Introduction

During the earlier times, the laws penalizing the economic offenses were not very strict and this resulted in the offenders not getting the punishment they deserved, and they were usually able to stay away from the clutches of law. This was resulting in an increase in economic offenses and this was a grave concern for the people and the government. Over time, to address this issue, the laws dealing with economic offenses have been strengthened by way of amendments and the introduction of new laws. This article aims to examine the evolution of economic laws in India.

Economic Offences-Definition

The basic definition of the term means any offence or crime which deals with fraud, forgery, cheating, or deceiving or counterfeiting of money or money equivalents. These offences are also termed as financial offences. These offences are which are associate with money and its equivalent. Corruption is also consider a part of economic offences.

History

As per the data provide by the National Crime Records Bureau (NCRB) the rise of the economic offenses can be traced back to 2000 and they have been continuously rising since then. If we look at the data between the years 2014 and 2018, we can see that there have been almost 1,50,000 cases of economic offenses every year (see the table below).[1]

2014 1,42,560 cases
2015 1,50,170 cases
2016 1,43,524 cases
2017 1,48,972 cases
2018 1,56,268 cases

*Crime Rate is calculate as a crime per one lakh of population.

Famous cases/scams of India

The following cases brought substantial changes in the existing laws and introduced new laws which ultimately led to the strengthening of the laws against economic offenses.

Hiten Dalal In the Year 1991-1992
Harshad Mehta In the Year 1992-1993
Ketan Parekh In the Year 2001-2002
Saradha Chit Fund In the Year 2013
Vijay Mallya In the Year 2016
Nirav Modi In the Year 2018

Recent changes in the laws

Many new Acts were introduce and amendments were made to the existing provisions of law after the increase in the economic offenses and these famous scams.

A. Securities and Exchange Board of India Act, 1992[2]: SEBI is a non-statutory body and was established after Hiten Dalal and Harshad Mehta’s scams. The act was enact in 1992 many changes were made to the existing stock market exchange

such as:

Power to dispose of, seize and hold the property of the offenders.
Compulsory registration of Stockbrokers, sub-brokers and share transfer agents, etc.
The act had its own tribunals called Securities Appellate Tribunal.
The act also provided punishments and other penalties for the offenders.

SEBI was given statutory power in the year 1992 through this Act. The act was further amend in 2014 after the Saradha chit fund case. After this amendment, SEBI was empower to search, ask for call records and obtain any other such information. The definition of the Collective Investment Scheme (CIS) was also widen through this amendment.

B. Extradition Act, 1962[3]: The objective of the Extradition Act is to send back those convicted offenders who have run away from their countries for ensuring justice. The Act was amend in 1993 and it widened the definition and scope of the term fugitive

C. Constitution of India: Article 246(A) of the Constitution deals with tax evasion by the introduction of Goods and Services Tax in 2016. (Introduced by the Constitutional Amendment (101st) under Article 246(A)

D. Fugitive Economic Offender Act, 2018[4]: This Act was introduced after the Vijay Mallya loan scam and Nirav Modi’s scam. These two scams involved fraud of huge amounts of money. When the news of their offense made the headlines, they escaped the country. This Act, thus, empowers the court to confiscate/seize the properties and assets of the absconded economic offenders. The Act empowers the Indian Courts to have extra-territorial jurisdiction of the Indian Courts.

Existing economic offenses and laws governing them

A. Prevention of Money-laundering Act, 2002: This Act deals with money laundering. Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involve in any process or activity connect proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainte property shall be guilty of the offense of money-laundering.[5]

B. Prevention of Corruption Act, 1988[6]: This Act deals with incidents of corruption.

C. Indian Contracts Act, 1872[7]: Certain provisions of this Act define fraud. It means and includes any of the acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract. (S.17)

D. Indian Penal Code, 1860[8]: Section 463 of this Act deals with forgery. Whoever makes any false documents or false electronic record or part of a document or electronic record, with intent to cause damage or injury, to the public or to any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery.

In a similar manner ‘cheating’ is define under Section 415,‘counterfeit’ is define under Section 28 of the Indian penal Code 1860 and ‘Criminal breach of trust’ is define under Section 405 of the Act.

Conclusion

After the recent amendments and the new laws, it can be said there has been a decrease in Economic Offences, but the harsh reality is that they still exist in our society. In addition to the introduction of new laws and amendments in them, the need of the hour is that the enactment of these laws should be strict. The system should be such that these people are unable to run away from the law. The Acts should also focus upon compensating the victims of such crimes. Also, the government should focus upon strengthening the relations with other countries and enter into treaties and agreements so the offenders who abscond to other nations can be extradite back to the country.