affect the health or material of the community as a whole, and not merely of
individual victims. Similarly economic offences are those which affect the country’s economy, not
merely the wealth of an individual”
MENS REA, NATURE OF LIABILITY & BURDEN OF PROOF
The fundamental principle of penal liability is actus non facit reum, nisi mens sit rea, (the act itself is not criminal
unless accompanied by guilty mind)
In law, crime consists of two elements- actus reus and mens rea; the former represents the physical aspect and the
latter its mental aspect.
Conventional crimes defines these state of mind in words like intentionally, knowingly, voluntarily, fraudulently,
dishonestly etc. Mens rea must extend to all three parts of an act, i) physically doing or not doing ii) the
circumstances and iii) the consequences
Although mens rea is a sacrosanct principle of criminal law, it can be waived in certain circumstances and in
certain cases a statue can impose strict liability, the presence or absence of guilty mind is not relevant
Many statutes dealing with socio-economic crimes do not require any mens rea- “ intention to commit a breach of
statute need not be shown; a breach in fact is enough
Some critics therefore do not regard them as real crimes but as regulatory offences or quasi-criminal offences-
mala prohibita ( wrong because it is prohibited) in stead of mala in se ( crime that is considered wrong in and of
itself )
MENS REA
Mens rea requirement is a common law legacy. However, there are instances in common law where the
doctrine is dispensed with (like public nuisance, possessing counterfeit currency, kidnapping, waging
war, sedition).
This was justified because
(i) it was difficult to prove mens rea in some cases,
(ii) as they were penalised under social welfare legislations, a purposive construction was required to
further the objectives of the Act.
(iii) punishment in these cases is usually light and
(iv) they are offences which are in the nature of mala prohibita and not mala in se.
PUBLIC WELFARE OFFENCE ?
Most of the statutory enactments focus their attention on the acts themselves, irrespective of the
mental intention.
This is one reason why some others refuse to consider it a ‘crime’, as it does not punish a guilty mind.
Many attempts have been made to separate this class of offences from those of obvious criminality.
Such attempts resulted in the classification of these offences in the category of ‘administrative penal
law’ and ‘public welfare offences’.
As Sayre asks, “are we to look forward to a day when criminality will be based on external behaviour
alone irrespective of intent?”
PUBLIC WELFARE OFFENCES
Several modern statutes passed in the interests of public safety and social welfare waives
mens rea and in stead imposes strict liability in matters concerning public health, food, drugs
etc.
Examples; The Motor Vehicle Act, The Arms Act, The NDPS Act, The Public Liability Insurance
Act
Similarly, in other statutory offences like bribing, smuggling, Forex violations, sale of
adulterated articles etc. the guilty mind is taken not into account by the court
The underlying principle of justification for such statutory offences is pointed out by Roscoe
Pound, Dean, Harvard Law School);
“Statutory crimes express the needs of the society. Such statutes are not meant to punish vicious will,
but to put pressure on the thoughtless and inefficient to do their whole duty in the interest of public
health, safety and morals.”
LEADING CASE: STATE OF MAHARASTRA V MH GEORGE, AIR 1965 SC 722
RBI, under Sec 8 of the then FERA, placed some restrictions on the entry of gold to India ( gold can be brought to
India on a transit provided that such gold was declared in the manifest for transit)
The accused left Zurich by plane and reached Bombay ( on the way to Manila), where the gold bars were
recovered from his jacket by the custom officers
The plea of the accused was that he had no mens rea and that he had no knowledge of the RBI guidelines
SC held that there was no scope for the invocation of the doctrine of mens rea in this particular case
According to the provisions of the Act, the very concept of “bringing” or “sending” would exclude an involuntary
bringing or sending (absolute embargo)
If bringing into India was a conscious act, the mere “bringing” constitutes the offence, and no further mental
condition is postulated as necessary to constitute an offence
The dissenting minority judgment of Subbarao J strongly emphasized the common law presumption of mens rea
asserting that a court cannot “ignore mens rea on a slippery ground of a welfare measure unless the statute
compels it to do so.”
LEADING CASE: STATE OF MAHARASTRA V MH GEORGE, AIR 1965 SC 722
The accepted propositions in this case could be summerised as follows:
Unless a statute either clearly or by necessary implication rules out mens rea as the constituent part
of the crime, an accused should not be found guilty unless he has a guilty mind
The question of “necessary implication” is to be determined from the object of the statute. Strict
liability would be implied, if the very object of statute would be defeated by reading mens rea into it.
Mere fact that the object of the statute is to promote public welfare or curb grave social evil is not
enough to exclude mens rea.
Where it can be shown that imposition of strict liability would result in the conviction of a class of
persons whose conduct could not in any way effect the observance of the law, strict liability is not
likely to be intended.
STATE OF MADHYA PRADESH V NARAYAN SINGH 1989 3 SCC 596
In this case a lorry driver and a helper were prosecuted for transporting fertilizers without a permit in
contravention of the Fertilizer Movement Control Order (FMC Order) under Sec 3 & 7 of Essential
Commodities Act
The trial court and the High Court held that they were not liable for conviction since the prosecution
failed to prove mens rea on their part in transporting the fertilizers
Supreme Court set aside the orders; held the words in Sec 7 (1) are “if any person contravenes
whether knowingly, intentionally or “otherwise” any order made under Sec 3”. The section is
comprehensively worded so that it takes within its fold not only contraventions done knowingly or
intentionally but even “otherwise”, i.e., done unintentionally.
The element of mens rea in transportation of fertilizers without a valid permit is therefore not a
necessary ingredient for convicting a person for contravention of an order
STATE OF ORISSA V K RAJESWAR RAO AIR 1992 SC 240
In this case the respondent was found to have sold adulterated cumin (Jira) punishable under
Prevention of Food Adulteration Act
The sole question that emerges for consideration is whether it is necessary that the respondent
should be the owner of the shop for being prosecuted
The Supreme Court held: “the Act prohibits manufacture, sale of certain articles of food. The phrase
‘himself or any other person on his behalf’ obviously included any other person like servant, son,
father, or agent irrespective of the relationship legal or jural etc.
It is enough for the prosecution to establish that the person who sold the adulterated article of food
had sold it to the purchaser.
It is not necessary for the sanctioning authority to consider that the person selling is the owner,
servant, agent or partner or relative of the owner or was duly authorised in this behalf
29TH LAW COMMISSION REPORT ON MENS REA IN SOCIO ECONOMIC
OFFENCES
There is no uniformity in the socio economic statutes in India as regards the existence of mens rea or strict
liability
Firstly, there are offences in respect of which mens rea is undoubtedly required ( for example public property),
Secondly, there are offences which, though requiring mens rea, possess a special character of their own ( for
example many offences falling under the category of black-marketing)
Thirdly, there are offences which can, with a fair measure of accuracy, be described as offences of strict liability
(for example offences regarding food and drugs)
Fourthly, there are acts in respect of which their moral culpability is a matter of controversy ( example; tax
avoidance)
The question whether the liability under a statute is absolute is ultimately one of construction of the particular
statute
The answer will depend upon the language employed in the statute, the policy behind it and how far the
enforcement of the statute would suffer by adhering to the doctrine of mens rea
29TH LAW COMMISSION REPORT ON VICARIOUS LIABILITY IN SOCIO
ECONOMIC OFFENCES
The rule at common law is that (subject to certain exceptions) a master is not vicariously responsible
for the crimes of his servants
But vicarious liability in statutory offences is justified when the master chooses to delegate the
business to a servant and if the servant in course of conducting a business does an act which is
absolutely prohibited, the master is liable
The maxim “qui facit per alium, facit per se” applies- “he who acts through another does the act himself"
The offence is within the class where the legislature has absolutely prohibited certain acts to be done
Really speaking, vicarious liability is an aspect of strict liability
In so far as mens rea is eliminated or modifies, these special offences are quasi-criminal rather than
criminal
SUPREME COURT ON “ATTRIBUTION LIABILITY” OF COMPANIES
The debate on vicarious liability in India has been dominated whether a company can be held criminally liable for
the actions of its employees
Supreme Court in Iridium India telecom Ltd v. Motorola Inc (2011 1 SCC 74) based its ruling on the “principle of
concept of attribution” in stead of vicarious liability- borrowed from House of Lords decision on Tesco
Supermarket Ltd.
A company can not think and act on its own as it is a juristic personality. It thinks and acts through certain of its
employees
In other words, the mental states and actions of its employees are attributable to the company
This is a legal fiction but necessary legal fiction in order for the separate legal personality of the company to
sustain itself over a period of time; otherwise the company would not be able to sign contracts, acquire property,
negotiate with business partners, make public disclosure and statements
The Supreme Court extended the “actions of the directing minds” of the company to the company itself and held
that the company can be held liable by “attribution”.
BURDEN OF PROOF
It is the onus of proof that refers to the legal obligation on a party to satisfy the fact-finder, to a
specified standard of proof, that certain facts are true.
When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on
that person (Sec 101 IE Act )
The term burden of proof has two distinct meanings: Firstly, 'legal burden' which may be used to
indicate the burden of proof on the pleadings which means that it rests on the party that asserts the
affirmative of an issue. This is fixed at the beginning of the trial and is settled as a question of law.
Secondly, the “evidential burden” which indicates the duty of going forward with the arguments either
at the beginning of the case or at any time during the trial, since this is a constantly shifting burden.
In criminal trials, the legal burden of proof is always on the prosecution to prove the charges beyond
all reasonable doubts
BURDEN OF PROOF
In many socio-economic offences, we find the burden of proof is shifted to the accused ( for example,
in Essential Commodities Act, Prevention of Corruption Act, NDPS Act etc.)
Where the law imposes a burden of proof on the defendant, it is an evidential burden, unless the law
expresses otherwise
Statutory presumptions which place an ‘evidential’ burden on the accused, requiring the accused to do
no more than raise a reasonable doubt on the matter with which they deal, do not breach the
presumption of innocence
Since the presumption of innocence reflects the legal burden and not evidential burden, the argument
that in penal jurisprudence of certain socio-economic offences there has been deviation from this
principle ‘presumption of innocence” is clearly erroneous.
CORE RECOMMENDATIONS OF SANTHANAM COMMITTEE, 29TH LAW
COMMISSION & 47TH LAW COMMISSION REPORTS
Santhanam Committee:
In 1962, Lal Bahadur Shastri, then Minister Home Affairs, Government of India, appointed Santhanam to preside
over the committee on anti-corruption.
The scope of the Santhanam Committee's work was the prevention and detection of misappropriation or
maladministration in government departments.
K Santhanam, Member of Parliament headed the Committee and hence the name
The terms of the Commission were:
1. to study the functions of Vigilance units of different Ministries and to suggest measures for its effectiveness
2. to study the functioning of the Special Police establishment and suggest measures to improve its functioning
3. to suggest steps and measures for each Department for checking corruption
4. to suggest changes in law which would ensure speedy trial of cases of corruption
SANTHANAM COMMITTEE
5. to examine the rules conducting disciplinary proceedings for effective disposal
6. to suggest social climate for the public so that bribery and corruption does not flourish
7. to examine Government Servant’s Conduct Rules and recommend changes to maintain absolute integrity
8. to suggest steps for securing public support for anti-corruption measures
9. to suggest measures for the employees corporate public undertakings to maintain absolute integrity
SANTHANAM COMMITTEE
The committee submitted its report in 1964, which included a number of recommendations for preventing
corruption, such as strengthening laws and regulations, improving transparency and accountability, and promoting
ethical behavior among public officials.
It recommended the creation of a Central Vigilance Commission, the apex vigilance institution, to look into cases
committed against central government officials.
Creation of CBI
The Government Servant’s Conduct Rules were redrafted
The Committee extensively dealt about white collar crimes and anti-social crimes and recommended to place the
various legislation under the India Penal Code
29TH LAW COMMISSION
29th Law Commission
Title: Proposal to include certain social and economic offences in the India Penal Code - 1962
The Commission extensively dealt with aspects of existing laws, particularly the modus operandi, mens rea, burden
of proof, liability etc.
It was of the considered opinion that the special statutes define offences which could be termed as “public
welfare offences”, “quasi-criminal offences”, “strict liability offences”, “regulatory offences” etc., different from
criminal offences placed in IPC
The rule making powers of the Executive under such subsidiary statutes are critical to enforcement, which may
not be possible if they would be part of the India Penal Code; the legislations are different from one another and
need specialised agencies for investigation
Recommended amendments to the existing laws; was not in favour of bringing them under IPC
47TH LAW COMMISSION
The 47th Law Commission Report
Title: The Trial and Punishment of Social and Economic Offences- 1972
Desirability of dealing with adequately and swiftly with such offences
Recommendations: Burden of disproving mes rea on the accused, increase in maximum punishment,
removal of relaxing power of the court, appeal against inadequacy of sentence, constitution of Special
Courts for trial, preventive detention in certain circumstances, public censure etc.
Thank you
