Page |1

INDEX
PAGE
SR No.
Topic
No.

I. INTRODUCTION 3

II. OBJECTIVE 3

III. CONTENT

i. White collar crimes in different profession. 4-5

a. Legal Profession
b. Corporate World
c. Medical Profession

IV. WHITE COLLAR CRIMES IN INDIA 5

V. LEGISLATION 6-7

i. Prevention of corruption Act, 1988

ii. Indian Penal Code, 1860

VI. CASES 8-9

i. Sahara India Real Estate Corporation Ltd.

(SIRECL) and the Sahara Housing Investment
Corporation Ltd. (SHICL) vs SEBI
2013 1 SSC (civ) 1

ii. Harshad Mehta Securities Fraud case

1998 (5) BomCR 783, (1998) 2 BOMLR 114

VII. CONCLUSION 9

9
VIII. BIBLIOGRAPHY
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WHITE COLLAR CRIMES

INTRODUCTION

The term “white collar crime” was coined by a sociologist and criminologist Edwin
Hardin Sutherland1 in 1930s. He defined white collar crimes as “crimes committed by
people who enjoy the high social status, great repute, and respectability in their
occupation”.

The definition given by Edwin Hardin Sutherland was criticised by Coleman and
Moynihan due to certain ambiguous terms used while framing the definition. Edwin
while demarcating clarified that white-collar crime basically means the crime committed
by the educated people belonging to a higher class of society during the course of their
occupation. The concept of “white collar crime” was finally recognised in the year 1941.
Traditional crimes are called “blue collar crimes” they include both violent acts such as
murder, sexual assault and armed robbery and non-violent act such as prostitution, illegal
gambling, etc. These crimes are easily detected, having a clear victim unlike the white-
collar crimes which are undetectable and victimises public at large. One important
difference between the two is that, the criminals involved in blue collar crimes are those
belonging to the under-privileged section of the society; on the other hand upper class is
involved in white collar crimes, committing these in a very organized manner.

OBJECTIVE

The paramount contention of this monograph is to understand what white collar are
crimes & how deep rooted such crimes are in different professions which leads to the
downfall of a country. White collar crimes extend to all professions practised in the
country. There’s an attempt to emphasize over few of the profession where white collar
crimes are evident over past few years. Further there is a discussion over the extent of
white-collar crimes in India. The latter part of this monograph narrates about the Indian
legislations duly introduced in order to curb all the unethical practices that have been
observed in the country. By amending different Acts and introducing different sections
that recognises the offence the now existing laws have made stringent punishment for the
same.

1
https://www.oxfordbibliographies.com/view/document/obo-9780195396607/obo-9780195396607-
0020.xml#:~:text=Later%2C%20in%20a%20systematic%20study,%E2%80%9D%20(Sutherland%201949%2C
%20p.&text=Sutherland%2C%20Edwin%20H.,1940.
 Page |3

CONTENT

White collar crimes exist in different professions some of them are enlisted as
follow:

In Legal Profession

The Chapter 5 of Advocates Act,1961 deals with conduct of Advocates. Advocacy is a

noble profession and one while practicing such a profession should not use deceitful
means and should not tend to be corrupt as it would disgrace and dishonour the
profession. A lawyer has professional duty towards the court, client, fellow advocates
and towards the society at large defrauding with any of these would lead to professional
misconduct which can attract punishment and also diminishes the credibility and
reputation of the advocates. Neglecting these laws and excusing the pious oath of
advocacy advocates do commit professional misconduct which includes furnishing
improper information, giving improper information, coercing witness of opponent,
offering bribe to the officers of the court. Shambhu Ram Yadav v. Hanuman Das
Khatry2, In this case an advocate practicing for 50 years , indulged into bribing the
judiciary who upfront demanded for a sum of rupees 10,000 from the advocates client
and the advocate in his oral statement has mention about the same. Aggrieved by this
behaviour of the advocate the court had punished him by debarring him for practising in
any court and had also strike down his enrolment number in the Bar Council of
Rajasthan also a fine of rupees 5,000 was charged by the bar council within stipulated
time, subsequently the court had upheld the directions of the bar council of India.

In Corporates:

Due to industrialisation there has been increase in the competition and the nature of
operations in corporate offices leading to increase in corporate frauds. Companies in
order to make them look well functioned conceal or misrepresent sensitive information.
Different types of corporate scams primarily includes Financial frauds viz manipulation
of accounting records, omission of amount, misapplication of accounting principle. A
popularly known scam in the history of India is the satyam scam3 (2012) 10 SCC 603
which is the biggest representation of unethical behaviour in professional conduct, in this
scam there was misrepresentation of the accounts of the company to the board, stock
exchanges, regulators, investors and all other stakeholders. The financial statement were
misrepresented leading to portray delusional financial health of the company leading to
2
https://indiankanoon.org/doc/1788027/
3
https://indiankanoon.org/doc/17578142/
 Page |4

inappropriate impression on the investors of the share market. There was loss of about
100 billion which has made it biggest scam in the history of India.

In Medical field:4

Doctors are professional body backed by superior knowledge and experience gained
through persistent hard work and it is yet another honoured and noble profession of
Indian society. But some of the doctors are involved in this profession just for the
purpose of money making, some medical practitioners advice critical and long lasting
treatments to extract money out from the pockets of the patients, many doctors are
involved in making fake medical certificates just to extract some money overlooking the
subsequent effect of their deed, billing patients unnecessarily so as to extract money from
the insurance, suggesting specific labs for testing or recommending specialist doctors in
order to gain some percentage income, prescribing unwarranted drugs to the patient in
exchange of financial gain. Major Pankaj Rai vs the State of Karnataka5 in this case an
unnecessary transplant was performed by a doctor to earn monitory benefits, the
transplant performed was not even licensed to the hospital in which it was performed
hefty fees were charged from the relatives of the patient even after that the patient had to
lose her life and the same wasn’t even conveyed to the relatives of the patient all of this
scenario does give us a clear picture of gross unprofessional behaviour by a medical
practitioner.

White collar crimes in India6

Industrialisation and economic growth have led to globalisation making white collar
crime a global phenomenon, the world at large is their field of operation. These criminals
are outcome of the twentieth century’s competitive economy. Many professionals
indulge in these crimes for their personal gain and behave in a unethical manner which
go unnoticed unlike traditional crimes , such illegal activities have increase a threat to the
society and need to be understood well be armour oneself from falling victims to such
criminals. In recent years there has been a steady increase in crimes relating to computer
viz the stealing a bank, credit card, or proprietary information from a computer which
has been termed as cybercrime and these crimes are not just restricted to the boundaries
of our nation but extends over the entire globe. Statistics have shown that most lost that
has been incurred to the nation as whole lately has been because of white collar crime
and has seen to be maximized over the last few years .India being a developing country
can’t afford to fall prey to such crimes as they would lead to decrease in economy of the
country. Crimes like this are also difficult to curtail as it is difficult to find the culprit due
to this wide spread of network and technical advancement unlike traditional crime there
is no physical presence.

4
https://www.linkedin.com/pulse/how-private-hospitals-cheating-patients-corporates-ritesh-kumar-singh
5
https://indiankanoon.org/doc/151735876/
6
https://www.indianbarassociation.org/wp-content/uploads/2020/01/White-Collar-Crime-Survey-2019.pdf
 Page |5

Legislation

Earlier there existed sections in IPC which use to deal with corruption in India later the
said section where omitted and the Prevention of Corruption Act came into force in the
year 1988. White collar crime has been existence in the Indian society for a very long
time just that it was not tagged as with any term, the most commonly observed practise is
bribery which is a big accepted practise in all possible professions. Section 171-B of
Indian penal code 1860 defines bribery as giving or acceptance of a gratification either as
a motive or reward to any person, to induce him to stand or not to stand as a candidate or
to withdraw from the contest or to vote or not to vote at an election. It also includes offer
or agreement to give or offer and attempt to procure a gratification, as explained in
Section 7 of the Prevention of Corruption Act, 1988, include and offer gratification it is
not restricted to pecuniary gratification or to gratification estimable in money.

Punishments enlisted as per the Prevention of Corruption Act, 1988:7

Section 7– Public servant taking gratification other than legal remuneration in respect of
an official act shall be punishable with imprisonment, which shall be not led than six
months out which may extend to five years and shall also be liable to fine.

Section 8– Taking gratification, in order by corrupt or illegal means, to influence public

servant shall be punishable with imprisonment for a term which shall be not less than six
months, but which may extend to five years and shall also be liable to fine.

Section 9– Taking gratification, for exercise of personal influence with public servant
shall be punishable with imprisonment for a term which shall be not less 8than six
months, but which may extend to five years and shall also be liable to fine.

Section 10– Punishment for abetment by public servant of offences defined in section
8,shall be punishable with imprisonment for a term which shall be not less than six
months, but which may extend to five years and shall also be liable to fine.

Section 11– Public servant obtaining valuable thing without consideration from person
concerned in proceeding or business transacted by such public servant, shall be
punishable with imprisonment for a term which shall be not less than six months, but
which may extend to five years and shall also be liable to fine.

Section 12– Punishment for abetment of offences defined in section 7 or section 11,
shall be punished with imprisonment for a term which shall be not less than six months,
but which may extend to five years and shall also be liable to fine.

Section 13– Criminal misconduct by a public servant shall be punishable with

imprisonment for a term which shall be not less than on year, but which may extend to
seven years and shall also be liable to fine.

Section 415 to 420 of Indian Penal Code, 1860 deals with the offence of cheating.

7
https://abhimanuias.com/state/Searchdetail.aspx?type=BL&id=8412
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Offenses and Punishment under Companies Act, 20138

Fraud is punishable offence section 447 of the Companies Act, 2013. If a person is found
guilty of fraud the offender is punished for a term of not less than 6 months and which
extends to 10 years, with fine which would be not less than the amount involved in fraud
and the fine might also extend to three times of the amount that is involved in the fraud.
Imprisonment for a term of 3 years in charged against people who have performed a
crime against the general public.

Section 488 of the Companies Act, 2013 deals with punishment for fraud committing
fraud if a person deliberately makes a false claim, believing that it is false and
intentionally omitting some material fact, knowing that it is true then he is liable for his
misconduct. Such false statement can be created by return, report certification, financial
statement, prospectus, statement or any other documents required for the reason stated in
this Act or any rules made under it.

Cyber crimes9 such as Introduction of viruses or malicious programmers, Unauthorised

access and downloading files, Unauthorised copying of an extract from any data,
Damage to computer system or computer network, Helping any person to facilitate
unauthorised access to a computer, Denial of access to an authorised person to a
computer system are punishable under section 43 and 44 of the Information Technology
Act, 2000. The prime objective is to provide a legal recognition for the encryption of
information shared in commercial transactions and ensure the safety of the user.

After witnessing huge scams in the year 2018 the Indian government had come up with a
new Act named as The Fugitive Economic Offenders Act, 2018 under which criminals
who have committed white collar crimes in India and have fled to other countries the
said act gives power to the government confiscate any property of the economical
offender which is present in India.

CASES:
8
https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
9
https://www.indianbarassociation.org/wp-content/uploads/2020/01/White-Collar-Crime-Survey-2019.pdf
 Page |7

Sahara India Real Estate Corporation Ltd. (SIRECL) and the Sahara Housing Investment
Corporation Ltd. (SHICL) vs SEBI10

Citation: 2013 1 SSC (civ) 1

FACTS: For the incorporation of the Sahara India Real Estate Corporation Ltd.
(SIRECL) and the Sahara Housing Investment Corporation Ltd. (SHICL) the company
offered fully convertible debentures and had risen over crores of rupees over a span of 2
years. The prospectus highlighted that the company has no interest to get the securities
listed.

ISSUES:

Did SEBI have jurisdiction upon the matter at hand?

Was the issuance of OFCD a public issue?

Section-67 (3) provides that if offer is made to more than 49 people, the offer becomes
public offer. So, does Section-67 (3) of the Companies Act make an offer of shares and
debenture ipso facto, a public issue?

Section-73 provides that section companies intending to make offer to the public must
make apply for a public stock market. So does Section-73 supersede Section-63?

Do the acts not cover the issue related to “hybrid” securities?

Held: 31st Aug, 2012 Honourable Supreme Court delivers the judgment in which the
court directed the company to refund the money to the creditor with interest of 15 per
cent per annum. The decision of the Supreme Court was in the favour of the respondent
and held that the idea of hybrid security was difficult to incorporate. This judgment given
by the Supreme Court of India is considered to be a landmark judgment which has given
power to the governing body SEBI to investigate into matters of not just listed companies
but also unlisted companies, so that unlisted companies can’t take advantage of those
loopholes.

 Harshad Mehta Securities Fraud case11

Citation: 1998 ECR 1 SC, JT 1998 (4) SC 323.

Facts: It was one of the biggest scam which has occurred in the year 1992. In this scam
there was unnatural pumping of money in the stock markets causing an abnormal rise in
the price of these shares,by a stockbroker Harshad Mehta . Which was later exposed by a
renowned journalist Sucheta Dalal who wrote an article in The Times of India detailing
the loopholes in the banking system that had been exploited by the stockbroker.

10
https://indiankanoon.org/doc/168701962/
11
https://indiankanoon.org/doc/1521815/
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Issue: Are the practices performed in the share market permissible and if not what
punishment should be imposed on the offenders who commit such crimes

Held: Harshad Mehta was charged with cases relating to bribery, falsification forging of
accounts, criminal conspiracy etc. There where almost about 70 criminal cases and and
about 600 civil casese imposed on him. Currently many criminal cases got disposed but
many civil cases are yet pending in the court of law. After experiencing the biggest crash
in the stock market various changes have been bought in SEBI’s rules and regulations.

CONCLUSION:

White collar crimes have been up on the rise since many years due to globalisation. Even
though there have been measures taken to curb the crime rate by amending the present
laws and introducing new laws ; but the question to be answered is whether the law made
punishments awarded are enough for the offenders to put an end to it. Even if white
collar crimes do not harm someone physically, yet the crimes lead to economic and
financial harm. Hence the author is of the view that there shall be observed no leniency
in such matters. India being a developing country can’t carry the burden of such
professional crimes leading to economical loos and hence the state agencies should work
together in order to reduce the crimes.

BIBLIOGRAPHY:

TITTLE Ahmad Siddique’s Criminology ,

AUTHOR S.M Afzal Qadri.

PUBLISHER Eastern book company

YEAR 2016

EDITION 7thedition