White Collar crimes are committed by individuals having higher position in one organisation, be it private or public one. It tends to cause very high rate of monetary harm to the individuals. It consist crimes like fraud, bribery, forgery,tax evasion, etc. Federal Bureau of Investigation itself defined this as, “Illegal acts characterized by deceit, concealment or violation of trust, which are not dependent upon the application or threat of physical force or violence. Individuals and organizations commit these acts to obtain money, property or services; to avoid the payment or loss of money or services; or to secure personal or business advantage”.
Corporate Fraud is one of the brutal crime in the hierarchy of White Collar crimes. It does not only cause the monetary losses but large amount of people suffers simultaneously including the government of the country. Although general motive of such frauds are making illegitimate money, tax evasion and creating false image of company to attract more investors.
As a firm, Tabish Sarosh & Associates has achieved immense success in this field. Our firm has been handling such cases with remarkable outcomes. We have the specially qualified team of individuals expertise in the arena of corporate fraud. Here, we believe in justice, equity and good conscious. We believe that every individual has a story to tell and we have guts to fight for it.
But before continuing further, do we know what Corporate Fraud actually is?
Section 17 of Indian Contract Act, 1872 defines ‘Fraud’ as it means and includes any of the following 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: the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
1. The active concealment of a fact by one having knowledge or belief of Our fact;
2. A promise made without any intention of performing it;
3. Any other act fitted to deceive;
4. Any such act or omission as the law specially declares to be fraudulent.
A Corporate Fraud is a fraud when one corporate organisation intentionally misrepresent the statistics, date and other relevant information from the public at large and specially from the current and potential investors. Several modusoperandi are being adopted by the corporate entity to commit such fraudulent activities, such as deception of the accounting records, debt hiding, fabricating prospectus, etc.
COMPANIES ACT, 2013
Section 447 of the act states the punishment for fraud.
It says that: Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud:
Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.
Explanation.—For the purposes of this section—
(i) ― “fraud”
in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss;
(ii) ― “wrongful gain” means the gain by unlawful means of property to which the person gaining is not legally entitled;
(iii) ― “wrongful loss” means the loss by unlawful means of property to which the person losing is legally entitled.
As the offence of Corporate fraud has a potential of affecting a country financial, government consider it as a serious offence. It eventually leads government to goes beyond professional liability and includes personal liability to the same.
First successful trial conduct by Indian Judiciary was the trial of Mundhra Scam. In this Hon’ble Justice M.C. Chagla critically observed the necessity of more effective laws to preventing the same in further future. As it is also highlighted in the report of the Vivian Bose Commission, “How the big industries indulge in frauds, falsification of accounts and record tampering for personal gains and tax evasion etc.” During the issue of Dalmia Jain group of companies in 1963.
Although above-mentioned case are not it. Corporate field witnesses various scams disgrading the sanctity of the field. Such as:
- Satyam computer Scam
Also known as Enron of India. It affects the Indian legal system to such the extent that government was forced to draft new and upgraded form of Companies Act. In this the entity present highly deceptive account to its investors and the public at large. It includes malafide auditing practices in connivance with their promoters. This scam involves the fraud of around USD 1 billion.
- DHFL Scam
It is a housing finance company. It used to grant loans to the near and dear of the promoters. Although their credit score was not worthy enough as well as they ceased to provide their adequate addresses. Around 6 lacs dummy accounts were created which used to grant loans, which ultimately utilised in siphon funds to the company of the promoter. These loan further automatically turned into non- recoverable assets.
This ultimately leads to misrepresentation of accounting record of the company to tempt the potential investors. It was a massive case of money laundering. It was the first fraud in the sector of Housing Finance company.
- Punjab National Bank Scam
It is one of the massive as well as recent scam in India. It involves the fraud of around Rs. 15,000 Crores. It was committed by Nirav Modi and Mehul Choksi. Both of them owned the company of Gitanjali Gems which involves in the rough diamonds and exporting polished diamonds.
Nirav Modi was defrauding the Punjab National Bank and other banks by initiating Letter of Credits(LCs) without any underlying transactions with his junior level banking officials. And LCs were not maintained in the RTGS system which was required in all banks. Fraudulent amount further increased to Rs. 16,000 Crores after the inclusion of Mehul Choksi.
- Kingfisher Airlines (KLA) Scam
This corporate organisation was launched by Vijay Mallya. The company assumed to be a success in the beginning. But it resorted to its borrowing funds in every possible way for the over-valuation of brand value. But he was not able to clear his debt even after selling his family liquor and beer business.
It leads to the fraud of around Rs.9000 Crores.
These are one of the most discussed corporate fraud in this date. But there are many many more.
It do not only affect the nation but also affect the individual immensely. Tabish Sarosh & Associates is not merely a firm but a vision of excellence. Along with the highly qualified team, this firm aims more higher, to fight for what’s right and to fight for the dignity of legal field. Whether one is the victim of corporate fraud or being falsely accused for the crime of corporate fraud. We have seen it all, we have handle it all. This firm have the experience, dedicated associates and a confident environment for our clients. One will imminently stopped his/her hunt for a suitable representative in the court of justice. As we know how exhausting and DE humane this chest is. We aim for the satisfaction of our clients and we aim for justice.