white collar crime

CHAPTER I
COCEPT AND SCOPE OF WHITE COLLAR CRIMES
INTRODUCTION
Our generation is witnessing a wave of economic crimes as never before. It looks impossible to come out of them. In such conditions many questions arise before us. The most important of those is, whether there was ever a fear of these economic crimes of such a great intensity that it will become impossible for us to deal with them? If yes, why we have not felt alarm of this fear? In order to get the logical answer to these questions, it is important to understand the concept of white collar crimes given by E. H. Sutherland, who terms these economic crimes as Socio-economic crimes because this class of crimes affect the entire society.
I. HISTORICAL BACKGROUND
The concept of white-collar crime is usually associated with E. H. Sutherland whose penetrating work in this area focused the attention of criminologists on its demoralising effect on the total crime picture. Sutherland pointed out that besides the traditional crimes such as assault, robbery, dacoity, murder, rape; kidnapping and other acts involving violence, there are certain anti-social activities which the persons of upper strata carry on in course of their occupation or business. These activities for a long time were accepted as a part of usual business tactics necessary for a shrewd professional man for his success in profession or business. Thus any complaint against such tactics often went unheeded and unpunished. It must, however, be stated that Sutherland was preceded by other writers who focused attention on the dangers to society from the upper socio-economic group who exploited the accepted economic system to the detriment of common masses. Thus Albert Morris refers to a paper entitled “criminal capitalists” which was read by Edwin C. Hill before the international congress on the prevention and repression of crime at London in 1872. In this paper the learned writer underlined the growing incidence of crime as an organised business and its evil effects on society. In 1934, Morris drew attention to the necessity of a change in emphasis regarding crimes. He asserted-that anti-social activities of persons of high status committed in course of their profession must be brought within the category of crime and should be made punishable.
Finally E. H. Sutherland through his pioneering work emphasised that these “upper world” crimes which are committed by the persons of upper socio-economic group in course of their occupation violating the trust, should be termed “white-collar crime” so as to be distinguished from traditional crime which he called, “blue collar crime”. Sutherland further pointed out that white collar crimes differ from the crimes committed by criminal syndicates. This distinction could be based on the extent of presumed respectability. Thus if a person who belongs to a respectable class of society and possess some degree of good reputation, sells shoddy goods, he is committing a white collar crime. If a group of persons unknown to their victims sells the same type of shoddy goods, that wood not is a white collar crime.
Sutherland carefully examined the depredation of about seventy large corporations involved in white collar crimes and found that the charges against them included contracts, combinations or conspiracies in restraint of trade, misrepresentation in advertising, infringement against copyrights, financial frauds and violation of trust, breach of war-regulations and other miscellaneous offences. But people knew very little about the trickery of these big business criminals and even if they knew, they were apathetic towards the problem because of the fact that “the legal battles involved therein are dragged out for years in the courts, with the result that the charges are forgotten long before they are settled1.
Sutherland tried to explain the concept of white collar crimes through his differential association hypothesis. Before we understand the concept of white collar crimes, it is important for us to understand the differential association hypothesis.

II. DIFFERENTIAL ASSOCIATION HYPOTHESIS
Differential association is a learning theory which focuses on the processes by which individuals come to commit criminal acts. According to Sutherland, criminal behavior is learned. Criminal behaviour is learned in interaction with other persons in a process of communication. The principal part of the learning of criminal behaviour occurs within intimate personal groups. When criminal behaviour is learned, the learning includes, (a) techniques of committing the crimes, which are sometimes very complicated, sometimes very simple; (b) the specific direction of motives, drives, rationalizations and attitudes. The specific direction of motives and drives is learned from definitions of the legal codes as favourable or unfavourable. A person becomes delinquent because of an excess of definitions favourable to violation of law over definition unfavourable to violations of law. Differential association may vary in frequency, duration, priority, intensity. The process of learning criminal behaviour by association with criminal and anti-criminal patterns involves all of the mechanisms that are involved in any other learning. While criminal behaviour is an expression of general needs and values, it is not explained by those general needs and values, since non-criminal behaviour is an expression of the same needs and values. It is called differential association. It is a genetic explanation both of white collar criminality and lower class criminality. Those who become white collar criminals generally start their careers in good neighbourhood and good homes, graduate from colleges with some idealism, and with little selection on their part, get into particular business situations in which criminality are practically a folkway and are inducted into that system of behaviour just as into any other folkway. The lower class criminals generally start their careers in deteriorated neighbourhood and families, find delinquents at hand from whom they acquire the attitudes toward, and techniques of, crime through association with delinquents and in partial segregation from law-abiding people. The essential of the process are the same for the two classes of criminals. This is not entirely a process of assimilation, for invention is frequently made; perhaps more frequently in white collar crime than in lower class crime. The inventive geniuses for the lower class criminals are generally professional criminals, while the inventive geniuses for many kind of white collar crime are generally lawyers.
A second general process is social disorganization in the community. Differential association culminates in crimes because the community is not organized solidly against that behaviour. The law is pressing in one direction, and other forces are pressing in the opposite direction.
In summary, he believed that an individual’s association are determined in a general context of social organization (for instance, family income as a factor of determining residence of family and in many cases, delinquency rate is largely related to the rental value of houses) and thus differential group organization as an explanation of various crime rates is consistent with the differential association. Thus some of the white collar crimes, according to Sutherland, are accepted as “normal” procedure which is an integral part of the business subculture. The business tactics adopted are not regarded as offences, and once a person joins the business he learns the same and also justifies it.
III. CONCEPT OF WHITE COLLAR CRIMES
A white collar crime is a relatively newer concept. It is associated with the noted criminologist, E. H. Sutherland. He presented his concept of “white collar” crime in his address to the American sociological society in 1939, which was later published as “white collar criminality” in American sociological review in 1940. He later wrote his book entitled “White Collar Crimes” in 1949. He was able to impress many criminologists and sociologist of his time through his understanding of criminology. His criticism was inevitable as it happens with all the theories because no theory is complete and Sutherland’s white collar crime was not an exception. Effect of his theory was that he was threatened by the corporate lobby in USA because his research was based on 70 large corporations. He had to omit some of the text from his writing.
According to Sutherland, the economists are well acquainted with business methods but not accustomed to consider them from the point of view of crime; many sociologists are well acquainted with crime but not accustomed to consider it as expressed in business. It is a comparison of crime in the upper, or white-collar, class, which is composed of respectable, or at least respected, business and professional men; and crime in the lower class, which is composed of persons of low socio-economic status. Sutherland made this comparison for the purpose of developing the theories of criminal behaviour. According to him, the criminal statistics show unequivocally that crime, as popularly conceived and officially measured, has a high incidence in the lower class and a low incidence in the upper class; less than two percent of the persons committed to prisons in a year belong to the upper class. These statistics refer to criminals handled by the police, the criminal and juvenile courts, and the prison, and to such crimes as murder, assault, burglary, robbery, larceny, sex offences, and drunkenness, but exclude traffic violations. According to Sutherland, the criminologists have used the case histories and criminal statistics derived from these agencies of criminal justice as their principal data in order to develop general theories of criminal behaviour. These theories are that, since crime is concentrated in the lower class, it is caused by poverty or by personal and social characteristics believed to be associated statistically with poverty, including feeble-mindedness, psychopathic deviations, slum neighbourhood, and ”deteriorated” families. According to Sutherland, the conventional explanations are invalid principally because they are derived from biased samples and they have not included vast area of criminal behaviour of persons not in the lower class. One of these neglected areas is the criminal behaviour of business and professional men2.
According to Sutherland, the “robber Barons” of the last half of the 19th century were white collar criminals. The present day white collar criminals are more suave and deceptive than the “robber barons.” There criminality has been demonstrated again and again in the investigation of land offices, railways, insurance, munitions, banking, public utilities, stock exchanges, the oil industry, real estate, reorganization committees, receiverships, bankruptcies, and politics.
According to Sutherland, white collar criminality is found in every occupation. White collar criminality in business is expressed most frequently in the form of misrepresentation in financial statements of corporations, manipulation in the stock exchange, commercial bribery, bribery of public officials directly or indirectly in order to secure favourable contracts and legislations, misrepresentation in advertising and salesmanship, embezzlement and misapplication of funds, short weights and measures and misreading of commodities, tax frauds, misapplication of funds in receiverships and bankruptcies.
According to Sutherland, in the medical profession, which is probably less criminalistic than some other professions, are found illegal sale of alcohol and narcotics, abortion, illegal services to underworld criminals, fraudulent reports and testimony in accident cases, extreme cases of unnecessary treatment, fake specialists, restriction of competition, and fee-splitting. Fee-splitting is violation of a specific law in many states and a violation of the conditions of admission to the practice of medicine in all. The physician who participates in fee-splitting tends to send his patients to the surgeon who will give him the largest fee rather than to the surgeon who will do the best work. These varied types of white collar crimes in business and the professions consist principally of violation of delegated or implied trust, and many of them can be reduced to two categories: misrepresentation of asset values and duplicity in the manipulation of power.
According to Sutherland, white collar criminality in politics, which is generally recognized as fairly prevalent, has been used by some as a rough gauge by which to measure white collar criminality in business. Sutherland clarifies that these statement obviously do not mean that every business and professional man is a criminal, just as the usual theories do not mean that every man in the lower class is a criminal3.
According to Sutherland, the difference between the customary crimes and white collar crime is that, the financial cost of white collar crimes is probably several times as great as the financial cost of all the crimes which are customarily regarded as the “crime problem”. He further says that, the financial loss from the white collar crime, great as it is, is less important than the damage to social relations. White collar crimes violate trust and therefore create distrust, which lowers social morale and produces social disorganization on a large scale. Other crimes produce relatively little effect on social institutions or social organization.
For Sutherland, white collar crime is a real crime. It is not ordinarily called crime, and calling it by this name does not make it worse, just as refraining from calling it crime does not make it better than it otherwise would be. It is called crime here in order to bring it within the scope of criminology, which is according to Sutherland, justified because it is in violation of the criminal law. Conviction in the criminal court, which is sometimes suggested as the criterion, is not adequate because a large proportion of those who commit crimes are not convicted in criminal courts. This criterion, according to Sutherland, needs to be supplemented. He says that, the criterion of the crimes of one class must be kept consistent in general terms with the criterion of the crimes of the other class. The criterion of white collar crimes, as Sutherland proposes, supplements convictions in the criminal courts in four respects, in each of which according to him, the extension is justified because the criminologists who present the conventional theories of criminal behaviour make the same extension in principle.
First, other agencies than the criminal court must be included, for the criminal court is not the only agency which makes official decisions regarding violations of the criminal law. The juvenile court, dealing largely with offences of the children of the poor, in many states is not under the criminal jurisdiction. The criminologists have made much use of case histories and statistics of juvenile delinquents in constructing their theories of criminal behaviour. This justifies the inclusion of agencies other than the criminal court which deal with white collar offences. The most important of these agencies are the administrative boards, bureaus, or commissions, and much of their work, although certainly not all, consists of cases which are in violation of the criminal law.
Second, for both classes, behaviour which would have a reasonable expectancy of conviction if tried in a criminal court or substitute agency should be defined as criminal. In this respect, convictibility rather than actual conviction should be the criterion of criminality. The criminologists would not hesitate to accept as data a verified case history of a person who was a criminal but had never been convicted. Similarly, it is justifiable to include white collar criminals who have not been convicted, provided reliable evidence is available.
Third, behaviour should be defined as criminal if conviction is avoided merely because of pressure which is brought to bear on the court or substitute agency. White collar criminals relatively immune because of the class bias of the courts and the power of their class to influence the implementation and administration of the law. This class bias affects not merely present-day courts but to a much greater degree affected the earlier courts which established the precedents and rules of procedure of the present-day courts. Consequently, it is justifiable to interpret the actual or potential failures of conviction in the light of known facts regarding the pressure brought to bear on the agencies which deal with offenders.
Fourth, people who are accessory to a crime should be included among white collar criminals as they are among other criminals. When the federal bureau of investigation deals with a case of kidnapping, it is not content with catching the offender who carried away the victim; they catch and the court may convict twenty- five other persons who assisted by secreting the victim, negotiating the ransom, or putting the ransom money into circulation. On the other hand, the prosecution of white collar criminals frequently stops with one offender. Political graft almost always in collusion between politicians and business men but prosecution are generally limited to the politicians4.
According to Sutherland, this analysis of the criterion of white collar criminality results in the conclusion that a description of white collar criminality in general terms will be also a description of the criminality of the lower class. The respects in which the crimes of two classes differ are the incidentals rather than the essentials of criminality. They differ principally in the implementation of the criminal laws which apply to them. The crimes of the lower class are handled by policemen, prosecutors, and judges, with penal sanction in the form of fines, imprisonment, and death. The crimes of the upper class either result in no official action at all, or result in suits for damages in civil courts, or are handled by inspectors, and by administrative boards or commissions, with penal sanctions in the form of warnings, order to cease and desist, occasionally the loss of a license, and only in extreme cases by fines or prison sentences. Thus the white collar criminals are segregated administratively from other criminals, and largely as a consequence of this are not regarded as real criminals by themselves, the general public, or the criminologists. This difference in the implementation of the criminal law is due principally to the difference in the social position of the two types of offenders5.
According to Sutherland, the theory that criminal behaviour in general is due either to poverty or to the psychopathic and sociopathic conditions associated with poverty can now be shown to be invalid for three reasons.
First, the generalization is based on a bias sample which omits almost entirely the behaviour of white collar criminals. The criminologists have restricted their data, for reasons of convenience and ignorance rather than of principle, largely to cases dealt within criminal courts and juvenile courts, and these agencies are used principally for criminals from the lower economic strata. Consequently, their data are grossly biased from the point of view of the economic status of criminals and their generalization that criminality is closely associated with poverty is not justified.
Second, the generalization that criminality is closely associated with poverty obviously does not apply to white collar criminals. With a small number of exceptions, they are not in poverty, were not reared in slums or badly deteriorated families, and are not feebleminded or psychopathic. They were seldom problem children in their earlier years and did not appear in juvenile courts or child guidance clinics. The proposition, derived from the data used by the conventional criminologists, that “the criminal of today was the problem child of yesterday” is seldom true of white collar criminals. The idea that the causes of criminality are to be found almost exclusively in childhood similarly is fallacious. Even if poverty is extended to include the economic stresses which afflict business in a period of depression, it is not closely correlated with white collar criminality. Probably at no time within fifty years have white collar crimes in the field of investments and are corporate management been so extensive as during the boom period of the twenties.
Third, the conventional theories do not even explain lower class criminality. The sociopathic and psychopathic factors which have been emphasized doubtless have something to do with crime causation, but these factors have not been related to a general process which is found both in white collar criminality and lower class criminality and therefore they do not explain the criminality of either class. They may explain the manner or method of crime-why lower class criminals commit burglary or robbery rather than false pretenses.
According to Sutherland, in view of these defects in the conventional theories, a hypothesis that will explain both white collar criminality and lower class criminality is needed. For reasons of economy, simplicity, and logic, the hypothesis should apply to both classes, for this will make possible the analysis of causal factors freed from the encumbrances of the administrative devices which have led criminologists astray6.
Thus Sutherland summarises his theory of white collar crime as, the persons of high social status and respectability as white collar criminals. According to him, white collar criminality is real criminality, being in all cases in violation of the criminal law. White collar criminality differs from lower class criminality principally in an implementation of the criminal law which segregates white collar criminals administratively from other criminals.
The theories of the criminologists that crime is due to poverty or to psychopathic and scyocopathic conditions statistically associated with poverty are invalid because, first, they are derived from samples which are grossly biased with respect to socio-economic status; second, they do not apply to the white collar criminals; and third, they do not even explain the criminality of the lower class, since the factors are not related to a general process characteristic of all criminality. Sutherland feels that the theory of criminal behaviour which will explain both white collar criminality and lower class criminality is needed.
It is submitted that Sutherland’s definition of white collar crimes is vague in many respects. Today only business tactics, occupational crimes, or professional crimes can not only be termed as white collar crimes. It also includes a vast area of small crimes like, hoarding, profiteering, black marketing, food adulterating etc in the context of India. Sutherland’s main contribution is to make a clear distinction between conventional perception of crimes such as murder, robbery, theft, rape, kidnapping etc and economic crimes. His contribution is to include the white collar crimes in research of the criminologists and sociologists as a special subject, so that the proper and effective mechanism of punishment of the offenders of this class of criminals can be evolved.
IV. CAUSES OF WHITE COLLAR CRIMES
Since the identification of white collar crimes as the important area of study, many causes of its commission in society have also been identified. Study of the causes of white collar crimes is also important because, then only we will be able to suggest the measures to curb the growing menace of white collar crimes such as corruption, bribery, professional misconduct, legal misconduct, irresponsibility of the big corporations etc. “white collar crime has to be placed on the same footing as ‘mass disobedience’ of laws in climate of public opinion, which look upon business practices as necessary for successful performance even if they are illegal. The result is ‘mass neutralization’ of law and order which give rise to a group norm which approves white collar crimes as ‘normal response’.
As per the 29th Law Commission Report, “the inability of all section of society to appreciate in full the need of high standard of ethical behaviour) results in the emergence and growth of white collared and economic crimes, renders enforcement of law, more difficult”.
The said report enumerates the following factors responsible for the increase of white collar criminality:
The advances of technological and scientific development are contributing to the emergence of ‘mass society’. With large rank and file and a small controlling elite, encouraging the growth of monopolies, the rise of managerial class and intricate institutional mechanism. The inability of all section of society to appreciate in full the need results in emergence and growth of white collar and economic crimes.
The economic growth and industrial progress throughout the globe is one of the most important causes for the rise in white collar crime. The socio-economic status of the white collar criminals acts as an insulation from clutches of sentencing. By means of most powerful influence the white collar criminals get away from the rigours of law. It helps in the propagation of white collar criminals. Criminal law administrators and judges are also allegedly sympathetic towards white collar criminals which results in their scotch-free-go. White collar criminals are tactful, intelligent and stable under the cover of high-social status.
As Sutherland himself rightly said, “the social disorganization on account of individualistic policies and competitive economy are the real causes for this type of criminality.” No doubt white collar crimes are not merely the reflection of the society’s attitude towards various types of crimes but also the guarantee and acceptance or approval of its culture.
V. WHITE CALLER CRIMES IN CERTAIN PROFESSIONS
Some of the professions involving technical expertise skill provide sufficient opportunities for white collar criminality. Those include medical profession, engineering, legal practise, private educational institutions etc.
a) Medical Profession:
White collar crimes which are commonly committed by persons belonging to medical profession include issuance of false medical certificate, helping illegal abortion, secret service to dacoits by giving expert opinion leading to their acquittal and selling sample-drug and medicine to patients or chemists. Dilatory tactics adopted by the members of this profession in treatment of their patients with a view to extracting huge sums from them has become an accepted norm, particularly with those medical men who do not have a good practice or have only a marginal earning.
The persons employed inessential services of the government or other undertakings are often confronted with the problem of getting leave due to shortage of staff. They therefore, procure medical certificate regarding their false sickness and produce it to the department to justify their absence from duty. In return, they have to pay certain amount to the concerned medical staff. These tactics have proved a boon and a workable alternative to employees who have difficulty in obtaining leave from the employers.
Fake and misleading advertising is yet another area in which the white caller criminals operate. They make illegal and misleading claims of medical cure through advertisements in newspapers, magazines, radio and television thus adding to human misery. Many patent medicines are not only worthless but harmful. Similar advertisements for cosmetics and adulterated food are also widespread in practice which are injurious to public helth. These persons may not break the letter of the law but, by violating its spirit, they commit crimes which are not only anti-social but also injurious to public health7.
b) Engineering
In the engineering profession, underhand dealings with contractors and suppliers, passing of sub-standard works and materials and maintenance of bogus records of work-charged labour are some of the common examples of white collar crime. Scandals of this kind are reported in newspapers and magazines almost every day. Construction of buildings, roads, canals, dams and bridges with sub-standard material not only-endangers public safety but also results into huge loss to public exchequer8. ”it is submitted that many projects of common-wealth games could not be completed in time because of scandals of this kinds.”
c) Legal Profession
In India, the lawyers profession is not looked with much respect these days. There are two obvious reasons for this. The deteriorating standards of legal education and unethical practices resorted to by the members of legal profession to procure clientage are mainly responsible for the degradation of this profession which was once considered to be one of the noblest vocations. The instances of fabricating false evidence, engaging professional witnesses, violating ethical standards of legal profession, resorting to frequent strikes to press their demands and deletory tactics in collusion with the ministerial staff of the courts are some of the common practices which are quite often practised by the legal practitioners.
Generally, the professional crooks and criminal gangs have their own trusted lawyers who can be depended upon to arrange things and keep himself ready with bail bond or habeas corpus writ to avoid arrest of the gangster. If the members of the gang are arrested, the lawyer has to find out ways and means to arrange or ‘fix’ their release. There are criminal lawyer who arrange professional alibis, cooked witnesses in close liaison with the police for defending the gangster. We have some of the judicial decisions to study on legal misconduct.
In Harish Chandra Tiwari v. Baiju9, Court held on following facts. Appellant Harish Chandra Tiwari was enrolled as an advocate with the Bar Council of the State of UP in May 1982 and has been practising since then, mainly in the courts at Lakhimpur Kheri District in UP. Respondent Baiju engaged the delinquent advocate in a land acquisition case in which the respondent was a claimant for compensation. The Disciplinary Committee has described the respondent as “an old, helpless, poor illiterate person.” Compensation of Rs. 8118/- for the acquisition of the land of the said Baiju was deposited by the State in the court. Appellant applied for releasing the amount and as per orders of the court he withdrew the said amount on 2.9.1987. But he did not return it to the client to whom it was payable nor did he inform the client about the receipt of the amount. Long thereafter, when the client came to know of it and after failing to get the amount returned by the advocate, complaint was lodged by him with the Bar Council of the State for initiating suitable disciplinary action against the appellant. Court held that among the different types of misconduct envisaged for a legal practitioner, misappropriation of the client’s money must be regarded as one of the gravest. In this professional capacity the legal practitioner has to collect money from the client towards expenses of the litigation, or withdraw money from the court payable to the client or take money of the client to be deposited in court. In all such cases, when the money of the client reaches his hand it is a trust. If a public servant misappropriates money, he is liable to be punished under the present Prevention of Corruption Act, with imprisonment which shall not be less than one year. He is certain to be dismissed from service. But if an advocate misappropriates money of the client, there is no justification in de-escalating the gravity of the misdemeanour. Perhaps the dimension of the gravity of such breach of trust would be mitigated when the misappropriation remained only for a temporary period. There may be justification to award a lesser punishment in a case where the delinquent advocate returned the money before commencing the disciplinary proceedings.
Shambhu Ram Yadav v. Hanuman Das Khatry10, it was a case where Court upheld the order of bar council of India dated 31st July 1999, which held that the appellant has served as advocated for 50 years and it was not expected of him to indulge in such a practice of corrupting the judiciary or offering bribe to the judge and he admittedly demanded Rs.10,000/- from his client and he orally stated that subsequently order was passed in his client’s favour. This is enough to make him totally unfit to be a lawyer by writing the letter in question. We cannot impose any lesser punishment than debarring him permanently from the practice .His name should be struck off, from the roll of advocates maintained by the Bar Council of Rajasthan. Hereafter the appellant will not have any right to appear in any Court of Law, Tribunal or any authority. Court impose a cost of Rs. 5,000/- to the appellant which should be paid by the appellant to the Bar Council of India which has to be within two months
Though there is a definite code of conduct for legal profession, but it is only an ornamental document. This does not, however, mean that all lawyers are corrupt and unethical. Quite a large number of them are most sincere and honest in their profession commanding great respect from all sections of society11. Perhaps, it is because of the peculiar nature of their profession that the lawyers and advocates have to resort to these tactics in order to survive in the profession which is becoming more and more competitive with the passage of time.
d) Educational Institutions
Yet another field where white collar criminals operate with impunity are privately run educational institutions in this country. The governing bodies of these institutions manage to secure large sums by way of government grants or financial aid by submitting fictitious and fake details about their institutions. The teachers and other staff working in these institutions receive a meagre salary far less than what they actually sign for, thus allowing a margin for the magnificent to grab huge amount in this illegal manner. The victimise teachers can hardly afford to complain about this exploitation to high ups because of the fear of being thrown out of job. They are, therefore, compelled to compromise with the situation. Although the government has introduced the scheme of treasury-payments for teacher for private institutions, but the problem still persists in one form or the other. That apart, fake and bogus enrolment of students who are residing far away from the place of location of these institutions is yet another source of illegal earning for them. They charge huge amounts by way of donations or capitation fees from such needy students. Even rackets operate in these institutions for procuring students to appear in different examinations on the basis of manipulated eligibility certificates or domicile certificates in return for huge sums. These dishonest and unscrupulous practices have damaged the standard of education in India to such an extent that it is causing an irreparable loss to the younger generation.
More often than not, these privately managed educational institutions as also those imparting some professional education enjoy the patronage of some influential politicians and many of them are even owned by them. Many such institutions are virtually non-existent and are functioning as commercial shops, enabling the students to get degree on payment of huge sums in blatant violation of the government rules, regulations and norms. The magnitude of this white collar criminality has adversely affected the standard of education in most states, and, therefore, problem needs to be tackled through stringent statutory measures.
e) Higher Education and Academics
In recent years, higher education and academics are also witnessing a wave of white collar crimes in India as never before. It has become very easy for some students to get fake degrees for themselves in lue of huge sum. Sometimes, those students of the universities, who do not attend any classes, have been able to secure good marks and even first class degrees by adopting these fraudulent means. Even in academics, specially, some lecturers and professors do not take classes regularly in the universities although they are payed highly for the same. Some lecturers and professors do not check examination-papers in time even after receiving good payment for the same. In faculty of law Delhi University, faculty authorities have renovated their office spending huge amount, but have not even cared to make drinking water facility for the students. In appointment matters of the lecturers and ad hoc teachers, nepotism and favouritism has started playing its role in big way. Arbitrariness in appointment matters is at peak, which is giving rise to a new class of white collar crimes.
f) White Collar Crimes in Business Deals
The term “white collar crimes” was coined by Sutherland mainly for the business world and it is still rampant. There have always been instances of violation of trust. Sutherland made careful study of a number of large corporations and business houses in United States and found that they were involved in illegal contracts, combinations and conspiracies in restraint of trade, misrepresentation in advertising, infringement against copyrights and trade marks, unfair labour practices, bribing public officials and so on. The public hardly knows the trickery of business criminals as they treat it as not too important for their purpose. Sutherland attributed the highest degree of criminality to business world which include trade, businessmen and industrialists.
g)Deficiency of Service for Making Money
Under Section 2(1) (g) of the Consumer Protection Act 1986, it is defined to mean any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service12.
In spite of this wide definitions of the consumer protection act, there is a deficiency of service to their consumers by many corporations insurance companies and banks. Most of the times, there is no hearing of the consumer’s complains by these service providers. There are many judicial decisions for us to study and understand the magnitude of white collar criminality in this field.
In Maina Devi Bairlaia v. Life Insurance Corporation of India13, Maina Devi 's husband took a life insurance policy for Rs.50,000. Before the second premium fell due, he died due to sudden illness. The claim made by Smt. Maina Devi, the widow of the insured, was not entertained for as long as 14 years. It was only when she got her miseries published in newspapers and certain MPs took up the matter in Parliament that she was sent a cheque for Rs.50,310.
On a suit before National Commission, it was held that the Corporation had been highly negligent in the performance of its services. Smt. Maina Devi, the complainant, had suffered hardship and loss on account of deficiency in service. She was held entitled to interest @ 12% p.a. from the date of expiry of 3 months from the date of death of the assured till the amount was paid to her. The Commission also awarded her compensation of Rs.15, 000 for mental torture and harassment.
It is submitted that the insurance companies always falter in settling the claims of their consumers. Terms of their policies are also not clear. Often the common man is not able to understand them easily. Government has not come out with solutions to keep proper check on these insurance companies.
In Skypack Couriers Pvt. Ltd. & Another v. M/s. Anupama Bagla14, non-delivery of a video cassette by a courier service company resulting in the complainant losing admission to the desired college was held to be 'deficiency ' in service as the complainant was put to serious hardship and loss by reason of the neglect and failure on the part of the courier to deliver the article entrusted to them for carriage. Accordingly, compensation of Rs.10,000 was awarded to the complainant.
In S.P. Dhavaskar v. Housing Commissioner, Karnataka Housing Board15, the complainant booked a house with the Karnataka Housing Board against a deposit of Rs.1.66 lakhs. After five years, the Housing Board informed the complainant that the construction of the houses was not upto the expected level and, therefore, he could either take back the amount of deposit without interest or opt for a new house. The complainant made a claim of Rs.4.65 lakhs.
The State Commission held that the act of the Housing Board amounted to deficiency in service and returning deposit amount without interest was unreasonable and ordered payment of interest @ 18% p.a. The argument of the Karnataka Housing Board that under its Rules and Regulations, allottees were not entitled to interest was struck down by the State Commission and also by the National Commission against an appeal by the Housing Board.
In Punjab National Bank v. Tej Rajinder Singh16, the bank issued two FDRs in the joint names of two persons payable to "either or survivor". On the death of one of the joint holders the survivor complainant asked the bank to pay the amount to him. But the bank did not release the amount on the ground that the deceased had guaranteed repayment of a loan to a company and a civil suit was pending before a court. Allowing his complaint the District Forum held that on the death of one of the joint holders the complainant had acquired the status of survivor and as such he became lawfully entitled to receive the payment and had become absolute owner of the two deposits. It was also held that the deceased had not created any lien on the amount of FDRs. Both the District Forum and the State Commission came to the conclusion that the complainant became the full owner in respect of the FDRs and denial of payment of their proceeds on maturity with interest was deficiency in service.
The National Commission endorsed the decisions of District Forum and the State Commission and held that the payment instructions on the FDRs were "either or survivor". The complainant, on the death of the joint holder of the FDR, became their absolute owner by survivorship. The forums below were right in holding that the complainant had become full owner of the FDRs and had a right to maintain the complaint be­cause of the deficiency in service by not paying the amount.
h) Criticism of Sutherland’s Views on White Collar Crimes
Sutherland’s definition of white collar crime has evoked criticism from certain quarters. Coleman and Moynihan pointed out that lack of definite criteria for determining who are ‘persons of respectability and status’ has made Sutherland’s definition of white collar crime most controvercial. It seems likely that what Sutherland meant by this is absence from convictions for crimes other than white collar crimes. The element of ‘high social status’ as used in the definition also leads to confusion: clearly it has far narrower meaning than is given to that term in everyday usage. Sutherland himself did not stick to this meaning and included thefts and frauds committed by middle or even lower middle-class workers in course of their employment or work. Some critics have suggested that some crimes should have been called as ‘occupational crimes’ instead of being termed as ‘white collar crimes’. It is further argued that in fact the important “element in the definition of white collar crime is not the socio-economic status of the individual, but rather the type of crime and the circumstances of its commission. These usually include pilfering, false accounting, bribery; embezzlement etc. tax-evasion is not an authentic white collar crime, at least in terms of Sutherland’s definition because although associated with work, it is not committed in the course of an occupation. Some critics further allege that such violation come within the purview of the Special Commition, Tribunals and Boards instead of normal criminal justice administrators. Therefore, strictly speaking, they cannot result into conviction of the offender and hence he cannot be called ‘criminal’ in real sence of the term. Commenting on this aspect of the issue, tappan observes that treating person committing white collar crime as criminal would mean deviating from legal definition of crime inasmuch as personal value consideration of the administrator would gain primary in place of precision and clarity of legal provisions in deciding such cases. Sutherland, however, justifies the special procedure of trial for white collar criminals by administrative agencies on the ground that it would protect the offender from the stigma of criminal prosecution17.
Another criticism quite often advanced against Sutherland’s definition of white collar crime is that include even those violations of law which are not committed in course of occupation or profession and these violations do not necessarily belong to upper strata of society or the so called ‘prestigious groups’. For example, tax-evasion is not committed only by person of high status but it can be committed by persons belonging to middle or even lower strata of society.
Yet another objection against the definition of white collar crime is that it does not necessarily require mens rea which is an essential ingredient of a crime. The doctrine of mens rea based on common law has no application to statutory offences in India and the requirement of guilty mind may be excluded either expressly or by implication in such cases18.
h) Relation of White Collar Crimes with the Socio Economic Offences
All white collar crimes are socio-economic offences, but it is not so vice versa. White collar crimes as the discussion has shown, affect visibly or subtly the economy of a nation. Most often these crimes flourish under the garb of business practices and accepted conventions in trade circle. Characteristic of white collar crimes are radically different from ordinary or conventional type of crime in several respects:
These crimes are committed by people of high status in society such as doctors, advocates, chartered accountant, government officials and not by traditionally conceived criminals e. g. thieves, robbers, dacoits, murderers, rapists etc.
Means of crimes differ from those of traditional crimes such as fraud, misrepresentation, adulteration of food, malpractices, irregularities etc. These crimes are committed by means of deliberate and planned conspiracies without any feelings and sentiments. When socio-economic crimes are committed, people tend to tolerate them because, they themselves indulge in them and they themselves often identified with those who do so19.
Originally, white collar crimes were seen as involving middle and upper class businesspersons who committed crimes in normal course of their work. But now it refers to a wide variety of occupationally oriented violations committed by persons of any class.
The victim of socio-economic offences is normally an entire community, society or even the entire nation besides the individuals. These crimes do not involve or carry with them any stigma while the traditional crime carries a stigma with them involving disgrace and immorality.
These crimes constitute a separate category because the control of such crime ‘involves the protection and preservation of the general health and economic system of the entire society against the exploitation and waste.’
Corruption in bureaucracy, high public offices with huge amount of money at their disposal for effecting schemes proposed by the government will also fall under white collar crimes. Indian penal code contains provisions to check such unbecoming conduct on the part of public servants. To illustrate:
As per section 168 “Whoever, being a public servant, and being legally bound as such public servant not to engage in trade, engages in trade, shall be punished with simple imprisonment for a term which may extend to one year, or with fine, or with both”.
171 (e) - Punishment for bribery: ‘whoever commits the offence of bribery shall be punished with imprisonment of either description for a term which may extend to one year or with fine, or with both: provided that bribery by treating shall be punished with fine only’.
Explanation- “treating” means that form of bribery where the gratification consists in food, drink, entertainment, or provision.
Mr. Rajeev Gandhi, the then prime minister of India, had once observed in 1988, that corruption is so widely spread in India, that if one rupee is released by the government for the common man, by the time it reaches to the common man, it remains only 15 paise. Recently, our prime minister, Dr. Manmohan Singh noted that it is now only five paise finds its way into the hands of the common man. Sufferings of the common man are endless, especially in last few years, since the prices of the essential commodities are rising everyday. Food inflation is in double digit for a very long time. Government has completely proved to be failed in preventing the price rise and checking the food inflation. Our biggest achievement, our public distribution system, which was the example and inspiration even for the western countries like U.S.A, has become our biggest failure today because, essential commodities are not reaching to the hands of the common man, even when our prime minister repeatedly says, “we have enough stock of the essential commodities”. On the one hand, food is rotting away in the government go downs, on the other, hoarding of the food items is reaching to its new peak. The most unfortunate aspect is that the Supreme Court of India has to order to the democratically elected government of this country to distribute the food to the poor people of this country. Even more unfortunate aspect is that, instead following the Supreme Court’s order, our prime minister had suggested that Supreme Court should not interfere in the policy matters. Failure of the public distribution system shows, how the white collar crimes have deeply rooted in the Indian society from the lower class to the upper class. Everybody is becoming a victim of socio-economic offences today in India. We can thus safely say that noone is an exception to the menace of socio-economic offences in this country and the hope is very little that we will be able to come out of it very soon.
VI. CONCLUSION
Sutherland has given a new dimension to the understanding of criminology. It was he, who started the systematic study of the crimes committed by upper class people, namely economic crimes. These crimes generally go unheated and unpunished. Even if these criminals are punished, still the punishment is very light. This class of criminals enjoys the sympathy of judges in the courts.
Problem with Sutherland’s theory is that it includes only the crimes committed by the upper class of society. Therefore, it is very difficult to include many crimes in it such as tax evasion, theft etc.
In a new era, this class of crimes has become very complicated. Sometimes, it is very difficult to detect them. The criminals of this class of crimes are not only shrewd but they are also using the new technology to commit these crimes.
Today not only the person of upper class of society commits these crimes but even middle and lower class is also equally involved in committing them. Therefore, the simpler approach would be to divide the crimes into two parts. On the one hand, traditional crimes such as murder, rape, robbery, kidnapping, criminal extortion etc on the other, economic crime which can be committed by anybody includes a hoarder and a tax evader. Actually neither the traditional crimes, nor the economic crimes can be committed by the people of particular class alone.
Awareness needs to be spread fast against the economic crimes such as corruption. Fast growing media can play an important role in spreading awareness against the menace of economic crimes. It is important to evolve a special mechanism to deal separately with these crimes. Those agencies dealing with the economic crimes, need special training to deal with the threat.. These agencies should be kept away from the political influence. Laws should be made more stringent in order to deal with these crimes. It is important and in the interest of the society to deal with this class of crimes as effectively as possible. It is not easy to fight with the menace without the broader public participation. Political will has to be very strong if we want to achieve the goal in quick time.

CHAPTER II
I. SOME MAJOR SCANDALS EXPLAINING THE MAGNITUDE OF WHITE COLLAR OR ECONOMIC CRIMES
No society can be termed as a corruption free society. Because of the corruption, the term “white collar crimes” is being used very frequently for a long time. In last two decades, India and the entire world has experienced huge scandals which can explain us the magnitude of white collar crimes. It is very difficult to prevent or tackle these scandals because in most of the cases, very influential people are involved in them. Often they are very shrewd people and are able to win the legal battles very comfortably. In this chapter, I have mentioned some of those major scandals which will explain us the magnitude of economic crimes which can disturb the whole social fabric.
a) Enron Scandal
First major scandal which shook U.S.A and the entire world in the first decade of twenty first century was Enron scandal. It was called ‘one of the most intricate pieces of financial chicanery in history’ for investors in its stocks and its employees. The Enron scandal did tremendous damage to the company created a crisis of investor’s confidence the links of which has been seen since the great depression.
Enron was a $100 billion corporate empire that had more than 200,000 employees in 40 countries and controlled about one quarter of all trading in natural gas and electricity in the United States. The company poured the millions of dollars into political campaign and lobbyists arguing of further deregulation of energy markets. The Enron hierarchy expected the never-ending innovation and growth from its executive to feed this monster enterprise. In response executives created imaginary markets, 'paper partnerships ' and phantom growth that enabled them to report profits that did not exist and to hide there debts. Executives were accomplished at cooking the financial books in many ingenious ways, which kept Enron 's stock prices rising and thus their own compensation. Because much of the competition received by Enron 's executives was stock based, they had major incentives to make the company look as good as possible to investors by reporting high profits20.
In India, the situation is not very different than the western countries. Condition here actually is worst. In last two decades, corruption has crossed all the limits in India. We have witnessed so many big scandals that we have become habitual of them. Today the people of this country seemed to have lost faith in government. Many of the top officials and ministers are involved in the biggest scandals that rocked entire nation. Hardly anybody has received the punishment which they deserve. It gives us the impression that the corruption is ruling this country and the common man has no remedy against these scandals. One reason for these big scandals may be that the ministers and the civil servants have got vast powers in their hands. It is very difficult and sometimes impossible to prosecute them. There is hardly any check on the powers of the civil servants and the ministers. All the attempts to pass the Lokpal Bill in the parliament have felled so far. It is well said that the power tends to corrupt and absolute power tends to corrupt absolutely. Some of the big scandals in India have been sited below in order to understand the magnitude of economic crimes in this country.
b) Bofors Scandal
The Bofors scandal was a major corruption scandal in India in the 1980s; the then Prime Minister Rajiv Gandhi and several others were accused of receiving kickbacks from Bofors AB for winning a bid to supply India 's 155 mm field howitzer. It was a biggest scandal of that time. It was speculated that the scale of the scandal was to the tune of Rs. 400 million. The name of the middleman associated with the scandal was Ottavio Quattrocchi, an Italian businessman who represented the petrochemicals firm Snamprogetti. Quattrocchi was reportedly close to the family of Prime Minister Rajiv Gandhi and emerged as a powerful broker in the 1980s between big businesses and the Indian government.
In 1997, the Swiss banks released some 500 documents after years of legal battle and the Central Bureau of Investigation (CBI) filed a case against Quattrocchi, Win Chadha, also naming Rajiv Gandhi, the defence secretary S. K. Bhatnagar and a number of others. On february 5, 2004, the Delhi High Court quashed the charges of bribery against Rajiv Gandhi and others, but the case was still being tried on charges of cheating, causing wrongful loss to the government, etc. On May 31, 2005, the High Court of Delhi dismissed the Bofors case allegations against the British business brothers, Shrichand, Gopichand and Prakash Hinduja.
In December 2005, the Mr B. Daat, the additional solicitor general of India, acting on behalf of the Indian Government and the CBI, requested the British Government that two British bank accounts of Ottavio Quattrocchi be unfrozen on the grounds of insufficient evidence to link these accounts to the Bofors payoff. The two accounts, containing € 3 million and $1 million, had been frozen. On January 16, the Indian Supreme Court directed the Indian government to ensure that Ottavio Quattrocchi did not withdraw money from the two bank accounts in London. The CBI, the Indian federal law enforcement agency, on January 23, 2006 admitted that roughly Rs 21 crore, about US $4.6 million, in the two accounts have already been withdrawn. The British government released the funds based on a request by the Indian government. The deals cost the Government of India an extra 160 crore. The Italian businessman no longer figured in the CBI 's list of wanted persons and the 12-year Interpol red corner notice against the lone surviving suspect in the Bofors payoff case was withdrawn from the agency 's website after the CBI 's appeal. However, on January 16, 2006, CBI claimed in an affidavit filed before the Supreme Court that they were still pursuing extradition orders for Quattrocchi. The Interpol, at the request of the CBI, had a long-standing red corner notice to arrest Quattrocchi. Quattrocchi was detained in Argentina on 6 February 2007, but the news of his detention was released by the CBI only on 23 February. Quattrocchi was released by Argentinian police. However, his passport was impounded and he was not allowed to leave the country as there was no extradition treaty between India and Argentina, the case was presented in the Argentine Supreme Court. The government of India lost the extradition case as the government of India did not provide a key court order which was the basis of Quattrochi 's arrest. In the aftermath, the government did not appeal this decision owing delays in securing an official English translation of the court 's decision. A Delhi court discharged Quattrocchi from the case, as there was no credible evidence against him, on 4 March 201121.
Thus the Indian government has been able to manipulate the whole bofors scandal case in a most systematic way. The government can be directly blamed for withdrawal of the case against the sole survivor accuse of the bofors scandal, Ottavio Quattrocchi. Actually the government never intended to brought him to the justice. In almost all the scams, the response of the government has been same. No influential officer has served imprisonment so far.
c) Security Scam of 1992
With the arrival of the concept of liberal economy in India in 1991, more and more money started pouring into stock markets. India became good place for the heavy investments. Indian stock markets were looked at positively by the small and large investors. Foreign investors were also not far behind. Government was willing to give good facilities to the investors to invest freely in the stock markets even though the country was not fully ready for these fundamental changes in economic policies. This left some room for the stock market scams because security measures were not properly taken. Thus the first stock market scam came to light very soon. This stock market scam is known as security scandal of 1992. The masterminds of these security scams were Harshad Mehta and Hiten Dalal.
In April 1992, press reports indicated that there was a shortfall in the Government Securities held by the State Bank of India. In almost a month, investigations uncovered the tip of an iceberg, later called the securities scam, involving misappropriation of funds to the tune of over Rs. 3500 crores. The scam engulfed top executives of large nationalized banks, foreign banks and financial institutions, brokers, bureaucrats and politicians. The functioning of the money market and the stock market was thrown in disarray. The tainted shares were worthless as they could not be sold. This created a panic among investors and brokers and led to a prolonged closure of the stock exchanges along with a precipitous drop in the price of shares. In less than 2 months following the discovery of the scam, the stock prices dropped by over 40%, wiping out market value to the tune of Rs. 100,000 crores22.
The scam was in essence a diversion of funds from the banking system (in particular the inter-bank market in government securities) to brokers for financing their operations in the stock market. The cost of finance in the informal money market which finances stock market operations was about twice that of the formal market in which banks lend to each other against government securities. The difference in the cost of finance in the two markets could not be attributed to the difference in the level of risk. The phenomenon of high interest rates in badla finance was mainly due to artificial segmentation of the markets. Therefore there were enormous profits to be had for anybody who could find a way of breaching the artificial wall separating the two markets and arbitrage between them. That in essence was what the scam was all about.
Anticipating the good tidings for the private sector with advent of the reform process, the stock market started booming. The BSE Sensex rose from around 1000 in February 1991 to a peak of 4500 in March 1992 just before the scam came to light. This meant an enormous increase in the scale of finance required by operators in the stock market. Heavy margins imposed by the BSE on settlement trading added to the funds requirement. At the same time, in the wake of new free market philosophy nationalized banks were under pressure to improve their bottom line. The proposed increase in capital adequacy requirement added to the pressure on the banks. This was happening at the same time when there was a growing need for funds in the informal money market to finance stock market operations at very high rates of interest. The time was therefore most appropriate for somebody to find innovative ways of diverting funds from the banking system to the stock market. Brokers who were operating in both the markets were ideally placed to do this, and thus the scam was born23. It would be impossible to trace all the money swindled from the banks. The following appear to be the possibilities:
The bulk of Harshad Mehta 's purchases was made at low prices. The average portfolio corresponded to an index well below 2500 with many of the shares untraceable till today. A powerful "bear cartel", represented by Hiten Dalal, A.D. Narottam and others, operated in the market with money cheated out of the banks. It is likely that a considerable part was spent on financing the losses in the rising stock markets. It is rumoured that a part of the money was sent out of India through the hawala racket, and brought back as India Development Bonds. A part of the money must have been spent as bribes and kickbacks to the various accomplices in the banks and possibly in the bureaucracy and in the political system. A part of the money might have been used to finance the losses taken by the brokers to window-dress various banks ' balance sheets returning to the banking system.
The scam was made possible by a complete breakdown of the control system both within the commercial banks as well as the control system of the RBI itself. The immediate impact of the scam was a sharp fall in the share prices. The index fell from 4500 to 2500 representing a loss of Rs. 100,000 crores in market capitalization. Scam just resulted in withdrawal of about Rs. 3,500 crores from the market.
Unfortunately broker Harshad Mehta could be convicted in only one case. Involvement of the government officials and the ministers could not be uncovered. Harshad Mehta was died in February 2001 even before receiving his punishment which he deserved. It shows how the prosecution is delayed in the white collar crimes and the government officials are rescued from the trouble.

Fodder Scam:
Fodder scam was one of the scam in the history of India, which gained attention of media in late 20th century. Many top officials of the Bihar government including the chief minister was alleged to have involved in that scandal. This is one more example of how investigation is delayed and affected greatly by the government of the state. It shows how the entire Indian Political system has become corrupt over the years and how difficult it is to bring the corrupt officials and the ministers to the justice. It also shows how the trust is violated by the government and distrust is created in the minds of the millions of citizens of this country.
Fodder Scam was a corruption scandal that involved the alleged embezzlement of about 950 crore (US$210.9 million) from the government treasury of the eastern Indian state of Bihar. The alleged theft spanned many years, was engaged in by many Bihar state government administrative and elected officials across multiple administrations (run by opposing political parties), and involved the fabrication of "vast herds of fictitious livestock" for which fodder, medicines and animal husbandry equipment was supposedly procured. Although the scandal broke in 1996, the theft had been in progress, and increasing in size, for over two decades. Besides its magnitude and the duration for which it was said to have existed, the scam was and continues to be covered in Indian media due to the extensive nexus between tenured bureaucrats, elected politicians and as an example of the mafia raj that has penetrated several state-run economies. The scam was said to have its origins in small-scale embezzlement by some government employees submitting false expense reports, which grew in magnitude and drew additional elements, such as politicians and businesses, over time, until a full-fledged mafia had formed24.
In February 1985, the then Comptroller and Auditor General of India, T.N. Chaturvedi, took notice of delayed monthly account submissions by the Bihar state treasury and departments and wrote to the then Bihar chief minister, Chandrashekhar Singh, warning him that this could be indicative of temporary embezzlement. but the warnings were ignored in a manner that was suggestive of a pattern by extremely senior political and bureaucratic officials in the businesspeople that it revealed, sectors in the country25. In 1992, Bidhu Bhushan Dvivedi, a police inspector with the state 's anti-corruption vigilance unit submitted a report outlining the fodder scam and likely involvement at the chief ministerial level to the director general of the same vigilance unit, G. Narayan26.
On January 27, 1996, the deputy commissioner of West Singhbhum district, Amit Khare, acted on information to conduct a raid on the offices of the animal husbandry department in the town of Chaibasa in the district under his authority. The documents his team seized, and went public with, conclusively indicated large-scale embezzlement by an organized mafia of officials and businesspeople. Chief minister ordered the constitution of a committee to probe the irregularities. There were fears that state police, which is accountable to the state administration, and the probe committee would not investigate the case vigorously, and demands were raised to transfer the case to the Central Bureau of Investigation (CBI), which is under federal rather than state jurisdiction. Allegations were also made that several of the probe committee members were themselves complicit in the scam. Public interest litigation was filed with the Supreme Court of India, which led to the court 's involvement, and based on the ultimate directions issued by the supreme court, on March 1996, the Bihar High Court ordered that the case be handed over to the CBI27.
As the investigation proceeded, the CBI unearthed linkages to the serving chief minister of Bihar, Laloo Prasad Yadav and, on May 10, 1997, made a formal request to the federally-appointed governor of Bihar to prosecute Laloo.
A few days of uncertainty followed the CBI 's request to the state governor to prosecute the chief minister. The governor, A. R. Kidwai, was accountable to the federal government, and had already stated that he would need to be satisfied that strong evidence against Laloo existed before he would permit a formal indictment to proceed. The federal government, led by newly appointed prime minister Inder Kumar Gujral who had just succeeded the short-lived government of the previous prime minister HD Deve Gowda, consisted of a coalition that depended on support from federal legislators affiliated with Laloo for its survival.
On June 17, the Governor gave permission for Laloo and others to be prosecuted. The CBI also began preparing a chargesheet against Laloo to be filed in a special court. Expecting to be accused and imprisoned, Laloo filed an anticipatory bail petition, which the CBI opposed in a deposition to the court, listing the evidence against Laloo. Also, on June 21, fearing that evidence and documentation that might prove essential in further exposing the scam were being destroyed, the CBI conducted raids on Laloo 's residence and those of some relatives suspected of complicity.
On June 23, the CBI filed chargesheets against Laloo and 55 other co-accused , including Chandradeo Prasad Verma (a former union minister), Jagannath Mishra (former Bihar chief minister), two members of Laloo 's cabinet (Bhola Ram Toofani and Vidya Sagar Nishad), three Bihar state assembly legislators (RK Rana of the Janata Dal, Jagdish Sharma of the Congress party, and Dhruv Bhagat of the Bharatiya Janata Party) and some current and former IAS officers (including the 4 who were already in custody).
As it became evident that Laloo would be engulfed in the scandal and its prosecution, demands for him to be removed from the chief ministership had gained momentum both from other parties as well as within Laloo 's own party, the Janata Dal. On July 25, Laloo resigned from his position, formed his own political party Rashtriya Janata Dal, and was able to install his wife, Rabri Devi as the new chief minister28.
As the CBI discovered further evidence over the following years, it filed additional cases related to fraud and criminal conspiracy based on specific criminal acts of illegal withdrawals from the Bihar treasury. Most new cases filed after the division of Bihar state (into the new Bihar and Jharkhand states) in November 2000 were filed in the new Jharkhand High Court located in Ranchi, and several cases previously filed in the Bihar High Court in Patna were also transferred to Ranchi. Of the 63 cases that the agency had filed by May 2007, the majority were being litigated in the Ranchi High Court.
Laloo 's initial chargesheet, filed by the CBI on 27 April 1996, was against case RC 20-A/96, relating to fraudulent withdrawals of 37 crore (US$8.21 million) from the Chaibasa treasury of the (then) Bihar government, and was based on statutes including Indian Penal Code sections 420 (cheating) and 120(B) (criminal conspiracy), as well as section 13(2) of the Prevention of Corruption Act, 198829.
After 135 days in judicial custody, Laloo was released on bail on December 12, 1997. The next year, on 28 October 1998, he was rearrested on a different conspiracy case relating to the fodder scam, at first being kept in the guest house, but then being moved to Patna 's Beur jail when the Supreme Court objected. After being granted bail, he was rearrested yet again in a disproportionate assets case on 5 April 2000. His wife and then Chief Minister Rabri Devi was also asked to surrender on that date, but then immediately granted bail. This stint in prison lasted 11 days for Laloo, followed by a one-day imprisonment in another fodder scam case on 28 November 2000.
Due to the multiplicity of cases, Laloo Yadav, Jagannath Mishra, and the other accused were remanded several times in the years since 2000. In 2007, 58 former officials and suppliers were convicted, and given terms of 5 to 6 years each. Till May 2007, about 200 people were punished with jail terms of between 2 and 7 years. In January 2011, more 35 people were awarded jail terms for 4-6 years by the Ranchi High Court. These include some high ranked officers in Bihar Government30.
Thus fodder scam in Bihar does not only show a bureaucratic corruption but it also indicates towards the criminalization of politics in India. Although several officials have got the punishment, no politician received any imprisonment. Even today, these politicians are roaming free after committing large scale white collar crimes. It is important to note that there are several states in India where there is no development taking place only because of the huge corruption. No welfare schemes are properly implemented in these states. These states are known as rogue states only because of these politicians. Industrial development is almost completely stopped in these states for many years because decisions on setting up the industries are not taken in time. Employment generation has been completely stopped in these rogue states. Although, the corruption has become a big issue today, yet no steps are being taken by the government of India or the states to curb the menace. Actually, the political willpower is lacking to fight the menace of corruption.
d) Stock Market Manipulation Scam 1999-2001
Yet another stock market scam in India came to light in year 2001. it is called a stock market manipulation scam. Ketan Parekh was a mastermind of this scam. Although he was convicted, yet he did not receive stringent punishment which he deserved. That raised several important questions about the safety of investment in Indian stock markets.
On 9th Dec 2010, one television news channel claimed that Ketan Parekh has relation with Ravi inder (arrested by Delhi police in November 2010). According to the news channel he still has a vital role in Indian share market.
A chartered accountant by training, Parekh came from a family of brokers, which helped him create a trading ring of his own. Between 1999 and 2000, as the technology bubble was engulfing the rest of the world, the stock market in India sprang to life too.
Be it investment firms, mostly controlled by promoters of listed companies, overseas corporate bodies or cooperative banks, all were ready to hand the money to Parekh, which he used to rig up stock prices by making his interest apparent. In no time, scrips like Visualsoft rose from Rs 625 to Rs 8,448 per share and Sonata Software from Rs 90 to Rs 2,150. But the vicious cycle of fraud did not end with price rigging. The inflated stocks had to be dumped onto someone in the end, for which Parekh used financial institutions like the UTI. But the party ended rather abruptly a day after the Union Budget was presented in February 2001. A bear cartel started disrupting Parekh 's party by hammering prices of the K-10 stocks, precipitating a payment crisis in Kolkata31.
As SEBI investigated, it was evident that bank and promoter funds were used to rig the markets. Parekh was arrested in March that year and was in custody for 53 days32. He was convicted in 2008, for involvement in the Indian stock market manipulation scam in late 1999-2001. Currently he has been debarred from trading in the Indian stock exchanges till 2017. it is important to note that he was given one year imprisonment by the court for involvement in 1992 stock market scam but still he could not be stopped from carrying another scam. He was able to influence the policy makers very easily.
e) Counterfeit Stamp Scam
Era of scams in India continued even in the beginning of twenty first century. In year 2006, one more scam came to light. This scam is called as counterfeit stamp scam. Mastermind of this scam was Abdul Karim Telgi. Although this scam was of different type, yet the magnitude of this scam was so great that this was resulted in loss of billion of rupees to the Indian government. It is important to note that Telgi was not the person of having high respectability and social status. He was a son of a relway employee. It shows that this class of crimes can be committed by any class of person. It is not important for him to be a person of a particular class to commit economic crimes of grave nature.
Abdul Karim Telgi began printing fake stamp papers somewhere in late 1990s. He appointed 300 people as agents who sold the fakes to bulk purchasers, including banks, insurance companies, and share-broking firms. His monthly profits have been estimated as being in the neighborhood of Rs 202 crore (slightly more than US $40 million). The size of the scam was estimated to be more than 43000 crore (US$9.55 billion)33.
The Telgi case brought corruption in the Karnataka police force to light, causing a national scandal in India. Under the influence of the supposed truth serum, Telgi is said to have blurted out several big names of the politicians. Although the politicians had denied the charges, yet there was a strong case of nexus of the white collar criminals with politicians in India34.
On 17 January 2006, Telgi and several associates were sentenced to ten years rigorous imprisonment. On June 28 2007, Telgi was sentenced to rigorous imprisonment for 13 years and fined a whopping Rs 202 crore on various counts in one of the main cases of the scandal. Hours after Telgi pleaded guilty and repented his actions, Judge Chitra Bedi of a special court pronounced the quantum of punishment under various sections of the IPC and the Maharashtra Control of Organised Crimes Act. This is the harshest punishment given to Telgi in any of the fake stamp paper cases he has been convicted for so far in Maharashtra and Karnataka.
f) Satyam Computer Scam
Satyam computer scandal was came to light in early 2009. CEO of the satyam computers ltd and auditor is being prosecuted for the falsifying the accounts and over valuating its shares. This scandal had resulted in loss of billions of rupees to its shareholders. Nothing much is known how this scandal was carried on by the big corporate personalities.
g) IPL Scandal
Cricket is played in every part of India. It has become a number one sport in this country. It is said that cricket is a religion in India. India has recently won the world cup cricket tournament hosted by it with Bangladesh and Shri Lanka. But this game has been always in controversy for illegal betting and match fixing.
As limited overs cricket started way back in 1971, people started taking this game as an entertainment rather than a sport. Then came the twenty-twenty overs format. This started giving more entertainment to the spectators.
Indian Premier League was started by the Board of Cricket Control in India BCCI in response to Indian Cricket League ICL which was established to give enough chances to the players who were not getting chances to play at the international level despite the good talent In them. Players were auctioned and huge sums were offered to them for playing for their respective teams. This started more entertainment to the viewers. Television rights of IPL were sold at the higher rates than the international matches. This became an important source to earn money for the people in BCCI. Cricket became a product over night. It had became an important source to turn black money into white for many people.
It was alleged that the IPL chairman Mr. Lalit Modi was falsifying the account. Allegations were made against him specially when he took a name in a scandal of one union minister who is a current chairman of International Cricket Council ICC. Several Allegations were made against Modi including, money laundering, match-fixing, illegal betting, team auction manipulation, political corruption and multi-million dollar kickbacks. He was soon suspended from the chairmanship of the IPL. It is important to note that the people who suspended him were not the people of clean images.
Another controversy rocked IPL very soon. One more high profile minister had to quit his ministership from the cabinet. He was alleged to have helped won model to gain five per cent stake in one IPL team auction. After quitting the ministership, the minister had married the same model later in the year. Nobody knows the complete truth behind these IPL scandals. It appears that the entire IPL cricket tournament is nothing but a money laundering exercise. People who are carrying these scandals are so shrewd that it is very difficult for us to know the truth behind them.

h) Commonwealth Games Scandal
According to the government, economy of India is growing. Its infrastructure is improving with the rapid pace. In order to show this development, India was willing to host more and more international sports tournaments so that the attention of the international community can be gained towards the rapid growth of this country. Government was willing to make international community realize that India is a good place to make the investment despite the economic meltdown which had crippled big economies world over. Economic meltdown did not affect India as such although industrial output slowed down to some extent. Business community did not suffer economically in India as much as it suffered in United States of America, Europe and Japan. Government has always been claiming during this period that India is achieving the growth rate about seven to nine per cent. Government of India had a good chance to show that the conditions for the investments are much better in India as compare to America and Europe. In order to show its success story to the world, India soon got a chance to host Commonwealth Games 2010 which is one of the biggest sports events after Olympic Games in the world. For this, entire infrastructure had to be built. Many stadiums had to be either renovated or newly constructed. Roads had to be repaired. New flyovers had to be constructed. Metro train projects had to be completed in time. Arrangements had to be made for the guests to reside and enjoy the games.
Problems arose very soon when it looked that most of the projects will not be completed in time. Because of the delay, two important stadiums were not ready at the time of the games. Budget of the games started overshooting very soon. Corruption started to appear in the many projects. Actually, all the projects were started very late. It never looked that India will be able to host the games successfully. Huge money was spent on these games. It was alleged that the welfare funds were diverted towards Commonwealth Games. Corruption was estimated up to 60.000 crore rupees. Contractors and engineers plundered billions of rupees. Few ministers are suspected to have involved in this corruption. Media played an important role in bringing the corruption before the citizens of this country. Disappointments and nervousness could be easily seen in the ministers and government sources. Because of this nervousness, some of the government sources and the ministers started blaming seasonal rainfall for non-completion of the projects. Voices could be heard against this massive corruption in the parliament. It was becoming clear that it is not just a massive corruption but a huge scandal. Prime Minister of India promised independent enquiry of this huge corruption but doubts were raised specially when Mr. P. J. Thomas was appointed as a Central Vigilance Commissioner CVC of India. This appointment was one of the most controversial appointments in the history of India because Thomas himself is facing corruption charges in the court. Which later forced the Supreme Court to declare that this appointment does not exist in law.
As soon as the games were over, people started looking at the government for its promises against the scandals. Members of the civil society and the social activists started filing Right to Information RTI applications to the CVC. CVC has found discrepancies in tenders and alleged misappropriation amounting to about Rs 8,000 crore. It says, the discrepancies like payment to non-existent parties, wilful delay in execution of contracts, over-inflated price and bungling in purchase of equipment through tendering have been noticed. It further notes that The total misappropriation amount may touch a figure of Rs 5,000 to Rs 8,000 crore, which is quite huge and alarming.
In reply to an RTI application filed by PTI, the CVC has given details of projects executed by different government agencies where discrepancies have been detected. Complaints regarding alleged embezzlement of Rs 1.5 crore in the purchase of HOVA Courts for Badminton stadium, malpractices in the tender for kitchen equipment installation, misappropriation in video board tenders for remodelling and upgradation of Major Dhyan Chand National Stadium were received by the CVC. The matter pertaining to appointments in OC and workforce consultants without adequate qualification and experience has been received and a report is awaited from the Sports ministry, the RTI reply said. The CVC is probing at least 22 more Games-related construction and procurement works carried out by different government agencies here for alleged financial irregularities. Out of the total projects, six were carried out by the Sports Ministry, four by the Delhi Development Authority, three by the Organising Committee and two each by the Municipal Corporation of Delhi and Central Public Works Department of the Delhi government. One work each relating to Department of Commerce, Indian Meteorological Department and New Delhi Municipal Council is also being probed, the RTI reply said. The matter regarding alleged manipulation of tenders by Indian Meteorological Department and its senior officers is under investigation by the CVC, it said. A complaint regarding alleged irregularities in awarding contracts for sound system, LED display boards and other communication systems for various Commonwealth Games stadia was also received and inspected by the CVC. Though no amount was mentioned, the reply said CVC has noticed the national exchequer has incurred losses running into several crores of rupees. A report has been called for from the Central Public Works Department on September 8 and is still awaited, the Commission said while responding to the RTI query. An analysis by Chief Technical Examination Wing of CVC had earlier found alleged financial and administrative irregularities in 16 construction and procurement projects. Six of them were done by the PWD, three by the MCD, two each by the CPWD, DDA, NDMC and one by RITES, a government of India enterprise, a CVC report said35. Committee formed by Prime Minister Manmohan Singh headed by former Comptroller and Auditor General (CAG) V K Shunglu to probe the scandals. CVC will give its final findings based on the Shunglu Committee report. As per now, Shunglu Committee has submitted its report on 29th march 2011. Its content has not been made public.
Although India could host the commonwealth games, it remains to be seen whether the people involved in this huge scandal will get the stringent punishment or will escape from the rigours of the law. It is important to see how the government deals with these kinds of scandals. Commonwealth games have left huge scandal behind them. It is very important to probe this huge corruption if the people behind this are to be held responsible. Past experience shows that the government had adopted lenient approach towards the prosecution of the criminals of these scandals. Judiciary also did not understand the seriousness of this class of crimes.
i) 2G Spectrum Allocation Scandal
2G spectrum allocation scandal is called a mother of all the scandals in India so far. It helped raising the outcry of the society against the corruption. Social activists and lawyers seem to have stood firm against the huge corruption. Now everybody feels that this has come to the level where it has become impossible to fight for the corruption free society. Nobody trusts the government’s that it will fight against the menace. People have accepted the corruption as a part of their lives. No minister and government officer looks to be clean in this country. Law has felled to show its effect. India faces a wave of corruption as never before. 2G spectrum scandal is one of the biggest known scandal so far. In order to fight such massive corruption, we must understand that the corruption and the democracy can not exist together.
The 2G spectrum scam involved officials and ministers in the Government of India illegally undercharging mobile telephony companies for frequency allocation licenses, which they would use to create 2G subscriptions for cell phones. According to a report submitted by the Comptroller and Auditor General based on money collected from 3G licenses, the loss to the exchequer was rs. 176379 crore (US$39.16 billion). The issuing of the 2G licenses occurred in 2008, but the scam came to public notice when the Indian Income Tax Department investigated political lobbyist Niira Radia and the Supreme Court of India took Subramaniam Swamy 's complaints on record [With Case type:Writ Petition (Civil),Case No:10, Year:2011]. The case details of the main PIL filed with the supreme court is Type:Writ Petition (Civil),Case No:423, Year:2010.
Former Telecom Minister of the NDA government Arun Shourie was the whistleblower who helped uncover the scam and also exposed many loopholes in the UPA government 's policy towards issuing telecom licences. In 2008, the Income Tax department, after orders from the ministry of Home and the PMO, began tapping the phones of Nira Radia. This was done to help with an ongoing investigation into a case where it was alleged that Niira Radia had acted as a spy.
Some of the many conversations recorded over 300 days were leaked to the media. The intense controversy around the leaked tapes became known in the media as the Radia tapes controversy. The tapes featured some conversations between politicians, journalists and corporation. Politicians like Karunanidhi, journalists like Barkha Dutt and Vir Sanghvi and industrial groups like the Tata Group were either participants or mentioned in these tapes36.
The selling of the licenses brought attention to four groups of entities - politicians who had the authority to sell licenses, bureaucrats who implemented and influenced policy decisions, corporations who were buying the licenses, and media professionals who mediated between the politicians and the corporations on behalf of one or the other interest group37.
Raja, the Ex-Minister of Communications and Information Technology who was the minister when the controversial second round of spectrum allocations took place. Mr.Raja, an MP of the Dravida Munnetra Kazhagam from the Nilgiris constituency, was forced to resign following the public outcry. He was appointed the minister of telecommunications again for the second time when the UPA returned to power in the last general elections despite huge reservations from economists and other political parties. This was due to the pressure exerted by the DMK, one of the main allies of the Congress. Raja was arrested on February 2nd, 2011 for his alleged role in manipulating rules to allocate favourable spectrum to some telecom companies at throwaway prices. After the February 2nd arrest DMK party members and workers immediately passed a resolution declaring that the arrest doesn 't mean Raja is guilty, and claimed opposition parties were targeting him for political purposes. He is currently lodged in the Tihar Jail in Outer Delhi. The Indian Central Bureau of Investigation (CBI) has raided his various houses, offices and other NGOs and beneficiaries related to A.Raja.
M. Karunanidhi, the Chief Minister of Tamil Nadu and the DMK chief. The Radia tapes indicated his wife and his daughter as beneficiaries in the deals involving huge corporates. Recently, Kalaignar TV, a television channel owned by Karunanithi and his family members was raided in connection with the spectrum scam. CBI has unearthed evidence of money trail leading towards the Kalaignar TV.
Kanimozhi, Member of Parliament and daughter of DMK chief and Tamil Nadu Chief Minister Karunanidhi. In November 2010 Outlook published transcripts of six conversations between lobbyist Niira Radia and Kanimozhi from May 2009. India Today claims that these conversations reveal that Kanimozhi filtered the information flowing to her father and thereby "tipped the scales in favour of" A. Raja, who was Minister of Communications and Information Technology during controversial 2G wireless spectrum allocations in 2008. The New York Times 's Delhi correspondent Lydia Polgreen said Raja 's rise to telecommunications minister was "emblematic" of how politics in India really work, with the DMK "more closely resembling a sprawling family business empire than a political party," and highlighted Mr. Raja 's "close relationship" with Kanimozhi. Following the Central Bureau of Investigation 's raid on Tamil Maiyam, an NGO of which she is a director, Kanimozhi said the DMK party will come out clean in the CBI probe, stating "The law has to take its own course. It is a process to prove us not guilty.”
Pradip Baijal, a bureaucrat who is alleged to have recommended policies that favored certain Telecom companies when he was heading the TRAI. Post retirement, Baijal joined Noesis, a consulting firm. Raja has made references to Baijal 's decisions in 2003 as the basis for his decisions in 2008; something which has been attacked by Arun Shourie and several media pundits. The houses and offices of the bureaucrat were recently raided by the Central Bureau of Investigation as part of their investigations. Siddhartha Behura, former telecom secretary who served in the DOT at the time of the 2G allocation.
P. J. Thomas, Secretary of the Department of Telecommunications at the time of the 2G allocation. R K Chandolia, private secretary of Raja during UPA-I when the licences were awarded. He was an Indian Economic Service officer of the 1984 batch cadre.When Raja became the Telecom Minister once again in UPA-II, Chandolia had been promoted to the Joint Secretary rank. Raja re-designated him Economic Adviser, which gave him the charge of all important policy-related work. Chandolia interacted with all the licensees. It is said that it was Chandolia who, from DDG-access services A K Srivastava 's room, had handed out letters of intent to representatives of various companies38. These are some of those ministers and bureaucrats who are suppose to have involved in the 2G scam. Recently charge sheet has been filed against A. raja who has been a telecom minister at that time.
There are some corporations also involved. Unitech Group a real estate company entering the telecom industry with its 2G bid; sold 60% of its company stake at huge profit to Telenor after buying licensing (Including land values properties for towers). Swan Telecom sold 45% of its company stake at huge profit to Emirates Telecommunications Corporation (Etisalat) after buying licensing.
Other corporations involved are, Loop Mobile, Videocon Telecommunications Limited, S Tel, Reliance Communication, Sistema Shyam Mobile (MTS) - Sistema Mobile Russia, Tata Communications, Essar, Dishnet Wireless, Allianz Infra. Some corporate personalities also involved. those are, Anil Ambani - Reliance Group (ADAG), Shahid Balwa - DB Realty and Etisalat DB Telecom(formerly Swan Telecom), Vinod Goenka - Dynamix Group, Venugopal Dhoot - Videocon Group, and Prashant Ruia - Essar Group. All of them ither questioned by CBI or suspect in the scam39.
Several lawyers, social activists and members of the civil society have filed petitions in the Supreme Court against this large scale corruption. Subramaniam Swamy, activist lawyer and politician, whose letters to the Prime Minister demanding action and affidavits and cases in the Supreme Court brought the issue into the public limelight. Paranjoy Guha Thakurta, a journalist who was one among the very first to write on the irregularities in the awarding of 2G spectrum allocation by the Telecom Ministry. He is also one of the petitioners in the 2G PIL currently being heard in the Supreme court. Prashant Bhushan, on behalf of the Centre for Public Interest Litigation. Anil Kumar, on behalf of the civil society organisation several eminent people like former chief election commissioners J.M. Lyngdoh, T.S. Krishnamurthy and N. Gopalaswami and former central vigilance commissioner (CVC) P. Shankar are also petitioners in the suits filed by civil society groups40. A. Raja arranged the sale of the 2G spectrum licenses below their market value. Swan Telecom, a new company with few assets, bought a license for 1537 crore (US$341.21 million). Shortly thereafter, the board sold 45% of the company to Etisalat for 4200 crore (US$932.4 million). Similarly, a company formerly invested in real estate and not telecom, the Unitech Group, purchased a license for 1661 crore (US$368.74 million) and the company board soon after sold a 60% stake in their wireless division for 6200 crore (US$1.38 billion) to Telenor. The nature of the selling of the licenses was that licenses were to be sold at market value, and the fact that the licenses were quickly resold at a huge profit indicates that the selling agents issued the licenses below market value. Nine companies purchased licenses and collectively they paid the Ministry of Communications and Information Technology 's telecommunications division 10772 crore (US$2.39 billion). The amount of money expected for this licensing by the Comptroller and Auditor General of India was 176700 crore (US$39.23 billion). Media sources such as OPEN and Outlook reported that Barkha Dutt and Vir Sanghvi knew that corporate lobbyist Nira Radia was influencing the decisions of A. Raja. The critics alleged that Dutt and Sanghvi knew about corruption between the government and the media industry, supported this corrupt activity, and suppressed news reporting the discovery of the corruption. The tapes leaked to the public include conversations between Nira Radia and Ratan Tata. Tata petitioned the government to acknowledge his right to privacy and demanded accountability for the leak, with the Minister for Home Affairs, CBI, Indian Income Tax Department, the Department of Telecommunication, and the Department of Information Technology as respondents in the petition41. In early November 2010, opposition accused Congress for protecting Raja from corruption charges and called for his resignation. By mid November A. Raja resigned. In mid November, the comptroller Vinod Rai issued show-cause notices to Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat to respond to his assertion that all of the 85 licenses granted to these companies did not have the up-front capital required at the time of the application and were in other ways illegal. Some media sources have speculated that these companies will receive large fines but not have their licenses revoked, as they are currently providing some consumer service. In response to the various allegations, the Govt of India has replaced the then incumbent Telecom minister ,A Raja with Kapil Sibal who has taken up this charge in addition to being the Union minister for Human Resources Development.Mr Sibal contends that the "notional" losses quoted are a result of erroneous calculations and insists that the actual losses are nil. The CBI conducted raids on Raja and four other telecom officials - former telecom secretary Siddharth Behura, Raja 's personal secretary R K Chandolia, member telecom K Sridhar and DoT deputy director general A K Srivastava on 8 December 2010. Raja, Behura and Chandolia were arrested on Feb 2nd 201142.
Investigation is going on by the CBI and the court of this huge scandal. Raja is still in Tihar jail. Many of his associates are also being investigated. One of his associate Mr. Batcha has been found dead in mysterious circumstances. CBI is also investigating this case. Recently, the Supreme Court has orderd day to day hearing of the 2G scandal case to the Patiala House Court. It is important to note that the scandals of these types are increasing everyday. Common man hardly has any remedy against this large scale corruption in the government. Government does not seem to be committed to fight against the corruption. We can understand that the pressure from the civil society and common man is rising against this menace. People have high hopes from the judiciary of this country. In such situations, it is hoped that the corrupt ministers and bureaucrats will be brought to the justice while following the due course of law.

CHAPTER III
LAW COMMISSION’S RECOMMENDATIONS AND THE LEGISLATIVE RESPONSE
I. INTRODUCTORY India is one of the most corrupt countries in the world. In its latest report for 2010, the global watchdog ranked us eighty-seventh on a list of 178 countries. There are others who tell us the same truth. Washington-based Global Financial Integrity (GFI) recently reported that over $125 billion worth of funds meant for the betterment of the poor were illegally siphoned out of the country by corrupt politicians and corporate officers between 2000 and 2008. In fact, the average citizen in this country does not need others to tell him how rotten the entire system has become; he experiences the malaise every day in his life. Though the country witnessed scams even in the early years after independence, such as the Jeep scandal (1948), the Mudgal case (1951), the Mundra deals (1957-58), the Malaviya-Sirajuddin scandal (1963) and the Pratap Singh Kairon case (1963), the blot has never been as big and as wide as it is today, with several high-profile scandals emerging one after the other. Think of one scam and numerous others will crowd your mind. A single word or expression is sufficient to bring vivid, though gloomy, memories to mind - Bofors, Fodder, CWG, Hawala, IPL, Koda, Provident Fund, Raja, Ramalinga, Recruitment, Security, Sugar, Sukhna, Telgi, Telecom, Urea, to name only a few. The scourge of corruption has engulfed all sectors of the public domain. The Army, Bureaucracy, Customs, Defence, Education, Health, Income Tax, Judiciary, Police, Parliament, Politics, Sport. No department or institution remains unsullied. The Government of India was conscious about the corruption in the bureaucracy and the ministries right since the independence of the country. It has made various attempts to deal with the menace. Various Law commissions were given the important task to suggest the robust laws. 29th Law commission report gave its suggestions on whether the socio-economic offences can be included in the Indian penal code. While, the 47th report was concerned with trial and punishment of the Socio-economic offences. These reports have taken full account of the White Collar Crimes in various countries and the India. Report of the Santhanam Committee was the earliest one, which is concerned with Prevention of Corruption and Setting up of Central Vigilance Commission.
Our legislatures have enacted several acts, to deal with the growing corruption. These acts still lack robust punishment for the white collar criminals. It is very difficult to prosecute a public servant against the corruption because, the Government often does not grant sanction for prosecution of public servant. Even if the sanction is granted, it is granted so late that the bureaucrats are able to get themselves out of the rigors of law.
This chapter has been divided in three parts. In part (a), remarks of the law commissions on the white collar crimes have been discussed. In part (b), various legislations have been mentioned as some of the examples of anti corruption measures by the government. These legislations have not been dealt with extensively because the page limit of this work. Only there names will suggest that we have huge laws to deal with the corruption. In part (c), issues related to the sanctions for the prosecution of the public servants have been dealt with. We have huge case law on this point. How the judiciary developed the law time to time has been discussed in detail.
II. SANTHANAM COMMITTEE REPORT White-collar criminality is common in India. The Santhanam Committee report gives a detailed and elaborate account of the criminal behavior of the so called men of respectability, such as business tycoons, industrialists, contractors, top ranking public servants etc. While turning the pages of the report, it reads as follows43:
Corruption can exist only if there is some one willing to corrupt and capable of corrupting. This willingness and capacity to corrupt is found in a large measure in the industrial and commercial classes. It is these persons who indulge in evasion and avoidance of taxes, accumulate large amounts of unaccounted money by various methods such as obtaining licences in the names of bogus firms and individuals and trafficking in licence suppressing profits by manipulation of transactions of immovable property. It is they who maintain an army of liaison and contact men, some of them live, spend and entertain ostentatiously.
Business communities in India of large and small merchants are basically a dishonest bunch of crooks nowhere in the world do business men get rich so quickly as they do in India. The traders have caused serious damage to Indian economy and sufferings to the common people. Such traders are anti-social criminals who deserve penal action44. The committee had recommended that these crimes should be brought within the structure of the IPC. This recommendation was rejected on the ground that it would mar the structure of the IPC45.
Law Commission on the White Collar Crimes:
As stated above, 29th law commission report is concerned with the socio-economic offences and white collar crimes. The important task before the commission was to examine whether the socio-economic offences can be brought within the Indian penal code. While talking about the causes of the White Collar Crimes, it had remarked46:
The inability of all sections of society to appreciate in full the need (of high standard of ethical behaviour) results in the emergence and growth of white-collared and economic crimes, renders enforcement of law, more difficult.
The advances of technological and scientific development is contributing to the emergence of 'mass society '. With a large rank and file and a small controlling elite, encouraging the growth of monopolies, the rise of managerial class and intricate institutional mechanism. The inability of all sections of society to appreciate in full, this need results in emergence and growth of white-collar and economic crimes. The economic growth and industrial progress throughout the globe is one of the most important causes for the rise in white-collar crime. The socio-economic status of the white-collar criminals acts as an insulation from the clutches of sentencing. By means of most powerful influence the white-collar criminals get away from the rigors of law. It helps in the propagation of white-collar criminal47. Criminal Law administrators and judges are also allegedly sympathetic towards white-collar criminals which results in their scotch-free-go. The report accepts that the White-collar criminals are tactful, intelligent and stable under the cover of high-social status and are able to come out of the rigors of the law. In its conclusion, the report reads48:
Problem of crime a complex one.—In the end, we should emphasise that the problem of checking crime in general, and of white-collar crimes in particular49, is a complex one. It is much wider than the form and content of the penal law, or the placing of its provisions. The inhibitions which prevent a person from committing crime generally may have their origin in various factors which contribute to the emergence of conscience and the creation of a sense of guilt. The sanctions imposed by the penal law constitute only one species of those inhibitions. Crime is not a legal problem; it is a social and economic one. The sanctions which can effectively operate to check crime are not legal only.
Among the basic elements in any culture are social values. These have been developed out of the historical experience of each society. Experiences and behaviour patterns which have brought the group satisfaction are positively valued. Experiences which have brought dissatisfaction are negatively valued. Sanctions are set by the society designed to "encourage approved behaviour and discourage disapproved behaviour. These sanctions are embodied in the folkways, mores, conventions, religious ideals and taboos, public opinion, and laws of a society, and may be promoted through education. Every society has to decide what kinds of behaviour shall be discouraged through law, and what kinds by appeal to other sanctions. We have seen in our society a great reliance on law and yet a considerable disrespect for many laws. Criminology is, strictly speaking, concerned only with acts which are made punishable under the criminal law.
When we consider the question of preventing the commission of a particular class of crimes, the matter becomes still more complex, because then one has to consider not only the criminal instinct in general, but the more detailed question as to why the desire to commit the crimes of that particular class arises50.
III. 47TH LAW COMMISSION REPORT
As stated above, 47th law commission report dealt thoroughly the issues related to the trial and punishment of the socio-economic offences. It had occasion to summarise some of the salient features of the socio-economic offences. Some of those are given as follows:
Motive of the criminal is avarice or rapaciousness (not lust or hate).
Background of the crime is non-emotional (unlike murder, rape, defamation etc.). There is no emotional reaction as between the victim and the offender.
The victim is usually the State or a section of the public, particularly the consuming public (i.e. that portion of which consumes goods or services, buys shares or securities or other intangibles). Even where there is an individual victim, the more important element of the offence is harm to society.
Mode of operation of the offender is fraud, not force.
Usually, the act is deliberate and wilful.
Interest protected is two-fold—
Social interest in the preservation of the property or wealth or health of its individual members, and national resources, and the general economic system as a whole, from exploitation, or waste by individuals or groups.
Social interest in the augmentation of the wealth of the country by enforcing the laws relating to taxes and duties, foreign exchange, foreign commerce, industries and the like.
The most important feature of these offences is the fact that ordinarily they do not involve an individual direct victim but are punished because they harm the whole society. This constitutes the primary reason why special efforts have to be made to enforce them. If a man or woman is robbed, assaulted or cheated, there is some person who is interested in getting the offender prosecuted, and because the act is a physical one, having an immediate and direct impact, both individual and social vengeance are likely to be aroused. This element is, however absent when, for example essential commodities are hoarded, or foreign exchange is illegally taken out of the country or prohibited goods are imported. No doubt, some social offences do involve a 'victim '. For example, when adulterated food is sold, the immediate consumer is harmed. But the criminal act is potentially capable of harming a large number of persons and that is the principal object behind punishing it51.
According to report, social offences are offences which affect the health or material welfare of the community as a whole, and not merely of the individual victim. Similarly, economic offences are those which affect the country 's economy, and not merely the wealth of an individual victim.
Socio-economic offences form intersecting circle with white-collar crimes and offences of absolute liability. Socio-economic offences and white- collar crimes could thus be intersecting circles. Again, socio-economic offences and crimes of strict liability also could be represented by intersecting circles52.
Report further states, the importance of suppressing social and economic crimes in any modern society is obvious. The transition from a rural and simple society to an industrialised and complex one entails regulation by or under law of activities having an economic import. The same process of transition from a simple to complex and a rural to urban society also necessitates an increasing attack on malpractices which were previously unknown, but which now emerge as a result of the process. The process gives rise to a two-fold increase in such malpractices—increase in the number of socio-economic malpractices and increase in their variety. Thus, newer forms of harmful activities not known previously—such as, unfair competition—raise their heads. And malpractices which would previously have been of a simple-recurring, monotonous type, now assume diverse and varying manifestations. Adulteration of foods and drugs is an example in point.
This has happened in every modern society. In a developing economy, it assumes still greater importance, because conduct which, though criminal, could previously have been overlooked—e.g. petty smuggling—has now to be dealt with more seriously. Just as in war, every inch of territory has to be defended, whatever the risk, so in an economic crisis or in a massive effort to build up a society with a sound and healthy social structure, the purity of every grain has to be protected and every, dot of evil has to be wiped out53.
The reason why offences against laws enacted to combat such evils do not find adequate response in the social consciousness is psychological. Our minds are familiar with conventional offences like murder, rape and theft offences where a tangible person or property of an individual is attacked. But it takes time to realise the seriousness of non-conventional crimes where intangible property, in the sense of economic resources of the community are involved, or where the harm caused is indirect and remote, and there is no immediate tangible object of the harm visible to the mind. Neither the offender nor the society adequately realises the harm, because of the absence of an immediate victim54.
47th report had recommended amendments in various acts including tax laws which are very complex in nature. Report had also recommended the shift in burden of proof from the prosecution towards the offender of the socio economic offences. Gravity of this class of crimes is as such that Even in the democratic setup; report felt the necessity of the Solitary confinement to deal with the socio-economic offences.
It is submitted that despite the vast material produced by these bulky law commission reports, stringent punishments could not be brought in the Indian laws to deal with the menace of socio-economic offences. Now, when we are hearing about the new scandal everyday, we are more concerned about the conviction of the offenders of the socio-economic crimes. Almost all the development funds are going in the wrong hands. Bureaucracy of this country is one of the least trusted bureaucracies in the world. Even ministers, who are the representatives of the people, are not looked at with faith. It is not the satisfactory position in Indian democracy. Socio-economic offences are required to be dealt with effectively so that the faith of the common man in the democratic setup can be restored. Indian Jurisprudence needs to be develop fast with the growing need of the stringent punishment to the offenders of the socio-economic crimes.
III. LEGISLATIVE RESPONSE
Right since its independence, India is facing a problem of socio-economic offences. Scandals were come to light even in the early years of the freedom of India. Over the years, entire system seems to have rotten. Governance has become one of the impossible tasks. All the welfare schemes have either felled, or have not been able to produce desired result because of the massive corruption in the bureaucracy, ministry and even at the lower level. People seems to have accepted the corruption as a part of their daily lives. In many sectors, private investment has hampered because of the huge corruption. It is not long ago, when one of the Australian firms had withdrawn its aid to the organizing committee of the commonwealth games because of the massive corruption came to light even before the beginning of the games.
But it is also not true that the Government of India has not tried to deal with the menace at all. Commitment of the government to deal with the threat is reflected in the early years of the independence when it had given an important task to the various law commissions to suggest changes In the laws to deal iffectively with socio-economic offences. The government has time to time enacted various laws so that the socio-economic offences and the white collar crimes should not go unpunished. Unfortunately, socio-economic offences and the white collar crimes could not still be codified in one single code.
In this part, my attempt is not to deal with any act specifically, but only to mention some of the acts so that we can understand the measures from the government to deal with socio-economic offences and the white collar crimes. Some of these acts enacted by the government to deal with the socio-economic offences are given below.
i) Prevention of Food Adulteration act of 1954. ii) Prevention of Corruption Act of 1988. iii) Foreign Exchange Regulation Act of 1973. iv) Consumer Protection Act of 1986.
v) Prevention of Money Laundering Act of 2002. vi) Immoral Trafic Prevention Act of 1956. vii) Dowry Prohibition Act of 1961. viii) The Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act of 1989.
These are some of the Acts which the government has enacted to deal with the Socio-Economic offences. Some of these acts are called as social legislations and there is a strict liability against the violator of the law. Good example of that is, prevention of food adulteration act 1954.
It is submitted that we have enough laws to deal with the socio-economic offences and the white collar crimes. Some amendments can help in bringing more stringent punishments so that the offenders of this class of crimes can be brought to justice.
Although several laws have been enacted, yet there is a lack of willingness in the government to enact stringent provisions to punish the offender because, many times, ministers and the members of parliament are also involved in the white collar crimes.
It is a need of the hour that the government should adopt the proactive approach in order to bring the stringent punishments so that no white collar criminal should go unpunished. Our legislatures has a duty towards a citizen of this country to protect him from ever growing menace of white collar crimes. Our legislatures can not escape this duty which our constitution has given to them.
IV. SANCTION FOR PROSICUTION OF PUBLIC SERVANT one of the important issue which is in the news for quite some time is that the government does not grant the sanction to prosecute the public servant. Even if it grants the sanctions, it takes years for the government to grant it. We have a provision regarding it in section 197 of the Code of Criminal Procedure 1973. there are several judicial pronouncements which helped the development of law on the point.
The expression “Public Servant” has not been defined in Section 21 of Indian penal code 1860. It enumerates the various functionaries who are designated as public servants. It is still valid today.
Sec 21. "Public Servant".—The words "public servant" denote a person falling under any of the description hereinafter following, namely:
The first clause of sec. 21 was repealed.
Second.—Every Commissioned Officer in the Military, Naval or Air Force of India;
Third.—Every Judge including any person empowered by law to discharge, whether by himself or as a member of any body of persons, any adjudicatory functions;
Fourth.—Every officer of a Court of Justice including a liquidator, receiver or commissioner whose duty it is, as such officer, to investigate or report on any matter of law or fact, or to make, authenticate, or keep any document, or to take charge or dispose of any property, or to execute any judicial process, or to administer any oath, or to interpret, or to preserve order in the Court, and every person specially authorised by a Court of Justice to perform any of such duties;
Fifth.—Every juryman, assessor, or member of a panchayat assisting a Court of Justice or public servant;
Sixth.—Every arbitrator or other person to whom any cause or matter has been referred for decision or report by any Court of Justice, or by any other competent public authority;
Seventh.—Every person who holds any office by virtue of which he is empowered to place or keep any person in confinement;
Eighth.—Every officer of the Government whose duty it is, as such officer, to prevent offences to give information of offences, to bring offenders to justice, or to protect the public health, safety or conveyance.
Ninth.—Every officer, whose duty it is, as such officer, to take, receive, keep or expend any property on behalf of the Government, or to make any survey, assessment or contract on behalf of the Government, or to execute any revenue process, or to investigate, or to report, on any matter affecting the pecuniary interests of the Government, or to make, authenticate or keep any document relating to the pecuniary interests of the Government, or to prevent the infraction of any law or the protection of the pecuniary interests of the Government.
Tenth.—Every officer whose duty it is, as such officer, to take, receive, keep or expend any property, to make any survey or assessment or to levy any rate or tax for any secular common purpose of any village, town or district, or to make, authenticate or keep any document for the ascertaining of the rights of the people of any village, town or district.
Eleventh.—Every person who holds any office by virtue of which he is empowered to prepare, publish, maintain or revise an electoral roll or to conduct an election or part of an election.
Twelfth.—Every person in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty by the Government; in the service or pay of the local authority, or corporation established by or under a Central, Provincial or State Act or a Government Company as defined in Section 617 of the Companies Act, 1956.
According to the illustration of this section, a Municipal Commissioner is a public servant. First two explanations of this section are very important for the purpose of our discussion. These explanations are,
Explanation 1.—Persons falling under any of the above descriptions are public servants, whether appointed by the Government or not.
Explanation 2.—Wherever the words "public servant" occur they shall be understood of every person who is in actual possession of the situation of a public servant, whatever legal defect there may be in his right to hold that situation55.
Sec. 197 of CR.P.C. reads as follows:
197. Prosecution of Judges and public servants. (1) When any person who is or was a Judge or Magistrate or a public servant not removable from his office save by or with the sanction of the Government is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty, no Court shall take cognizance of such offence except with the previous sanction-
(a) in the case of a person who is employed or, as the case may be,was at the time of commission of the alleged offence employed, in connection with the affairs of the Union, of the Central Government;
(b)in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of a State, of the State Government:
1 [Provided that where the alleged offence was committed by a person referred to in clause (b) during the period while a Proclamation issued under clause (1) of article 356 of the Constitution was in force in a State, clause (b) will apply as if for the expression "State Government" occurring therein, the expression "Central Government" were substituted.
(4) The Central Government or the State Government, as the case may be, may determine the person by whom, the manner in which, and the offence or offences for which, the prosecution of such Judge, Magistrate or public servant is to be conducted, and may specify the Court before which the trial is to be held56.
Thus in order to attract section 197(1) of the Criminal Procedure Code requiring prior sanction for prosecution of, inter alia, public servants the following conditions require to be established:
The public servant is or was one not removable from his office save by or with the sanction of the government;
The alleged offence must have been committed by him while acting or purporting to act in the discharge of his official duty;
The previous sanction for taking cognizance of any such offence must have been given by the Central Government if at the time of commission of the alleged offence the accused person is or was employed in connection with the affairs of the union; and similarly if the accused person is or was employed in connection with the affairs of a state such previous sanction would have to be accorded by the state government.
It is also provided by section 197(4) that the Central Government or the State Government, as the case may be, may determine the person by whom, the manner in which, and the offence or offences for which, the prosecution of such public servant is to be conducted, and may specify the court before which the trial is to be held. The power given by sub-section (4) to specify the court need not necessarily be exercised in every case. It is vested on grounds of convenience or the complexity or gravity of the case. It is also presumably to ensure that the dignity of high placed government servant is maintained and that he is not compelled to undergo the embarrassment of a trial by junior and inexperienced magistrates.
It is submitted that section 197 of CR.P.C. Unfortunately does not provide the procedure after the withholding the sanction for prosecution by the government of the public servant. It does not provide whether the government has a duty to communicate to the person who wants to prosecute the public servant that the sanction to prosecute has been withheld. There is no duty on the government to give the reasons of withholding sanction to prosecute the public servant.
In State of Orissa through Kumar Raghvendra Singh & Others v. Ganesh Chandra Jew57, it was observed that According to Black 's Law Dictionary the word 'cognizance ' means 'jurisdiction ' or 'the exercise of jurisdiction ' or 'power to try and determine causes '. In common parlance it means taking notice of a court, therefore, is precluded from entertaining a complaint or taking notice of it or exercising jurisdiction if it is in respect of a public servant who is accused of an offence alleged to have committed during discharge of his official duty. Such being the nature of the provision the question is how should the expression, 'any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty ', be understood? What does it mean? 'Official ' according to dictionary, means pertaining to an office, and official act or official duty means an act or duty done by an officer in his official capacity. Use of the expression, 'official duty ' implies that the act or omission must have been done by the public in the course of his service and that it should have been in discharge of his duty. The Section does not extend its protective cover to every act or omission done by a public servant in service but restricts its scope of operation to only those acts or omissions which are done by a public servant in discharge of official duty. It has been widened further by extending protection to even those acts or omissions which are done in purported exercise of official duty. That is under the colour of office. Official duty therefore implies that the act or omission must have been done by the public servant in course of his service and such act or omission must have been performed as part of duty which further must have been official in nature. The Section has, thus, to be construed strictly, while determining its applicability to any act or omission in course of service. Its operation has to be limited to those duties which are discharged in course of duty. But once any act or omission has been found to have been committed by a public servant in discharge of his duty then it must be given liberal and wide construction so far its official nature is concerned. For instance a public servant is not entitled to indulge in criminal activities. To that extent the Section has to be construed narrowly and in a restricted manner. But once it is established that act or omission was done by the public servant while discharging his duty then the scope of its being official should be construed so as to advance the objective of the Section in favour of the public servant. Otherwise the entire purpose of affording protection to a public servant without sanction shall stand frustrated. For instance a police officer in discharge of duty may have to use force which may be an offence for the prosecution of which the sanction may be necessary. But if the same officer commits an act in course of service but not in discharge of his duty and without any justification therefor then the bar under Section 197 of the Code is not attracted.
It has been held in Sankaran Moitra v. Sadhna Das and Another58, The primary object of the Legislature behind Section 197 of the Code is to protect public officers who have acted in discharge of their duties or purported to act in discharge of such duties. But, it is equally well settled that the act said to have been committed by public officer must have reasonable connection with the duty sought to be discharged by such public officer. If the act complained of has no nexus, reasonable connection or relevance to the official act or duty of such public servant and is otherwise illegal, unlawful or in the nature of an offence, he cannot get shelter under Section 197 of the Code. In other words, protection afforded by the said section is qualified and conditional. In such situations, when the question comes up for consideration before a Court of law as to the applicability or otherwise of Section 197 of the Code, it is not only the power but the duty of the Court to apply its mind to the fact-situation before it. It should ensure that on the one hand, the public servant is protected if the case is covered by Section 197 of the Code and on the other hand, appropriate action would be allowed to be taken if the provision is not attracted and under the guise of his position as public servant, he is trying to take undue advantage.
The underlying object behind this legal provision is to enable the more important categories of public servants performing onerous and responsible functions to act fearlessly by protecting them from false, vexatious or malafide prosecutions. But it is equally important to emphasize that the rights of the citizens should be protected and no excesses should be permitted. It is also proper that protection under the section is needed as much after retirement of the public servant as before retirement. The protection afforded by the section would be rendered illusory if it were open to a private person harbouring a grievance to wait until the public servant ceased to hold his official position, and then lodge a complain. The ultimate justification for the protection conferred by section 197 is the public interest in seeing that official acts do not lead to needless or vexatious prosecution. It should be left to the government to determine from that point of view the question of expediency of prosecuting any public servant. The purpose of the sanction is to secure a well considered opinion of a superior authority before the public servant actually prosecuted before a court. Public servants have to be protected from harassment in the discharge of official duties while ordinary citizens not so engaged do not require the safeguard. It is for this reason that the Supreme Court in Matajog Dobey v. H.C. Bahari has held that section 197(1) is not violative of Article 14 of the Constitution as the discrimination is based on rational classification59.
Section 197 contemplates a distinction between public servant who are removable only by or with the sanction of the government and those who are removable by some lesser authority. Though delegation by government of the power of removable to some subordinate authority is in a way equivalent to removable by the government through the medium of that authority, it has been held that section 197 must be interpreted in the light of certain well known features of the administrative system prevailing in India. It appears to be the policy of the legislatures to make the protection under section 197 available to a limited class of officers, and not to all public servants (Afzalur Rahman v. King Emperor)60.
The expression ‘public servant’ has not defined in the code. Therefore, by virtue of clause (y) of section 2, the definition of ‘public servant’ as given in section 21 of the Indian Penal Code will have to be relied upon while determining the meaning of the expression ‘public servant’ as used in section 197.
It was observed in Pukhraj v. State of Rajasthan61, that in order to attract section 197, it is necessary that the accused person must have committed the offence while acting or purporting to act in the discharge of his official duty. Again in Balbir Singh v. D.N. Kadian62, it was held that It is not every offence committed by public servant which require sanction for prosecution under section 197(1) of the Cr.P.C., nor even every act done by him while he was actually engaged in the performance of his official duties. But if the act complained of is directly concerned with official duties so that if question it could be claimed to have been done by virtue of the office, then sanction would be necessary and that would be so, irrespective of whether in fact, a proper discharge of his duties or not. If there is a coherent nexus between the act complained of as an offence and the duty of the public servant, sanction becomes necessary even if the act complained of is an excess of the exact duty of the public servant. It has been held that the sine qua non for the applicability of the section 197 is that the offence charged, be it one of commission or omission, must be one which has been committed by the public servant either in his official capacity or under colour of his office held by him.
Some offences cannot by their very nature be regarded as having committed by public servants while acting or purporting to act in the discharge of their official duty. For instance, acceptance of a bribe (an offence punishable under section 161 of IPC) is one of them and the offence of cheating of abetment thereof in another. Where a public servant commits the offence of cheating or abets another so as to cheat, the offence committed by him is not one while he is acting or purporting to act in the discharge of his official duty, as such offences have no necessary connection between them and the performance of the duties of a public servant, the official status furnishing only the occasion or opportunity for the commission of the offence. As the sale of adulterated articles of food is prohibited by the Prevention of Food Adulteration Act, a public servant cannot reasonably claim to sell the same in the performance of his duty. He can, therefore, be prosecuted without obtaining any sanction under section 197 of the Code.
In State of Maharashtra v. Atma Rama63, in the course of the investigation of a case of an alleged murder the IO assaulted four persons, kept them under wrongful confinement, stripped naked one of them and kept him hanging on a tree. As a result of this ill-treatment two of the persons made false confession statements. When the police officers were charge sheeted for offences under sections 330, 342, 343, 348 IPC, it was contended by them that the acts were done under the colour or in excess of their duty. Overruling that contention, Supreme Court observed that the provisions of sections 161 and 163 of the Cr.P.C. emphasize the fact that a police officer is prohibited from beating or confining persons with a view to induce them to make statements. In view of the statutory prohibition it cannot possibly be said that the acts complained of in this case are the acts done by the police officers under the colour of their duty or authority. In the opinion of the court, there was no connection in this case between the acts complained of and the office of the police officers and the duties and obligations imposed on them by law. The alleged acts fell completely outside of the scope of the duties of the police officers.
In S. Dutt v. State of U.P64. it was held that It is well settled that when a person commits several offences in the course of the same transaction and if the more serious offence requires a previous sanction or a special complaint, it would not be open to the prosecution to ignore the serious charge and prosecute the offender for a lesser serious charges which do not require a special complaint or previous sanction.
No particular prescribed form of sanction is envisaged but courts usually insist on being satisfied that the sanctioning authority has applied its mind to the facts of the case before granting sanction, and that the sanction is not arbitrary (Jaswant Singh v. State of Punjab)65. It is well settled that the act of granting sanction is an executive act and not a judicial act. The satisfaction that the sanctioning authority must have before according sanction is of a subjective character and not an objective nature. Also there is no need for any hearing before sanction is accorded to prosecute a public servant. The sanction need not specify the offences as precisely as a charge, and the omission to mention a particular sanction of the law does not seem to preclude the prosecution from proving the relevant facts.
In B. Saha v. M.C. Kochar66, it was observed that the question of sanction under section 197 can be raised and considered at any stage of the proceedings. Even during an inquiry under section 202 the plea of sanction under section 197 can be raised by the accused. In considering the question whether or not sanction for prosecution was required, it is not necessary for the court to confine itself to the allegations in the complaint and it can take into account all the materials or the record at the time when the question is raised and falls for consideration. Again in Suresh Kumar Bhikamchand Jain v. Pandey Ajay Bhushan67, it was observed by the Supreme Court that In fact there should not be any bar for the accused producing the relevant documents and materials which will be ifso facto admissible, for adjudication of the question as to whether in fact section 197 has any application to the case at hand.
The Supreme Court in Ram Kumar v. State of Haryana68, has stated that there are two requirements before a public servant engaged in the maintenance of public order is prosecuted for use of excessive force while discharging duties. (i) He cannot be prosecuted without obtaining sanction to prosecute under section 132; (ii) No court can take cognizance of the offence in the absence of previous sanction under section 197. Both these requirements are to be made before a public servant is proceeded against.
In State of Orissa v. Mrutunjaya Panda69, Court stated that If a public servant has been proceeded against without obtaining a valid sanction, section 465 may be invoked to cure the irregularity which provides, inter alia, that any error or irregularity in any sanction for the protection shall not be a ground for reversing an order of conviction by the appellate court unless in the opinion of that court a failure of justice has been occasioned thereby.
Sanction of a prosecution must be expressed with sufficient particularity to indicate clearly the matter which is to be the subject matter of proceeding and it should be apparent from the order of sanction that the authority applied its mind to the facts constituting the offence or offences. The government being an independent party not connected with the dispute between a complainant and the accused is expected to act fairly and take a decision which is objective when called upon to grant sanction. If the government withholds sanction arbitrarily, such an act of the government always be challenged in an appropriate proceeding.
Prevention of corruption act 1947 turned even after the amendment in it and even after the recommendations as per the Santhanam Committee report non effective. In order to make the anti-corruption laws more effective by widening their coverage and by strengthening the provisions, the Prevention and Corruption Bill was introduced in Parliament. The Statement of Objects and Reasons of the Bill are as under:
The Bill, inter alia, envisaged widening the scope of definition of the public servant, incorporation of offences under sections 161 to 165 of the Indian Penal Code into the new legislation enhancing the penalties provided for these offences and incorporation of the provision that the order of the trial court upholding the grant of sanction for prosecution would be final if it has not already been challenged and the trial has commenced. In order to expedite the proceedings, provision for day-to-day trial of cases and prohibitory provisions with regard to grant of stay and exercise of powers of revision of interlocutory orders have also been included. Since the provisions of section 161(9) of the IPC were incorporated in the proposed legislation with an enhanced punishment it was dropped from IPC.
The Supreme Court decided some of the very important points in R.S. Naik v. A.R. Antuley70. It was observed that The relevant date with reference to which a valid sanction is sign-qua-non for taking cognizance by an offence committed by a public servant is the date on which the court is called upon to take cognizance of which he is accused if, therefore, when the offence is alleged to have been committed the accused was a public servant but by the time the court was called upon to take cognizance of the offence committed by him as public servant, he had ceased to be a public servant, no sanction was necessary for taking cognizance of the offence against him. In the present case on the date when the cognizance was taken the accused had ceased to hold the office of the Chief Minister and thus ceased to be a public servant. Therefore, no sanction under section 6 of the Act was necessary before taking recognizance of the offence against the accused for offences alleged to have been committed in his former capacity as a public servant.
Where offences as set out in section 6 of the Act were alleged to have been committed by the public servant, sanction of only that authority was necessary who was entitled to remove him from that office which was alleged to have been misused or abused for correct motives. The holder of the office along would have opportunity to abuse or misuse the office. Therefore, the correct conduct is directly attributable and flows from the power conferred on the office. This inter-relationship and inter-dependence individual and office he holds is substantial and not severable. The offence would be committed by the public servant by misusing or abusing the power of office and it is from that office, the authority must be competent to remove him so as to be entitled to grant sanction.
A grant of sanction is not idle formality but a solemn act which removes protection against frivolous prosecutions. Therefore, the authority entitled to grant sanction must apply to its mind to the facts of the case, evidence collected and other incidental facts before according sanction. The removal authority alone would be able when the facts and evidence are placed before him to judge whether a serious offence is committed or the prosecution is frivolous or speculative. It is the vertical hierarchy between the authority competent to remove the public servant from that office and the nature of the office held by the public servant against whom sanction is sought which would indicate a hierarchy and which would, therefore, permit inference of knowledge about the functions and duties of the office and its misuse or abuse by the public servant. If, therefore, the accused has ceased to hold the office by the date, the court is called upon to take cognizance of the offences alleged to have been committed by such public servant, no sanction would be necessary despite the fact that he may be holding any other office on the relevant date which may make him a public servant as understood in section 21 IPC if there is no allegation that that office has been abused or misused for correct motive, because the competent authority entitled to remove the public servant from an office, which is neither alleged to have been used or abused, would not be able to decide whether the prosecution is frivolous or tendentious. In the present case, by the time the court was called upon cognizance of the offences, so alleged in the allegation the accused had ceased to hold office of the Chief Minister. Therefore, no sanction to prosecute him was necessary as former Chief Minister. The court observed that even assuming that as MLA the accused would be public servant under section 21 of the Act in the absence of any allegation that he used or abused his office as MLA that aspect would become immaterial. The court observed that MLA is neither in the pay of the government in the sense of the executive government nor remunerated by fee for performance of any public duty by the executive government. Therefore, he is not comprehended expression ‘public servant’ within the meaning of the expression in clause twelfth (a) he is thus not within the meaning of the expression in that clause.
Having regard to the history of evolution of section 21 IPC, it is clear that MLA was not a public servant within the meaning of the expression prior to the Amendment Act (40) of 1964 and the law did not undergo any change since the said amendment inasmuch as the amendment of the clause ninth and twelfth did not bring about any change in the coverage and construction of the two clauses prior to and since their amendment.
The use of the word ‘or’ in clause twelfth (a) of section 21 of the Act appears to be disjunctive. The expression “a person in the pay of the government” connotes a specific and independent category of public servant other than “a person in the service of the government” or “a person remunerated by fees or commission for performance of any public duty by the government”. Thus each part of the provision will receive its own construction and no part is rendered superfluous. The phrase “in the pay of” in clause twelfth (a) does not inhere a master servant or command – obedience relationship between the government as the payer and the public servant as the payee and may comprehend a situation that a person may be in the pay of the government without being in the employment of the government or without there being a master-servant relationship. The court observed that there is a broad division of functions such as executive, legislative and judicial in our constitution. The expression ‘government’ in section 21 IPC clearly denotes the executive and not the legislature. MLA is certainly not in the pay of the executive. Therefore, even though MLA receives pay and allowances, he cannot be said to be in the pay of the government i.e. the executive government. That is merely a mode of payment, but the MLA by a vote retained to have been earmarked for the purposes of disbursal of pay and allowances payable to them under the relevant statute. The said conclusion would govern also the third part of clause twelfth (a) i.e. ‘remuneration by fee for performance of any public duty by the government. Thus MLA is not remunerated by fee paid by the government i.e. the executive. The court did not deem it necessary to determine whether the MLA discharges any public duty or not. The court, however, made it clear that he certainly does not perform any public duty either directed by the government or for the government. He discharges constitutional functions for which he is remunerated fee under the Constitution and not by the executive. A MLA also does not discharge any judicial function to be covered under section 21(3) of the Act. Participation in a debate on a motion of breach of privilege or for taking action for contempt of the House and voting thereon does not make MLA a person as a member of a body of persons who discharges adjudicatory functions. The policy behind the provision in the Prevention of Corruption Act, 1947 and similar provisions in other status seeking sanction for prosecution of public servant is that there should not be unnecessary harassment of public servant. The object to save the public servant from harassment of frivolous and unsubstantiated allegations. Existence thus of a valid sanction is a pre-requisite to the taking of the cognizance of the offence. In absence of such sanction the court would have no jurisdiction to take cognizance of the offences. A trial without a valid sanction where one is necessary is a trial without jurisdiction of the court.
In the case of Vineet Narain v. Union of India71, it was observed by the Supreme Court that the time limit of three months for grant of sanction for prosecution must be strictly adhered to. However, additional time of one month may be allowed where consultation is required with the Attorney General (AG) or any other law officer in the AG 's office.
In R. Balkrishna Pillai v. State of Kerala and Another72, Chief Justice Sen and Justice A. M. Ahmadi sited para 15 of the 41st law commission report, which dealt with Sec 197 of CR.P.C. as it earlier stood. It reads:
It appears to us that protection under the section is needed as much after retirement of the public servant as before retirement. The protection afforded by the section would be rendered illusory if it were open to a private person harbouring a grievance to wait until the public servant ceased to hold his official position, and then to lodge a complaint. The ultimate justification for the protection conferred by Section 197 is the public interest in seeing that official acts do not lead to needless or vexatious prosecutions. It should be left to the Government to determine from that point of view the question of the expediency of prosecuting any public servant.
It was in pursuance of this observation that the expression 'was ' came to be employed after the expression 'is ' to make the sanction applicable even in cases where a retired public servant is sought to be prosecuted.
Taking note of the provisions of Article 167 (Article 164 for Ministers), it was pointed out that the Chief Minister is paid from public exchequer for performing a public duty and is, therefore, a public servant within the meaning of Section 197 of the Code. So also a Minister of a State is paid from its public exchequer, he is paid for doing the duty entrusted to him as a Minister and, therefore, on the analogy of the observations relating to the Chief Minister, the Minister must also be held to be a public servant. Since he is appointed or dismissed by the Governor, he would fall within the expression 'a public servant not removable from his office save by or with the sanction of the Government '. In the instant case, as pointed out earlier, by virtue of the provisions in the General Clauses Act, 1897 the expression 'Government ' used in Section 197 would mean the Governor in the case of a Chief Minister or a Minister.
It was held in Kalicharan Mahapatra v. State of Orissa73, that It must be remembered that in spite of bringing such a significant change to Section 197 of the Code in 1973, Parliament was circumspect enough not to change the wording in Section 19 of the new Prevention of Corruption Act 1988, which deals with sanction. The reason is obvious. The sanction contemplated in Section 197 of the Code concerns a public servant who "is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty", whereas the offences contemplated in the PC Act are those which cannot be treated as acts either directly or even purportedly done in the discharge of his official duties. Parliament must have desired to maintain the distinction and hence the wording in the corresponding provision in the former PC Act was materially imported in the new PC Act, 1988 without any change in spite of the change made in Section 197 of the Code.
Thus a public servant, who committed an offence mentioned in the Act, while he was a public servant, can be prosecuted with the sanction contemplated in Section 19 of the Act if he continues to be a public servant when the court takes cognizance of the offence. But if he ceases to be a public servant by that time, the court can take cognizance of the offence without any such situation. In other words, the public servant who committed the offence while he was a public servant, is liable to be prosecuted whether he continues in office or not at the time of trial or during the pendency of the prosecution.
It was observed in Romesh Lal Jain v. Naginder Singh Rana and Others74, Sanction required under Section 197 Cr. P.C. and sanction required under the 1988 Act stand on different footings. Whereas sanction under the Indian Penal Code in terms of the Code of Criminal Procedure is required to be granted by the State; under the 1988 Act it can be granted also by the authorities specified in Section 19 thereof. It was also held that the offences under the Penal Code and offences under the 1988 Act are different and distinct. The test which is required to be applied in such a case is as to whether the offences for one reason or the other punishable under the Penal Code is also required to be proved in relation to offences punishable under the 1988 Act. If the answer to the said question is rendered in the negative, the same test can be applied in relation to a matter of sanction. whereas an order of sanction in terms of Section 197 Cr. P.C. is required to be obtained when the offence complained against the public servant is attributable to discharge of his public duty or has a direct nexus therewith, but the same would not be necessary when the offence complained has nothing to do with the same. A plea relating to want of sanction although desirably should be considered at an early stage of the proceedings, but the same would not mean that the accused cannot take the said plea or the court cannot consider the same at a later stage. Each case has to be considered on its own facts. Furthermore, there may be cases where the question as to whether the sanction was required to be obtained or not would not be possible to be determined unless some evidence is taken, and in such an event, the said question may have to be considered even after the witnesses are examined.
In State of Karnataka v. Ameer Jain75, it was held that an order of sanction should not be construed in a pedantic manner. But, it is also well settled that the purpose for which an order of sanction is required to be passed should always be borne in mind. Ordinarily, the sanctioning authority is the best person to judge as to whether the public servant concerned should receive the protection under the Act by refusing to accord sanction for his prosecution or not. For the aforementioned purpose, indisputably, application of mind on the part of the sanctioning authority is imperative. The order granting sanction must be demonstrative of the fact that there had been proper application of mind on the part of the sanctioning authority.
Prevention of Corruption Act was enacted to make more effective provision for the prevention of bribery and corruption. Therefore, the provisions of the Act must receive such construction as would advance the object and purpose underlying the Act and at any rate it should not be defeated.
In conclusion, law commission has studied the problem of socio-economic offences and white collar crimes thoroughly and gave its recommendations through the various law commission reports. It is important to note that the 47th law commission report had suggested the changes in various acts in order to make the punishment for the offenders of this class of crimes mor stringent. It is submitted that we are still lacking the ineffective laws to deal with ever growing problem of socio-economic offences and white collar crimes.
Legislatures have enacted several acts to deal with the offences. We still do not have one common code to deal with the socio-economic offences. It is important to note that the 29th law commission report had rightly stated that bringing all the socio-economic offences in the ambit of Indian penal code will make the problem more complex. Therefore, it is submitted that when we are facing biggest threat from the menace of corruption and the white collar crimes, it is becoming clearer all the times that the common man has hardly any remedy against the bureaucrats and the public servants. Everybody in the country is becoming restless and agitated because of the huge corruption. Country need to be protected from this problem. Tax payer’s money can not be allowed to go in the wrong hands. Government can not play passive role all the times in order to protect the ministers and the public servants. Government should bring all the socio-economic offences in one common code with the robust laws. Burden of proof must be shifted towards the offenders because these laws are social legislations. Punishment should be very harsh against these class of criminals. Famous rule of the criminal law that the guilt of the accused should be proved beyond reasonable doubts should be relaxed. Even if it is not relaxed, it should be kept in mind by the judiciary that beyond reasonable doubts should not become beyond all the doubts. For the convictions of the offenders of the socio-economic offenders, legislature should give adequate response by bringing robust laws in the statutes.
Several issues emerged related to the sanction for prosecution of the public servants. Supreme Court has responded positively on these issues. It is submitted that although public servants need protection against the false complains so that they can work fearlessly. It is also important to note that wherever there is apprehension of the corruption from the public servants, sanction should be granted by the government for the prosecution. If the government decides to withholds sanctions, in such case, it should communicate to the person seeking the sanction its intention to withhold it. Actually, the government is duty bound to communicate the status of his application regarding the sanction to the citizen.
It is important to note that the minister is not the public servant within the meaning of term “public servant” given in section 21 of the Indian Penal Code. He gets the remunerations for his constitutional duties according to the Constitution of India and not because of the master-servant relationship. This issue again came before the Supreme Court In A rajas case. Supreme Court had criticized the Prime minister’s office for not granting the sanction to prosecute A raja to one Swami Subramanyam. If the government receives any application seeking the sanction to prosecute state or central minister, it should communicate to the citizen that no sanction is required to prosecute such minister. Government needs to rethink on the issue of the protection to the public servants even after their retirement specially when the corruption has crossed all the limits. It is important to restore the faith of the common man in the Indian legal system. Therefore, the government needs to play the proactive role for combating the menace of white collar crimes. It should create the environment where civil society and the government can join hands to combat the corruption.
Judiciary has given an appropriate response whenever case came before it. But still it should understand the gravity of the socio-economic offences and white collar crimes. Lighter punishments should not be a norm for the white collar criminals but it should be an exception. Judiciary has a very difficult task in its hands to insure that no white collar criminal should escape the punishments. It is important to note that it took years to set healthy judicial precedents. Lower judiciary needs to be given a proper training in order to deal with these complex issues. Judiciary can play an important role in restoring the faith of the common man in the democracy. It is a judicial activism which had helped in restoring the faith of the common man in the democracy soon after the emergency of 1975. Rather, it had helped in rescuing the democracy in that difficult time. Same type of judicial activism can help in fighting the menace of corruption and socio-economic offences.

CHAPTER IV
ISSUES RELATED TO THE APPOINTMENT OF CHIEF VIGILANCE COMMISSIONER AND LOKPAL BILL
Corruption and the democracy are opposed to each other. One of the biggest problems in Indian democracy is that it is facing massive corruption at every level. Corruption is so much that it has become harmful for the entire society and economy. Corruption is an abuse of public resources for private gain. Corruption undermines two of the basic principles on which democracies are based, viz. the equality of citizen 's rights and transparency of political decision-making.
Corruption is an abuse of public resources for private gain. The occasions for political corruption increase when control on the activity of public administrators are fragile and the division of power between political actors and the public bureaucrats, as well as between the Government and the middleman, is unclear. It is difficult to discover and punish cases of corruption. Research has shown that political corruption tends to be more widespread in authoritarian or totalitarian regimes and when public opinion and the press are unable to denounce corruption. Corruption develops because of confusion about the borders between State and society and between traditional and modern values. It can be expected to grow during phases of transition. Corruption should disappear in modern stable democratic societies. Instead, it is growing. Since State intervention in economic and social life has increased the occasions for political corruption, new technologies have increased the cost of electoral campaigns and the professionalisation of political careers has Increased the number of those who have to make a living from politics rather than living for politics. Corruption has not disappeared. Corruption has dangerous consequences for politics. Although political corruption is more widespread in non-democratic regimes, it is particularly dangerous for democracy because it undermines two of the major principles on which democracies are based; the equality of citizens ' rights and the transparency of the political decision-making process. Bribes open the way for access to the State for those who are willing to pay and can afford the price. The situation may leave non-corrupt citizens with the belief that one 'counts ' only if one has the right personal contacts with those who hold power. Because of its illegal nature, corruption increases the range of public decisions that are made in secrecy. It was suggested that internal controls on public bureaucracies through administrative controls and accounting procedures as well as ombudsman systems for public complaints, are remedies to control political corruption. The rule of code of conduct for political executives, public servants and private entrepreneurs, emphasising merit and regulated system of appointment in State bureaucracy and stimulating price in public service, would generate remedies for political corruption.76 Ironically, India has a huge anti-corruption set-up. At the central level, there is an Administrative Vigilance Division in the Ministry of Personnel, Public Grievances and Pensions. Every ministry, department, bank, public sector undertaking and autonomous institution has vigilance officers. The list of central vigilance officers has 648 names. Further, there is the Central Vigilance Commission and an enforcement agency, the Central Bureau of Investigation. At the state level, each state has either a State Vigilance Commission or a Lok Ayukta which is in charge of vigilance matters of the state government. In addition, states have directorates of anti-corruption and vigilance officers in different departments.
There is a plethora of central and state laws to deal with the menace. Besides the Prevention of Corruption Act, 1988, the Delhi Special Police Establishment Act, 1946, the Central Vigilance Commission Act, 2003 and laws enacted to deal with specific problems such as money laundering, income tax and excise evasion and foreign exchange manipulation, there are Lok Ayukta or Vigilance Commission Acts in the states. There is also the Indian Penal Code, some of its provisions are still relevant, despite a few having been repealed by the Prevention of Corruption Act.
There is a Latin proverb, which says: "The more corrupt the state, the more laws." In fact, we have seen in India, the more corrupt the state, the more anti-corruption agencies too.
This chapter deals with three anti-corruption agencies. Namely, Central Vigilance Commission, Central Bureau of Investigation and Lokpal. Chapter has been divided in three parts namely; part (a) discusses establishment of Central Vigilance Commission (CVC) and issues related to the appointment of Chief Vigilance Commissioner. In part (b) the establishment of Central Bureau of Investigation (CBI) has been discussed and in part (c), attempt has been made to understand as to why the lokpal bill has not been passed in the parliament despite the several attempts.

4.1 ESTABLISHMENT OF CENTRAL VIGILANCE COMMISSION,

The Central Vigilance Commission was established by the Government of India in 1964 on the recommendations of the Santhanam Committee on Prevention of Corruption. Before finalising its report, the Committee submitted its interim recommendations to the government in two parts. The first recommended the establishment of the Central Vigilance Commission. The second suggested conferring powers on the Commission, similar to those under Sections 4 and 5 of the Commission of Enquiry Act, 1952, so that it could undertake an inquiry into transactions where public servants were suspected of having acted improperly or in a corrupt manner.
The Committee envisaged a wide role for the CVC. It was not satisfied merely with the existing arrangements intended to investigate and punish corruption and misuse of authority by individual officers. "While this is indispensable, the Committee feels that the Central Vigilance organisation should be expanded so as to deal with complaints of failure of justice or oppression or abuse of authority suffered by the citizens though it may be difficult to attribute them to any particular official or officials.77
The Committee therefore recommended that the CVC should be vested with jurisdiction and power, inter alia, to "inquire into and investigate: (a) complaints against acts or omissions, decisions or recommendation, or administrative procedures or practices on the grounds that they are: (i) wrong or contrary to law; (ii) unreasonable, unjust, oppressive or improperly discriminatory; (iii) in accordance with a rule of law or a provision of any enactment or a practice that is or may be unreasonable, unjust, oppressive or improperly discriminatory; or (iv) based wholly or partly on a mistake of law or fact78.
The Government of India did not accept this recommendation. The Resolution with which the CVC was set up did not have this clause in its charter of functions. The reasoning for its exclusion was explained in these words: "The importance and urgency of providing a machinery for looking into grievances of citizens against the administration and for ensuring just and fair exercise of administrative power is fully recognised. But it is considered that the problem is big enough to require a separate agency or machinery and that apart from this the Central Vigilance Commission would be overburdened if this responsibility were to be placed upon it, and the Commission might as a result be less effective in dealing with the problem of corruption79.
The recommendation made by the Committee in the second part that the CVC should be given through suitable legislation certain powers to enable it to undertake enquiries remained unimplemented till 2003 when the CVC Act was legislated. Though these powers are now available with the Commission, they are not used by it.80
Thus the Central vigilance commission was established in 1964. From 1964 to 1993, for nearly three decades, the CVC played an important role in dealing with the problem of corruption. A very important milestone in its history occurred when the Supreme Court pronounced its judgement in what is popularly known as the Hawala Case which is also known as Vineet Narain v. Union of India case.
In Vineet Narain v. Union of India81, the Supreme Court made several observations about the CVC. This case has been dealt thoroughly. Brief facts of this case are given below.
On 25th March, 1991, one Ashfak Hussain Lone, alleged to be an official of the terrorist organisation Hizbul Mujahideen, was arrested in Delhi. Consequent upon his interrogation, raids were conducted by the Central Bureau of Investigation (CBI) on the premises of Surrender Kumar Jain, his brothers, relations and businesses. Along with Indian and foreign currency, the CBI seized two diaries and two note books from the premises. They contained detailed accounts of vast payments made to persons identified only by initials. The initials corresponded to the initials of various high ranking politicians, in power and out of power, and of high ranking bureaucrats. Nothing having been done in the matter of investigating the Jains or the contents of their diaries, the several writ petitions were filed, in 1993, in the public interest under Article 32 of the Constitution of the India. Following aligations were made in these writ petitions. These are government agencies like the CBI and the revenue authorities had failed to perform their duties and legal obligations inasmuch as they had failed to investigate matters arising out of the seizure of the "Jan diaries"; that the apprehension of terrorists had led to the discovery of financial support to them by clandestine and illegal means using tainted funds obtained through havala ' transactions; that this had also disclosed a nexus between politicians, bureaucrats and criminals, who were recipients of money from unlawful sources, given for unlawful consideration; that the CBI and other Government agencies had failed to investigate the matter, take it to its logical conclusion and prosecute all persons who were found to have committed and offence; that this was done with a view to protect the persons involved, who were very influential and powerful; that the matter disclosed a nexus between crime and corruption at high places in public life and it posed a serious threat to the integrity, security and economy of the nation; that probity in public life, the rule of law and the preservation of democracy required that the Government agencies the compelled to duly perform their legal obligations and to proceed in accordance with law against every person involved, irrespective of where he was placed in the political hierarchy.
Court made following interim orders. No one stood above the law so as to get impunity from investigation; the CBI and other agencies had not carried out their public duty to investigate the offences; and the CBI and other agencies should complete the investigations expeditiously and not report the progress of investigations to even the person occupying the highest office in the political executive. The Court found that the Inertia was the common rule whenever the alleged offender was a powerful person. Thus, it became necessary to take measures to ensure permanency in the remedial effect to prevent reversion to inertia of the agencies in such matters. Everyone against whom there is reasonable suspicion of committing a crime has to be treated equally and similarly under the law and probity in public life is of great significance. The constitution and working of the investigating agencies revealed the lacuna of its inability to perform whenever powerful persons were involved. For this reason, a close examination of the constitution of these agencies and their control assumes significance. No doubt, the overall control of the agencies and responsibility of their functioning has to be in the exhaustive, but then a scheme giving the needed insulation from extraneous influences even of the controlling executive, is imperative. It is this exercise which became necessary in these proceedings for the future.
It was observed that the facts and circumstances of the present case do indicate that it is of utmost public importance that this matter is examined thoroughly by this Court to ensure that all Government agencies, entrusted with the duty to discharge their functions and obligations in accordance with law, do so, bearing in mind constantly the concept of equality enshrined in the Constitution and the basic tenet of rule of law: "Be you ever so high, the law is above you.
It was further held that the investigation into accusation made against each and every person on a reasonable basis, irrespective of the position and status of that person, must be conducted and completed expeditiously. This is imperative to retain public confidence in the impartial working of the Government agencies.
In its final judgment, various measures were suggested by the Court which was delivered on 18 December 1997. The Court declared the Single Directive null and void and gave directions to establish institutional and other arrangements aimed at insulating the CBI and the Directorate of Enforcement of the Ministry of Finance from outside influences. The Court 's directives consisted of four parts. Part I was about the Central Bureau of Investigation and the Central Vigilance Commission. Part II contained directions about the Enforcement Directorate of the Ministry of Finance. Part III dealt with the Constitution and functioning of the Nodal Agency and Part IV gave directions on strengthening and improving the functioning of the Prosecution Agency.

Part I: CENTRAL BUREAU OF INVESTIGATION (CBI) AND CENTRAL VIGILANCE COMMISSION (CVC)
1. The Central Vigilance Commission (CVC) shall be given statutory status.
2. Selection for the post of Central Vigilance Commissioner shall be made by a Committee comprising the Prime Minister, Home Minister and the Leader of the Opposition from a panel of outstanding civil servants and others with impeccable integrity to be furnished by the Cabinet Secretary. The appointment shall be made by the President on the basis of the recommendations made by the Committee. This shall be done immediately.
3. The CVC shall be responsible for the efficient functioning of the CBI. While Government shall remain answerable for the CBI 's functioning, to introduce visible objectivity in the mechanism to be established for over viewing the CBI 's working, the CVC shall be entrusted with the responsibility of superintendence over the CBI 's functioning. The CBI shall report to the CVC about cases taken up by it for investigation; progress of investigations; cases in which chargesheets are filed and their progress. The CVC shall review the progress of all cases moved by the CBI for sanction of prosecution of public servants which are pending with competent authorities, specially those in which sanction has been delayed or refused.
4. The Central Government shall take all measures necessary to ensure that the CBI functions effectively and efficiently and is viewed as a non-partisan agency.
5. The CVC shall have a separate section in its Annual Report on the CBI 's functioning after the supervisory function is transferred to it.
6. Recommendations for appointment of the Director, CBI shall be made by a Committee headed by the Central Vigilance Commissioner with the Home Secretary and Secretary (Personnel) as members. The views of the incumbent Director shall be considered by the Committee for making the best choice. The Committee shall draw up a panel of IPS officers on the basis of their seniority, integrity, experience in investigation and anti - corruption work. The final selection shall be made by Appointments Committee of the Cabinet (ACC) from the panel recommended by the Selection Committee. If none among the panel is found suitable, the reasons thereof shall be recorded and the Committee asked to draw up a fresh panel.
7. The Director, CBI shall have a minimum tenure of two years, regardless of the date of his superannuation. This would ensure that an officer suitable in all respects is not ignored merely because he has less than two years to superannuate from the date of his appointment.
8. The transfer of an encumber Director, CBI in an extraordinary situation, including the need for him to take up a more important assignment, should have the approval of the Selection Committee.
9. The Director, CBI shall have full freedom for allocation of work within the agency as also for constituting teams for investigations. Any change made by the Director, CBI in the Head of an investigative team should be for cogent reasons and for improvement in investigation, the reasons being recorded.
10. Selection/extension of tenure of officers upto the level of Joint Director (JD) shall be decided by a Board comprising the central Vigilance Commissioner, Home Secretary and Secretary (Personnel) with the Director, CBI providing the necessary inputs. The extension of tenure or premature repatriation of officers upto the level of Joint Director shall be with final approval of the Board. Only cases pertaining to the appointment or extension of tenure of officers of the rank of Joint Director or above shall be referred to the Appointments Committee of the Cabinet (ACC) for decision.
11. Proposals for improvement of infrastructure, methods of investigation, etc. should be decided urgently. In order to strengthen CBI 's in-house expertise, professionals from the revenue, banking and security sectors should be inducted into the CBI.
12. The CBI Manual based on statutory provisions of the Cr. P.C. provides essential guidelines for the CBI 's functioning. It is imperative that the CBI adheres scrupulously to the provisions in the Manual in relation to its investigative functions, like raids, seizure and arrests. Any deviation from the established procedure should be viewed seriously and severe disciplinary action taken against the concerned officials.
13. The Director, CBI shall be responsible for ensuring the filing of chargesheets in courts within the stipulated time limits, and the matter should be kept under constant review by the Director, CBI.
14. A document on CBI 's functioning should be published within three months to provide the general public with a feedback on investigations and information for redress of genuine grievances in a manner which does not compromise with the operational requirements of the CBI.
15. Time limit of three months for grant of sanction for prosecution must be strictly adhered to. However, additional time of one month may be allowed where consultation is required with the Attorney General (AG) or any other law officer in the AG 's office.
16. The Director, CBI should conduct regular appraisal of personnel to prevent corruption and/or inefficiency in the agency.

Part II: ENFORCEMENT DIRECTORATE
1. A Selection Committee headed by the Central Vigilance Commissioner and including the Home Secretary, Secretary (Personnel) and Revenue Secretary, shall prepare a panel for appointment of the Director, Enforcement Directorate. The appointment to the post of Director shall be made by the Appointments Committee of the Cabinet (ACC) from the panel recommended by the Selection Committee.
2 The Director, Enforcement Director like Director, CBI shall have a minimum tenure of two years. In his case also, premature transfer for any extraordinary reason should be approved by the aforesaid Selection Committee headed by the Central Vigilance commissioner.
3. In view of the importance of the post of Director, Enforcement Directorate, it shall be upgraded to that of an Additional Secretary/Special Secretary to the Government.
4. Officers of the Enforcement Directorate handling sensitive assignments shall be provided adequate security to enable them to discharge their functions fearlessly.
5. Extensions of tenure upto the level of Joint Director in the Enforcement Directorate should be decided by the said Committee headed by the Central Vigilance Commissioner.
6. There shall be no premature media publicity by the CBI/Enforcement Directorate.
7. Adjudication/commencement of prosecution shall be made by the enforcement Directorate within a period of one year.
8. The Director, Enforcement Directorate shall monitor and ensure speedy completion of investigations/adjudications and launching of prosecutions. Revenue Secretary must review their progress regularly.
9. For speedy conduct of investigations abroad, the procedure to approve filing of applications for Letters Rogatory shall be streamlined and, if necessary, Revenue Secretary authorised to grant the approval.
10. A comprehensive circular shall be published by the Directorate to inform the public about the procedures/systems of its functioning for the sake of transparency.
11. In-house legal advice mechanism shall be strengthened by appointment of competent legal advisers in the CBI/Directorate of Enforcement.
12. The Annual Report of the Department of Revenue shall contain a detailed account on the working of the Enforcement Directorate.

Part III NODAL AGENCY
1. A Nodal Agency headed by the Home Secretary with Member (Investigation), Central Board of Direct Taxes, Director General, Revenue Intelligence, Director, Enforcement and Director, CBI as members, shall be constituted for coordinated action in cases having politico-bureaucrat- criminal nexus.
2. The Nodal Agency shall meet at least once every month.
3. Working and efficacy of the Nodal Agency should be watched for about one year so as to improve it upon the basis of the experience gained within this period.

Part IV PROSECUTION AGENCY
1. A panel of competent lawyers of experience and impeccable reputation shall be prepared with the advice of the Attorney General. Their services shall be utilised as Prosecuting Counsel in cases of significance. Even during the course of investigation of an offence, the advice of a lawyer chosen from the panel should be taken by the CBI/Enforcement Directorate.
2. Every prosecution which results in the discharge or acquittal of the accused must be reviewed by a lawyer on the panel and, on the basis of the opinion given, responsibility should be fixed for dereliction of duty, if any, of the concerned officer. In such cases, strict action should be taken against the officer found guilty of dereliction of duty.
3. The preparation of the panel of lawyers with approval of the Attorney General shall be completed within three months.
4. Steps shall be taken immediately for the constitution of an able and impartial agency comprising persons of unimpeachable integrity to perform functions akin to those of the Director of Prosecutions in U.K. On the constitution of such a body, the task of supervising prosecutions launched by the CBI/Enforcement Directorate shall be entrusted to it.
5. Till the constitution of the aforesaid body, Special Counsel shall be appointed for the conduct of important trials on the recommendation of the Attorney General or any other law officer designated by him.
In order to attain independence in the functioning of the Investigating officers in States, the Supreme Court also made the following observations "In view of the problem in the States being even more acute, as elaborately discussed in the Report of the National Police Commission (1979), there is urgent need for the State Governments also to set up credible mechanism for selection of the Police Chief in the States. The Central Government must pursue the matter with the State Governments and ensure that a similar mechanism, as indicated above, is set up in each State for the selection/appointment, tenure, transfer and posting of not merely the Chief of the State Police but also all police officers of the rank of Superintendent of Police and above. It is shocking to hear, a matter of common knowledge, that in some States the tenure of a Superintendent of Police is on an average only a few months and transfers are made for whimsical reasons. Apart from demoralising the police force, it has also the adverse effect of politicising the personnel. It is, therefore, essential that prompt measures are taken by the Central Government within the ambit of their constitutional powers in the federation to impress upon, the State Governments that such a practice is alien to the envisaged constitutional machinery. The situation described in the National Police Commission 's Report (1979) was alarming and it has become much worse by now. The desperation of the Union Home Minister in his letters to the State Governments, placed before us at the hearing, reveal a distressing situation which must be cured, if the rule of law is to prevail. No action within the constitutional scheme found necessary to remedy the situation is too stringent in these circumstances.

4.2 ATTEMPTS OF THE GOVERNMENT TO NULLIFY THE JUDGEMENT OF VINEET NARAIN CASE Even after the strong observations of the Supreme Court, government made several attempts to nullify the effect of the Vineet Narain case supra. Government, in a cabinet meeting, decided to ask the Law Commission of India for a report. The Law Commission submitted its report to the Government on 13 August 1998 and also sent the draft of the CVC Bill.
The Union cabinet discussed the subject in a meeting on 20 August 1998. The note circulated at this meeting by the secretariat informed the cabinet that the Law Commission 's report was still awaited. In the meantime, the draft of an ordinance prepared by the Secretaries was placed before the cabinet for approval. The cabinet decided that a committee of four ministers, including Mr Ram Jethmalani, then the Union Urban Development Minister, should settle the draft of the ordinance82.
On 21 August 1998, Mr Jethmalani called Justice Jeevan Reddy, then Chairperson, Law Commission of India and learnt that the draft had been forwarded to the government along with the report a week earlier, i.e. on 13 August 1998.
The facts suggest that the draft prepared by the Law Commission of India was with the government when the cabinet met on 20 August 1998 to discuss the subject and that the Law Commission 's draft was deliberately withheld. Instead, a draft prepared by the Secretaries more suited to the interests of their service was pushed up to the cabinet for approval. On 25 August 1998, less than five days after the cabinet meeting, the government hurriedly promulgated the Central Vigilance Commission Ordinance, 1998 in accordance with the draft prepared by the bureaucrats83.
Two provisions of the Ordinance, i.e. confining the selection of members to civil servants only and to induct the Secretary, Department of Personnel into the Commission as an ex-officio member immediately provoked controversy and media criticism.
The controversy over the Ordinance flared up further when Justice B. P. Jeevan Reddy, Chairman, Law Commission of India criticised the manner in which the CVC Ordinance had been handled by the government. He regretted in public that the government did not give due consideration to the Law Commission 's report and draft on the subject.
The matter came to the Supreme Court 's notice when Shri Anil Dewan, the amicus curiae in Writ Petition (Civil) No. 38/97, filed written objections to certain provisions of the Ordinance. Mr. Soli J. Sorabjee, then the Attorney General assured the Court on 22 September 1998 that the government would re-examine the matter and fine tune the Ordinance.
On 27 October 1998, another ordinance, the Central Vigilance Commission (Amendment) Ordinance, 1998 (No. 18 of 1998) was promulgated. The Amendment thus reduced the number of Vigilance Commissioners, removed the ex-officio member from the Commission, widened the selection of members of the Commission to include persons from public sector undertakings and dropped the Single Directive clause84.

4.3 Controvercy About the Single Directive Clause
The Supreme Court 's judgement declared the Single Directive as null and void in Vineet Narain case supra. The Court found it bad in law. It required a police agency to seek permission from the executive to initiate investigation into a criminal offence, which is contrary to law. It also violated the canon of equality in the application of law. "The law does not classify offenders differently for treatment...according to their status in life. Every person accused of committing the same offence is to be dealt with in the same manner in accordance with law, which is equal in its application to everyone."37 The CVC Act infracted these basic principles of legal jurisprudence by resurrecting the Single Directive. What was earlier a part of executive instruction was now given a statutory wrap85.
The CVC Act, 2003 goes beyond what was attempted earlier through the CVC Ordinance of 1998. While the Ordinance prescribed that approval prior to undertaking any inquiry or investigation against officers of the level of joint secretary and above would have to be obtained by the CBI from the CVC, the Act lays down that this approval has to be obtained from the central government. This is contrary to the provision of Section 8 (a) of the Act itself that states that the CVC shall exercise superintendence over the functioning of the Delhi Special Police Establishment Act in so far as it relates to investigation of offences under the Prevention of Corruption Act, 1988.
Single Directive clause was included in the Act by the Joint Committee of Parliament headed by Shri Sharad Pawar. The original Bill which was referred to the Committee did not have this clause. The Joint Committee tried to justify this restoration of the Single Directive on the ground that "no protection is available to the persons at the decision-making level". This is the same argument, which was rejected earlier by the Apex Court. This did not appear to disturb the Joint Committee, which recommended that protection in the form of the Single Directive "should be restored in the same format which was there earlier and...that the power of giving prior approval for taking action against a senior officer of the decision-making level should be vested with the central government by making appropriate provision in the Act." This was done in the CVC Act, which amended the Delhi Special Police Establishment Act of 1946 and inserted new provisions, including Section 6 (A) which incorporated the provisions of the Single Directive.
It is submitted that the protection against prosecution is already available to all public servants under Section 197 of the CrPC and Section 19 of the Prevention of Corruption Act, 1988. The Parliamentary Committee decided to provide protection even at the initial stage of conducting an inquiry or investigation into allegations of corruption against senior officers. The senior officers would thus have double protection - from investigation as well as prosecution. The law, in fact, provides a third protection. Even if prosecution is instituted, the government can always withdraw the case with the permission of the court under Section 321 of the CrPC. The government has occasionally used this provision too. 4.4 ANALYSIS OF THE CVC ACT OF 2003
The 2003 Act was enacted to provide for the constitution of a Central Vigilance Commission as an institution to inquire or cause inquiries to be conducted into offences alleged to have been committed under the Prevention of Corruption Act, 1988 by certain categories of public servants of the Central Government, corporations established by or under any Central Act, Government companies, societies and local authorities owned or controlled by the Central Government and for matters connected therewith or incidental thereto86.
The following are the salient features of the CVC act 2003. CVC is given a statutory status. It stands established as an Institution. CVC stands established to inquire into offences alleged to have been committed under the Prevention of Corruption Act, 1988 by certain categories of public servants enumerated above. Under Section 3(3) (a) the Central Vigilance Commissioner and the Vigilance Commissioners are to be appointed from amongst persons who have been or are in All India Service or in any civil service of the Union or who are in a civil post under the Union having knowledge and experience in the matters relating to vigilance, policy making and administration including police administration. The underlined words "who have been or who are" in Section 3(3)(a) refer to the person holding office of a civil servant or who has held such office.
In the case of N. Kannadasan v. Ajoy Khose and Others87, it was held that the said words indicate the eligibility criteria and further they indicate that such past or present eligible persons should be without any blemish whatsoever and that they should not be appointed merely because they are eligible to be considered for the post. The constitution of CVC as a statutory body under Section 3 shows that CVC is an Institution. The key word is Institution.
Section 4 refers to appointment of Central Vigilance Commissioner and Vigilance Commissioners. Under Section 4(1) they are to be appointed by the President by warrant under her hand and seal. Section 4(1) indicates the importance of the post. Section 4(1) has a proviso. Every appointment under Section 4(1) is to be made after obtaining the recommendation of a committee consisting of- (a) The Prime Minister- Chairperson; and (b) The Minister of Home Affairs and (c) The Leader of the Opposition in the House of the People-Members.
The key word in the proviso is the word "recommendation". While making the recommendation, the High Powered Committee performs a statutory duty. Under Section 5(1) the Central Vigilance Commissioner shall hold the office for a term of 4 years. Under Section 5(3) the Central Vigilance Commissioner shall, before he enters upon his office, makes and subscribes before the President an oath or affirmation according to the form set out in the Schedule to the Act. Under Section 6(1) the Central Vigilance Commissioner shall be removed from his office only by order of the President and that too on the ground of proved misbehaviour or incapacity after the Supreme Court, on a reference made to it by the President, has on inquiry reported that the Central Vigilance Commissioner be removed. These provisions indicate that the office of the Central Vigilance Commissioner is not only given independence and insulation from external influences; it also indicates that such protections are given in order to enable the Institution of CVC to work in a free and fair environment. The prescribed form of oath under Section 5(3) requires Central Vigilance Commissioner to uphold the sovereignty and integrity of the country and to perform his duties without fear or favour. All these provisions indicate that CVC is an institution of integrity.
Chapter III of the Act refers to functions and powers of the Central Vigilance Commission. CVC exercises superintendence over the functioning of the Delhi Special Police Establishment insofar as it relates to investigation of offences alleged to have been committed under the Prevention of Corruption Act, 1988, or an offence with which a public servant specified in sub­section (2) may, under the Code of Criminal Procedure, 1973 be charged with at the trial. Thus, CVC is empowered to exercise superintendence over the functioning of CBI. It is also empowered to give directions to CBI. It is also empowered to review the progress of investigations conducted by CBI into offences alleged to have been committed under the Prevention of Corruption Act, 1988 or under the Code of Criminal Procedure by a public servant. CVC is also empowered to exercise superintendence over the vigilance administration of various ministries of the Central Government, PSUs, Government companies etc88. The powers and functions discharged by CVC is the sole reason for giving the institution the administrative autonomy, independence and insulation from external influences.
POWER RELATING TO INQUIRIES:
The Commission shall, while conducting any inquiry referred to in clauses (c) and (d) of sub-section (1) of section 8, have all the powers of a civil court trying a suit under the Code of Civil Procedure, 1908 and in particular, in respect of the following matters, namely:—
a) summoning and enforcing the attendance of any person from any part of India and examining him on oath;
b) requiring the discovery and production of any document;
c) receiving evidence on affidavits;
d) requisitioning any public record or copy thereof from any court or office;
e) issuing commissions for the examination of witnesses or other documents; And
f) any other matter which may be prescribed89.
4.5 ISSUES RELATED TO THE APPOINTMENT OF THE CHIEF VIGILANCE COMMISSIONER
As already mentioned, the Supreme Court order in Vineet Narain case supra that the selection for the post of the Central Vigilance Commissioner should be made from a "panel of outstanding civil servants and others with impeccable integrity". The CVC Act, on the other hand, does not insist on such qualifications. It restricts the selection to civil servants, past and present and those who have held or are holding office in corporations and companies owned or controlled by the central government with experience in policy-making, administration, finance, law, vigilance and investigation90. The Act omits the category of "others", restricts selection mainly to civil servants and does not insist that the selected persons should be either "outstanding" or have "impeccable integrity."
Similar issues arose in Centre for PIL & Anr. v. Union of India & Anr91. The judgement of this case was pronounced by the Chief Justice Mr. S. H. Kapadia. The two writ petitions filed in this Court under Article 32 of the Constitution of India gave rise to a substantial question of law and of public importance as to the legality of the appointment of Shri P.J. Thomas as Central Vigilance Commissioner under Section 4(1) of the Central Vigilance Commission Act, 2003.
It was held that the government is not accountable to the courts in respect of policy decisions. However, they are accountable for the legality of such decisions. It was also held that the difference between legality and merit as also between judicial review and merit review.
On 3rd September, 2010, the High Powered Committee ("HPC"), duly constituted under the proviso to Section 4(1) of the 2003 Act, had recommended the name of Mr. P.J. Thomas for appointment to the post of Central Vigilance Commissioner. The validity of this recommendation falls for judicial scrutiny in this case. It was observed by the learned Chief Justice that if a duty is cast under the proviso to Section 4(1) on the HPC to recommend to the President the name of the selected candidate, the integrity of that decision making process is got to ensure that the powers are exercised for the purposes and in the manner envisaged by the said Act, otherwise such recommendation will have no existence in the eye of law.
Facts: Mr. P.J. Thomas was appointed to the Indian Administrative Service (Kerala Cadre) 1973 batch where he served in different capacities with the State Government including as Secretary, Department of Food and Civil Supplies, State of Kerala in the year 1991. During that period itself, the State of Kerala decided to import 30,000 MT of palmolein. The Chief Minister of Kerala, on 5th October, 1991, wrote a letter to the Prime Minister stating that the State was intending to import Palmolein oil and that necessary permission should be given by the concerned Ministries. On 6th November, 1991, the Government of India issued a scheme for direct import of edible oil for Public Distribution System (PDS) on the condition that an ESCROW account be opened and import clearance be granted as per the rules. Respondent No. 2 wrote letters to the Secretary, Government of India stating that against its earlier demand for import of 30,000 MT of Palmolein oil, the present minimum need was 15,000 MT and the same was to meet the heavy ensuing demand during the festivals of Christmas and Sankranti, in the middle of January, 1992, therefore, the State was proposing to immediately import the said quantity of Palmolein on obtaining requisite permission. The price for the same was fixed on 24th January, 1992, i.e., 56 days after the execution of the agreement. The Kerala State Civil Supplies Corporation Ltd. was to act as an agent of the State Government for import of Palmolein. The value of the Palmolein was to be paid to the suppliers only in Indian rupees. Further, the terms governing the ESCROW account were to be as approved by the Ministry of Finance. This letter contained various other stipulations as well. This was responded to by the Joint Secretary, Government of India, Ministry of Civil Supplies and Public Distribution, New Delhi vide letter dated 26th November, 1991 wherein it was stated that it had been decided to permit the State to import 15,000 MT of Palmolein on the terms and conditions stipulated in the Ministry 's circular of even number dated 6th November, 1991. It was specifically stated that the service charges up to a maximum of 15% in Indian rupees may be paid. After some further correspondence, the order of the State of Kerala is stated to have been approved by the Cabinet on 27th November, 1991, and the State of Kerala actually imported Palmolein by opening an ESCROW account and getting the import clearance at the rate of US $ 405 per MT in January, 1992.
The Comptroller and Auditor General ( 'CAG '), in its report dated 2nd February, 1994 for the year ended 31st March, 1993 took exception to the procedure adopted for import of Palmolein by the State Government. While mentioning some alleged irregularities, the CAG observed, "therefore, the agreement entered into did not contain adequate safeguards to ensure that imported product would satisfy all the standards laid down in Prevention of Food Adulteration Rules, 1956". This report of the CAG was placed before the Public Undertaking Committee of the Kerala Assembly. The 38th Report of the Kerala Legislative Assembly - Committee on Public Undertakings dated 19th March, 1996, inter alia, referred to the alleged following irregularities:-
a) That the service fee of 15% to meet the fluctuation in exchange rate was not negotiated and hence was excessive. Even the price of the import product ought not to have been settled in US Dollars.
b) That the concerned department of the State of Kerala had not invited tenders and had appointed M/s. Mala Export Corporation, an associate company of M/s. Power and Energy Pvt. Ltd., the company upon which the import order was placed as handling agent for the import.
c) That the delay in opening of ESCROW accounts and in fixation of price, which were not in conformity with the circular issued by the Central Government had incurred a loss of more than Rupees 4 crores to the Exchequer.
The Committee also alleged that under the pretext of plea of urgency, the deal was conducted without inviting global tenders and if the material was procured by providing ample time by inviting global tenders, other competitors would have emerged with lesser rates for the import of the item, which in turn, would have been more beneficial.
An FIR was registered against Mr. Karunakaran, former Chief Minister and six others in relation to an offence under Section 13(2) read with Section 13(1) (d) of the Prevention of Corruption Act, 1988 and Section 120B of the IPC. The State of Kerala accorded its sanction to prosecute the then Chief Minister Shri Karunakaran and various officers in the State hierarchy, who were involved in the import of Palmolein, including respondent No. 2 on 30th November, 1999. Mr. P.J. Thomas was not a party in that petition.
Keeping in view the investigation of the case conducted by the agency, two other persons including Mr. P.J. Thomas were added as accused Nos. 7 and 8. In the charge-sheet filed before the Trial Court, in paragraph 7, definite role was attributed to Mr. P. J. Thomas and allegations were made against him.
For a period of 5 years, the matter remained pending with the Central Government and vide letter dated 20th December, 2004, the Central Government asked the State Government to send a copy of the report which had been filed before the Court of competent jurisdiction. After receiving the request of the State Government, it appears that the file was processed by various authorities and as early as on 18th January, 2001, a note was put up by the concerned Under Secretary that a regular departmental enquiry should be held against Shri P.J. Thomas and Shri Jiji Thomson for imposing a major penalty. According to this note, it was felt that because of lack of evidence, the prosecution may not succeed against Mr. P.J. Thomas but sanction should be accorded for prosecution of Mr. Jiji Thomson. On 18th February, 2003, the DoPT had made a reference to the Central Vigilance Commission ("CVC" for short) on the cited subject, which was responded to by the CVC vide their letter dated 3rd June, 2003 and it conveyed its opinion as follows:
Keeping in view the facts and circumstances of the case, the Commission would advise the Department of Personnel & Training to initiate major penalty proceedings against Mr. P.J. Thomas and Mr. Jiji Thomson and completion of proceedings thereof by appointing departmental IO.”
Despite receipt of the above opinion of CVC, the matter was still kept pending, though a note was again put up on 24th February, 2004 on similar lines as that of 18th January, 2001. In the meanwhile, the State of Kerala, vide its letter dated 24th January, 2005 wrote to the DoPT that for reasons recorded in the letter, they wish to withdraw their request for according the sanction for prosecution of the officers, including Mr. P. J. Thomas, as made vide their letter dated 31st December, 1999.In its letter dated 4th November, 2005, the State took the position that the allegations made by the Investigating Agency were invalid and the cases and request for sanction against Mr. P.J. Thomas should be withdrawn. Vide letter dated 10th October, 2006, the Chief Secretary to the Government of Kerala again wrote a letter to the Government of India informing them that the State Government had decided to continue the prosecution launched by it and as such it sought to withdraw its above letter dated 24th January, 2005. In other words, it reiterated its request for grant of sanction by the Central Government.
The CVC vide its letter dated 25th June, 2007 informed the Ministry as follows :
The case has been re-examined and Commission has observed that no case is made out against Mr. P.J. Thomas and Mr. Jiji Thomson in connection with alleged conspiracy with other public servants and private persons in the matter of import of Palmolein through a private firm. The abovesaid officers acted in accordance with a legitimately taken Cabinet decision and no loss has been caused to the State Government and most important, no case is made out that they had derived any benefit from the transaction.
In view of the above, Commission advises that the case against Mr. P.J. Thomas and Mr. Jiji Thomson may be dropped and matter be referred once again thereafter to the Commission so that Vigilance Clearance as sought for now can be recorded.
It may be noticed that neither in the above reply nor on the file any reasons are available as to why CVC had changed its earlier opinion/stand as conveyed to the Ministry vide its letter dated 3rd June, 2003. Vide order dated 18th September, 2007, the Government of Kerala appointed Mr. P.J. Thomas as the Chief Secretary. Thereafter, on 6th October, 2008 CVC accorded vigilance clearance to almost all officers.
There are at least six notings of DoPT between 26th June, 2000 and 2nd November, 2004 which has recommended initiation of penalty proceedings against Mr. P.J. Thomas and yet in the clearance given by CVC on 6th October, 2008 and in the Brief prepared by DoPT dated 1st September, 2010 and placed before HPC there is no reference to the earlier notings of the then DoPT and nor any reason has been given as to why CVC had changed its views while granting vigilance clearance on 6th October, 2008. On 23rd January, 2009, Mr. P.J. Thomas was appointed as Secretary, Parliamentary Affairs to the Government of India.
The DoPT empanelled three officers vide its note dated 1st September, 2010. Vide the same note along with the Brief the matter was put up to the HPC for selecting one candidate out of the empanelled officers for the post of Central Vigilance Commissioner. The meeting of the HPC consisting of the Prime Minister, the Home Minister and the Leader of the Opposition was held on 3rd September, 2010. In the meeting, disagreement was recorded by the Leader of the Opposition, despite which, name of Shri P.J. Thomas was recommended for appointment to the post of Central Vigilance Commissioner by majority. A note was thereafter put up with the recommendation of the HPC and placed before the Prime Minister which was approved on the same day. On 4th September, 2010, the same note was submitted to the President who also approved it on the same day. Consequently, Shri P.J. Thomas was appointed as Central Vigilance Commissioner and he took oath of his office.
Supreme Court perused the CVC act of 2003 and made some very important observations in this case. It observed, “Judicial review seeks to ensure that the statutory duty of the HPC to recommend under the proviso to Section 4(1) is performed keeping in mind the policy and the purpose of the 2003 Act. We are not sitting in appeal over the opinion of the HPC. What we have to see is whether relevant material and vital aspects having nexus to the object of the 2003 Act were taken into account when the decision to recommend took place on 3rd September, 2010. Appointment to the post of the Central Vigilance Commissioner must satisfy not only the eligibility criteria of the candidate but also the decision making process of the recommendation. The decision to recommend has got to be an informed decision keeping in mind the fact that CVC as an institution has to perform an important function of vigilance administration. If a statutory body like HPC, for any reason whatsoever, fails to look into the relevant material having nexus to the object and purpose of the 2003 Act or takes into account irrelevant circumstances then its decision would stand vitiated on the ground of official arbitrariness. Under the proviso to Section 4(1), the HPC had to take into consideration what is good for the institution and not what is good for the candidate. When institutional integrity is in question, the touchstone should be "public interest" which has got to be taken into consideration by the HPC and in such cases the HPC may not insist upon proof. We should not be understood to mean that the personal integrity is not relevant. It certainly has a co- relationship with institutional integrity. The point to be noted is that in the present case the entire emphasis has been placed by the CVC, the DoPT and the HPC only on the bio-data of the empanelled candidates. None of these authorities have looked at the matter from the larger perspective of institutional integrity including institutional competence and functioning of CVC. Moreover, we are surprised to find that between 2000 and 2004 the notings of DoPT dated 26th June, 2000, 18th January, 2001, 20th June, 2003, 24th February, 2004, 18th October, 2004 and 2nd November, 2004 have all observed that penalty proceedings may be initiated against Mr. P.J. Thomas. Whether State should initiate such proceedings or the Centre should initiate such proceedings was not relevant. What is relevant is that such notings were not considered in juxtaposition with the clearance of CVC granted on 6th October, 2008. Even in the Brief submitted to the HPC by DoPT, there is no reference to the said notings between the years 2000 and 2004. Even in the C.V. of Mr. P.J. Thomas, there is no reference to the earlier notings of DoPT recommending initiation of penalty proceedings against Mr. P.J. Thomas. Therefore, even on personal integrity, the HPC has not considered the relevant material. The learned Attorney General, in his usual fairness, stated at the Bar that only the Curriculum Vitae of each of the empanelled candidates stood annexed to the agenda for the meeting of the HPC. The fact remains that the HPC, for whatsoever reason, has failed to consider the relevant material keeping in mind the purpose and policy of the 2003 Act. The system governance established by the Constitution is based on distribution of powers and functions amongst the three organs of the State, one of them being the Executive whose duty is to enforce the laws made by the Parliament and administer the country through various statutory bodies like CVC which is empowered to perform the function of vigilance administration. Thus, we are concerned with the institution and its integrity including institutional competence and functioning and not the desirability of the candidate alone who is going to be the Central Vigilance Commissioner, though personal integrity is an important quality. It is the independence and impartiality of the institution like CVC which has to be maintained and preserved in larger interest of the rule of law. While making recommendations, the HPC performs a statutory duty. Its duty is to recommend. While making recommendations, the criteria of the candidate being a public servant or a civil servant in the past is not the sole consideration. The HPC has to look at the record and take into consideration whether the candidate would or would not be able to function as a Central Vigilance Commissioner. Whether the institutional competency would be adversely affected by pending proceedings and if by that touchstone the candidate stands disqualified then it shall be the duty of the HPC not to recommend such a candidate. In the present case apart from the pending criminal proceedings, as stated above, between the period 2000 and 2004 various notings of DoPT recommended disciplinary proceedings against Mr. P.J. Thomas in respect of Palmolein case. Those notings have not been considered by the HPC. As stated above, the 2003 Act confers autonomy and independence to the institution of CVC. Autonomy has been conferred so that the Central Vigilance Commissioner could act without fear or favour. We may reiterate that institution is more important than an individual. This is the test. In the present case, the HPC has failed to take this test into consideration. The recommendation dated 3rd September, 2010 of HPC is entirely premised on the blanket clearance given by CVC on 6th October, 2008 and on the fact of respondent No. 2 being appointed as Chief Secretary of Kerala on 18th September, 2007; his appointment as Secretary of Parliamentary Affairs and his subsequent appointment as Secretary, Telecom. In the process, the HPC, for whatever reasons, has failed to take into consideration the pendency of Palmolein case before the Special Judge, Thiruvananthapuram being case CC 6 of 2003; the sanction accorded by the Government of Kerala on 30 th November, 1999 under Section 197 Cr.P.C. for prosecuting inter alia Mr. P.J. Thomas for having committed alleged offence under Section 120-B IPC read with Section 13(1)(d) of the Prevention of Corruption Act; the judgment of the Supreme Court dated 29th March, 2000 in the case of K. Karunakaran v. State of Kerala and Another in which this Court observed that, "the registration of the FIR against Shri Karunakaran and others cannot be held to be the result of malafides or actuated by extraneous considerations. The menace of corruption cannot be permitted to be hidden under the carpet of legal technicalities and in such cases probes conducted are required to be determined on facts and in accordance with law". Further, even the judgment of the Kerala High Court in Criminal Revision Petition No. 430 of 2001 has not been considered. It may be noted that the clearance of CVC dated 6th October, 2008 was not binding on the HPC. However, the aforestated judgment of the Supreme Court dated 29th March, 2000 in the case of K. Karunakaran v. State of Kerala and Another in Criminal Appeal No. 86 of 1998 was certainly binding on the HPC and, in any event, required due weightage to be given while making recommendation, particularly when the said judgment had emphasized the importance of probity in high offices. This is what we have repeatedly emphasized in our judgment - institution is more important than individual 's). For the above reasons, it is declared that the recommendation dated 3rd September, 2010 of the High Powered Committee recommending the name of Mr. P.J. Thomas as Central Vigilance Commissioner under the proviso to Section 4(1) of the 2003 Act is non-est in law and, consequently, the impugned appointment of Mr. P.J. Thomas as Central Vigilance Commissioner is quashed. Further, as held hereinabove, recommendation of the HPC and, consequently, the appointment of Shri P.J. Thomas was in contravention of the provisions of the 2003 Act, hence, we find no merit in the submissions advanced on behalf of respondent No. 2 on non-maintainability of the writ petition.”
It was further observed, “Under the proviso to Section 4(1) Parliament has put its faith in the High Powered Committee consisting of the Prime Minister, the minister for Home Affairs and the Leader of the Opposition in the House of the People. It is presumed that such High Powered Committee entrusted with wide discretion to make a choice will exercise its powers in accordance with the 2003 Act, objectively and in a fair and reasonable manner. It is well settled that mere conferment of wide discretionary powers per se will not violate the doctrine of reasonableness or equality. The 2003 Act is enacted with the intention that such High Powered Committee will act in a bipartisan manner and shall perform its statutory duties keeping in view the larger national interest. Each of the Members is presumed by the legislature to act in public interest. On the other hand, if veto power is given to one of the three Members, the working of the Act would become unworkable. One more aspect needs to be mentioned. Under Section 4(2) of the 2003 Act it has been stipulated that the vacancy in the Committee shall not invalidate the appointment. This provision militates against the argument of the petitioner that the recommendation under Section 4 has to be unanimous.”
The court issued the following guidelines for the appointment of the CVC. These are, (i) In our judgment we have held that there is no prescription of unanimity or consensus under Section 4(2) of the 2003 Act. However, the question still remains as to what should be done in cases of difference of opinion amongst the Members of the High Powered Committee. As in the present case, if one Member of the Committee dissents that Member should give reasons for the dissent and if the majority disagrees with the dissent, the majority shall give reasons for overruling the dissent. This will bring about fairness-in-action. Since we have held that legality of the choice or selection is open to judicial review we are of the view that if the above methodology is followed transparency would emerge which would also maintain the integrity of the decision- making process. (ii) In future the zone of consideration should be in terms of Section 3(3) of the 2003 Act. It shall not be restricted to civil servants. (iii) All the civil servants and other persons empanelled shall be outstanding civil servants or persons of impeccable integrity. (iv) The empanelment shall be carried out on the basis of rational criteria, which is to be reflected by recording of reasons and/or noting akin to reasons by the empanelling authority. (v) The empanelment shall be carried out by a person not below the rank of Secretary to the Government of India in the concerned Ministry. (vi) The empanelling authority, while forwarding the names of the empanelled officers/persons, shall enclose complete information, material and data of the concerned officer/person, whether favourable or adverse. Nothing relevant or material should be withheld from the Selection Committee. It will not only be useful but would also serve larger public interest and enhance public confidence if the contemporaneous service record and acts of outstanding performance of the officer under consideration; even with adverse remarks is specifically brought to the notice of the Selection Committee.
The Selection Committee may adopt a fair and transparent process of consideration of the empanelled officers.
Part (b) Establishment of Central Bureau of Investigation (CBI) Central Bureau of investigation CBI is one of the important anti-corruption investigating agency. It has many branches and anti-corruption is one of those. In Vineet Narain case supra, Supreme Court directed that the Central Vigilance Commission should be entrusted with the responsibility of exercising superintendence over the functioning of the CBI. Therefore, it is necessary to trace the origin of the CBI and highlight some of its functions. 4.6 Brief History
The CBI owes its origin to the Delhi Special Police Establishment (SPE) established by the government in 1941 to deal with corruption involving wartime purchases and supplies. The SPE was set up through an executive order by the Department of War, with its headquarters in Lahore. After the war ended, the need for a central agency to investigate cases of corruption involving central government employees continued to be felt. In 1946, the Government of India enacted the Delhi Special Police Establishment Act to give the organisation a statutory cover. The organisation was brought under the Home Department and its headquarters shifted to Delhi. In 1948, the post of the IGP was created to head the organisation92.
The SPE provided the nucleus on which the CBI was established on 1 April 1963 through a Resolution53 of the Ministry of Home Affairs, Government of India. The need to establish this organisation was felt not only to investigate crimes handled at that time by the Delhi Special Police Establishment (DSPE), including crimes with interstate ramifications, but also to collect crime intelligence, liaise with INTERPOL, maintain crime statistics and disseminate crime and criminal information, conduct police research, and coordinate laws relating to crime. Initially, it consisted of the following six divisions: Anti-Corruption Division (DSPE), Technical Division, Crime Records and Statistics Division, Research Division, Legal and General Division and Administration Division.
Over a period of time, the CBI 's charter was changed. While some of its functions were transferred to new organisations, such as the Bureau of Police Research and Development and the National Crime Records Bureau, its criminal investigation work increased significantly. A committee headed by the Cabinet Secretary reviewed the CBI 's functioning and recommended the reorganisation of its criminal investigation work. This was done in 1987 when it was decided that the Anti-Corruption Division would take up the investigation of corruption cases and Special Crimes Division would investigate major conventional crimes, such as murder, kidnapping, rape, rioting, arms smuggling, hijacking, illegal immigration, etc and economic offences, such as banking and other financial frauds, customs offences, counterfeiting of currency, narcotics and drug peddling, black marketing, etc. In 1994, investigation of economic offences was transferred to a separate Economic Offences Division93.
Thus what was initially an anti-corruption agency developed over a period into a specialised agency with a comprehensive charter to investigate a wide variety of crimes. Presently, the CBI comprises of Anti-Corruption Division, Economic Offences Division, Special Crimes Division, Legal Division, Technical Division, Policy and Coordination Division, Administration Division and Central Forensic Science Laboratory.
The CBI functions under the Ministry of Personnel, Public Grievances and Pensions, Government of India. Its headquarters is in Delhi, but it has branches across the country94.
4.7 LEGAL STATUS
As already mentioned, the CBI derives its legal powers from the Delhi Special Police Establishment Act of 1946. This Act was passed "to make provision for the constitution of a special police force in Delhi for the investigation of certain offences in the Union Territories, for the superintendence and administration of the said force and for the extension to other areas of the powers and jurisdiction of members of the said force in regard to the investigation of the said offences95."
The Act of 1946 is a small piece of legislation, consisting of seven sections in all, including the last one about "repeal". The Act is not confined merely to union territories, as the central government is authorised to extend it to other states and railway areas96. With the consent of the state governments, the Act has been extended to all states. The Act authorises the investigating agency to investigate only those offences, which are notified by the central government97. Almost all major offences have been specified by various notifications issued periodically by the government. The Act authorises the officers to enjoy all powers, duties, privileges and liabilities that police officers of the area enjoy98. The organisation cannot exercise its powers and jurisdiction in any area in a state without the consent of the state government99. The CBI thus does not have any original jurisdiction to do crime investigation work in a state. If the state government does not invite the CBI, the only way it can work there is when the Supreme Court or High Court asks it to do so. The courts get this power by virtue of their obligation and duty under the Constitution to protect citizens ' fundamental rights. Finally, there is the provision that vests the superintendence of this important investigating agency in the central government100, though now after Vineet Narain case supra, it partly vests in the CVC too.
The CBI is the premier investigating agency of the country. It figures in the Union List of the Seventh Schedule of the Constitution of India. It is listed at Serial No. 8 of the List as "Central Bureau of Intelligence and Investigation". Considering the importance that the framers of the Constitution attached to this organisation, it is rather strange - indeed ironic - that its working is still governed by a highly antiquated piece of legislation enacted during British rule for a somewhat limited purpose. India is no longer the country that it was in 1946 and the CBI is no longer what the Delhi Special Police Establishment was in those days. The size of the organisation has expanded; the pattern and incidence of crime which it is required to investigate have altered; the political environment in which it functions has been transformed; the expectations of the citizens from this agency have grown; and what is more, the norms and standards of police investigation work all over the world have seen a sea change.
The legislation governing an important organisation like the CBI must reflect these developments. It must recognise the paramount obligation of the organisation to function according to the requirements of the Constitution. It must mandate it to function so as to protect and promote the rule of law. Legislation must define the word 'superintendence ' and establish institutional and other arrangements to insulate the organisation from undesirable and illegitimate outside control, pressures and influences. It must ensure that the central government 's control over the agency is exercised to ensure that its performance is in strict accordance with law. The Act must make it a statutory responsibility of the government to establish a professionally efficient, effective and impartial system of investigation. It should set objectives, define performance standards and establish monitoring instruments; delineate CBI 's powers as well as its functions; outline the nature, philosophy and practices expected of the agency; and prescribe mechanisms to ensure its accountability. There should be no provision that can provide impunity.
The government 's reluctance to enact separate legislation for such an important organisation is inexplicable. The only way one can explain it is that it does not want the CBI to be professionally efficient, transparently fair and impartial in its functioning, working according to the tenets of the rule of law and not according to what the government wants it to do.
The anti-corruption law namely, Section 13 of the prevention of corruption Act 1988 requires the CBI to obtain sanction from the concerned government before prosecuting public servants involved in corruption cases. In other cases, the provision of the CrPC Section 197 is applicable. In many cases, there is considerable delay in receiving the sanction and sometimes it never comes. This worried the Supreme Court too, which in the Vineet Narain case judgement supra directed that the maximum limit of three months to grant sanction must be strictly followed. It was only in exceptional cases where consultation with the Attorney General became necessary that an additional one month might be allowed.
The Parliamentary Standing Committee of the Ministry went one step further and recommended that once the investigating agency came to the conclusion that prosecution was necessary and Director of Prosecution concurred, the necessary sanction must be given within 15 days. In case it is not given within that period, it should be treated as "deemed sanction" and the CBI should file a charge sheet in court101.
The government is not satisfied by providing impunity merely to serving officers; it has tried to include even the retired public servants within the ambit of impunity provisions of law. In 2008, it tried to extend the scope of such provisions to former public servants by amending Section 19 of the Prevention of Corruption Act, 1988. This attempt was made to undo the judgement of the Supreme Court in Badal v. State of Punjab in 2006, in which it held that Section 19 of the Prevention of Corruption Act, 1988 did not protect former public servants. Luckily, the amendment was not ratified by the Rajya Sabha even though it had been cleared by the Lok Sabha.
The CBI website does not show the number of cases where sanction is denied; it merely gives statistics of cases where sanction is pending102.
Lokpal and Lokayukta
"Corruption at the bureaucratic level operated like a subterranean monster, aiding, abetting and colluding with the political bosses. Service to the public has long given way to careerism with a work culture of 19th century aristocracy dealing with the citizens as ‘subjects.’ Burke cautioned, “Among people, generally corrupt, liberty cannot last long".
Supreme Court also said that corruption in a civilized society is a disease like cancer and if not detected in time, will malignise the polity of the country leading to disastrous consequence. It is like plague; it is contagious and if not controlled, spreads like a fire in a jungle. Its virus is compared with HIV leading to AIDS, being incurable State of MP & Others V Ram Singh103. Also see State of Andhra Pradesh V. V. Vasudeva Rao104. Corruption in public life is a gross violation of human rights. It is anti-people, anti-development and anti-national. Rampant corruption is major national malady. It is the single big factor retarding the progress of our country, responsible for millions to live below poverty line despite astronomical amount being spent on development. It is garbage which is required to be removed otherwise it would hamper development of the country and bring bad name to the nation.
Supreme Court observed in Lucknow Development Authority Vs M.K. Gupta105: "Harassment of a common man by public authorities is socially abhorring and legally impermissible. It may harm him personally but the injury to society is far more grieveous. Crime and corruption thrive and prosper in the society due to lack of public resistance. Nothing is more damaging than the feeling of helplessness. An ordinary citizen instead of complaining and fighting succumbs to the pressure of undesirable functioning in offices instead of standing against it."
4.8 OMBUDSMAN AND LOKPAL
The Indian Lokpal is synonymous to the institution of Ombudsman existing in the Scandinavian countries. The office of the ombudsman originated in Sweden in 1809 A.D., and adopted eventually by many nations 'as a bulwark of democratic government against the tyranny of officialdom '. Ombudsman is a Swedish word that stands for "an officer appointed by the legislature to handle complaints against administrative and judicial action. Traditionally the ombudsman is appointed based on unanimity among all political parties supporting the proposal. The incumbent, though appointed by the legislature, is an independent functionary - independent of all the three organs of the state, but reports to the legislature. The Ombudsman can act both on the basis of complaints made by citizens, or suo moto. He can look into allegations of corruption as well as mal-administration.
In the regular dispensation of government there are implicit and explicit ways that citizens can voice their grievances and demand change. But these are often difficult. Within administrative departments, for example, any decision of one official can be appealed to a higher official, all the way up to the head of a department. However, this mechanism has inherent flaws. Higher officers enjoy departmental fraternity with those against whom complaints are made, and both sail the same boat. Therefore their impartiality in judging appeals is always doubted. On the legislative side, an individual can approach the member representing his constituency for his demands. But given the absence of easy access of an ordinary citizen to his representative, this has more remained a myth more than reality. Among the organs of state, the Judiciary has proved itself to have highest credibility in protecting individual rights. However, due to procedural complexities involved in court cases - right from filing a case to the delivery of final verdict - there are inevitable delays of justice, which often are also denial of justice106.
The functionary is called by different names in different countries; its power and functions also vary. In the Scandinavian countries (Sweden, Denmark, Finland, Norway) he is called the 'Ombudsman '. He can take cognizance of the citizens ' grievance by either directly receiving complaints from the public or suo moto on the basis of information provided by the interested persons, or from newspapers, etc. However, in the U.K. the functionary - known as the Parliamentary Commissioner - can receive complains only through members of parliament. The ombudsmen can investigate a complaint by themselves or through any public or private agency. After investigation, in Sweden and Finland, the Ombudsman has the power to prosecute erring public servants; whereas in Denmark, he can only order prosecution. However, the power of prosecution is very rarely used. The strength of the ombudsman lies in the publicity attached to the office, and the negative view that attaches itself to all that the office scrutinises. In Sweden and Finland, ombudsmen can also supervise the courts. In other countries, their authority is only over the non-judicial public servants. In almost all the cases they deal with complaints relating to both corruption and mal-administration.
The existing devices in India for checks on elected and administrative officials have not been effective, as the growing instances of corruption cases suggest. As mentioned above, The Central Vigilance Commission (CVC) is designed to inquire into allegations of corruption by administrative officials only. The CBI, the premier investigating agency of the country, functions under the supervision of the Ministry of Personnel, Public grievances and Pensions (under the Prime Minister) and is therefore not immune from political pressures during investigation. Indeed, the lack of independence and professionalism of CBI has been castigated by the Supreme Court often in recent times. All these have necessitated the creation of Lokpal with its own investigating team in earliest possible occasion.
Therefore, there is a need for a mechanism that would adopt very simple, independent, speedy and cheaper means of delivering justice by redressing the grievances of the people. Examples from various countries suggest that the institution of ombudsman has very successfully fought against corruption and unscrupulous administrative decisions by public servants, and acted as a real guardian of democracy and civil rights.
In early 1960s, mounting corruption in public administration set the winds blowing in favour of an Ombudsman in India too. The Administrative Reforms Commission (ARC) set up in 1966 recommended the constitution of a two-tier machinery - of a Lokpal at the Centre, and Lokayukt(a)s in the states. The ARC while recommending the constitution of Lokpal was convinced that such an institution was justified not only for removing the sense of injustice from the minds of adversely affected citizens but also necessary to instill public confidence in the efficiency of administrative machinery. Following this, the Lokpal Bill was for the first time presented during the fourth Lok Sabha in 1968, and was passed there in 1969.
However, while it was pending in the Rajya Sabha, the Lok Sabha was dissolved, resulting the first death of the bill. The bill was revived in 1971, 1977, 1985, 1989, 1996, 1998 and most recently in 2001. Each time, after the bill was introduced to the house, it was referred to some committee for improvements - a joint committee of parliament, or a departmental standing committee of the Home Ministry - and before the government could take a final stand on the issue the house was dissolved107.
The Lokpal was visualized as the watchdog institution on ministerial probity. Broadly the provisions of different bills empowered the Lokpal to investigate corruption cases against political persons at the Central level. Some important features of the Lokpal Bill have varied over the years; in its most recent avatar, the bill contains the following:
Objective is to provide speedy, cheaper form of justice to people.
Members: Lokpal is to be a three member body with a chairperson who is or has been a chief justice or judge of the Supreme Court; and its two other members who are or have been judges or chief justices of high courts around the country.
Appointment: The chairperson and members shall be appointed by the President by warrant under his hand and seal on the recommendation of a committee consisting of the following persons. It 's not clear whether the committee has to make a unanimous decision or a majority decision will do. (a) The Vice-President (Chairman) (b) The Prime Minister (c) The Speaker of Lok Sabha (d) Home Minister (e) Leader of the House, other than the house in which PM is a member. (f) Leaders of Opposition of both the houses.
Independence of the Office: In order to ensure the independence of functioning of the august office, the following provisions have been incorporated.
Appointment is to be made on the recommendation of a committee.
The Lokpal is ineligible to hold any office of profit under Government of India or of any state, or similar such posts after retirement.
Fixed tenure of three years and can be removed only on the ground of proven misbehaviour or incapacity after an inquiry made by CJI and two senior most judges of SC.
Lokpal will have its own administrative machinery for conducting investigations.
Salary of Lokpal is to be charged on the Consolidated Fund of India.

Jurisdiction of Lokpal:
The central level political functionaries like the Council of Ministers including the Prime Minister, the Members of Parliament etc.
He can not inquire into any allegation against the PM in relation to latter 's functions of national security and public order.
Complaints of offence committed within 10 years from the date of complaint can be taken up for investigation, not beyond this period.
Any person other than a public servant can make a complaint. The Lokpal is supposed to complete the inquiry within a period of six months. The Lokpal has the power of a civil court to summon any person or authority. After investigation, the ombudsman can only recommend actions to be taken by the competent authority. A number of safeguards have been taken to discourage false complains or complain of malafide intent.
He can order search and seizure operations.
He shall present annually to the President the reports of investigation and the latter with the action take report has to put it before the both houses of parliament.
It may be noted that the Lokpal is supposed to investigate cases of corruption only, and not address himself to redressing grievances in respect of injustices and hardship caused by maladministration108.
It is submitted that since the Lokpal bill could not be passed in the parliament despite several attempts and lack of political will to fight the corruption, the role of the civil society has become very important. Civil society of India seemed to have understood its role for fighting the menace. Civil society members led by social activist Mr. Anna Hazare went on hunger strike so that the Government should be able to be compelled to enact the Lokpal bill. Thereafter, government has included the civil society members in the drafting committee so that the institution of Lokpal should become a reality. This is a new experiment in the democracy of India of its kind. It is hoped that the institution of Lokpal shall become a reality very soon and the era of cooperation between the government and civil society will continue in order to fight the corruption and maladministration.
"Institution of Lokpal has not as yet been created at the Centre although efforts have been made since, 1969 while Institution of Lokayuktas/Lokpal has been established by many States through State Legislations. They provide for inquiry/investigation into complaints of corruption against public servants. He protects Citizens’ Right against mal-administration, corruption, delay, inefficiency, non-transparency, abuse of position, improper conduct etc. The procedure to be followed is informal and inexpensive; technicalities do not come in way. Complaint is supported by affidavit, making out case for inquiry. He is representative of Legislature, powerful friend of citizens to act against officials action, inaction or corruption. But not anti-administration, rather helps in humanizing relations between the public and the administration, a step forward in establishing an ‘Open Government’ securing respect for the rule of law, an educator aiming at propagating the prevention of corruption, inefficiency and mal-administration in governance. He is, therefore, a check on corruption109.
Recently, Karnataka Lokayukta justice Santosh Hegde has shown the Karnataka Chief Minister and his son to have involved in the huge land scam irrupting big controvercy. Even there, politics has played a big role. Scam could be uncovered because the proactive role played by the Lokayukta in the state. Therefore, it is important to strengthen the institution of Lokayukta across all the states in the country in order to fight the menace of corruption and maladministration.

4.9 SUMMING UP
The CVC and CBI, the two most prominent anti-corruption agencies at the Centre, have been in existence for a fairly long period. This survey of the central government 's management of these two organisations shows that it has never wanted them to become professionally strong and effective.
As discussed above, the need to have an investigating agency at the Centre was felt as early as in 1948. However, the CBI was established only on 1 April 1963. Till date no law has been enacted to govern its functioning. It is still regulated by a law that is as anachronistic as the Police Act of 1861, which governs most police forces in the country. Just as the state governments have shown reluctance to accept the National Police Commission 's recommendations to replace the colonial era legislation with a new Police Act that is framed in accordance with the requirements of a modern democratic Constitution, similarly the central government has been equally obstinate in refusing the need for new law to manage and strengthen the CBI. The reason for its unwillingness to change in both cases is the same - the political executive must have complete control over police organisations so that it can misuse these for partisan purposes. The fact that the CBI has often been misused is supported by considerable evidence.
The story of the CVC is similar. It was established in 1964 through executive instructions and not law. It was only when the Supreme Court issued directions in 1997 to give it a statutory cover that action had to be initiated, though all possible attempts were made to thwart the implementation of that judgement. When the attempts failed, the government took six years to introduce the CVC Act of 2003. However, it ensured that the Act had sufficient shortcomings and inadequacies to reduce its effectiveness. This was seen recently when the central government appointed a man of its choice to head the CVC, despite blemishes on his record and strong objections by the opposition party and others. The appointment was challenged in the Apex Court through a petition seeking his removal from the key post on the ground that he is facing corruption charges. The Supreme Court has quashed his appointment.
The CVC Act brought the CBI under a system of dual control and CVC 's super­intendence over the CBI was considerably diluted. It also revived the Single Directive. The illegality that was committed through executive instructions earlier is now committed with the backing of law.
Sincere attempts have not being made to enact the Lokpal Bill although several states have enacted Lokayukta.
It is submitted that the illegalities which have been committed in the CVC act should be removed and the institution of CVC should be strengthened. Single Directive should be removed from the act. Special act should be enacted to govern the CBI for its effective functioning. It should be modernized as earliest so that it should be able to fight the corruption with full of its ability. Control of the government from the functioning of CBI should be removed and it should be allowed to work independantly so that it should become the important anticorruption agency. Similarly, Lokpal bill should become a reality as earliest and this institution should also be strengthened in order to fight the bureaucratic corruption. Prime Ministers office should be brought under the ambit of Lokpal. All the states in country should enact Lokayukta act so that corruption in the bureaucracy can be checked in the states.
Corruption, as someone has rightly said, is like "a ball of snow; once it 's set a rolling it must increase". If the rolling of the ball has to be stopped, the Government of India must show greater sincerity and a stronger will to deal with the menace than it has done so far.

CHAPTER V
CONCLUSION AND SUGGESTIONS
Study of white collar crimes as a part of criminology was started in late 1930s and 40s. Sutherland has a credit to draw the attention of the criminologists towards the area which remained untouched so far. Sutherland has given a new dimensions to the understanding of criminology. It was he, who started the systematic study of the crimes committed by upper class people, namely economic crimes. These crimes generally go unheated and unpunished. Even if these criminals are punished, still the punishment is very light. This class of criminals enjoys the sympathy of judges in the courts.
Problem with Sutherland’s theory is that it includes only the crimes committed by the upper class of society. Therefore, it is very difficult to include many crimes in it such as tax evasion, theft etc.
In a new era, these classes of crimes have become very complicated. Sometimes, it is very difficult to detect them. The criminals of this class of crimes are not only shrewd but they are also using the new technology to commit these crimes.
Today not only the person of upper class of society commits these crimes but even middle and lower class is also equally involved in committing them. Therefore, it is submitted that the simpler approach would be to divide the crimes into two parts. On the one hand, traditional crimes such as murder, rape, robbery, kidnapping, criminal extortion etc on the other, economic crime which can be committed by anybody including a hoarder and a tax evader. Actually neither the traditional crimes, nor the economic crimes can be committed by the people of particular class alone.
Awareness needs to be spread fast against the economic crimes such as corruption. Fast growing media can play an important role in spreading awareness against the menace of economic crimes. It is important to evolve a special mechanism to deal separately with these crimes. Those agencies dealing with the economic crimes, need special training to deal with the threat. These agencies should be kept away from the political influence. Laws should be made more stringent in order to deal with these crimes. Judiciary has to become more sensitive towards the problem of white collar crimes. Wherever there is a provision of maximum punishment, judges should not hesitate to award such punishment in the cases of socio-economic offences. Judiciary has given an appropriate response whenever case came before it. But still it should understand the gravity of the socio-economic offences and white collar crimes. Lighter punishments should not be a norm for the white collar criminals but it should be an exception. Judiciary has a very difficult task in its hands to insure that no white collar criminal should escape the punishments. It is important to note that it took years to set healthy judicial precedents. Lower judiciary needs to be given a proper training in order to deal with these complex issues. Judiciary can play an important role in restoring the faith of the common man in the democracy. It is a judicial activism which had helped in restoring the faith of the common man in the democracy soon after the emergency of 1975. Rather, it had helped in rescuing the democracy in that difficult time. Same type of judicial activism can help in fighting the menace of corruption and socio-economic offences. It is important and in the interest of the society to deal with this class of crimes as effectively as possible. It is not easy to fight with the menace without the broader public participation. Political will has to be very strong if we want to achieve the goal in quick time.
India has been facing the problem of white collar crimes right since its independent. We have witnessed several scandals even in the early years of our democracy. This tendency of economic crimes by the bureaucrats, public servants and the ministers has risen in last two and half decades. Public outcry against them is witnessed these days specially in light of “2G scam” and “common welth games irregularities scam”. Law commission of India in its 29th and 47th report and Santhanam committee report on prevention of corruption have studied the problem of white collar crimes and the corruption extensively. Although the legislatures have enacted several acts to deal with the massive corruption, still the legislative response has not been adequate to deal with the menace. Enough loopholes have been kept in the enactments so that white collar criminals such as the bureaucrats and ministers can easily get out of the rigors of law. In this regard it is submitted that all the socio-economic offences should be codified in one single code. Statutes should not be in the favor of the accused excessively. Burden of proof must be shifted towards the offenders because these laws are social legislations. Punishment should be very harsh against these class of criminals. Famous rule of the criminal law that the guilt of the accused should be proved beyond reasonable doubts should be relaxed. Even if it is not relaxed, it should be kept in mind by the judiciary that beyond reasonable doubts should not become beyond all the doubts. Judiciary should also be given a proper training to prosecute the white collar criminals. For the convictions of the offenders of the socio-economic offenders, legislature should give adequate response by bringing robust laws in the statutes. Such as, minimum and maximum punishment under the prevention of corruption act 1988 should be raised. There should be enhanced punishment for the public servants and the ministers if they found involved in corruption. Apart from the prevention of corruption act 1988, in other socio-economic legislations, the minimum and maximum punishment needs to be raised. Care should be taken that white collar criminals should not escape the punishments. Procedure of bringing the white collar criminals to the book should be simplified. Suitable amendments should be made in Criminal Procedure Code 1973 so that the law enforcement agencies should get enough power to prosecute the white collar criminals. Care should be taken that the conviction rate of the white collar criminals will be increased so that the effect of the punishment will be deterrent.
One of the important issue is the sanction for prosecution of the public servants. We find some of the most controvercial clauses in the acts namely, Sec. 197 of the CR.P.C 1973 and Sec. 19 of the prevention of corruption act 1988. Supreme Court has responded positively on these issues. It is submitted that although public servants need protection against the false complains so that they can work fearlessly. It is also important to note that wherever there is apprehension of the corruption from the public servants; sanction should be granted by the government for the prosecution. If the government decides to withholds sanctions, in such case, it should communicate to the person seeking the sanction its intention to withhold it. Actually, the government is duty bound to communicate the status of his application regarding the sanction to the citizen. Now the time has come for the government to ease the sanction norms so that the prosecution of the guilty public servants should become simple. Supreme Court had rightly observed in Vineet Narain case that sanction to prosecute the public servants must be granted within three month of the application.
It is important to note that the minister is not the public servant within the meaning of term “public servant” given in sec. 21 of the Indian penal code. He gets the remunerations for his constitutional duties according to the Constitution of India and not because of the master-servant relationship. This issue again came before the Supreme Court recently in A Rajas case. Supreme Court had criticized the Prime minister’s office for not granting the sanction to prosecute A Raja to one Swami Subramanyam. If the government receives any application seeking the sanction to prosecute state or central minister, it should communicate to the citizen that no sanction is required to prosecute such minister. Government needs to rethink on the issue of the protection to the public servants even after their retirement specially when the corruption has crossed all the limits. It is important to restore the faith of the common man in the Indian legal system. Therefore, the government needs to play the proactive role for combating the menace of white collar crimes. It should create the environment where civil society and the government can join hands to combat the corruption.
The CVC and CBI, the two most prominent anti-corruption agencies at the Centre, have been in existence for a fairly long period. Government never wanted them to become professionally strong and effective.
The need to have an investigating agency at the Centre was felt as early as in 1948. However, the CBI was established only on 1 April 1963. Till date no law has been enacted to govern its functioning. It is still regulated by a law that is as anachronistic as the Police Act of 1861, which governs most police forces in the country. Just as the state governments have shown reluctance to accept the National Police Commission 's recommendations to replace the colonial era legislation with a new Police Act that is framed in accordance with the requirements of a modern democratic Constitution, similarly the central government has been equally obstinate in refusing the need for new law to manage and strengthen the CBI. The reason for its unwillingness to change in both cases is the same - the political executive must have complete control over police organisations so that it can misuse these for partisan purposes. The fact that the CBI has often been misused is supported by considerable evidence.
The story of the CVC is similar. It was established in 1964 through executive instructions and not law. It was only when the Supreme Court issued directions in 1997 to give it a statutory cover that action had to be initiated, though all possible attempts were made to thwart the implementation of that judgement. When the attempts failed, the government took six years to introduce the CVC Act of 2003. However, it ensured that the Act had sufficient shortcomings and inadequacies to reduce its effectiveness. This was seen recently when the central government appointed a man of its choice to head the CVC, despite blemishes on his record and strong objections by the opposition party and others. The appointment was challenged in the Apex Court through a petition seeking his removal from the key post on the ground that he is facing corruption charges. The Supreme Court has quashed his appointment.
The CVC Act brought the CBI under a system of dual control and CVC 's super­intendence over the CBI was considerably diluted. It also revived the Single Directive. The illegality that was committed through executive instructions earlier is now committed with the backing of law.
Sincere attempts have not being made to enact the Lokpal bill for a long time although several states have enacted Lokayukta.
It is submitted that the illegalities which have been committed in the CVC act should be removed and the institution of CVC should be strengthened. Single Directive should be removed from the act. Special act should be enacted to govern the CBI for its effective functioning. It should be modernized as earliest so that it should be able to fight the corruption with full of its ability. Control of the government from the functioning of CBI should be removed and it should be allowed to work independantly so that it should become the important anticorruption agency. Similarly, Local bill should become a reality as earliest and this institution should also be strengthened in order to fight the bureaucratic corruption. Prime Ministers office should be brought under the ambit of Lokpal. All the states in country should enact Lokayukta act so that corruption in the bureaucracy can be checked in the states.
In the end, it can be said that my hypothesis that White collar crimes has the effect of adversely affecting the economy and the well being of the society at large and the magnitude of such crime is growing day by day in India. The problem has not been addressed sufficiently. Academic attention is on the wane. Legal regime is proving unsatisfactory. This hypothesis has been proved in this work with sufficient evidence. It is very important to investigate and punish the menace of white collar crimes because they have potential to cause harm to entire social fabric of the nation.
Dr. S. Radhakrishnan, the Second President of India, in this context once had observed:
The practitioner of the evil (i.e. white-collar and socio-economic crimes) the hoarders, the profiteers, the black marketers, and speculators are the worst enemies of our country. They have to be dealt with sternly, howsoever well placed, important and influential they may be, if we acquiesce in wrong-doing, people will lose faith in us.”

Bibliography
Primary source
Acts

1. Consumer Protection Act 1986
2. the Indian Penal Code
3. the Code of Criminal Procedure 1973
4. Prevention of Corruption 1964.
5. The Chief Vigilance Commission Act, 2003
6. The Delhi Special Police Establishment Act, 1946
Reports

1. Santhanam Committee Report on Prevention of Corruption, 1964
2. 29th Law Commission Report
3. 47th Law Commission
4. The Ministry 's Department-Related Parliamentary Standing Committee, Thirty-seventh Report

Secondary Source

Books
1. V. N. Paranjape, Criminology and Penology ( 14th Ed., Central Law Publication, 2010)
2. Walter Reckless : The Crime Problem,2 Sage Publication, 1956
3. Coleman & Moynihan : Understanding Criminal Data 2ND ED.,Open University Press, Buckingham(1996)
4. Goswami P. : Criminology (1964 Ed.)
Articles
1. Sutherland Edwin H, White Collar Criminality, Published by American sociological Review, Vol. 5, No. 1. Feb. 1940. pp. 1-12. Published by American Sociological Association.
2. K. P. Joseph. Lessons From Bihar Fodder Scam. Economic And Political Weekly, Vol. 32, No. 28 (Jul. 12-18 1997
3. “Seymour Martin Lipset Encyclopedia of Democracy” ‘corruption’ Vol. 1, P. 310

Websites

1. http://www.jstore.org
2. http//www.asociatedcontent.com
3. http://www.hinduonnet.com
4. http://www.hinduonnet.com
5. www.iimcal.ac.in
6. http://en.wikipedia.org
7. http://www.articles.timesofindia.indiatimes.com
8. http:// www.managementparadise.com
9. http://www.ptinews.com
10. http://www.legalserviceindia.com
11. http://www.cbi.nic.in

Bibliography: 5. The Chief Vigilance Commission Act, 2003 6 2. Walter Reckless : The Crime Problem,2 Sage Publication, 1956 3 4. Goswami P. : Criminology (1964 Ed.) Articles 1. Sutherland Edwin H, White Collar Criminality, Published by American sociological Review, Vol. 5, No. 1. Feb. 1940. pp. 1-12. Published by American Sociological Association.