1. CORPORATE FRAUDS & IT’S
IMPLICATIONS IN CRIMINAL LAW
Hormuz Mehta – Of Counsel
J. Sagar Associates
advocates & solicitors
Ahmedabad | Bengaluru | Chennai | Gurgaon | Hyderabad | Mumbai | New Delhi
2. The Concept of Mens Rea
Actus Non Facit Reum, Nisi Mens Sit Rea which
means – ‘The act itself does not constitute guilt
unless done with a guilty intent’.
2 Ingredients :
Actus Rues: Wrongful Act
Mens Rea: Guilty Mind
3. Classification of Offences for Mens Rea
Statute expressly provides for Mens Rea (IPC and
the burden of proof dilemma)
Statutory provision is silent on Mens Rea
Mens Rea is excluded also known as statutes with
strict liability (FERA, Negotiable Instruments Act)
4. Section 138 of the NIA
Section 138: Dishonour of Cheques
Ingredients to file a complaint :
Drawn on your own account
Towards discharge of debt
Presented within 3 months
Return unpaid due to insufficient funds
Demand in writing within 30 days
Failure to make payment within 15 days
5. Jurisdiction to file disputes u/s 138
Bhaskaran rule permitted filing in any of the five
jurisdictions :
1. Drawing
2. Presentation
3. Return
4. Notice
5. Failure
Dashrath Rathod introduced new law in 2014:
Complaint against the drawer of a cheque can be filed before
the court within whose jurisdiction of dishonor takes place.
6. Ordinance in 2015 (Sec 142(2))
Offence of 138 tried by court within whose
jurisdiction:
1. If the Cheque is delivered for collection through an
account, the branch of the bank where the payee
maintains the account is situated
OR
2. If the Cheque is presented for payment by the payee, the
branch of the drawee bank where the drawer maintains
the account is situated.
7. Corporate Crimes in India
Risen by 45% is last 24 months.
Real Estate, infrastructure followed by financial
service industries most affected.
Fraud & Bribery biggest contributors whilst Cyber
crimes increased the quickest.
8. Combatting Fraud, Corruption & Bribery
Whistleblower Protection Act 2011
Prevention of Corruption Act 1988 and
(Amendment pending before parliament)
Prevention of Money Laundering Act 2002
Right to Information Act 2005
Companies Act 2013 :
Sec 166 codifies Directors duties
Fines payable between Rs. 25,000 – 25 Crores
Imprisonment for offences such fraud, attempt to defraud
etc,
9. CYBER CRIME IN INDIA
Common cyber crimes: Hacking, Phishing &
Spoofing
Information Technology Act & Indian Penal Code
Maharashtra has the highest number of cyber
crimes.
10. The Threat of Arrest
“No arrest should be made only because the offence in non-
bailable and cognizable. Neither should arrest be made in a
routine, casual and cavalier manner or on a mere allegation of
commission of an offence made against a person”
– Arneesh Kumar v. State of Bihar
Conditions u/s Section 41(1) CrPC to make
arrest:
Prevent such person from committing any further offence
For proper investigation of the case
To prevent destruction or tampering of evidence
To prevent influencing witnesses
To ensure presence in court
11. Anticipatory Bail (Sec 438 CrPC)
Any person who apprehends arrest for a non-bailable
offence may apply to the Sessions or High Court,
whereby in the event of arrest he shall be released on
bail
Principles of ABA were laid down in Siddaram Mhetre
Vs. State of Maharashtra. Court may grant ABA taking
into account the following factors:
Nature of the offence
Criminal antecedents
Possibility of repeat
Reputation
Possibility of fleeing
Frivolous litigation
12. Countering Frivolous Litigation
S. 397 CrPC – Calling for records to exercise
power of Revision
Either Court may call for papers and proceedings of a
matter in an inferior court to satisfy the correctness, legality
or validity of any finding sentence or order.
S. 482 CrPC – Saving of Inherent Power of the
High Court
Nothing contained in the Code shall deem to limit the High
Court to make such orders as may be necessary to give
effect to any order under this code or to prevent abuse of
any court or otherwise to secure the ends of justice.
