Economic crimes committed by a person or an organization to achieve a financial and professional advantage. Economical crime is also known as financial crime.

Not only India, economic crime is widespread in the whole world on a large scale because economical crime are various type such as Fraud (e.g. cheque fraud credit card fraud, mortgage fraud, corporate fraud, bank fraud, insurance fraud, market manipulation, payment fraud), Tax evasion, Terrorist financing, Drug trafficking, Money laundering, food adulteration, Bribery, and corruption.

Impact of Economic offenses on National Economy

Financial offenses cause harm to the general economy of the nation and unfavorably influence the development and advancement of the country. Globally, the foreign investor is reluctant to invest in countries where economic crime is high. Where there is a high incidence level of economic crime, the government and bureaucracy are also viewed as being corrupt and weak.

Growth of economic crime in India

The National Crime Records Bureau data has revealed that a total of 1, 56,268 cases related to economic offenses were reported in the year 2018 in which Forgery, Cheating & Fraud (Secs.420, 465, 468, 471, 231-243, 255 and 489A to 489E IPC) cases are 1, 34,546 and some other sections like Criminal Breach of Trust (Secs.406 to 409 IPC) 20,456 case reported and Counterfeiting (Secs.231-243, 255 & 489A to 489E IPC) 1,266 a case reported [1].

According to NCRB data, the number of financial offenses across India increased from 1,48,972 in 2017 to 1,56,268 cases in 2018. Continuously the number of economical crime increasing every year, and most of the case in metropolitan cities of India were registered for forgery, cheating, and fraud (27,903), which accounted for 88.6 percent during 2018.

Among the 19 metropolitan urban communities with a population of over 3.5 million in Mumbai, Delhi, Jaipur, and Bengaluru accounted the most notable of 31,501 instances of financial crimes in 2018. These four urban areas accounted for 53.6% of every single monetary wrongdoing. As far as the percentage of crime is concerned, so Jaipur has the highest 142.7 cases per one lakh population. The total monetary offenses reported from these urban communities demonstrated a guiding pattern in 2018 over the past two years. In 2017, the police registered 29,064 cases and in 2016, the number of cases was registered is 30,734. In the last few years, cases of cheating, forgery, and fraud have registered in the metropolitan city or state of India in bulk. A growing economic crime in India is a serious concern. A reason behind the continuous growth of economic crime is a low risk and high profits [2].

In 2018, 10050 Economic Offence Cases registered in which less than 1 Lakh Property losses, 841 economic Offence Cases registered in which 1 to 10 Crore Property losses and 12 economic Offence Cases registered in which above 100 Crore Property losses in Metropolitan Cities. In every year the Indian government suffering average 6 Crore direct losses due to fraud [3].

Laws dealing with economic offenses

Financial crimes are often referred to as white-collar crimes and are systematically accomplished as deception and fraud by technically qualified people, wealthy agents, and corporate officers. To punish the criminal relating to economic offenses a number of Acts are present, some acts are:-

1.     Tax-evasion, The Income- Tax Act, 1961

2.     Illegal Drug smuggling, Narcotic Drugs, and Psychotropic Substances Act, 1985

3.     Corporate and business fraud, The Prevention of Money Laundering Act 2002

4.     Stock Market Manipulations, Companies Act, 2013/ IPC

5.     Illegal Trafficking in contraband goods and smuggling, Customs Act, 1962 & COFEPOSA, 1974

6.     The Prevention of Food Adulteration Act, 1954

7.     Corruption and Bribery of Public Servants Frauds, Prevention of Corruption Act, 1988

8.     Theft of Intellectual Property, Copyright Act, 1957 (Amendments of 1994 & 1999)

9.     Illegal Trafficking in Arms, Arms Act, 1959 [4].

Prevalent economics crime in India

Prevalent economics crimes in India are Nirav Modi scam, Sahara India scam, Saradha chit fund scam, Vijay Mallya scam etc.

·       Case study- Nirav Modi scam

The most popular scam of 2018 is the scam of Nirav Modi, in which a scam of $1.77 billion has been done in connivance with the manager of Punjab national bank and Nirav Modi. The scam was carried out through fraudulent letter of undertaking (LOU) bond issue to an overseas branch of other Indian banks, including Allahabad Bank, Axis Bank, and Union Bank of India, using international financial communication system, SWIFT for a Buyer’s credit payment without the entry in a Punjab National Bank system data, at its Brady House branch in Fort, Mumbai [5].

·       Case study- Sahara India scam

To raise a fund from the public, on 30th Sep 2019 Sahara prime city company submitted a Draft Red Herring prospectus (DRHP) to SEBI for issuing an IPO (Initial public offering). But SEBI found that the two company Sahara housing investment corporation LTD. (SHICL) and Sahara India real estate corporation LTD. (SIRECL) has raised they are found in an illegal way. These two companies borrow their fund by many people through optionally fully convertible debentures (OFCD), whereas the rule is such that if a company have to issue OFCD more than 50 people then have to take permission from SEBI and collection process must be completed in 6 weeks. But these two companies issue OFCD approx. 3 Crore people and collected 24000 Crore funds in more than two years without the permission of SEBI [6]. Then SEBI registers a complaint against SIRECL & SHICL Company and orders to the Sahara Company to return the money of OFCD holder with 15% interest. Sahara Company went to Supreme Court disregarding SEBI order; however, the judgment came against the Sahara India Company, in which the court said that the money collected from the OFCD holder would have to be deposited within 3 months to SEBI with 15% interest and also have to submit all the documents of the OFCD holder. After paying one installment Sahara India company said that the rest amount already returned to the OFCD holder but it was not so and those Document Sahara submitted to SEBI in which many numbers of OFCD holder details are false or incomplete, hence SEBI said this matter can be a money laundering. Finally, on 28th Feb.2014 Supreme, The court passed an order to arrest chairman of the Sahara group Subrata Roy and still, he is in jail.

 REFERENCES

•         Crime in India Table Contents | National Crime Records Bureau, Table 8A.1. (n.d.). Retrieved June 20, 2020, from https://ncrb.gov.in/en/crime-in-india-table-addtional-table-and-chapter-contents
•      Crime in India Table Contents | National Crime Records Bureau, Table 8B.2. (n.d.). Retrieved June 20, 2020, from https://ncrb.gov.in/en/crime-in-india-table-addtional-table-and-chapter-content
•      Crime in India Table Contents | National Crime Records Bureau, Table 8B.3. (n.d.). Retrieved June 20, 2020, from https://ncrb.gov.in/en/crime-in-india-table-addtional-table-and-chapter-contents
•      Agha, S. (2013). Study of Economic Crimes in India with Special Emphasis on Financial Market Crimes and Control Measures [Abstract]. SSRN Electronic Journal. doi:10.2139/ssrn.2340506
•         Kolte, A., & Wagh, P. (2019, June 01). (PDF) Analyzing Punjab National Bank Scam. Retrieved June 20, 2020, from https://www.researchgate.net/publication/335517910_Analyzing_Punjab_National_Bank_Scam
•         Shashikant, U. (2014, March 10). Sahara: A landmark case that brought focus on investor protection. Retrieved June 20, 2020, from https://economictimes.indiatimes.com/opinion/et-commentary/sahara-a-landmark-case-that-brought-focus-on-investor-protection/articleshow/31658922.cms?from=mdr

Author – Atul Abhishek, Intern at Legal Desire Media & Insights (June 2020)

Mr. Atul Abhishek, currently he is doing Master in Forensic Science from Galgotias University, Uttar Pradesh. He has graduated in ‘Zoology Honours’ From Veer Kunwar Singh University, Ara. He did several certificate courses from reputed organizations like WHO, UNICEF, Saylor academy, TCSION, Future Learn, Alison Etc. He has attended many workshops and seminars or webinars. Apart from academics, they are also involved in social work along with some organizations and NGOs.