JUDICIAL RESPONSE TO THE WHITE COLLAR CRIMES IN INDIA
This work is a reflection of pure judicial response to assist in the eradication of white collar crime from India. The work is not considering other material for its support but is relying exclusively upon the judicial precedents. Thus, the work is directly proceeding from the judicial activism.
The judiciary has taken a serious note of the growing intensity of the white-collar crimes. For the sake of convenience the judicial response in this regard can be classified under the following there headings:
(1) Judicial response under the Prevention of Corruption Act, 1988,
(2) Judicial response under the Prevention of Food Adulteration Act, and
(3) Judicial response under other statutes dealing with white- collar crime.
(1) Prevention of Corruption Act:
The strict judicial vigilance over corruption is reflected in various judgments of the Apex Court.
In J.Jayalalitha v U.O.I the Supreme Court observed: “The legislature has enacted the Act and provided for speedy trial offences punishable under the Act in public interest as it has become aware of rampant corruption amongst the public servants. While replacing the 1947 Act by the present Act, the legislature wanted to make the provisions of the Act more effective and also to widen the scope of the act by giving a wider definition to the term “public servant”. The reason is obvious. Corruption corrodes the moral fabric of the society and corruption by public servants not only leads to corruption of the moral fabric of the society but is also harmful to the national economy and national interest, as the persons occupying high posts in government by misusing their powers due to corruption can cause considerable damage to the national economy, national interest and image of the country”.
In State of Maharashtra v Prabhakar Rao the Supreme Court observed that the definition of public servant u/s 21 of I.P.C is of no relevance under the Prevention of Corruption Act. This means that a person may be held liable under the Act even if he is not a public servant within the meaning of section 21 of I.P.C.
In Govt of A.P v P.V.Reddy the Supreme Court observed: “The Prevention of Corruption Act, 1988 was brought into force with the avowed purpose of effective prevention of corruption and bribery. The said Act, with a much wider definition of “public servant” was brought into force to purify public administration. Under the repealed Act of 1947, the definition of public servant was restricted to public servant as defined in Section 21 of I.P.C. In order to curb effectively bribery and corruption not only in government establishments and departments but also in other semi-governmental authorities and bodies and their departments where the employees are entrusted with public duties, a comprehensive definition of public servant has been given in section 2(c) of the Act. When the legislature has given such a comprehensive definition of public servant to achieve the purpose of punishing and curbing growing corruption, it would be appropriate not to limit the contents of the definition clause by construction which would be against the spirit of the statute. The definition of public servant, therefore, deserves a wide construction. The court is required to adopt a purposive approach as would give effect to the intention of the legislature. Employees or servants of a cooperative society, which is controlled or aided by the government, are covered by the Section 2(c) (iii) of the Act and hence are public servant”.
In Ram Narayan Poply v C.B.I the Supreme Court, defining the object and purpose of the Special Court (Trial of Offences Relating To Transactions in Securities) Act, 1992 observed that the Act was promulgated with a view to recover public monies lost by certain banks and financial institutions in securities where such losses arose as a result of such transactions. The Court further observed: “It is equally trite to state the contrary proposition that where there are no losses at all, the institution of the special court was wholly unnecessary and the special court was not to try such transactions even if they amounted to some technical offences”.
The court further defined the purpose of section 13(2) of the POCA by mentioning that it intends to deal with aberrations of public servants. The court held that he appellant in furtherance of criminal conspiracy, in his capacity as a public servant abused his position by causing and/or allowing MUL’s funds to be utilized for the wrongful gain of appellant 5. Thus, the court held that the provisions of section 13(1) (c) read with section 13(2) are clearly applicable.
Referring to the nature and the adverse affect of white collar crimes, the court observed: “The offences in these cases were not of conventional or traditional types, the ultimate objective was to use public money in a carefully planned manner for personal use with no right to do it. The cause of the community deserves better treatment at the hands of the court in the discharge of its judicial functions. The community or the State is not a persona non grata whose cause may be treated with disdain. The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculations and deliberate design with an eye on personal profit regardless of the consequences to the community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crime with a permissive eye, unmindful of the damage done to the national economy and national interest. Unfortunately in the last few years, the country has seen an alarming rise in the white collar crimes, which has affected the fiber of the country’s economic structure. These cases are nothing but private gain at the cost of public and lead to economic disaster”.
The Supreme Court, however, preferred to apply “reformative theory” instead of the punitive theory of punishment in this case. The court observed: “Normally, in cases involving offences which corrode the economic stability are to be dealt with sternly. However, considering the fact that the occurrence took place a decade back, and the trial has spread over a few years, and the death of one of the accused, we feel custodial sentence for the period already undergone would meet the ends of justice. While fixing the quantum of sentence, we have duly considered the fact that in the instant case the amount has been paid back”.
In Vivek Gupta v C.B.I the Supreme Court considered the scope of the jurisdiction of special court dealing with corruption cases. The court held that even if the appellant was not charged under the POCA but under sections 120-B/420 of I.P.C, the special judge has the power to try the appellant with other co-accused who, in addition to the said sections, were also charged under section 3 and 4 of POCA. The court, applying the provisions of sections 3and 4 of the Act and section 220 and 223 Cr.P.C, held that such recourse is available to the special court.
In State of M.P v A.K.Gupta the Supreme Court dealt with criminal misconduct committed by the public servant while holding their offices. The court observed: “Section 13 of the Act deals with various situations when a public servant can be said to have committed criminal misconduct. Section 13 (1) (e) is applicable when the public servant or any person on his behalf, is in a possession or has, at any time during the period of his office, been in possession for which the public servant cannot satisfactorily account pecuniary resources or property disproportionate to his known source of income. Section 13 (1) (e) corresponds to section 5 (1) (e) of the POCA, 1947 (old Act). But there have been drastical amendments. Under the new clause, the earlier concept of “known source of income” has undergone a radical change. As per the explanation appended, the prosecution is relieved of the burden of investigating into “source of income” of an accuse to a large extent. The prosecution cannot be expected to know the affairs of an accused person. These will be matters “specifically within the knowledge of the accused”, within the meaning of section 106 of the Indian Evidence Act, 1872. The legislature has advisedly used the expression “satisfactorily account”. The emphasis must be on the word “satisfactorily” and the legislature has, thus, deliberately cast burden on the accused not only to offer a plausible explanation as to how he came by his large wealth, but also to satisfy the court that his explanation was worthy of acceptance”.
In R.Sai Bharathi v J.Jayalalitha the Supreme Court observed: “The criminal law merely prescribes the minimum standards of behaviour. While in public life, those who hold high offices should not take shelter under the umbrella of criminal law but stand by high probity. Further, criminal law is meant to deal with criminals ordinarily. Persons in public life are expected to maintain very high standards of probity, and, particularly, when there is likely to be even the least bit of conflict of interest between the office one holds and the acts to be done by such person, ought to desist himself from indulging in the same. Such standards of behaviour were scrupulously observed in the earlier days after independence, but those values have now dwindled and instances of persons holding high elective offices indulging in self-aggrandizement by utilizing government property or in distribution of the largesse of the government to their own favourites or for certain “quid pro quo” are on the increase. We have to strongly condemn such actions”.
In this connection it is essential to refer the offence as specified under section 169 of I.P.C. Section 169 specifies that for the completion of offence under section 169 the following conditions must be fulfilled:
(1) the person should be a public servant,
(2) in such capacity he is legally bound not to purchase or bid for “certain property”, and
(3) either in his name or in the name of another or jointly, or in shares with others.
The offence u/s 169 is incomplete without the assistance of some other enactment, which imposes the legal prohibition required. Section 481 of the Cr.P.C, Section 189 of the Railways Act, 1989 and Section 19 of the Cattle Trespass Act, 1871, and instances of that nature in several enactments are available in which persons mentioned therein shall not directly or indirectly purchase any property at a sale under those Acts. It is fairly clear that prohibition should flow from a law as ordinarily understood, that is to say, an enacted law or a rule or regulation framed under such law. The rules and administrative instructions governing the public servants holding the civil posts have no application in this case .
(2) Prevention of Food Adulteration Act:
The object and purpose of the POFAA (Act) are to eliminate the danger to human life from the sale of unwholesome articles of food. It is enacted to curb the widespread evil of food adulteration and is a legislative measure for social defence. It is intended to suppress a social and economic mischief- an evil that attempts to poison, for monetary gains, the very sources of sustenance of life and the well being of the community. The evil of adulteration of food and its effects on the health of the community are assuming alarming proportions. The offence of adulteration is a socio-economic offence. The construction appropriate to social defence legislation is, therefore, one, which would suppress the mischief aimed at by the legislation and advance the remedy. The offences under the Act are really acts prohibited by the police powers of the State in the interests of public health and well-being .The prohibition is backed by the sanction of a penalty. Intention or mental state is irrelevant .
In State of Orissa v K.R. Rao the Supreme Court defined the scope of the prohibition against selling of adulterated food. The court observed: “In the absence of any provision, express or necessarily implied from the context, the courts would not be justified in holding that the prohibition was only to apply to the owner of the shop and not to the agent of the owner who sells adulterated food. The Act is a welfare legislation to prevent health hazards by consuming adulterated food. The mens rea is not an essential ingredient. It is a social evil and the Act prohibits commission of the offence under the Act. The essential ingredient is sold to the purchaser by the vendor. It is not material to establish the capacity of the person vis-à-vis the owner of the shop to prove his authority to sell the adulterated food exposed for sale in the shop. It is enough for the prosecution to establish that the person who sold the adulterated article of food has sold it to the purchaser”.
In Delhi Administration v Manohar Lal the supreme Court held that the High Court, in exercise of its revisional jurisdiction, has no power to itself decide to commute the sentence imposed under sections 16/7 of the Act and direct the convict to deposit in trial court a specified sum as fine and inform the government of such deposit for formalizing the matter by passing appropriate order u/s 433(d) of Cr.P.C.
In State of H.P v Narendra Kumar the Supreme Court observed: “The occurrence of adulteration took place nearly two decades back, and the courts below acquitted the accused, though erroneously. Therefore, keeping in view the nature of violation and the peculiar facts and circumstances of the case while sentencing the accused to undergo 6 months RI and fine of Rs 1000, we make it clear that if the accused moves the appropriate government to commute the sentence of imprisonment the same may be considered subject to such conditions or terms as the government may choose to impose. For a period of 3 months the accused need not surrender to undergo sentence. During this period it shall be open to him to move the appropriate government for commutation. The fate of the order of commutation, if any, shall be operative. If no order in the matter of commutation is passed by the appropriate government, the accused shall surrender to serve the remainder of the sentence”.
(3) Other statutes:
There are other statutes as well which deal with white collar crimes. For instance, the Conservation of Foreign Exchange and Prevention of Smuggling Activities (COFEPOSA) and Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976(SAFEMA) also deal with white collar crimes.
In Safiya v Govt of Kerala the Supreme Court observed that the court could not lost sight of the fact that those who commit economic offences do harm to the national interest and economy. The High Court came to the conclusion that the detenue has violated the provisions of the law (COFEPOSA) and his activities are not in the larger national interest. The court should be slow to come to the aid off the detenue in such cases.
Similarly, in Kesar Devi v U.O.I the Supreme Court while upholding the forfeiture of the properties of the offender observed: “The combined effect of section 6(1) and section 8 is that the competent authority should have reasons to believe that properties ostensibly standing in the name of a person to whom the Act applies are illegally acquired properties, he can issue a notice to such person. Thereafter, the burden of proving that such properties are not illegally acquired properties will be upon the person to whom notice has been issued. Under the scheme of the Act, there is no requirement on the part of the competent authority to mention or establish any nexus or link between the money of the convict or detenue and the property sought to be forfeited. In the present case, the appellant is the wife of the detenue and she has failed to establish that she had any income of her own to acquire the three properties. In such circumstances, no other inference was possible except that it was done so with the money provided by the husband”.
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