Introduction

In contemporary times, with the modernization of crimes, white collar crime has evolved to be a more complex and rapidly growing category of offences. White-collar crimes are different from traditional crimes, where the basic element is breach of trust and fraudulent practices carried out by practicing unethical business with the objective of gaining money. The term ‘white-collar crime’ was initially coined by the criminologist and sociologist Edwin H. Sutherland in 1939 as “a crime committed by a person of respectability and high social status in the course of his occupation”. It was basically believed that members of the high strata were most capable and easily able to engage in such illicit activities before Sutherland conceptualized this thing.

Unlike other crimes, white-collar crimes are very distinct, as they are harmful to society, and are committed by highly educated and well-influential individuals who have abused their high positions and have acted against their official and ethical responsibilities. In other crimes, the intent may form part of the crime at a later stage, but here the perpetrator is well aware of the consequences of the crime he is committing and has the intent from the beginning. (Rahul Dinesh Surana vs. The Senior Assistant Director, Serious Fraud Investigation Office, Crl. O.P.No.21728 of 2022)

The white-collar crimes include Fraud, Insider trading, Ponzi scheme, identity theft, embezzlement, counterfeiting, spying and tax evasion, also known as espionage.

 BNS 2023 vs IPC 1860: How White Collar Crime Provisions Compare

Recently, in 2023, the new criminal law replaced the old IPC, 1860, with the intent to modernize the regulations and to add effective penal provisions for new crimes and the evolving ways of committing crimes. IPC, 1860 was the most comprehensive codified criminal law of India. However, the former criminal code, i.e. IPC, does not define the term “white-collar crime”. But the new criminal act, i.e., BNS, 2023, has introduced sections and provisions to deal with white-collar crimes. But the new criminal act, i.e., BNS, 2023, has introduced section 111 to deal with white-collar crimes. These offences are also better regulated, and offenders are prosecuted through other provisions of criminal law and some special statutes like the Prevention of Corruption Act, Information Technology Act, Prevention of Money Laundering Act, etc.

The Indian Penal Code, 1860, contained provisions for similar crimes such as section 415, 417, 420 for fraud, section 463, 465, 468, 471 for forgery and section 405, 406, 409 for criminal breach of trust.

The new criminal law, Bhartiya Nyaya Sanhita, 2023, which has replaced the Indian Penal Code, 1860, has modernized these above-mentioned provisions. Section 318 of the new act has comprehensively dealt with cheating, its punishment and honestly inducing the delivery of the property. Section 336 and 340 of the act deal with forgery, its punishment, and Section 316 has also comprehensively dealt with the criminal breach of trust, and its punishment.

There are ancillary provisions to deal with the white-collar crimes in India, such as:

The Companies Act, 2013, u/s 447 provides punishment for the commission of fraud, i.e., imprisonment for a term of not less than six months, which can be extended to ten years.

For computer-related crimes, the IT Act, 2000, u/s 43 and 44, legally recognises the encryption of information shared in commercial transactions. The punishment for the following offences is laid out in the Post Nirav Modi and 2G scam in 2018, the Government of India passed the Fugitive Economic Offenders Act, 2018, to punish these offenders who have committed white-collar crime in India and fled to other countries in order to escape their criminal liability and evade the jurisdiction of Indian Courts. The Government was given the power by this act to confiscate the property of an economic offender in India who flees to another country.

What’s New After the Enactment of the New Provisions

In the new criminal law, i.e. BNS, 2023, there are many inclusions to expand the scope of the law to prosecute the criminals of their time. The changes are:

  • The provision of BNS and other new criminal laws such as BNSS have included digital, electronic records and financial data like emails, banking logs, and digital ledgers as part of the “document” for prosecution and the maximum imprisonment time for cheating has been changed from 1 year to now 7 years.
  • One of the most significant developments in the new act is the introduction of section 111 of BNS, which penalises organised crime and defines it as:

“Any continuing unlawful activity including kidnapping, robbery, vehicle theft, extortion, land grabbing, contract killing, economic offence, cyber-crimes, trafficking of persons, drugs, weapons or illicit goods or services, human trafficking for prostitution or ransom, by any person or a group of persons acting in concert, singly or jointly, either as a member of an organised crime syndicate or on behalf of such syndicate, by use of violence, threat of violence, intimidation, coercion, or by any other unlawful means to obtain direct or indirect material benefit including a financial benefit, shall constitute organised crime.”

This provision recognises the contemporary white-collar crimes and has penalized it upto maximum punishment, that is, life imprisonment or death penalty.

  • Section 356 of the BNSS enables the trial of economic offenders who flee the jurisdiction, ensuring that justice is not stalled and
  • Sections 107-110 of BNSS talk about the procedures for attachment of properties derived from proceeds of crime, which is crucial in economic offences.

Recent Cases and Judgments

In India, bank frauds are very common, and there is an alarming rise in such frauds, where it is often seen that there is a collusion between the borrower and the bank officials, fake documents and the misuse of the borrowed sum. The Nirav Modi- PNB scam (2018) can be said as the prominent example and the recent one may be the Chanda Kochhar (ICICI)-Videocon loan scam (2019), where the CEO, Chanda Kochhar, sanctioned Rs. 3250 crores to the Videocon group in exchange for a Rs. 64 crore bribes, going against the bank policies. The case is again in the news due to the attachment of properties of the ex-CEO.

The next example could be the NSE-CEO Chitra Ramkrishna insider access case, where one of the Delhi-based broker company got preferential access to the data of the NSE. This was one of the lapses of the government.

The case CBI v. Sudipta Sen (Saradha Scam) [2019] witnessed the fraud of 2500 crores, where the Hon’ble Supreme Court held that Ponzi Schemes are frauds under the IPC &; SEBI Act.

The most recent one could be said is the Sahiti infra–Money Laundering Case, where the ED arrested Sandu Purna chandra Rao, who was the former director of Sahiti Infratec Ventures India Ltd., who fooled over 700 homebuyers by collecting Rs360 Crore by fraudulent pre-launch property and misused over Rs120 Crore for personal gains through shell entities.

Conclusion

In India or globally, white-collar crimes have posed a great threat as they can destabilise the economy, the government and lead people on the roads. Before the enactment of BNS, 2023, there were stringent laws, but they were not in one place, and there was no mention of white-collar crime in the main criminal law. However, after its enactment in India, we now have a progressive law on it. The legislative reform has a great impact on the legislation, laws and crimes in the country. Additionally, such a robust and transparent legal framework is essential to curb the white-collar crimes and safeguard the public trust, the governance and the good health of the economy.

Author: Sachin Sharma, Associate
Co-author: Utsav Pandey, Intern