WHITE COLLAR CRIMES IN INDIA

PROJECT REPORT ON-

WHITE COLLAR CRIMES IN INDIA

PROJECT SUBMITTED TO-

MR. ANINDHYA TIWARI

(FACULTY OF LAW & JUSTICE IN THE GLOBALIZING WORLD)

PROJECT SUBMITTED BY-

SHOAIB ALVI

ID – MU19LLM1Y014

STREAM – LL.M. (1 Year)

SEMESTER – I

MATS UNIVERSITY, RAIPUR

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 CERTIFICATE OF DECLARATION

I hereby declare that the project work entitled “White Collar Crimes in India” submitted to
MATS University, Raipur, is record of an original work done by me under the able guidance of
Mr. Anindhya Tiwari, Faculty Member, MATS University, Raipur.

SHOAIB ALVI
ID: MU19LLM1Y014
Stream – LL.M.
Semester - I
Date- 8th Feb, 2021

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 ACKNOWLEDGEMENTS

This is not just a customary acknowledgement of help that I received but a sincere expression of
gratitude to all those who have helped me to complete this project and made it seem apparently
more readable than otherwise it would have been.

I am in debt to my faculty advisor MR. ANINDHYA TIWARI for giving such an interesting and
wonderful topic “White Collar Crimes in India” and who has been extremely kind to make
space for all my enthusiasm & endeavours and making it seem easy by clearly explaining its
various aspects.

I am also grateful to all my friends and seniors who have given their valuable suggestions
pertaining to the topic and have been a constant source of help and support.

Thanking everyone.

SHOAIB ALVI

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 CONTENTS

TABLE OF CASES…………………………………………….…3
Chapter 1- INTRODUCTION……………………………….…....4
Chapter 2- WHITE COLLAR CRIMES IN INDIA………………………………………7
Chapter 3- TYPES OF WHITE COLLAR
CRIMES………………………………………………..……...9
Chapter 4- DIFFERENCE BETWEEN WHITE
COLLAR CRIME AND BLUE
COLLAR CRIME …………………………………………………….12
Chapter 5- EFFECTS OF WHITE COLLAR
CRIME …………….…………………………………………………..…16
Chapter 6- CONCLUSION……………………………………….21
BIBLIOGRAPHY……………………...…………………………30

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 CHAPTER 1- INTRODUCTION

‘White collar crime’ is a crime committed by persons of respectability and high social status, in
course of their occupation. A white collar criminal belongs to upper socio-economic class who
violates the criminal law while conducting his professional qualities. 

Thus misrepresentation through fraudulent advertisements, infringement of  patents, copyrights

Definition:

Crime: Committing offence against human beings by inflicting physical material, monetary or
mental torture. White collar crime is defined by many scholars as: -
1. Crime committed by persons of respectability and high social status in course of their
occupation. (Sutherland).
2. Those illegal acts which are characterized by deceit, concealment or Violation of trust and
which are not dependent upon the application or  threat of physical force or violence.
(Federal Bureau of Investigation)
3. An illegal act or series of illegal acts committed by non physical kinds of means and by
concealment or guile, to obtain money or property or to obtain business advantage. (Her
best Edle hertr)4. In somewhat more precise terminology white color crimes are those offences
that require as an element, that the offender be (i) A corporate entity or officer of such entity
or (ii) performing a particular job or  saving a particular position at the time of he
committed the offence.
White collar criminalities are: Fabricated balance sheets and profit and loss accounts of
businesses, passing of goods, concealment of defects in the commodity for sale etc., These white
collar crimes by their very nature are such that the injury or damage caused as a result of this is
so widely diffused in the large body of society that their gravity in regard to individual victim is
also negligible. It is probably for this reason that till late these crimes did not attract much
attention as they do not carry with them any loss of social status of the offender even if he is
caught or detected.2
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Hypothesis:
This study of convicted white-collar offenders treats their
explanationsfor involvement in criminal activities. It focuses specifically on thetechniques that ar
e used to deny criminality. The strategies used toaccomplish this end are detailed. It is suggested 
that the accountsdeveloped by white-collar offenders to explain involvement in criminal
activities are structured by the mechanics, histories, and organizational formats of offenses and
by the requirement that they defeat the conditions of successful degradation ceremonies. In
conclusion, some preliminary observations concerning the causes of white-collar crime are
made.

Aim and object of the study:

White collar crime is more dangerous to society than the ordinary crimes, because the financial
loss from burglaries, robberies larcenies etc. The most dismal aspect of white collar crimes is
that there is no effective programme for the enforcement of criminal law against them and the
influential persons involved in these crimes are able to resist enforcement of law against white
them.
1. Should “White Collar Crime” Refer Only to Activity
That is Actually Criminal or Also to Other Forms of Non-Criminal “Deviance”?
2. Should “White Collar Crime” Refer to Conduct Engaged in by Particular Kinds of Actors,
or Only to Particular Sorts of Acts?
3. Assuming that “White Collar Crime” Should Refer to Some Particular Group of Criminal
Offenses, What Factors Should Determine Which Offenses If the above questions are answered
than it is easy to distinguish the white collar crimes. By this we can bring this authorized
offences into low book. Than the low can become a watch dog to
Save the society from the economic loss, health loss, moral loss etc.
•The impact of white collar crime is so much diffused in thecommunity that the individual
victims are only marginally affected by it, and therefore, they conveniently forget all about it.
•The members of the community themselves contribute to thecommission of various white-collar
crimes willingly or un-willingly. For instance, illegal gratification to public servants to get the

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work done quickly, black marketing in times of scarcity, evasive priceviolations, rent – ceiling
violations etc3

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 CHAPTER 2- 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 Standard on 22.11.2016 published a report titled ‘The
changing dynamics of white collar crime in India’ stating that in the last 10 years, the Central
Bureau of Investigation (CBI) has found a total of 6,533 cases of corruption out of which 517
cases were registered in the past two years.Statistics showed that 4,000 crores worth of trading
was carried out using fake or duplicate PAN cards. Maharashtra showed a rapid increase in the
number of online cases with 999 cases being registered. The report also mentioned that around
3.2 million people suffered a loss because of the stealing of their card details from the YES Bank
ATMs which were administered by Hitachi Payment Services. 

Advancement in commerce and technology has invited unprecedented growth in one of the types
of white collar crimes, known as cybercrime. Cybercrimes are increasing because there is only a
little risk of being caught or apprehended. India’s rank on Transparency International’s
corruption perception index (CPI) has improved over the 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.India is a developing country and white collar crimes are becoming a major cause for
its under development along with poverty, health, etc. The trend of white collar crimes in India
poses a threat to the economic development of the country. These crimes require immediate
intervention by the government by not only making strict laws but also ensuring its proper
implementation.

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 behind
the growth of white collar crimes in India. 

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  Greed

The father of modern political philosophy, Machiavelli, strongly believed that men by nature are
greedy. He said that a man can sooner and easily forget the death of his father than the loss of his
inheritance. The same is true in the case of commission of white collar crimes. Why will a man
of high social status and importance, who is financially secure, commit such crimes if not out of
greed?4

 Easy, swift and prolong effect

The rapid growing technology, business, and political pressure has introduced the criminals to
newer ways of committing white collar crimes. Technology has also made it easier and swifter to
inflict harm or cause loss to the other person. Also, the cost of such crimes is much more than
other crimes like murder, robbery or burglary, and so the victim would take time to recover from
it. This would cut down the competition. 5

 Competition

Herbert Spencer after reading ‘On the Origin of Species’ by Darwin, coined a phrase that
evolution means ‘survival of the fittest’. This implies that there will always be a competition
between the species, and the best person to adapt himself to the circumstances and conditions
should survive. 6

 Lack of stringent laws

Since most of these crimes are facilitated by the internet and digital methods of transfer
payments, laws seem reluctant to pursue these cases as investigating and tracking becomes a
difficult and complicated job. Why it becomes difficult to track it is because they are usually
committed in the privacy of a home or office thereby providing no eyewitness for it.

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  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. The
reasons behind white collar criminals going unpunished are:

 Legislators and the people implementing the laws belong to the same class to which
these occupational criminals belong.
 The police put in less effort in the investigation as they find the process exhausting
and hard, and often these baffling searches fail to promise favourable results. 
 The judiciary has always been criticised for its delayed judgement. Sometimes it so
happens that by the time court delivers the judgement, the accused has already
expired. This makes criminals loose in committing crimes. While white collar crimes
are increasing at a faster rate, the judiciary must increase its pace of delivering
judgement.

CHAPTER 3- TYPES OF  WHITE COLLAR CRIME IN INDIA

The ambit of white collar crimes is varied. Some of the white collar crimes that have been
reported in India are:

 Blackmail

Section 503 of the Indian Penal Code, 1860 defines blackmailing or criminal intimidation as,
making a demand for money or any other consideration by imposition of threat to cause physical

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injury, or to cause damage to ones property, or to accuse one of a crime, or to expose somebody’
secret. The threat can be induced in the following ways:

1. 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. 

2. By revealing those matters of the victim which are sensitive enough to cause financial
loss to him. For example, if X knows that the property Y owns has been fraudulently been
taken over from Y’s parents by deceitfully taking their signatures on the will. The X, a
senior manager of  a law firm, asks Y, a junior employee of the same company, to take out
the file containing the personal details of the chief secretary of the company from the
storehouse of the company. When Y refuses to do so, X threatens to reveal her secret of
forgery to the police. X is said to be blackmailing B. 7
3. By doing acts which could falsely accuse the other person of a crime, thereby affecting
his life in many ways. For example, when X, an officer at senior most post asks her
secretary to marry his son else he would falsely accuse her of embezzlement of 10 lakhs
rupees from the company, which actually has been done by X. This is blackmailing as a
white collar crime.
4. By revealing a report which shows that person’s involvement in a crime. For example, M,
the lawyer of N, and an old enemy of his, which N has no idea about, in a murder case,
asks him to pay him double the amount else he would give the court the recordings in
which M has confessed that he had murdered the person and the manner in which he has
committed the same. This is blackmailing. 

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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
unauthorizedly 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. As per the report released by the Economic Times, it was
found that over 900 cases of credit/debit cards and internet banking have been registered during
the period of April-September, 2018. All these cases involved an amount of 1 lakh rupees and
above. Minister of State for Electronics and IT (2018), S.S. Ahluwalia, informed that the Reserve
Bank of India by 30th September, 2018 had registered a total of 921 cases of credit/debit card
fraud.8

In 2017 a Metropolitan Magistrate became a victim of credit/debit card where the victim
received two messages for two transactions done from his debit card, not in India, but abroad.
The victim claimed that those transactions did not have his consent. A complaint of cheating
under Section 420 of the Indian Penal Code, 21860 was filed. 

 Currency Schemes 

These schemes basically refers to the practice of determining the value of the currency in the
near future. The determining of the value is not based on any firm evidence though. According to

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a report, ‘Trend and Progress of Banking in India’ released by the Reserve Bank of India,
published by the Financial Express in January, 2019, it was alleged that the banks have lost
41,168 crore rupees in the financial year of 2018 which shows a 72% rise from what was in
2017. The reason behind this rise is the fraud against currency schemes. The report cited that
fraud have turned out to be a major concern with a 90% rise of such cases in the credit portfolio
of banks with the major chunk of fraud being concentrated in off-balance sheet operations,
foreign exchange transactions, deposit accounts and cyber-security. 

Common types of currency schemes in India

 Schemes involving advance payment of fees 

In these cases the victims are asked to make an advance payment of the sum. They would be
promised to be receiving just the double of what they have invested. But one the money has been
given, no track of the offenders can be found. In these cases, the scammers target those people
who have already lost much amount somewhere. An appeal is made to their sentiment that the
amount they are investing would be doubled and they would be able to recover the loss caused
from the last transaction done by them.

The commission of this type of fraud had originated from nigeria. The first case of ‘Nigeria 419’
in India was registered in August in 2003 where Piyush Kankaria, a Howrah-Kolkata based
businessman filed a multi-million fraud case under Section 420 of the Indian Penal Code, 1860.
Piyush, out of financial crises, had become a victim to this fraud where he had to claim 7.5
million dollars from an account in return for 3 million dollar and for which Piyush had already
advanced a mobile handset as a gift.

 Scams in the boiler room 

Boiler room refers to the office which are frequently changed, that is, the office which is not
stable and shifts regularly. In these cases, the scammer creates a website giving all fake or false
information. The address given on the website would be a temporary one, the toll-free number
would be invalid, though all will appear legitimate on the screen. By the time one realizes that

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they have been defrauded, the scammer moves on to another similar scam at some other place. It
was recently in 2019 itself when a person by the name of Rohit Soni, from Rajasthan, who was a
B.com. Graduate created a fake Amazon website similar to the original website. How Rohit
made a profit out of it was by providing the customers with a link which gave access to an app
named ‘4Fun’, and for every download he received a sum of 6 rupees.

 Exempt securities scam

Exempt securities scam refers to the selling of securities by a company without filing a
prospectus. This offence is committed against wealthy people who are persuaded to invest in a
business. The offenders pitch a fraudulent investment as ‘exempt ‘ securities. A fake promise is
made to the victim that the business would go public. These scams involves a great risk and
make you lose all your investments. It was in 1992 when an Indian stockbroker, Harshad Mehta,
was held guilty with as much as 27 charges released against him for having committed various
financial crimes under the securities scam of 1992. Harshad had been accumulating huge wealth
through massive stock manipulation facilitated by the use of fake or worthless bank receipts.The
Bombay High Court, as well as the Supreme Court of India, held him guilty for being a part of a
huge financial scandal involving 4999 crore rupees. This scandal had taken place against the
biggest stock market that is the Bombay Stock Exchange (BSE). After having lived in jail for 9
years Harshad Mehta dies in 2001.

 Scams in the foreign exchange market

In the foreign exchange market, investors buy and sell currencies depending upon its exchange
rate. These markets are often dominated by large and developed banks that have plentiful
resources at hand. The staff in such organizations are well skilled and trained in using the
advanced technology and therefore it becomes difficult to beat these professionals.In the foreign
exchange market, it is not new to see people becoming prey to the illegal or fraudulent schemes
known as forex schemes. Since these schemes are often carried online  from another country, the
chance of losing your money is high as one is likely to buy services from those firms which are
not legitimately set up can market their services ultra vires. It is easy to fake things online. The
result of these scams could be that the money one invests might get stolen and one might lose

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everything that he had invested.As per the report published by the Times of india in 2017, the
Central Bureau of Investigation has held a total of 13 private companies responsible for sending
unknown foreign remittances which hold the value of 2,253 crore rupees under bogus imports of
goods during 2015-2016. 

Similarly in 2015, as published by the Times of India, the Bank of Baroda was alleged to have
been involved in forex scam worth rupees 6,172 crore. This money was sent from India to Hong
Kong for importing cashew nuts, pulses and rice. However, at a later stage it was found that
nothing was imported and instead all this money went into 59 different bank accounts of several
companies. Similarly, in 2015-16, the Directors of a Mumbai-based company called M/s Stelkon
Infratel Pvt. Ltd., Manish Prakash Shyamdasani and Mungaram Hakmaram Dewasi, were held
liable for their indulgence in large scale illegal foreign remittances under fraudulent imports of
goods 2015-16. 9

 Offshore investing scams

These scams induces a person to send their money ‘offshore’ to some other  country to get more
money in return than invested. These scams mostly aim at exempting a person from paying
taxes. But the ultimate result of it is that people land up paying money in back taxes, and
penalties. The major risk involved in these scams is that the victim in cases of foreign investment
are not able to seek remedy from the civil court and thus one is not able to recover the invested
money.It was in 2008 when Ketan Parekh, a stockbroker from Mumbai, and the Director of the
Madhavpura Mercantile Co-operative Bank,  was convicted for his involvement in the scam that
happened between 1998 to 2001 in the Indian Stock Market. Parekh was held responsible for
rigging price artificallicy of securities.

He had been able to do this by borrowing money from various banks including his own bank
which he was the Director. What parekh used to do was, at first place, he purchased large stakes
from small market capitalization companies. He continued to do so unless a large sum of money
has been accumulated and then jacked up the prices via circular trading with other traders,
collusion with other companies as well as with the large institutional investors. This led to a huge

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rise in the prices of the shares. For example, the price of the shares of Zee telefilms rose from
127 rupees to 10,000 rupees. These stocks were referred to as the ‘K-10’ stocks and Parekh was
given the name of ‘Pentafour’.For the purpose of looking into such a scam, Joint Parliamentary
Committee was set up which found Parekh guilty of circular trading of money and rigging the
prices of 10 companies from 1995 to 2001, on a false pretext. 

 Scam against the pension of a retired person

Older people have their retirement accounts where they keep their savings for the period after
retirement from their services. Usually, money from these accounts can be withdrawn only after
the attainment of a certain age, and only a certain sum of money can be withdrawn in a year, and
also some tax is imposed on the money withdrawn. Some company can fake such accounts. It
can ask the person to invest in their bank where they would be able to keep their savings safely.
The bakers asks the person to buy the shares of the company from their savings which would be
repaid by granting 60-70% loan from the invested money and the rest would be kept by the bank
as a fee. These promises turns out to be fake and the investment made, worthless. 10There is a
high possibility to lose one’s retirement savings in totality to such scams. It was in 2009
when India Today published a report on pension scams in India. The report said that in Uttar
pradesh, a huge amount of money which was supposed to be used for giving pension to the 60-
years-old people, who were Below the Poverty line (BPL) and used to earn 300 rupees per month
were being given to younger people.The scheme was basically meant for the older people from
the lower strata of the society. The divesting of the money to young people was assisted by the
Uttar pradesh Government by issuing fake BPL cards and certificates showing false age. This
helped each beneficiary of the scheme to earn 3,600 rupees annually, half of which was given as
a commission to the official who has helped the very person in forging the documents.11

 Double dip scam

The person who has already been a victim of a scam is likely to become a victim again. And
when it happens, it is called a double dip scam. The offender in the first instance can store the
information of the victims and pass on to other such offenders, thereby assisting them in making
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money fraudulently.   The case might also be that the first offender calls you again and you spill
out your grudge from the first fraud that you have become  a victim of. The scammer then offers
you to recover your money in return for a small fee. One would again lose one’s money in this
way. Unveiling the double dip scam taking place within political parties, the India Today has
published a report back in 2016 when  politicians were found to have converted back money into
white money for 40% commission. The political parties were found double-dipping as brokers
for undeclared wealth. There politicians used to do the business of converting black money into
white in near to their offices in Ghaziabad, Noida and Delhi. . 

 Scam by building a relationship

In such cases the offender targets a group of people, or organizations or communities. The
offender in cases are somebody close that the victim. He builds a relationship of trust with the
victim, or become a member of the same religious community against whom he has committed
fraud, and then misusing the faith people have planted in him, he gains profit by cheating those
people. These scams are also called affinity scams.12

 Pump and dump scam

A company who owns a large amount in a low-priced stock, which is actually an illegitimate
business, will find potential investors and persuade them to invest in their stock. As more people
would invest, the price of the stock would increase and when it reaches its peak the scammers
would sell all the shares, earn profit and run away, taking with him all your money.13

It was in 2015 when Rakesh Jhunjhunwala was said to have raised his wealth by purchasing
2,50,000 odd shares because of which though his shares of the ‘Surana Solar’ experienced an
18% rise, but after the dump-sum scam was discovered, the prices quashed. That is how a
loophole in the system was also discovered.The happening of such scams reveals that there is no
proper system to check the authenticity of the information being supplied. And taking the
advantage of such a  loophole, the Surana Solar made namesake deals easily with the investors
causing them great loss. 
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  Scams by way of sending spam emails

Often the scammer sends spam mails making fake offers and promises. In the year 2017, a record
of 7.5 million cases of spam mails was discovered. Once you reply to such emails you get caught
in the trap as these mails are fraudulent. Most of these mails are regarding microcap stock where
investments are highly risky when compared to other stocks.The customers of the ICICI
Bank became a victim of such scam where certain group of people representing themselves to be
an official of the bank, asked for sensitive information about tye bank account and defrauded
them. The fraud was finally discovered by the manager of the bank when a few of the customers
who had received such spam mails filed a complaint. Such a scam in the IT Act is defined as
‘phishing’. 14

 Fraud with the insurance company 

Sometimes the case may be that people use false documents to obtain insurance from the
insurance company. For example, a person can fake the price of her property by raising its value
on the fake documents and obtain insurance for that fake amount. They make the papers in such
a way that it seems legitimate and insurance company get defrauded.The case can also be that the
consumer deliberately stage an accident, theft, injury or any other damage which comes under
insurance policy. Or they sometimes exaggerate the damage caused. They even go on to omit or
provide false documents or application or information to claim insurance. Also insurance fraud
can be committed by an insurance company, agent or consumer where they deliberately deceive
the other person for illegitimate financial gain. Two officials of the Life Insurance
Corporation of India were arrested for falsely extracting 3 crore rupees as death claims from the
company. The officials forged documents they manipulated around 190 insurance policies with
the account numbers of their acquaintances in place of the real nominee. Though the origin
policy holders were alive they could not make out the fraud that has been made to them. 

Relevant Legal provisions under the Indian Penal Code, 1860

 Section 205 which deals with false personation in suit or in a proceeding. 

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  Section 420 that deals in cheating and inducing someone to deliver property with
dishonest intentions.

 Section 464 which talks about making false documents. 15

 The kick-back fraud 

A kickback fraud is one in which one person bribes another with something of value in order to
convince the other to take a favourable decision. For example, a contractor in order to get the
approval for building complex bribes the government official with a promise to give a small art
of the land to him. In another example, a biomedical company offers a doctor to advertise his
products by advising it to his patients and in return, the company would provide him with free
travelling for the next 5 years. Abhishek Verma, the youngest billionaire at the age of 28 in 1997,
known as the ‘Lord of War’, was arrested for his involvement in the Scorpene submarines deal
case, AgustaWestland VVIP helicopter bribery scandal and Navy War room leak case. He was
accused of having received kickbacks for a total sum of 200 million dollars. 

 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.

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  Fraud in buying and purchasing of securities

When the broker of  a company wrongfully shows the inflated price of stocks in order to make
people invest in his stock, it 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.They collectively
participated in a scheme to inflate the net asset value for hedge funds by more than USD 100
million. They started manipulating the funds by raising the value of the securities and thereafter
obtained inflated quotes for the PPI which helped them raise USD 100 million. This kept the real
value hidden and got the people into the trap by showing the inflated value of the securities of
the PPI.

 Fraud over calls

Commonly known as telemarketing fraud, these frauds are made over the phone calls. Here, a
person is approached to make an investment for building a charitable organization, or asks for
their bank account details to obtain a certain amount for charitable purposes. The amount
received is then used for any other purpose other than the one it has been taken for. 

 Fraud in welfare activities

Welfare fraud is committed when a person tries to seek profit from the State or the Federal
Government by deriving benefits from its activities like public assistance, food stamps, or
medical facilities, etc. For example, Abdul Karim Telgi, was accused in the stamp paper case in
India where he appointed 350 fake agents to spread the scam around 12 States. This business
included selling stamp papers to banks, insurance companies, and those firms which dealt in
stock brokerage. He was able to club around 200 billion rupees. 16

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 CHAPTER 4 - DIFFERENCE BETWEEN WHITE COLLAR CRIME AND BLUE-

COLLAR CRIME

The term ‘blue collar crime’ came into existence some time in the 1920s. The term was then used
to refer to Americans who performed manual labor. They often preferred clothes of darker shade
so as to stains less visible. Some used to wear clothes with a blue collar. These worked for a low
wage on an hourly basis. White collar crimes have been prevalent since centuries and it is not
new to all types of businesses, professions and industries. 

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.

Here are the characteristics of white collar crimes which distinguish it from other crimes of
general nature:

Meaning

Blue-collar crimes refer to people who work physically, using their hands, whereas white collar
crimes refer to knowledgeable works, who use their knowledge to commit crimes.

New v/s Traditional 

Where blue-collar crimes refer to traditional crimes that have been committed since ages, the
concept of white collar crimes has recently developed. It’s a new species of crime. 

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Mens rea

To constitute a crime element of mens rea and actus reus is must. Where mens rea is an essential
element of blue collar crimes, its involvement in white collar crimes is not necessary. 

Independent of social and personal conditions

White collar crimes have no relation with the social conditions, like poverty, or personal
conditions of the offender albeit it matters in the conventional nature of crimes.

Direct access to the targets

Since the offenders who commit white collar crimes are people at a higher position in a company
they have easy, direct and valid access to their targets. The case is different with blue-collar
crimes. For example, if Jhethalal decides to commit theft in the house of Babitaji, he will first
have to break the door or make a passage of entrance to get inside Babitaji’s house and thereafter
commit theft.So, before actually committing theft, Jhethalal will first have to get access to
Babitaji’s house. Whereas in white collar crimes, one can have direct access to their target
making use of one’s higher position and power. 17

Veiled offenders

In the case of white collar crimes, one does not have to come face to face with the victim and so
their identity remains veiled. Whereas in case of blue collar crimes, one has to come face to face
in order to inflict injury upon others. 

Involvement of politicians

In many cases it has been found that the offenders have strong connections with politicians and
sometimes, politicians are also involved in committing the crime thus making it difficult for the
victims to take action against such offenders.

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 CHAPTER 5- EFFECTS OF WHITE COLLAR CRIME

 Effect on the company

White collar crimes causes huge loss to companies. In order to recover the loss, these companies
eventually raise the cost of their product which decreases the number of customers for that
product. This works according to the law  of demand states that, other things being equal, when
the price of a commodity rises, it’s demand would fall and when the price lowers, its demand
would increase.In short, the price of the commodity is inversely proportional to its demand.
Since the company is in loss, the salaries of the employees are lessened. Sometimes the company
cut down the jobs of several employees. The investors of that company and its employees finds it
difficult to repay their loans. Also, it becomes hard for people to obtain their credits.

 Effect on the employees

White collar crimes endanger employees. They become conscious of their working conditions,
whether it is safe anymore or not. They start doubting if they are safe and that they can still be
given in their trust to the company.

 Effect on customers

The most important concern of the customers is whether the products which they are using is
safe or not. This doubt rise to see the rate at which white collar crimes have been increasing.

 Effect on society

White collar crimes are harmful to the society for those people who should be cited as a moral
example and who must behave responsibly are one committing such crimes. The society thus
becomes polluted.

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When the former director of Andhra Bank and the directors of a Gujarat based pharma company,
Sterling Biotech, were arrested for their involvement in 5000 crore fraud case. They used to
withdraw money from bank accounts of several benami companies. This was one big scam
which put the people in fear.Also in 2018 the Punjab National Bank (PNB) found that fraudulent
transactions of value 11, 346 crore rupees have been taking place in its Mumbai branch. “The
Staff there used to fake LoU ( Letter of Understanding) for the buyer’s credit to the company of
Nirav modi and Gitanjali Group”, as published in the Business World. 

 Loss of confidence

Stock fraud or trading scandals, like that happened in the U.S. in the 1980s, makes people lose
faith in the stock market. Barry Minkow, a teenager and the owner of the business of carpet
cleaning built a million dollar corporation in the 1980s. But, he was able to achieve this only
through forgery and theft.He managed to create more than 10,000 counterfeiting documents and
sales receipts without coming to someone’s notice. His company although created through fraud
was able to make market capitalization of 200 million dollars and leased 4 million dollars of
land. Later, he was sentenced to 25 years of imprisonment. Eron was the seventh largest energy
trading company, based on revenue, in U.S. Forgery made them waive off hundreds of millions
of debts out of their book. The investors thought that the performance of the company was really
good and stable. But later on it as found that the incredible numbers on revenue records were
fictitious. The famous Eron scandal where all the retirement accounts were wiped out it was
found that people had loss their normality, their power and public confidence. 

 Effect on offenders

The authorities have shown no consensus on the definition of white collar crimes. There are no
accurate statistics available to analyse the causes and effects of such crimes and therefore
government fails to take exact measures to prevent them. Also, though these crimes are on the
rise, they are generally not reported.

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These crimes have no eyewitnesses as they are committed in camera, which means that the
offenders commit these crimes while sitting in  a closed room or in their personal space using
their computers, and nobody could know about what they are doing on their computer.This
makes it difficult to track the offenders. All these loopholes becomes an incentive for the
offenders to fearlessly commit such crimes because the punishment is also for  a short term
unlike in blue-collar crimes. Offenders are mostly seen roaming freely which poses a danger to
the society.

 Effects on the temperament of the affected person

The target of the offenders are generally elderly people with little access to liquid assets and their
cognitive ability is less than that of younger people. So they become an easy target for the
offenders. The victims of such crimes often undergo depression and are seen to have suicidal
tendencies, because sometimes the loss incurred is unbearable. 

The renowned startup founder, Vijay Shekhar Sharma, the person who founded the widely used
app for transaction namely Paytm, became a victim of blackmailing by his personal secretary
Sonia Dhawan. She along with others stole his personal data along with sensitive business plans,
to extort money from him. Also, Sharma received regular calls stating that his personal
information would be revealed to the public if he doesn’t give the required amount to them.
Sharma was put under a lot of pressure.

Recent White Collar Crime Cases in India

 SEBI v. Burman Plantation and Others 18

Before the High Court of Allahabad, the learned counsel on behalf of SEBI claimed that the
company is being wrongly accused as the company was not in a position to pay its debts,

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Complaint Case No. 69 of 2010

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including payments to its investors. When the advertisement by the company was put to
question, the council said that the advertisement was given in 2003 while the order was passed in
2004, when the company was not in a position to payback its debts. Moreover, the sum of money
which the investors were claiming was nowhere cited. The main claim of the counsel made the
legislatures raise the punishment from 1 year to 10 years and also increased the fine which may
now extend to 25 crores by amending the laws under section 24(1) of the SEBI Act. At last, Ravi
Arora, the accused, was held liable.

 Abhay Singh Chautala v. C.B.I. 19

There were two appellants in the present case against whom a charge sheet was filed for
committing an offence under Section 13(1)(e) and 13(2) of the Prevention of Corruption Act,
1988 read with Section 109 of the Indian Penal Code, 1860 in separate trials. It was alleged that
both the accused had accumulated disproportionate wealth as per their income when they were
they members of the Legislative Assembly.

When the Central Bureau of Investigation (CBI) initiated its investigation it was found that the
father of the appellant had acquired huge properties and same as the case with the appellants.
The High Court held that the appellant had provided a totally different office(s) of the accused
than they were actually holding at that time. Thus the sanction under Section 19 of the
Prevention of Corruption Act, 1988 was held to be without any merit. 

 Binod Kumar v. State of Jharkhand & Others 20

This case was filed against several ministers of the State of Jharkhand along with the Chief
Minister for having the possession of unaccountable money. The High Court had requested the
Central Government to transfer the case from Enforcement Directorate to CBI by way of power
given to it under Section 45 (1A). It was alleged that the ministers were in possession of hefty
19
Criminal Appeal No. 1257 Of 2011
20
Criminal appeal no.1257 of 2011

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amounts of money and though no evidence was found to charge them with money laundering
case, a strict investigation was proposed. The ministers were said to be the owners of property
not only in India but abroad as well. Therefore, the court asked for an investigation to determine
this wealth was acquired by making use of the official position. It was to be clarified if a white
crime has been committed under the Prevention of Corruption Act, 1988 and under the Indian
Penal Code, 1860. The CBI started its investigation under Prevention of Corruption Act, 1988
and the Indian Penal Code, 1860 as the power to carry on investigation under Prevention of
Money Laundering Act was only with the Enforcement Directorate, which is of course subjected
to the power given to the Central Government under Section 45 (1-A) of the Prevention of
Money-laundering act.

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 CHAPTER 6- CONCLUSION

White collar crimes have two surprising features, first, that they are non-violent crimes, though
the criminals have the tendency to gain control or have a sense of entitlement, and, second, that
they are committed by people in the higher profession.However, these crimes are also committed
by poorly paid underlings, although the mastermind behind the commission of such crime could
be a rich person enjoying a higher social status in his occupation. white collar crimes are often
committed because of peer pressure or are dependent on the culture of the company. As our
society is growing towards modernity and the world is experiencing new technological
advancement, the rate of crime is also increasing at a faster rate. Particularly the growth in white
collar crimes has been enormous. From the medical profession to educational institutions, these
crimes are being committed everywhere. The cases of online fraud are also increasing at an
alarming rate. India, as a developing nation, has faced difficulties in leading its economy towards
growth because of these crimes in general and corruption in particular. 

The investigating officials are in need of training where they could acquire the skill to trace these
criminals, otherwise tracking of whom is  difficult, complicated and tiresome job. The
investigating officials’s work should be scrutinized to ensure transparency in the work as the
white collar crimes are committed by people enjoying higher social status in their
occupation.The government must make laws that are strict enough to reduce the commission of
such crimes. And the system should be such that not only there exist laws giving strict
punishment to the accused but also dispose off maximum cases in a short while. If not done so
then people will soon lose complete faith in the system, as these crimes are committed by people
who should act as a role model for the society. 

The media has a key role to play in reducing the rate of increasing white collar crimes. It has
been noted that most of the white collar crimes go unreported. So, if the media becomes more
active towards publishing frauds and scams at higher levels and revealing how do the people at
higher position in a company use their powers arbitrarily, and also make efforts in making people
aware about the white collar crimes, and avoid corrupt practices, then this would definitely help
in reducing the rate at which the white collar crimes are being committed.

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 BIBLIOGRAPHY

o https://shodhganga.inflibnet.ac.in/bitstream/10603/43935/8/08_chapt
er%202.pdf
o https://blog.ipleaders.in/white-collar-crimes/
o Para 4; A.I.R. 1987 SC 1321
o 1964 A.I.R. 295 SCR (4) 224
o Anosh Ekka v. Central Bureau of Investigation
o Arun Kumar Mishra v. Directorate of Enforcement 
o People v. Fort , 138 Mich. App. 322 (Mich. Ct. App. 1984)
o SEBI v. Burman Plantation and Others, (2013) 
o Abhay Singh Chautala v. C.B.I., (2011) 
o Binod Kumar v. State of Jharkhand and Others, (2011) 
o D.K. Gandhi v. M. Mathias, 6th August, 2007 
o Jacob Mathew v. State of Punjab, (2005) 6 SCC 1 (para 18) 
o Emperor v. Kanayalal Mohanlal Gujar, (1939) 41 BOMLR 977

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