White-Collar Crime Under BNS 2023: Constitutional Rights and Criminal Liability

Summary: White-collar crime in India involves economic and financial offences committed through deception, dishonest appropriation, breach of trust, manipulation of documents and abuse of professional or commercial positions. This research examines the relationship between these offences, the Constitution of India and the Bharatiya Nyaya Sanhita, 2023, which replaced the Indian Penal Code, 1860 with effect from 1 July 2024. It distinguishes unlawful private conduct from unconstitutional legislation and examines Parliament’s legislative competence under Articles 245 and 246, together with the relevance of Article 39(c). The paper analyses fundamental rights under Articles 14, 19, 20, 21 and 22, including equality before law, business freedoms, protection against retrospective punishment, self-incrimination, personal liberty and procedural safeguards during arrest. It reviews BNS provisions concerning cheating, criminal misappropriation, criminal breach of trust, forgery, falsification of accounts, conspiracy, abetment and organised crime. Particular attention is given to judicial decisions concerning dishonest intention in commercial transactions, the seriousness of economic offences, bail, fair procedure and enforcement under the Prevention of Money Laundering Act, 2002. The paper also considers the distinction between civil contractual breaches and criminal fraud, evidentiary difficulties in financial investigations, delayed trials and the transition from the IPC to the BNS. It concludes that effective enforcement requires clear proof of criminal intention, specialised investigation, timely adjudication and consistent protection of constitutional rights, ensuring that financial crime is punished without undermining the liberty of accused persons.

White-Collar Crime in India: Its Relationship with the Constitution and the Bharatiya Nyaya Sanhita, 2023

Abstract:

White-collar crime is committed with documents, signatures and trust rather than with force, and for that reason it is often treated as a lesser wrong than ordinary crime. This paper examines how such crime is related to the Constitution of India and to the Bharatiya Nyaya Sanhita, 2023 (BNS), which replaced the Indian Penal Code, 1860 on 1 July 2024. It begins with the meaning and origin of the term, then explains why white-collar crime is illegal but not “unconstitutional”, and looks at the constitutional basis for the laws that punish it and the rights that the accused continues to enjoy. It then turns to the BNS, which has no separate chapter on the subject and reaches such conduct through general offences of cheating, breach of trust, forgery, falsification of accounts, conspiracy and organised crime. The paper argues that the strength of these provisions will depend less on their wording than on proof of dishonest intention and on fair and speedy trials.

1. Introduction

Most people picture a crime as something violent: a theft, an assault, a murder. White-collar crime does not look like that. It happens in offices, banks and government departments, and the weapon is usually a pen or a spreadsheet. A forged balance sheet or a diverted investor fund can hurt thousands of people, yet nobody is physically injured, which is partly why such offences were taken lightly for so long.

In India the subject has two sides. The first is constitutional. Does the Constitution allow the State to punish economic offenders, and what protection does it give them while doing so? The second concerns ordinary criminal law. When the Bharatiya Nyaya Sanhita, 2023 (BNS) came into force on 1 July 2024, how did it deal with fraud, forgery, breach of trust and organised financial crime?¹

This paper treats the two together, because in practice they cannot be separated. Every prosecution for a financial offence is a meeting point between a penal provision and a constitutional guarantee. The paper first sets out what white-collar crime means, then deals with the constitutional framework, the rights of the accused and the provisions of the BNS, and ends with the judicial approach, some practical problems and a few suggestions.

2. Research Methodology

This research adopts the doctrinal method of legal research. It examines the Constitution, statutory provisions, judicial decisions and books to understand how white-collar crime is related to the constitutional scheme and to the BNS.

The study concentrates on the constitutional provisions that bear on economic offences and on the offences in the BNS that are commonly associated with white-collar crime. No empirical data has been collected, and the illustrations used in the paper are hypothetical examples made by the author.

3. Meaning and Origin of White-Collar Crime

The term white collar crime was first used by the influential criminologist Edwin Sutherland in 1939. Sutherland believed a person’s social status influenced the kind of criminal activity they could become involved in, defining white collar crime as:

“a crime committed by a person of high social status and respectability in the course of his occupation”.²

Sutherland used the phrase in his presidential address to the American Sociological Society in December 1939, and the address was published in 1940.³ His main point was that the criminology of his day studied poverty, slums and broken homes, and therefore gave a false picture of who commits crime. Respectable businessmen, he argued, broke the law as often as anyone else, but they were not recorded in the same statistics and were rarely treated as real criminals.

Later writers have said that the definition is too narrow, because many financial crimes are now committed by ordinary employees and online fraudsters who are not “high status” in any sense. Modern usage therefore looks at the nature of the act: it is non-violent, it depends on deceit or breach of trust, and it is done for financial or personal gain. This wider meaning is used in the rest of this paper, and it fits Indian law better, since Indian law punishes the act and not the social class of the person.

4. The Constitutional Framework related with White Collar Crime

4.1 Illegal or unconstitutional?

It is often asked whether white-collar crime is constitutional or unconstitutional in India. The question needs correcting. The words “constitutional” and “unconstitutional” describe laws, government actions and official policies. They do not describe the conduct of private persons. A director who cheats shareholders has broken the law and can be punished, but he has not violated the Constitution in the technical sense, because the Constitution does not bind him as it binds the State.

The position is different for a statute. If Parliament made a law that took away or reduced a fundamental right, that law would be void to that extent under Article 13(2).⁴ So the correct statement is that white-collar crime is illegal, and the laws that prohibit and punish it are constitutional so long as they remain within the powers given to the legislatures and do not violate Part III.

4.2 Legislative competence

The power to make criminal laws comes from the Constitution. Article 245 allows Parliament to make laws for the whole or any part of India, and State Legislatures to make laws for their own States. Article 246 divides subjects between the Union and the States through the three Lists of the Seventh Schedule.⁵ Criminal law and criminal procedure are in the Concurrent List (List III, Entries 1 and 2), so both Parliament and the States can legislate on them.

For this reason India has many overlapping statutes on economic offences. The BNS is a Central law, and so are the Prevention of Corruption Act, 1988, the Prevention of Money Laundering Act, 2002 (PMLA) and the Companies Act, 2013. A serious argument against Parliament’s competence to enact them is difficult to make.

4.3 Directive Principles

The Directive Principles add a policy reason. Article 39(c) directs the State to secure that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.⁶ Directive Principles are not enforceable in court, but they help explain why economic offences deserve firm treatment.

5. Fundamental Rights and the Accused Person

The Constitution does not only empower the State to punish. It also limits how the State may do so. An accused in a white-collar case, however wealthy or powerful, has the same rights as any other person.

5.1 Article 14

Equality before the law cuts both ways. Offenders cannot claim immunity because of rank or wealth. The Supreme Court applied this reasoning when it struck down Section 6A of the Delhi Special Police Establishment Act, which required prior Central Government approval before the CBI could investigate senior officers, on the ground that it created an unjustified classification among corrupt public servants.⁷ At the same time, Article 14 protects the accused against arbitrary procedures.

5.2 Article 19(1)

The freedom to carry on a business is subject to reasonable restrictions in the public interest, and bans on fraudulent trade practices are valid on that footing.

5.3 Article 20

Clause (1) prevents conviction under a law that was not in force when the act was done, and a heavier penalty than the law then allowed. Clause (2) bars prosecution and punishment for the same offence more than once. Clause (3) says that no person accused of an offence shall be compelled to be a witness against himself. The Supreme Court has read clause (3) as protecting the right to silence and has restricted forced narcotic and lie-detector tests.⁸

5.4 Article 21

After Maneka Gandhi v. Union of India, any procedure that takes away personal liberty has to be fair, just and reasonable.⁹ This is the main source of the law on bail, speedy trial and protection against arbitrary arrest in economic cases.

5.5 Article 22

An arrested person has the right to be told the grounds of arrest, to consult a lawyer, and to be produced before a magistrate within twenty-four hours.¹⁰ In Pankaj Bansal v. Union of India, the Supreme Court held that the grounds of arrest under the PMLA must be given to the arrested person in writing.¹¹

These rights are not obstacles to prosecution. They are what make a conviction legitimate. A system that ignored them would damage the public trust that the laws are meant to protect.

6. The Bharatiya Nyaya Sanhita related with White-Collar Crime

6.1 The general position

The BNS does not contain a chapter called “white-collar crime” and does not define the term. This was also the position under the Indian Penal Code. White-collar conduct is reached through general offence relating to dishonesty, property, documents and criminal agreements, and the prosecution has to fit the facts into the ingredients of a particular section.

One consequence is often overlooked. A broken business promise or a failed contract is not automatically a crime. In Hridaya Ranjan Prasad Verma v. State of Bihar, the Supreme Court held that for cheating, the dishonest intention must exist at the time the promise is made, and a later failure to keep it does not by itself prove cheating.¹² This protects honest business people from criminal cases in what are really civil disputes.

6.2 Fraud, property and documents

Cheating (Section 318). This replaces IPC Section 420 and the related provisions. A person cheats when he deceives another and dishonestly or fraudulently induces that person to hand over property, or to do or omit something that causes or is likely to cause harm. Collecting money from investors on false promises of returns, when there was never an intention to pay, is the standard example. Cheating that induces delivery of property carries imprisonment up to seven years and a fine.¹³ Cheating by personation (Section 319) applies where the offender pretends to be someone else, such as a person posing as a bank officer to get a customer’s card details.

Criminal misappropriation (Section 314) and criminal breach of trust (Section 316). These two are often confused. Misappropriation is the dishonest taking or use of another’s movable property. Criminal breach of trust requires that the property was entrusted to the accused, or that he had control over it, and that he dishonestly used or disposed of it against the terms of the trust or the law. The punishment rises with the position of the offender. A clerk or servant faces a higher penalty than an ordinary person, and a public servant, banker, merchant or agent faces the highest, up to life imprisonment.¹⁴
Forgery (Sections 335 to 340). These sections cover making a false document or false electronic record, forgery of different kinds, possession of forged documents and using a forged document as genuine. The BNS expressly includes electronic records, which matters because most modern financial fraud is digital.

6.3 Business records, extortion and related offences

Falsification of accounts (Section 344) punishes a clerk, officer or servant who, with intent to defraud, destroys, alters or falsifies the books, papers or accounts of his employer, or makes a false entry or omission. It is the provision closest to accounting fraud at the employee level. Fraud by the company and its directors is dealt with mostly under Section 447 of the Companies Act, 2013.

Extortion (Section 308) arises where a person puts another in fear of injury and dishonestly induces him to deliver property or valuable security. Criminal intimidation (Section 351) applies to threats of injury to body, reputation or property made with the intent specified in the section.

Receiving stolen property (Section 317) covers dishonest receipt or retention of property where the person knows or has reason to believe it is stolen.

6.4 Conspiracy, abetment and organised crime

Large financial frauds are rarely the work of one person. They need an accountant, a signatory, a middleman and often an official who looks the other way. The BNS therefore has provisions on group responsibility.

Criminal conspiracy (Section 61) covers an agreement between two or more persons to commit an illegal act, or a legal act by illegal means, and it allows the prosecution to reach planners who never handled the money. Abetment (Sections 45 to 49) applies to a person who instigates an offence, joins a conspiracy to commit it, or intentionally aids it, such as a professional who knowingly prepares false documents for a fraudulent scheme. Common intention (Section 3(5)) makes each person liable for a criminal act done by several in furtherance of the common intention of all, but courts insist that common intention be proved and that mere presence is not enough.

Organised crime (Section 111) is the most significant new feature in this area. Earlier, organised crime was dealt with mainly by State laws such as the Maharashtra Control of Organised Crime Act, 1999. The BNS brings it into the general penal code. The Explanation to Section 111 lists economic offences such as criminal breach of trust, forgery, hawala transactions, mass-marketing fraud and schemes to defraud several persons or financial institutions.¹⁵ Where no death is caused, the punishment is imprisonment of not less than five years, which may extend to life, along with a heavy fine.

Section 111 applies only if its requirements are met, namely continuing unlawful activity by a person, singly or jointly, as a member of an organised crime syndicate, for material benefit. A single fraud by one person on one occasion does not satisfy it. Petty organised crime (Section 112) deals with certain offences by a member of a group or gang, such as some forms of theft and cheating, and it should not be stretched to cover every minor commercial dispute.

6.5 An illustration

Consider a promoter who collects ₹50 lakh from twenty investors by promising a fixed monthly return, with no intention of paying and no business behind the promise. If the accountant knowingly records the receipts as “loans” in the books, the facts may attract cheating under Section 318, criminal breach of trust under Section 316 if the money was entrusted for a specific purpose, falsification of accounts or forgery, and abetment or conspiracy against the accountant. If a group runs such a scheme repeatedly, Section 111 may also be considered.

Now take a different case. A businessman takes an advance from a client in good faith, begins the work, and then fails to finish it because the market collapses. This is a breach of contract, and unless a dishonest intention at the start can be shown, it is not cheating.¹⁶ The difference between the two cases lies in the state of mind at the time of the promise. Both are hypothetical illustrations made by the author, and not reports of actual cases.

7. The Judicial Approach

The Supreme Court has repeatedly said that economic offences are different from ordinary property crimes. In State of Gujarat v. Mohanlal Jitamalji Porwal, the Court observed that offences affecting the economy of the country as a whole are a class apart and must be viewed seriously, because they are committed with deliberate planning and for personal gain at the cost of the community.¹⁷

The Court has also warned that seriousness alone is not a reason to deny bail. In Sanjay Chandra v. CBI, it held that the purpose of keeping an accused in custody before trial is to secure his presence at trial, and not to punish him in advance.¹⁸

The PMLA shows how the Court treats a law that is strict by design. In Nikesh Tarachand Shah v. Union of India (2018), the twin conditions for bail in Section 45 were struck down as arbitrary under Articles 14 and 21. Parliament then amended the provision. In Vijay Madanlal Choudhary v. Union of India (2022), a three-judge bench upheld the amended Section 45 and many other parts of the Act, observing that money laundering is a distinct and serious problem that justifies special treatment.¹⁹ The decision has been criticised, particularly on arrest powers, so the debate is not closed.

8. Transition and Practical Problems

8.1 The change from the IPC to the BNS

The change from the IPC to the BNS raises a point under Article 20(1). Offences committed before 1 July 2024 continue to be governed by the IPC, since the BNS cannot be applied backwards to the disadvantage of an accused. The savings provision in the BNS keeps earlier proceedings alive under the old law.²⁰

8.2 Delay and misuse

Complex financial cases involve large volumes of documents and many witnesses, and trials can last for years. This weakens deterrence, and it also hurts accused persons who spend long periods in custody before trial. A related problem is the registration of criminal cases in what are essentially civil disputes, and the courts have criticised this on several occasions. Both come from the thin line between business failure and fraud.

9. Suggestions

Four changes seem worth considering. First, special courts and dedicated benches for economic offences should be strengthened, so that trials are decided within a reasonable time. Second, investigators should be trained to distinguish a civil breach from criminal fraud before a case is registered. Third, safeguards such as written grounds of arrest and regular judicial review should be applied consistently across all statutes. Fourth, official data on the filing, trial and disposal of white-collar cases should be published regularly, so that future studies can test the claims made here.

10. Conclusion

White-collar crime sits at the point where criminal law and constitutional law meet. The conduct is illegal, but it is not unconstitutional, because that word belongs to laws and State action. The Constitution gives Parliament and the State Legislatures the authority to make laws against financial offences, and the Directive Principles supply the policy reason. The Fundamental Rights ensure that the fight against financial crime is carried out by a fair procedure.

The BNS does not create a separate category called white-collar crime, but it covers the conduct through cheating, forgery, misappropriation, breach of trust, falsification of accounts, conspiracy, abetment and, importantly, organised crime in Section 111. Its effectiveness depends on proof of dishonest intention in each case, and on fair and quick trials.

In short, the Constitution says how the State may punish, and the BNS says what it may punish. A system that gets both right will protect the economy, public trust and the accused person’s liberty together.

Bibliography

Statutes

• Bharatiya Nyaya Sanhita 2023.
• Companies Act 2013.
• Constitution of India 1950.
• Indian Penal Code 1860 (repealed).
• Prevention of Corruption Act 1988.
• Prevention of Money Laundering Act 2002.

Cases Discussed

• Pankaj Bansal v. Union of India, (2024) 7 SCC 576; 2023 INSC 866; decided on 3 October 2023 (Supreme Court). The Court required written communication of grounds of arrest under the PMLA, reinforcing the constitutional protection of personal liberty.
• Vijay Madanlal Choudhary and Others v. Union of India and Others, 2022 SCC OnLine SC 929; (2023) 12 SCC 1; decided on 27 July 2022 (Supreme Court). The Court upheld the amended bail restrictions and several challenged provisions of the PMLA, recognising the seriousness of money laundering.
• Nikesh Tarachand Shah v. Union of India and Another, (2018) 11 SCC 1; decided on 23 November 2017 (Supreme Court). The Supreme Court invalidated the then-existing twin bail conditions under Section 45 PMLA on constitutional grounds.
• Subramanian Swamy v. Central Bureau of Investigation, (2014) 8 SCC 682; decided on 6 May 2014 (Supreme Court). Discussed regarding the invalidation of Section 6A of the Delhi Special Police Establishment Act on equality grounds.
• Sanjay Chandra v. Central Bureau of Investigation, (2012) 1 SCC 40; decided on 23 November 2011 (Supreme Court). Discussed concerning the purpose of pre-trial detention and the constitutional importance of bail.
• Selvi v. State of Karnataka, (2010) 7 SCC 263; decided on 5 May 2010 (Supreme Court). Discussed concerning protection against compelled self-incrimination and involuntary scientific investigative techniques.
• Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168; decided on 31 March 2000 (Supreme Court). Discussed concerning the distinction between a dishonest promise constituting cheating and a subsequent breach of contract.
• State of Gujarat v. Mohanlal Jitamalji Porwal, (1987) 2 SCC 364 (Supreme Court). Discussed regarding the serious economic and social consequences of financial offences.
• Maneka Gandhi v. Union of India, (1978) 1 SCC 248; decided on 25 January 1978 (Supreme Court). Discussed for the constitutional requirement that procedures interfering with personal liberty must be fair, just and reasonable.

Books and Reports

• Sutherland, E.H., “White-Collar Criminality” (1940) 5(1) American Sociological Review 1.
• Sutherland, E.H., White Collar Crime (Dryden Press, 1949).

Notes:

¹ Bharatiya Nyaya Sanhita 2023 (Act 45 of 2023), brought into force on 1 July 2024, repealing the Indian Penal Code 1860. ↩

² Edwin H Sutherland, White Collar Crime (Dryden Press 1949) 9. The wording follows the commonly quoted form of the definition; check it against the edition you cite before submission. ↩

³ Edwin H Sutherland, “White-Collar Criminality” (1940) 5(1) American Sociological Review 1. ↩

⁴ Constitution of India, art 13(2). ↩

⁵ Constitution of India, arts 245–246 and Seventh Schedule, List III, Entries 1 and 2. ↩

⁶ Constitution of India, art 39(c). ↩

⁷ Subramanian Swamy v. CBI (2014) 8 SCC 682. ↩

⁸ Selvi v. State of Karnataka (2010) 7 SCC 263. ↩

⁹ Maneka Gandhi v. Union of India (1978) 1 SCC 248. ↩

¹⁰ Constitution of India, art 22(1) and (2). ↩

¹¹ Pankaj Bansal v. Union of India (2024) 7 SCC 576. ↩

¹² Hridaya Ranjan Prasad Verma v. State of Bihar (2000) 4 SCC 168. ↩

¹³ Bharatiya Nyaya Sanhita 2023, ss 318 and 319; compare Indian Penal Code 1860, ss 415–420. ↩

¹⁴ Bharatiya Nyaya Sanhita 2023, ss 314 and 316; compare Indian Penal Code 1860, ss 403 and 405–409. ↩

¹⁵ Bharatiya Nyaya Sanhita 2023, s 111 and Explanation. ↩

¹⁶ Hridaya Ranjan Prasad Verma (n 12). ↩

¹⁷ State of Gujarat v. Mohanlal Jitamalji Porwal (1987) 2 SCC 364. ↩

¹⁸ Sanjay Chandra v. CBI (2012) 1 SCC 40. ↩

¹⁹ Nikesh Tarachand Shah v. Union of India (2018) 11 SCC 1; Vijay Madanlal Choudhary v. Union of India 2022 SCC OnLine SC 929. ↩

²⁰ Bharatiya Nyaya Sanhita 2023, s 531 (repeal and savings); Constitution of India, art 20(1). ↩

Author : Shadharsh .S.k  | Co-Author : Vevetha .S.R | [VINAYAKA MISSIONS LAW SCHOOL]