Nov 01, 2022

White-Collar Crime 2022

This practice guide provides an overview of certain key concepts under Indian criminal law and touches upon different facets of white-collar offences.

4.1 Defences

A strong defence strategy in a criminal offence has two hallmarks:

  • Version of facts to be pleaded need to be plausible; and
  • Version of fact is backed by credible and admissible evidence.

During a trial, an accused person has a chance to establish their defence against the charges brought by the prosecution, including by cross examining witnesses and bringing witnesses of their own.

The onus of proof is beyond all reasonable doubt and rests on the prosecution. Even in cases where there is reverse burden of proof such as the PMLA, the prosecution still needs to prove the foundational facts before triggering the reversal of burden of proof on the accused.

In many instances, prior approval and sanction of the higher authorities within a department is required before prosecution can be initiated. For example, under the PCA, without taking the prior sanction of the state or central government as is applicable, the investigation agency cannot commence an enquiry or an investigation against the government official. Another defence available to accused persons is that of assailing the chain of custody or deviation from due process as provided under the IPC and the CrPC. The two statutes have ample safeguards and provisions supervising the procedure for seizure of case related property and articles.

 4.2 Exceptions

The IPC statutorily prescribes general exceptions, which are the defences provided to the accused that exculpate criminal liability. In other words, there are some exceptions provided under the IPC which can make an act or omission (offence) non-criminal/non-offence.

Thus, acts or omissions by children, or a person of unsound mind, or committed by a person justified by law, or committed under the influence of intoxication, or committed by a person in good faith, or acts committed by a person under threat or duress are generally exempt from prosecution for the crimes mentioned. However, the burden of proof for availing benefit of the exception is high and inferences will be drawn from the overall facts and circumstances of the case and the credible evidence presented by accused person to show that such mitigating factors and influences existed.

 4.3 Co-operation, Self-Disclosure and Leniency

Every person is mandated under law to cooperate with the relevant investigation agencies in matters of inquiry/investigation. This includes, providing the requisitioned materials/information/documents as sought by the investigation agencies during the course of inquiry/investigation, and appearance before the relevant investigation officer when summoned either to provide any information/material/document or to record statement. There is also a legal duty to furnish correct and accurate information to the investigation officer when called upon to do so. It is punishable under law to fail to provide relevant information/material/documents or to provide false information. The aforesaid rule is, however, subject to the constitutional right against self-incrimination.

Additionally, knowledge of offences of grave nature, such as murder, kidnapping, etc, are mandatorily reportable by the public to the concerned authorities.

In the event an accused person pleads guilty to an offence during or before commencement of trial, the courts have discretion to take a lenient view while sentencing them. However, while exercising this discretion, the court cannot award a sentence, which is lower than the minimum sentence prescribed for such offence.

Additionally, with a view to obtaining evidence of any person supposed to have been directly or indirectly concerned in or privy to an offence, the court at any stage of inquiry or trial may grant pardon to such person on the condition of their making a full and true disclosure of the circumstances within their knowledge with respect to the offence in question, whether as a principal or abettor of such offence. However, the aforesaid power of the court is applicable only to grave and serious offences, which prescribe minimum punishment of seven years or more.

 4.4 Whistle-Blower Protection

It was in May 2014, the government of India notified the Whistle Blowers Protection Act, 2014 to establish a mechanism for receiving complaints relating to disclosure on allegations of corruption or wilful misuse of power by public servants and to further provide adequate safeguards against victimisation. However, the Act is yet to be operationalised.

One of the drawbacks of the aforesaid legislation in the current form is that it does not cover corporate whistle-blowers.

Apart from the above, there are certain other voluntary mechanisms in India to deal with whistle-blowing. SEBI mandates that every listed company must have a whistle-blower policy in place. Moreover, SEBI has also introduced a reward mechanism from 2019 onwards to encourage employees of listed companies to come forward with their concerns.

In 2020, the Ministry of Corporate Affairs implemented a new format for conducting statutory audits of companies, known as the Company Auditors Report Order, 2020 and has been made applicable for audits beginning from financial year 2021–2022. A salient feature of this order is that the auditor of the company will now be obligated to generate reports regarding whistle blower complaints filed against the company during the said financial year.

 5.1 Burden of Proof

According to Indian criminal law, doctrine of ‘innocence until proven guilty’ is well recognised. Unless a statute specifically provides for reversing the onus of proof, the burden of proof will always rest with the prosecution, which must prove its case beyond reasonable doubt against each accused person.

A reverse onus clause is prescribed under certain special statutes, including the PMLA and IT Act. In terms of the reverse onus clause, there is a presumption of guilt against a person charged for the specialised offence and it is up to the accused person to prove their innocence. However, even in such a case, the prosecution has to prove that the foundational facts are established before the reverse onus triggered.

The constitutionality of reversing the burden of proof has only been upheld in India in the most extreme cases, such as terrorism, gang and mafia crimes, drug offences, and sexual violence against children.

 5.2 Assessment of Penalties

There is no formal sentencing policy in India. Consequently, there is a wide discretion with courts in matters concerning sentencing of accused. Penalty upon conviction can take two forms namely, imprisonment and/or fine.

A number of broad guidelines have been outlined by the Supreme Court with respect to the award of sentences to accused persons. As per these, while awarding sentences, courts must consider the principle of proportionality and deterrence.

Broadly, certain mitigating circumstances that courts consider while sentencing an accused upon completion of trial include past antecedents of the accused, their mental and physical health at the time of offence, as well as their socio-economic background.

Courts may impose fine as an alternative for imprisonment or can add it to the imprisonment. For certain offences, statutes stipulate maximum quantum of fine that may be imposed by the court. However, when the sum is not expressed under the statute, the quantum of fine to which the offender is liable is unlimited, though the guiding principle here is that fine shall not be excessive.

In determining the quantum of fine in cases in which the relevant statute does not specify the amount, the court will generally look at the severity of the offence, the extent of the victim’s loss or damage, and the capacity of the perpetrator to pay the fine.

While there is no concept of deferred prosecution agreement and non-prosecution agreement in India, the concept of plea bargaining in a limited scope is applicable in India.

Plea bargaining refers to pre-trial negotiation between the accused and the prosecution where the accused agrees to plead guilty in exchange for certain concessions by the prosecution. In India, the benefit of plea bargaining is limited to sentence bargaining, ie, the accused agrees to plead guilty to the stated charge and, in return, they bargain for a lighter sentence. The benefit of plea bargaining/sentence bargaining in India can only be availed in the following circumstances:

  • where the maximum punishment is imprisonment of up to seven years;
  • where the offences do not affect the socio-economic condition of the country; and
  • where the offences are not committed against a woman or a child below the age of 14 years.

Plea bargaining is an entirely voluntary process between the accused and the victim and the court monitors it closely to ensure that there is no compulsion or coercion of any kind during the process.

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