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Legal Remedies against False Allegation of White Collar Crime: Lawyers Advice

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Legal Remedies against False Allegation of White Collar Crime: Lawyers Advice

Meaning and types of White-Collar Crimes: –
There are two classes of criminal offences, namely Traditional Offences and Socio-Economic offences or White-Collar Crimes. The former has been in existence since the inception of human civilisation. This mainly includes murder, rape, robbery and dacoity. However, on the other hand, the latter is merely a cause of scientific and technological advancement. Socio-Economic Crimes can simply be termed as the product of the industrial revolution. Socio-Economic crimes or as Sutherland referred it, ‘White Collar Crimes’ are basically those crimes which either affect the health and material welfare of any particular community or the overall economy of the country.
Sayre has distinguished, ‘Public Welfare Offences’ under eight broad categories, namely,

  1. Unlawful sale of intoxicating liquor
  2. Sale of impure or adulterated food or medicine
  3. Sale of misbranded articles
  4. Contravening anti-narcotic acts
  5. Criminal nuisance
  6. Contravening traffic regulations
  7. Contravening motor vehicle laws
  8. Violation of general regulations of Police

Some other Socio-Economic Crimes listed are as follows:

  1. Evasion of legally inflicted taxes,
  2. Racketeering, Hoarding, Black-marketing and Profiteering,
  3. Contravention of anti-narcotics legislation and bootlegging,
  4. Violation of rationing and guest control orders ,
  5. Trafficking in licenses and quotas,
  6. Embezzlement and misappropriation of funds and other malpractices including share pushing,
  7. Bribery, favouritism, and nepotism in public services.

Lack of guilty mind and wrongful act weakens the allegations made out against the accused: –
For a person charged with White Collar crime in order to prove his innocence needs to substantiate that his act was not wrongful in nature, thereby unable to satisfy the maxim actus reus. The Hon’ble Supreme Court in State of Maharashtra v. M.H George, 1965 AIR 722, has clearly held that mens rea or guilty mind is an important element for substantiating any white-collar offence. Unless, the act is performed voluntarily as described under section 39, or the person doing the same has a reason to believe as held under section 26, or dishonestly as stated under section 24, or fraudulently as defined under section 25 of the Indian Penal Code, the act cannot be said to contain mens rea or guilty mind/intention. It may be noted that it is the burden of prosecution to prove the existence of actus reus and mens rea in the cases involving white-collar crime.

Acts and Omission made under undue influence contradicts the allegation of voluntarily causing the execution of crime: –
It may have happened that the person charged with white collar crime had committed the act or omission under some undue influence. In M. Rangaswamy v. Rengammal, AIR 2003 S.C 3120, the Hon’ble Supreme Court clearly held that such act or omission shall be termed to constitute undue influence where the relationship between the parties are such that one of them is in a position to dominate the will of the other, and such party or person is utilising his dominant position to obtain an unfair advantage over the other. It is manifest that both the aforementioned conditions are satisfied by the person charged with the offence. He has to substantiate that the other person or party was in a position to dominate the will of the former using an unfair advantage of his position. Now, it may be important to note that a person is said to be in a dominating position if he holds a real or apparent authority over the other, or shares a fiduciary relation with the other, or has made a contract with a person having his mental or physical health temporarily or permanently affected by the reason of age, mental and bodily distress, or some illness.

Individual dishonestly induced in giving his consent to an act of wrongful nature is said to be cheated: –
Another defence available to a person charged with the offence of white-collar crime is that the such person was dishonestly induced by another person to deliver any property to some person or provide his consent that any person shall retain property or make him do or omit to do anything which he would have done or omitted if he was not defrauded, and further causing damage to his mind, reputation or bodily health. The Supreme Court of India listed out the main ingredients of the criminal offense defined under Section 420 of the Indian Penal Code, i.e. cheating and fraudulently inducing delivery of property in Samir Sahay v. State of Uttar Pradesh, Criminal Appeal Number 1541 of 2017:
(i) defrauding or deceiving any person;
(ii) fraudulently convincing the other person to deliver any goods or property to any person;
(iii) consenting that a person shall retain a property;
(iv) intentionally inducing a person to do or omit to do any act, which may act or omit to do.
Intoxication caused without one’s knowledge or will is an excuse: –
White Collar Crimes are mostly committed by individuals with a greater intelligent business mind and people possessing the mental capacity to comprehend the nature and gravity of the alleged offence. Under Section 86 of the Indian Penal Code, in case the person alleged with the offence was intoxicated and such intoxication was administered to him against his will, then such person shall not be held liable for the alleged offence. Dr H.S Gour has summed up the law relating to intoxication in his work “Penal Law of India” (7th edition), where he has clearly held that involuntary drunkenness, that is an intoxication caused without one’s knowledge or will is an excuse. Now, the state of intoxication refers to a state which renders an individual incapable of comprehending the nature of the act or omission or what is incorrect or contrary to law.

Remedial measures: Submitting an application to conduct a fair observation with respect to the alleged crime: –
Coming to the remedial measures, in the case where the allegation arises out of the First Information Report, then an application made under section 156(3) of the Code of Criminal Procedure can be submitted before the concerned magistrate where the same can direct the police to carry out the investigation in a fair manner. This procedure has been introduced with the judgement made in Sakiri Vasu v. State of Uttar Pradesh, Case Number: Appeal (Crl.) 1685 of 2007, where it was held that a magistrate possesses the power under section 156(3) of the Code of the Criminal Procedure to order a fair investigation. Further, the hectic task of approaching the High Court under section 482 of the Code of Criminal Procedure finally went away.

Granting Anticipatory Bail has no restrictions whatsoever: –
In circumstances where the First Information Report is filed but the accused is not arrested but possesses reasonable apprehension and a reason to believe that he shall be arrested. Then, the accused can file an application for anticipatory bail under section 438 of the Code of Criminal Procedure. It may be important to note that, there is no restriction whatsoever on granting Anticipatory bail to a person. Furthermore, it is not even important that the criminal offence in respect of which the Anticipatory bail is prayed has been registered with the Police officer.

Bail is subject to the discretion of the judge and not a right of the accused: –
Unlike the Anticipatory bail, regular bail especially in cases involving non-bailable offence is a matter of discretion of the judge and not right of the accused. The Supreme Court of India in Y.S Jagan Mohan Reddy v. Central Bureau of Investigation, Criminal Appeal Number 730 of 2013, placed critical points which are to be considered while granting bail in cases involving economic offence:
a. Nature of accusations;
b. Nature of evidence in support of the accusation;
c. The severity of the punishment entailed by the conviction;
d. The character of the accused;
e. Situations which are peculiar to the accused;
f. Reasonable possibility of protecting the presence of the accused at the trial.
Certain stringent laws like the Companies Act, 2013 and the UAPA, 1967 held that bail should not be granted unless the accused is able to prove his innocence in respect of the offence alleged. Hence, the defence counsel is often faced with obstacles from the Prosecution in the stage of bail hearings.

Moving an application to Quash the First Information Report with proper consideration of critical points: –
For an individual charged with white-collar crime, which is a non-bailable offence, the counsel for the accused can move an application under Section 482 of the Code of Criminal Procedure to quash the First Information Report. Now, this part is quite challenging but in case the court is satisfied with the facts and circumstances of the case, quashing of the FIR becomes easier. However, since non-bailable offences involve criminal offences of the grave and serious nature, it becomes difficult for the courts to take any motion against the public tranquillity. But, if certain crucial points imperative for the quashing of the First Information Report is understood, which involves:

  1. Nature & Gravity of the offence.
  2. Facts and Circumstances of the case.
  3. Possibility of settlement or compromise between the parties.
  4. Lack of Clarity of the evidence against the accused.
  5. Lack of Prima Facie evidence.
  6. Fairness of the Allegations made out in the FIR.
  7. Presence of legal bar against the initiation of the proceedings.
    the Hon’ble High Court may use its inherent power quash the First Information Report.

In Bhajanlal v State of Haryana (AIR 1992 SC 604), the Hon’ble Supreme Court of India issued few critical considerable points with respect to the exercise and application of High Court’s inherent powers in quashing the First Information Report, which is as follows:

  1. Firstly, if it is established that the accusation made out in the FIR, although acceptable at the face value yet prima facie does not substantiate any matter against the accused. It may be noted that judiciary considers prima facie evidence an important part in getting the FIR quashed.
  2. Secondly, in the case where it is difficult to substantiate any evidence and facts in support of the allegation made out in the First Information Report, or simply the evidence presented lacks clarity as to whether the offence was committed by the accused.
  3. Thirdly, the allegations made out in the complaint/First Information Report are fictional and that a prudent person might fail in concluding a valid base to drag the proceedings.
  4. Lastly, the presence of a legal bar in the Code of the Criminal Procedure or some other act under which a criminal proceeding may be initiated which furnishes remedies to the grievances of the accused.

An individual charged with a white-collar crime needs to establish his defence in order with the proper application of the remedial measures. A slight deviation from the proper application may result in huge blunders with the individual landing up in jail. Our laws have made it difficult for the individual accused of white-collar crime to even get bail. However, if the aforementioned defences are established with proper evidence and facts, then it becomes easier for the accused to acquit himself of all charges. Furthermore, Section 482 of the Criminal Procedure Code can help the accused get his First Information Report quashed away, subject to the condition that few critical points with respect to the offence and accused are considered with utmost sincerity. Now, this burden rest upon the accused and his counsel to satisfy the points with proper consideration.
Authored By: Adv. Anant Sharma & Aniket Pandey

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