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WHITE COLLAR CRIMES IN INDIA


Introduction:

White collar crimes are those crimes which are committed by the high professionals, in their occupation, exploit social, economic and technical power of personal and corporate gain. White collar crime, is a very broad concept and includes many types of non-violent offences like fraud, and illegal financial transactions. White collar crimes are crimes that are done by the most elite people in their usual work. Few examples of white collar crimes of a better understanding are: fraud, counterfeiting, embezzlement, tax evasion etc.

It is seen that White Collar Crimes are a major problem and it is difficult to find out the actual number of these crimes as they remain unrecorded by the Federal Bureau of Investigation's (FBI) crime statistics.


History:

The most influential criminologist of the 20th century and also a sociologist, Edwin Hardin Sutherland, for the first time in 1939, defined white collar crimes as “crimes committed by people who enjoy the high social standard, great repute, and respectability in their occupation”. The five attributes of the given definition are:

  • It is a crime.

  • That is committed by an important person of the company

  • Who enjoys high social status in the company

  • And has committed it in the course of his profession or occupation

  • There may be violation of trust.

White Collar Crimes in India

Corruption, fraud and bribery are some of the most common white collar crimes in India as well as all over the world. The Business Standards on 22.11.2016 published a report titled “The changing dynamics of white collar crime in India” stating that in past 10 years, the Central Bureau of Investigation (CBI) has found a total of 6533 cases of corruption out of which only 517 cases have been registered in past 2 years.

In 2014, India was ranked 85th which subsequently improved to 76th position in 2015 because of several measures to tackle white collar crimes. In 2018, as per the report of The Economic Times, India was placed at 78th position, showing an improvement of three points from 2017, out of the list of 180 countries.

Reasons for the growth of white collar crimes in India

Greed, competition and lack of proper laws to prevent such crimes are the major reasons of the growth of white collar crimes in India.

  • Greed: The father of modern philosophy, Machiavelli, strongly believed that man by nature are greedy. It is said that a person will sooner or later forget about the death of his father than the loss of his inheritance. The same is correct with respect to the commission of white collar crimes.

  • Competition: Herbert Spencer after reading “On the origin of Species” by Darwin, he coined a phrase that evolution means “Survival of the fittest”. It implies that there will be competition between species and the only person who adapt himself wins and survives.

  • Lack of awareness: The nature of white collar crimes is different from the conventional nature of crimes. Most people are not aware of it and fail to understand that they are the worst victims of crime.

  • Necessity: People also commit white collar crimes to meet their own needs and the needs of their family. But the most important thing that the people of high social status want to feed their ego.

Difference between white collar crime and blue-collar crime

The term ‘blue collar crime’ came into picture in 1920. The term was used to refer to the Americans who prefer manual labor. These people work on low incomes or on hourly basis.

The difference between ‘blue collar crimes’, which are crime of a general nature, and ‘white collar crimes’ was laid down by the Supreme Court of India in the case of State of Gujarat v. Mohanlal Jitamalji Porwal and Anr. Justice Thakker elucidated that one person can murder another person in the heat of the moment, but causing financial loss or say committing economic offences requires planning. It involves calculations and strategy making in order to derive personal profits.

Basis of differenceBlue Collar CrimesWhite Collar CrimesMeaningBlue-collar crimes refer to people who work physically, using their hands. White-collar crimes refer to knowledgeable works, who use their knowledge to commit crimes.New v/s TraditionalTraditional concept committed since ages.It is recently developed. It is a new species of crime. Mens reaMens Rea is essential in blue-collar crimesMeas Rea is not an essential item in white collar crimes.Direct access to the targetThe people don’t have easy, direct and valid access to its targets. The people have complete access to the targets. Veiled offendersThe offender has to come face to face with the victim. The offender doesn’t have to come face to face with the victim.ExamplesMurder, theft, extortionCyber-crime, counterfeiting, fraud etc.

Types of white collar crime in India

The ambit of white collar crime is very varied. Some of the main white collar crimes in India are:

Blackmail: Section 503 of the Indian Penal Code, 1860, defines blackmail as making a demand for money and any other consideration by imposing a threat to cause physical injury or damage to one’s property. For example, by revealing a secret of the person which the offenders knows if revealed will cause great embarrassment to the victim. For example, if A, the Managing Director of the company XYZ, knows that B, a female employee of the same company, was bearing the child of somebody other than her husband. A asked B to commit forgery on the account papers so that he could embezzle 20 lakhs rupees from the company without anybody knowing about it, or else he would reveal her secret which would cause great embarrassment not only to her but her family as well.


When does blackmailing become a white collar crime?

For blackmailing to be considered under the ambit of white collar crime, it should be committed by or show an involvement by someone enjoying higher social status in an occupation.


Credit card frauds

These frauds are committed when one person uses the credit card of another person unauthorized to obtain goods of value, he is said to have committed credit card fraud against the other person. For example, in 2003 in Mumbai, Amit Tiwari, a 21 years old engineering student was arrested for using too many names, for having too many bank accounts and too many clients, all false managed to defraud a Mumbai-based credit card company, CC Avenue, of around 9 lakhs rupees.

This case brought to the notice of the authorities that credit card frauds have not been recognized by the Information Technology Act, 2000. The loophole in the law has caused a great loss to the company.


The act of embezzlement:

When a person who has been entrusted with money or property to use it for his own purpose, but makes use in any manner, other than what is being told in an illegal manner, is said to have committed the offence of embezzlement. The act of embezzlement may be characterized as criminal breach of trust which has been defined in section 405 of the Indian Penal Code, 1860.

It defines criminal breach of trust as “an act where a person who has been entrusted with a property misappropriated it or falsely converted it to his own use or dispose of it without any law allowing him to do so”. Embezzlement is a misappropriation of someone’s property where a person has an intent to cause loss to the other person and criminal misappropriation is an offence under Section 403 of the Indian Penal Code, 1860.

The essential elements that constitute the crime of embezzlement are as follows.

  1. The two parties must share a fiduciary relationship, that is, a relationship based on trust.

  2. It is important that the defendant receives a certain amount of money or asset by making wrongful use of this relationship.

  3. The defendant while embezzling the asset or money should act like he is the owner of that goods or he owns the money which he is giving to another person

  4. There should be an intention to deceive on the part of the offender.

Some examples of embezzlement, in which the people have committed white collar crimes are:

It is often found that the company provides a car to its senior employees for official work. But these cars are seen to be used for purposes other than official duties which amount to embezzlement.

In banking sector, the bank tellers, who are people directly dealing with the customers gives them access to the funds of the bank for work.

Racketeering

It refers to a wrongful act or says criminal act of a person where he indulges in illegal business with a profit motive.

The number of cases of racketeering has experienced a rise in the recent times. According to a report published in India Today in February, 2019, Raju alias Hakla was arrested for his involvement in 113 cases of murder, dacoity and robbery. A kidney racket case was revealed in 2019 where a businessman from Gujarat, Brijkishore Jaiswal, was about to undergo an illegal kidney transplant. This happened in Powai’s Hiranandani hospital. When the wrongful practice was unveiled, the CEO of the hospital, Sujit Chatterjee and 5 other people were taken under arrest.

Fraud over calls: Commonly called, telemarketing fraud, these frauds are made over a phone call. Here, a person is approached to make an investment for building a charitable institution and thus asking them about the details of their bank accounts to obtain a certain sum of money.

Fraud in buying and purchasing of securities: When the broker of a company wrongfully shows the inflated of stocks in order to make people invest in his stock, is called securities fraud.

In 2019, pursuant to the report published by News18, Anilesh Ahija, known to the public as Neil, CEO and Chief Investment Officer of Premium Point Investments LP (PPI), an investment firm that managed hedge funds along with Jeremy Shor, former PPI trader, was arrested on the charge of securities fraud.


Using wrong weights: The consumer forums are flooded with the cases where shopkeepers use false weight to sell their goods. The people who become prey to this kind of fraud are the ones who are illiterate.

In Emperor v. Kanayalal Mohanlal Gujar Sawkar, the accused, bought certain quantity of hirda from the vendor, Savleram. ‘Adholis’ which are primitive methods of measuring weights was used to measure the hirda. Despite warning from the patil of the village to not use these weights as they didn’t give accurate measures, Sawkar agreed to use them and later on seize the adholis and filed the suit. Sawkar said that false weight have been used to measure hirda but the court said that since he had agreed to the same and also Savleram didn’t had bad intent, Savleram would not be held liable for fraud.


Bribery: Bribery is a white collar crime where a person asks for money, or a favor, or something of value in order to get the other person’s work done. For example, if an electoral officer asks a person to offer him wine and only then will he be allowed to give vote, it would amount to bribery.

The punishment for bribery has been provided under Section 171E of the Indian Penal Code, 1860 which says that any person who commits such an offence would be imprisoned for a term which may extend to 1 year or with fine or both. Also, Section 13 of the Prevention of Corruption Act, 1988 has penalized acts constituting an offence under this head, being engaged in by public officials.


Cybercrime: As the use of computer and internet is increasing, so is the crime relating to it. The crimes which involves the use of computer, coupled with the use of internet are called cybercrime. It is where the computer is used as the object of the crime or as a tool to commit an offence.

The only legislation which deals with the offences related to cybercrime is Information Technology Act, 2000. The exact definition of cybercrime hasn’t been provided in any of the acts or laws as it is not possible to define such a nature of crime where computer and internet is involved.