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The Indian Penal Code, 1860
Section 5 in The Indian Penal Code, 1860
The Income- Tax Act, 1995
The Drugs (Control) Act, 1950
The Customs Act, 1962

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Law Commission Report
Proposal To Include Certain Social And Economic Of Fences In The ...
LAW COMMISSION OF INDIA TWENTY NINETH REPORT ON PROPOSAL TO INCLUDE CERTAIN SOCIAL AND ECONOMIC OF FENCES IN THE INDIAN PENAL CODE ‘ 1966 CONTENTS 4 PARA. i U Suaincr-Mztrmi 4 e ·_PM¤¤ 1;% No. ` ‘ ' · · Itrnonucronv 1-3 Genesis of the Report' '. '. ‘ ...... I ` 4 Reference to Law Commission ....... 5 Material studied I. . K. i. x . . . l. . { WIHTE-COLLAR Camas -7 _ 6 White-coUar crimes ........ . 3 7 Relevance of white-collar crimes _. , ..... . 5; 8-9 Problem of white-collar crime- · ....... S IO Focussing of attention on white-collar crimes in the West . . ~ 6 II Reasons why such crimes escape punishment] . . ._ . ' 6E` I2 Description of white-collar crime' ` . ` Q . . i . . I3 White-cohar crimes in 1 Sth century ...... 8 14-16 White-collar crimes in England _. A ..... . 1 ` 81 I1 Restrictive trade practices _. . _ .. . - . . . , . 9+ 18-19 Conspiracy . . Y. ». ·. -. . ~· . . . · 9i 20 Sutherland’s study ·. -. r. u . . ; . j ·. ‘ ‘ ‘ roi 2I Main species of white-collar crime `. . ' .... V $*162 22 Adulteration of food, etc 1 J.; A ..... V , ”_ xii; 23 Racketeering (organised crimes) in the U.S.A . . . , 24 White-collar crimes by professional people _ ..._ . . 25 Price control laws in U.S.A .. ..... , ·_ 1;; 26 White-collar crimes in adluent society _. ,. .. . ‘ A _. I in 1235 Eoouoivuc Camas m Sovurr Russu i 27-28 Economic crimes in Soviet Russia ·. 1 1 , _, 29 Important species of economic crimes Z L '. ' . . , L 30 Death penalty in Russia for certainieoonomic crimes . . . i n k E 31 Reasons for imposing deatlnpeuultyrl n ·. U .. ` ` 1 _ .7 V .L ·V 32 M**¥¤=2#¤P=¤#1*i¢S is Es o n E - 7 -,,:4 ·i i cm Pm. Susyscr-Mnraa PA cs No. 33 Some salient points as to the provisions in England, U.S.A. and So- viet Russia .... . .... ’ . I7 34 Position in Commonwealth countries ...... I 8 Man: Pomrs T0 mz CONSIDERED—GENERAL Oasmvarrous 35 Main points to be considered . . . . . . . I8` i 36 Addition of new provisions . . ..... 18 37 General observations as to proposal for transfer . . . . 19 38 Correct approach . . ..... L . IQ 39 Permanent offences and temporary malpractioes _ .... 23 40 Example of Guest Control Order cited ..... 2 I 41-42 Character of special statutes ...... ., 2I 43 Multiplication of onences ....... 22 A 44 Criminal Law and Morality ....... 23 45 Line of division thin ........ 25 46 Function of criminal law and moral law compared . . . 25 41 Analysis of anti-social etc., olfences ...... 25 j I ANALYSIS or smzcuu. ruuctnmrrs - 48 Analysis of special enactment ...... . 26 2 49 Special penal provisions .... - . . . . 26 50 Mens rea modified • . . . . . . . 27 E 5: Analysis of kinds of mem rea ...... . 27 A 52-53 Strict liability ......... 28 A ri 54 Knowledge of illegality whether relevant .... . 2Q 55-56 English cases on mens rea under particular statutes . . . 29 57 Offences under the Customs Act ..... . 30 58-59 Onences un.der the Foreign Exchange Act . . . - . . 3 1 60 Classiiication of offences in question, with reference to mens rea . · 3 1 61 Companies ......... . 31 62-65 Liability of omoars of 00mP¢\¤i¤ i ..... . 32 66 Vicarious liability ....... _ . . 34 67-71 Modification. by statute . . . . . . . . 34 U 12 Vicarious liability-an aspect of strict liability . ». . . . 37 13 Object of the analysis regarding mem rea , U . . . . 3 7 ` 74-75 Special rules of evidence . . . . ' . . . . 38 I Q 76 Importance of delegated legislation in relation to statutory ofcnces . 39 ( vi Pam Susyacr-narru PM! No. 77 Penalties by rules ...... ‘ . . . 42 78 Special powers . . . ....... 4·2 79 Special provisions as to sanction ....... 43 ; 80 Provisions for publicity . . . , .... 43 , 81 Special character of the enactments .... . . . 44 . S2 Possibility of new offences in tiiture ...... 83-84 Likelihood of new devices corniuginto existence .... 44 7 85-89 Genesis of special enactments ...... 4S` 90 Alterations in the Indian Penal Code by special enactments . . 47. _ QI "Special" enactments and problems dealt with by them . . . ‘ CATEGORY 1.-Ommcas Piummzrmo Eoouoivuc Davnorumr _ _ 92 Oifences preventing economic development (Category 1) . . . 47 93 Other economic crimes mentioned by Santhamm Committee . . 48 94-95 Whether adoption of economic crimes from Eastern Europe feasible 49 96-97 Points suggested in comments ....... A 49 CATEGORY 2.-Evnsrou mn Avommcs or Thxi 98 Evasion, etc. of tax (Category 2) . . .... . 50 99-100 "Evasion" and "avoidi1ce"’i ....... 5f 101-106 Attitude towards tax avoidance in ..... 52 107-109 interpretation of taxing Acts ....... 110 Avoidance not always haudulent ...... $6 111 Views of Courts in India as to 7 ..... 56 IvI2 Methods of checking evasion ....... $7 } 1 113 Existing provisions andysed ....... 114 Transfer of existing provisions not feasible ..... II 5-117 Placing provisions as to evasion in the Penal Code . . . 58 118 Qudfgcén of enactment of genual provision as to ta? evasion consi- · 119 Addition of new provision ....... ’ 6; 12o Points suggested in comments ....... Q; 121* Avoidance how to beteckled _ . ,, ..... t jg ( vi) Pam. Sumner-ivmrrmz Pace No. CATEGORY 3.-LMISUSE or Pmzuc Posmou or Punuc Smzvnrrs g 122 Misuse of their position by public servant (Category 3) , . 61 123 Existing provisions analysed . . . .... 61 I24i Misuse without benefit . . . . L . . . 62. 125 Points raised in comments .... 4 . . . 62. CATEGORY 4.—Dm.1v1mY or Goons nor nz Aoooxnnxcs ' wtm OONTRACI 126 Delivery, etc., of goods not in accordance with contract (Category 4) . 127 Existing provisions analysed . . . _ .... 128-129 "C.heating" and delivery of goods, eu:. ..... 63, 130-131 Meaning of "deception" ........ 64 I32 Point of implied representation academic ..... 65 · 133 ‘ Attempt to cheat . . . A . Q .... 65 I 134 Complicity of oiiioers and offenders · ...... 65 E 135 Position in English Law . . . ‘ ..... 65 136 Kinds of malpructices .... I .... 66· 137 Proposed section ......... 67 138 Points suggested in comments . . . A _ . _ . . . ~ 67 139 Proposed section not to be enacted without likely reper- cussions ...... I · .... 67 CATEGORY 5.—HOARDING» mn Pnoivrrmmmca 140 Hoarding and proiiteering (Category 5)i ..... 6T 141 Existing provisions analysed ....... 67 142-143 History of legislation relating to control of essential commodities . 68‘ 144 Points suggested in comments .... ‘ . . , 69 145 West Bengal Act .... i . A .... 69 146 Addition of new provisions ' . A . . . . . . 69· CATEGORY 6.—mADUL'l'ERA1'ION 147 Adulterstion .......... 70- 148 Existing provisions ....... - . . » 70 149-150 Transfer not feasible .... .... 70 151 Addition ofnewprovisions .= 4 ._ 6 . Jig-· ‘ .... 71‘ 7 (vii) _ PARA Sunyscr-mrmn P-AGB N0. V 152 Adulteration and public opinion. ..... ‘ . . 7 I 153-155 Failure of prosecutions ......... 72 CATEGORY 7.—Trm1=·i· mm MQISAPPROPRIATION or PUBLIC PROPERTY mn 1·U1~ms 156 Theft and misappropriation of public property and funds (Category 7) 72 157 Transfer not feasible ......... 73 158 Addition of new provisions ....... 73 ISQ-160 Provision proposed for theft of public property .... 73 161 Points suggested in comments ....... 73 CATEGORY S.-T1um=1c1tmc na Licences 162-163 Traiicking in licences, pamits, etc. . . . A . . _. 73 164 Meaning of "traiHcking" and points suggested in comments . . 74 165-168 Tranicking to be dealt with by special enactments . n . . 75 Conctusion ` ? 169-171 Problem of crime a complex one . .... . . 76 172 Appendices . . ._ . . . . . . . 76 APPENDICES , , ; , { APPENDIX 1.—Existingsta¤1ory provisionsregarding otfences calculated · - f ‘ T to prevent or obstruct the economic development of the · country and endmger its economic health . . . 78 . A1·1>m~m1x 2.-Existing statmory provisions regarding evasion or avoidance . V of Tax or dutyandthe consequent penaltythereof . 86, ‘ i APPENDIX 3.—Existing statutory `provbions penalising misuse of_posi- tion by public servants than that of Theft, Bnbcxg ° ` A Misappropristion and ilreach of Trust), occurring various statutes · . - ..... T. -:110 · Amumnxx 4.—Existing statitory provisiom reprding offences in the A l nature of bmachcs of qununcts resulting in delivery of goods not according tospecilications .... 101 APPENDIX 5.—Existing statutory provisions as to Hoarding and Black- -_ Marketing . . " .... _ . . id Arpmnrx 6.-Pi-ovisions relating to adulteratiou of food and drugs and the penalties provided therefor .... 114 Avrmvmx 7.—Exist‘ statutory provisions as to Then andMisappro- priatiof of public and funds . . . JIU; . ofiii) Pac! 1=•t>11ND1x 8.—Existing statutory provisions relating to traiiicking in \ licences, permits, etc ....... 136 .APPEND1X 9.—Provisions of the Defence of India Rules, 1962—relevant or analogous to the offences in question . . . 137 ry .APPBNDIX 1o.—List of Central Acts pertaining to anti-social offences, other than the offences listed by the Santhanam Com- · mittee ........ 138 — .A1>1>sumx 11.—Provisions of the Lncome-Tax Act, 1961 (43 of 1961) referred to in the Report of the Committee on Prevention ' of Corruption, page 271 (middle), as oiering scope for evasion ......... 139 APPENDIX 12.——Surnmary of certain points as to IBX evasion etc., dis- cussed in the Report of Income-tax Investigation Com- mission, 1949 presided over by Shri Vardachariar . 141 APPENDIX 13.—Points as to Evasion Avoidance discussed in the _ Report of the Taxation uiry Commission (1953-55) I42 " l JKPPENDIX 14.-Summary of the points made in " India¤Tax Reform " _ by Mr. Kaldor, Department of Economic Affairs, . Ministry of Finance, Government of India (1956) . 145 APPENDIX 15.-Tax Evasion-prosecution in India t'or—(Ex¤-acts 'from · _ Report of the Direct Taxes etc. Committee) , 145 APPENDIX 16.-Extracts from the Criminal Code of Hungarian People’s Republic, 1962 ........ 147 ' VAPPBNDIX 17.—Extr¤cts of certain sections of thevfepal Code of Norway [" Norwegian Peml Code " (rgrg published in the Q American Series of Foreign Penal odes . . . 161 · Avrsuotx 18.-—Extrscts of certain sections of the Argentina Penal Code, ‘ taken from the translation blished in the American Series of Foreign Penal Gxigu (1969) .... 162 ,APPENDIX I9.—·ED$uSh Law relating to spreading false rumours to affect · prices, etc. · . . — ...... 162. Arrtmntx 2o.—Position in English Law regarding certain offences (Bri- bery and Corruption, Conspiracy, Cheating, Embezzle- ment, etc.). ........ 163 T APPENDIX 2r.-Economic crimes in certain Eastern-European coun- tries ........ Q 169 .APPENDH 22.-Tax Evsiqn provision in U.S.A. (Section 1201,- Revenue Code) . ....... 175 A1=1>11ND¤1 23.——7Ah.C Penal Code am? the Prevention of Corruption, etc. 8 ‘ ct ..,....... 1 2 A APPENDIX 24a-—S|.l goods and diqtiig .... 187 A1>1>1:m:>¤t 25.—Some provisions of Hindu Law regarding high prices and sdimeraticn j. _. _ .· . . . . 188 y.A1>1·1m¤1x _26.—§_dulteratio¤ Laws of .... 189 ., 4 — iA1·1>m~m1x 27.-BKSEC principles for pure food laws .... 194 T .AI’PEND1X 28.—Pr0visions in Tasmania (Australia) regarding anti- social, etc., oifences ....... 196 ,APPENDlX 29.-·Canadian Laws as to, ami-social etc; otfenees . . 201 sA1>1·1zND1x 30.-English law relating no compiracy .... 208 ,A.PPBNDIX` 31.—Proposed amendments to the Indian Penal Code . 211 .,»A1>1>1:ND1x 32.—Proposed amendments to the Code of Criminal Pro- cedure, :898 ........ 212 INTRODUCTORY 1. The circumstances in which the preparation of this g°¤°$” °f Report was undertaken may be brieily stated. The Gov- °R°’°'° ernment of India appointed in 1962 a Committee to review the problem of corruption and to make suggestionsl on various matters connected therewith. One of the terms of reference of the Committee was, "'I`o suégest changes in the law which would ensure speedy tria of cases of bribery, corruption and criminal misconduct and make the law otherwise more effective?.". Dealing with this, the Committees made the following observations :— "7.2. The substantive law relating to bribery, cor- ruption and criminal misconduct is contained in the Indian Penal Code and the Prevention, of Corru tion Act, 1947, the procedural law in the Criminal Pgoce- dure Code, Criminal Law Amendment Act, 1953 and some special rules of evidence relating to such cases in the Prevention of Corragion Act. The working of the relevant provisions of se, enactments in prosecu- tions in courts and also at the stage of investigation have disclosed that certain changes in the law are re- quired in order to ensure speedy trials and more effective results. We have examined the existing provisions in the light of experience gained in numerous cases, and so in the context of social changes and economic objectives which have created new problems. "7.3. Amendments to the Pndian Penal Code The Indian Penal C0d€: was enacted in 1860, and though it has been amended here and there, its main structure hascontinued intact during the last 100 years andymomr Itcis an admirable com- 0 pilation of substantive criminal law, and of _ its provisions are as today as they were ‘ when they were brmulhtcd; But the social and economic stru¢tu1·• of Iztdiaéhu changed in such a _ large extent, especially during the last 17 years of freedom, that in many respects the Code does not truly reflect the deeds of the present day. It is dominated by theinotion that almost all `major , ’Scc the Report of the C0¤3¤1i¤l¢¢ 011 the P!¢Y¢11ti0¤. of CB¤¤Pti0¤» (1 , age 1, para. 1-1. ‘ Committee is hereafter referred to as the sigma anim)., mm ·see the Report of the Smdmmm pane 2. vm, 1-A and P¤8¢53»P¤Q¤‘P‘1• é *Repm_-[ at me Simthmalu C6¤ifi¥l¥9=»·¤*g§3;P!£¤&~7‘§ dir; , 2 crimes consist of offences 'against person, pro- perty or State. However, the Penal Code does not deal in any satisfactory manner with acts which may be described as social oifences having regard to the special circumstances under which they are committed, and which have now become a domi- nant feature of certain powerful sections of modern society.". -2. The Reportl of the Santhanam Committee broadly categorised the offences as followsz- "(1) Offences calculated to prevent or obstruct the economic development of the country and en danger its economic health; (2) Evasion and avoidance of taxes lawfully im- posed; (3) Misuse of their position by public servants in making of contracts and disposal of public property, _ issue of licences and permits and similar other matters; (4) Delivery by individuals and industrial and commercial undertaking of goods not in accordance with agreed specifications in-fulfilment of contracts entered into with public authorities; ' (5) Proiiteering, black-marketing and hoarding, (6) Adulteration of foodstuffs and drugs; (7) Theft and misappropriation of public property and funds; and - (8) Trafficking in licences, permits, etc." 3. The Committee then went on to observe”:-- , - "Some of these odenoes have been made punish- r able' by special enactments. 1We are of the opinion r thatit is desnable to add $.1\0V¤' chapter to the Indian _ Penal Code bringing together =a11 the offences in such__ special enactments and! s¤PP}¤me‘nting them with new ’ provisions so that allmocitl dfences will find a promi- nent place in» the general tcriminal law "of the country. It is a matter for theeflovesrnnent to consider whether _ thiswork sh0uld·be undertaken by a special legal - _ committee or referred to the Law Commission.". Reference to 4. The Goverru·nent° decided, that the matter should be- . OEM- considered by the Law Commission, and-‘ referred the- , ‘ ‘R¢i5¤rf ¤f`¤¤= S T Z 'T ss. 5d»IPlfd£;f$‘§3f’Y*f' ‘¤ ( ‘R*=P°F°.°€ *1** A- ‘e ··-.. P*$*.$4·~H"*~*-7‘.A· ».--<:sri= •mhi¤¤i·y¤rvn¤i¤- fsf, ‘ “ " ‘ g . 3 above proposal of the Santhanam Committee to this Com- mission’, as the revision of the Indian Penal Code was under the Commission’s consideration. That is the genesis - of this Report. In view of the importance of the matter, we decided to deal with it separately from the general • revision of the Indian Penal Code. 5. In order to facilitate our consideration of the sub- Material ject, we have studied the various special enactments rela- ¤t“d'°d· * ting to the offences in question2, the penal laws of several other countriesg, and the literature available on the sub- · ject, including the Reports of several Committeesi A . study of the judicial decisions relating to these offences was also made, in order to find out .whether the existing I provisions relating to these offences are not adequate? ° The proposals of the Santhanam Committee were cir- t culated by us for comments to State Governments and High Courts, and several other persons and bodies. We have considered each one of these comments in detail. The — important points made in some of the comments will be = dealt with in the Report under the relevant categories? Wm·r1=;-Cou.An CRIMES 6. From the discussion in another part of the Santha- gggcolm · nam Committee’s Report', it would appear, that the Com- mittee attached great importance to the emergence of offences and mal-practices known as "white-collar" crime. We quote the relevant portion:-- ‘2.l3. The advance 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 monopo- · lies, the rise of a managerial classand intricate institu- tional mechanisms. Strict adherence to a high stand- ard of ethical behaviour is necessary for the even and honest functioning of the new social, political and economic processes. The inability of all sections of { society to appreciate in full this need results in the emergence and growth of white-collar and economic l,, crimes, renders enforcement of the laws, themselves »-·' " not suiiiciently deterrent,. more difficult. This type of *Para. 3, supra. ’See Appendices 1 to 8. ‘ *Particu1arly, England, Australia, Canada, New Zealand, United States of America, Soviet Russia, Hungary, Norway, France and Argentina. 4See Appendices I2, 13, I4 and 15. y ‘A part of the material studied by us will be found in some of the Ap- pendices to this Report. wr °S<=¢ paragraphs s8, 76, 96, 97, 129, 12s, 1s6, 1a8, 144, 164, md 168, 4 G. . *Repon of thd Santhanam gms 2-13 2-14. V , . 4 ; crime is more dangerous, not only because the finan• c cial stakes are higher but also because they cause irrei parable damage to public morals. Tax-evasion and avoidance, share-pushing, mal-practices in the sharé market and administration of companies, monopolis· tic control, usury, under-invoicing or over-invoicing, hoarding, profiteering, sub-standard performance of contracts of construction and supply, evasion of A economic laws, bribery and corruption, election offences and mal-practices are some examples of white-collar crime,'. · "2.l4. Corruption can exist only if there is some one willing to corrupt and capable of corrupting. We regret to say that both this willingness and capacit to corrupt is found in a large measure in the industrial and commercial classes. The ranks of these classes _ have been swelled by the speculators and adventur- ers of the war period. To these, corruption is not only an easy method to secure large unearned profits, but. also the necessary means to enable them to be in at Q position to pursue their- vocations or retain their post- § - tion among their own competitors. It is these persors who indulge in evasion and avoidance of taxes, accu- mulate large amounts of unaccounted money by vari- ous methods such as obtaining licenses in the names of bogus iirms and individuals, trafficking in licensee, suppressing profits by manipulation of accounts to avoid taxes and other legitimate claims on profits, accepting money for transactions put through without accounting for it in bills and accounts gon-money) and undenvaluation of transactions in immovable pro-A perty. It is they who have control over large funds and are in a position to spend considerable sums of money in entertaimnent. `It is they who maintain an army of liaison and contact men, some of whom live, spend and entertain ostentatiously. We are unable to believe that so much money is being spent only for the purpose of getting thin s done quickly. It is said that, as a large majority ofdhe high officials are incor- ruptible and are likely to react strongly against any, direct attempt to subvert their integrity, the liaisorrni and contact men make-a careful study of the charac-i ter, tastes and weakneses of officials with whom they" may have to deal and that these weaknesses are, thai, exploited. Contractors and suppliers who have par#· fected the art of getting business by under-cutting, of ‘ making good the loss by passing oil sub-standajd ` works and goods generally spare no pain or expen S+ ture in creating a favourable atmosphere. Possession, . of large amounts of unaccounted money by various persons including those belonging to the industrial and commercial classes is a major impediment in tg; puriiication of public lie. If anti-corruption activit i are to be successful, it must be recognised that it is as 5 important to iight these unscrupulous agencies of cor- ruption as to eliminate corruption in the public ser- vices. In fact they go together.". 7. The above extractl from the Santhanam Com- Relevance or mittee’s Report seems to indicate, that many of the oifen- Wl?it°‘°°u” ces which that Committee had in mind were crimes usual- °m"°s‘ ly known as white-collar crimes, We, therefore, proceed to discuss the problem of white-collar crime in detail. 8. In recent times the problem of white-collar crime *’Qb*°m,°* l has received considerable attention. "White-collar giggcchr crime" has been defined approximately as a crime com- ` mitted by a person of respectability and high social status in the course of his occupation? The emphasis is on the connection with occupation. The commission of a crime of this category is facilitated by the oilice_ calling, profession or vocation of the individual concerned. White-collar crimes, thus, exclude crimes like murder, adultery and intoxication, even if committed by people of the upper class, since these have nothing to do with their occupation. 9. The object of those who had drawn attention to the ’ prevalence of white-collar crime was to educate the public about the harm caused to the society by such crime, and to point out that these crimes should bear the same moral stigma as acts regarded as crimes according to the ortho- dox notions. It was pointed outs, that one of the reasons for the differential implementation of the law in the area of white-collar crimes was the "relatively unorganized resentment of the pub1ic" towards such crime, The reasons for the absence of such resentment were stated to be as " follows‘:— (a) The violations of law in such cases are com-— plex, and can be appreciated only by experts; (b) The public agencies of communication (like _ the press) do not express the o anised moral senti- ments of the community, partlyrlsecause the crimes are complicated and cannot be easily presented asn news, but probably in a greater degree because these agencies of communication are themselves controlled by businessmen involved in the violations of many of ` these laws. C (c) The laws for the regulation of business belong to a relatively new and specialised part of the statutes. A Tara. 6, supra. p _ *Sutherland, White-Collar Crime, (1949),, page 9. Sec also Sutherland and Cressey, Principles of Criminology ($69), page 40. 'Sutherland, White-Collar Crime, (1249), _ 4Sec Sutherland, White-Collar drime $0-$1. 6 of 10. Attention was focussed on the problem of white- iattcntibn on collar crime in England and the U.S.A. after the First` white-couar World War, when it was realised that losses resulting from -crim¤S i¤*h¤ business frauds far exceeded those from the 0 ences “’“*· a ainst propert that were unishable under the orthodox g . . Y P . notions of crime. It was the financier, not the gangster, who was the greater public enemyl. As defined_by Suther- land, white-collar crime is a "viplation of the criminal law by a person of the upper socio-economic class in the course of his occupational activities". Later, he seems to have added a refinement to the defi- nition, by defining a white-collar criminal as "a person of the upper socio-economic class who violates the criminal law in the course of his occupational or professional A activities2." f . . ` He pointed3-4 out, that white-collar crime was more dangerous to society than crimes committed by the members ( of the lower class, first, because the financial losses were higher, and secondly, because of the damage inflicted on . the public morals. { The necessity of revising the social attitude towards such ’ anti-social behaviour and perceiving its dangers was ‘ pointed out by various other writers also'·-°. Reasons yvhy 11. Sutherland also elaborated the reasons why such s¤¤h ¤¤m¤S crimes went unpunished. "The difference in the implemen- Qsftfsm p““' tation of the criminal law is due principally to the difference ‘ ' in the social position of the two types of offenders". ‘ Because of their social status, implementation of the crimi- nal law in relation to whitecollar criminals becomes difH~ cult. They are more powerful than the traditional criminals ‘ "Consumers, investors and stockholders are unorganised, lacktechnical knowledge and cannot protect themselves"'-’ 1ThlHTH2H Arnold, Folklore of Capitalism, page 276. A 'See DictiomryofSodology edited by Fairchild (Vision Press, London) (1958), under " criminal White·collar", contributed by Edwin H. Suther- land. °See Annals of the American Academy of Political and Social Sciences (September, 1941), Vol. 217, page 112. 4See. also Sutherland, "White-collar Criminality", (1940), American Sociological Review, pages I, 4. , °See Annals of the American Academy of Political and Social Sciences, (September, 1941), Vol. 217, "Crime in the United States ". 4 °See also paras. I2, 19, 24, infra. 'See Sutherland, "White-collar Criminality", American Sociologid Review, (1940), page 1, page 8. U ’Embezzlement is an iexceptien tlds. V White-collar crime, it is stated, goes undetected because · it "transcends the visibility of ordinary cheating practices i of small mercha-nts*". It can, however, be gathered from A reports of investigating committees or from conversation with intimate friendsz. ‘ _ _ 12. That white-collar crime is essentially connected with 3.°;‘{)'i‘:;‘°” social status has been brought out in the following descrip- Colm mmm tion given by a writer on Crimin01ogy":—- — "White-collar crime is most distinctively defined in · terms of attitudes toward those who commit it. White- collar crime is deiinitely made punishable by law. It is convictable behaviour. However, it is generally re- garded by courts and by sections of the general public as much less reprehensible than crimes usually punished — by our courts, which may be designated "blue-collar crime". Blue-collar crime is the crime of the under-privileged; whiteqzollgr crime is upper sr rmddle-class crime- Just what propsruon or section of the population must condone this type or behaviour to constitute it as white-collar is net. and perhaps cannot be. clear. Many courts and other authorities clearly distinguish between a man who illegally misrepresents the qualities of his products and a burglar or robber. Yet the very existence of the law Pemlizing the former time of act indicates an adverse Qttitude toward it, though ordinarily not of the same d€gIee. The fact that white-collar crime is punished in Q less degrading ways than ‘*ordinary crime" does not - imply that the former is petty. Actually society loses huge sums through white-collar crime. Some of the rackets we described in an earlier chapter are white— collar crimes; some are not. As—`Sutherland defines the term, most racketeering by oiiicers of 3 labour union e * would not be white-collar crime; nor, apparently would the vice racket be so defined. Thus neither in terms of class status, business activity, attitudes, nor degree of " . seriousness can white>collar crime be wholly separated ° ' from other crime. Nevertheless, it is the somewhat dis- t · tinctive attitudes and policies toward the ojfender in . such cases which have been given significance in discus- , sions of white-collar crime.' It ep _‘ ars that even outs side of business circles, white-coil; crime is less re» g prehensible than ordinary' crime§ because low-class ' __ people often aspire to be white-collar criminals. Or if _ o not, they at least accent the same individualism and the V same value of materialism which the middle and upper classes accept. White·eollar crime is attractive because _ · it brings material rewards with little or no loss of d status.’ . — *Rccklcss, The Crime Problqn, (1955), page 206. tc. Sutherland, *‘ Crime inB i` ** Annals · of Political and Social Scicnqe (r*r§‘ . g` jg Agdqgy .· rmt mi Emma, ciimixicgy me-rbi. Q . < 47 Law—2.§ ; ’ *‘ ·* l t 2 o i . i Wh**°·9°Ua¤ 13. Problems similar to white-collar crimes had arisen as 1 'j‘Q3,‘°§€fmy_ far back as the 18th century. The "South Sea Bubble" led z to the Bubble Act of 1720*, which may be cited as example of an effort by the Legislature to deal with "‘aud on a big g scale perpetrated by unscruplous persons“-*. But the varie- 1* ties of such crimes and their diverse manifest/‘·ons were seen more acutely after the First World War. _ . m;;`$Qllar 14. Certain species of white·co11ar crime have received ‘ England. special attention ·in England. One example is, "share-push— § ing" (victimisation of the public by fraudulent dealings in ? stocks and shares)‘. Legislation penalising this mal-practice was enacted in 19395-°·'-8. ( There are similar provisions in the Company Law in 1 India? ` 15. Another example of legislation relating to white- 4 ` collar crime in England was the Prices of Goods Act, 1939, under section 1 of which it was unlawful to sell any goods the price of which was regulated, at a price exceeding the . authorised pricew. , 16. Taxation frauds have been regarded as an imporl- tant kind of white-collar crimes, and Legislatures in all countries have been constrained to go on adding more and more stringent provisions in the law relating to taxation, as so to bring within their net transactions which, under , the preexisting law,twere’ not taxable. The problem as- sumed importance in England in the forties. For the *2 present purpose, it is not necessary to discuss in detail the 3 difference between "tax-evasion" and "tax-avoidance'"'. The former is a breach of the law, while the latter raises only ethical questions; r · ‘The Bubble Act, 172D (6 Geo. 1, c. 18). ` _ ` 2See Gower, Modern Company Law (1957), (1963 Impression), page 27 to 30. . .. _ · ` **See also Gower in (1952) 68 L.Q.R. 214. *See Report of the Deparunental;Committee on Share-p h'ng, -- pointed by the President of the Beard of Trade, (1937), Cmd. ap g ¤Prevention of Fraud gnvestments) Act, 1939 (2 and 3 Geo. 6 c. 16) V later replaced by the Act o 1958 (6 8: 7 Eli:. 2 c. 45). 8 E? Fowler, Avlodgrn gompuny Law, (1957), (I§63 Impression) pages 25-2,orte etc 199. _ ’For a summary of caseson the Act, see Note in (1961) 24 Modern Law Review 781-784 by B.W.M. Downey. at ¤See also analysis in R. vv. Russell, (IQS3) 1 W.L.R. 77, 79, SI (C.C.A.). ' °See section 68_df the Companies Act, 1956, (1 of 1956), punishing false, deceptive or misleadng statements, etc., made by any person knowingly or recklessly to induce any other person to buy, etc., shares. ¤°The Act was replaced by the Goods and Services (Price Control) Act, 1941 (4 & 5 Geo. 6, c. 31} which, imhs turn, was repenledby the S.L.R. 4 Acts, IQSORD/211953.; l e 5 g V · ,,, ·‘See para. 99 et Seq, idfrai i { E 17. Other types of activities on which attention has been §;g;fi?d'° focussed in England inrecent times are restrictive trade mi . 1 · 1 4 h» b- · t M , practices , though the legis ation on t .1S su ]ec is no so widely framed as "ant1-trust legislation ’ m the United States of America. 18. Apart from these statutory provisionsa there is the conspiracy. common law offence of "conspiracy", in D England, the ‘ scope and application of which may be wide enough to V cover many fraudulent transactions not covered by speci- fic criminal statutest. We may quote the observations of Fitzgerald J. in one ` of the leading cases on conspiracy‘:—- . "A conspiracy consists in the agreement of two or more to do an unlawful act, or to do alawful act by . unlawful means. By the terms "1llegal" and "}unlav(s;ful’, it is not intended to confine t e e nition to an act that would be ' in itself be a crime. or an offence. They ex- _ tend to and may embrace many cases in which the pufpose ofda cpigpiracy, ifaleffected by one person on y, wou no e a crimin act· as for instance, if - several persons combined to violate a private right, the violation of which, if _done by one, would be wrongfulbut not in itself criminal. If, for instance a tenant withholds his rent, that is a violation of the right of his landlord to receive it, but would not be a criminal act 1n_the tenantathough it would be the violation of a right. But, 1f two or more incite him to do that act, their agreementso to incite him is by the law of the land an offence}'. _He furthen observed, "Consp1racy has been aptly des- cribed as divisible under three headsh- "where the end to be attained is in itself a crime; where the object 1S to do injury to a third party or to a class, though if that injury were effected by a single for a summary, see Sir David‘Cairns "M l' d R ' ' 5m::..;;.?.2;**=;2gs*i·#:2°2-..:-·z.:~i,%Pf?£EZEiT%*?adig ~ _ _ s _ p . ICS, CI C ' 1ée;1r;:;;y§)nPr:Iet1ples"ia (196é;) ?99), mid Report of thg Royal e ress 19 , . 1811 . · » I "l`he Monopolies and Rcstrictive Practices (Inquiry and Control) Act, L V r 948 , the Monopolies, etc., Commxsuon Act, 1953 (now repealed) ; the Rlegtintiva Trade _Pract§elsA Act, ,1951; ; the RE:-sale Prices Act, 1964 (c. 58) ; _ 3 C OIIOPO ICS BD. €I`g€fS , 1965 C. 50). °P8!`3S. I4 IO I7, Supfd. 4See Appendix 30, for a detailed discussion. ¤R. v. Pa ll nd me , ( 88 Co C.C. , F` , (Irish Queerfs gfnch1Divisio,ri). ISe;)Tr;t¤.er Armitag;8Caseslt<;1r{‘;€I$liiini1¥al ? Law, (1964), pm rvs-. , °This ysi was f' d ' b ·r ` Gro '.T¤•ud It v. Veitch, $94;) r Alclcgcnvglz-id¥ Qr7r » t t S 3} » ; io ‘ individual it would be a civil wrong but not a crimi·~ nal; and where the object is lawful, but the means to be resorted to are unlawful ........ The law of cons- piracy is not an invention of modern times.' It is part of our common law; it has existed from time imme- morial. It is necessary to redress certain classes of injuries which at times would be intolerable, and which but for it would go unpunished.", - 19. In the United States of America, the expression "white-collar crime" was made current by Sutherlandi. Certain other authorities had also pointed out the damage to society from the upper socio-economic groups which ex- ploited the accepted economic system to the detriment of the masses?-3. Sutherland’s 20. In his book "White·¢0llar crime"' Sutherland exa- swdy· mined the criminal activities of 79 of the biggest corpo- rations in America, and focussed attention on the follow-- _ ing types of law-breaking by them:-— ‘ ¥ (1) Restraint of trade. 1 (2) Misrepresentatinn in advertising. (3) Infringement 0f Patents, trade marks and copyrights. (4) Unfair labour practices. * (5) F Iauds ill (business- . Thereafter, several other studies and reports have eeme out in the U.S.A. on the x Main species 21. The main crimes that have attracted attention in ( <>fWh¤°1 the U.S.A. under the head uf white-collar crimes may be °°u“' °"“‘°· summarised_as follows:-— _ ’ (a) frauds in business, in relation to sale of bonds ~ and investments°; ’ i (b) adulteration of food and drugs, and mislead- ing advertisements'-B; p ‘Sutherla11d, " White·c0ll1r Crimi1m1ity", American Sociological Review (February, 1940), pages I•··•IQ._' ‘ ’See Barnes & Teeters, New Horiions (1959), page 41. ”See also para. 10, supra. _ 4Edwin H. Sutherland, Whiwcclhr Crime (1949) (Dryden Press, » I New York). V ‘ °E. g. Hartung, " Whitewollar Crime ; and its significance in theory and practice " (1953) I7 Federal Probation 31. ‘ °Cf. Barnes & Teetcrs, New Horizon; in Criminology (1959), page 45. A ;KalKen & Schlink, " 10::;::00,000 Gubea Pigs " (New York, Vanguard, 1932 . · V L ‘936;Ruah Lamp. The Hmwv (New X¤n\=»‘F•¤·¤r. r,_ ` ll 9- ? (c) mal-practices in the medical profession, such E as "il1ega1 sale of alcohol and narcotics, abortion, illegal services to underworld criminals, fraudulent reports and testimony in accident cases, extreme cases of unneces- sary treatment, fake specialists, restriction of compe- tition and fee-splittingw; _ (d) crimes by lawyers, such as guiding the crimi- nal or quasi-criminal activities of corporations, twist- ing of testimony to give a false picture, fake claims ` (bogus liability in accidents), etc."-”; _ (e) trusts, cartels, combines and syndicates, etc., formed to combat competition, or to raise prices or other wise to interfere with the freedom of trade to the detri- ’ - mentor honest businessmen or the consuming public. This has now become a branch of the law by itself and is usually dealt with under the topic of "Anti- trust legis1ation"; (j) bribery and graft by public otlicerst 22. Adulteration of food and drugs has received exten- Adultemion sive consideration in the United States of , America°, <>f f°¢¥» °*°· along with the question df drug addiction and sale of narco- · » tics, such as opium, and several Acts have been enacted on the subject? The latest of the Acts, the Federal Narcotics Control Act, 1956, besides penalising the addicts', also punishes those who handle narcotics ‘for profit and exploi- » tation. For sale of heroin" by a pérson over 18 to a person under 18, death sentence can be awarded under the Act oi 1956. 23. Another topic which has received special attention R¤¤k¢Q¢=ri¤s in the U.S.A. is "organized crimes’Q Le. crimes wherein the (°Fg‘“*’9d traditional criminals join hands with big business for secur- g1;n5g:_ ing ends harmful to the community. Literature on this su ject is abundant’. This is popularly known as "racketeer- ‘Sutherland, "White-collar Criminality", American Sociological Review (February, 1940), Vol. 5, page 1, at page 2. 8 *Barnes & Teeters, New Horizons in Criminology (1959), pages 47 and 4 . "Kefauve‘r, Crime in America (1952), page 57. 4See " Crime in America " by Esttes Kefauver, Chairman of the Senate Crime Investigating Committee (May, 1950 to May, 1951). (Gollancz) (I952)» pages 15. 25» and 55- °See " Federal Food, Drug and Cosmetic Act, (1954) 67 Harward Law Review 633. ‘ °See the Harrison Anti-Narcotics Act, 1915 (regarding opium); the { Marihauna Tax Act, 1937 ; and the Federal Narcotics Control Act, 1956. ’For a summary, see Barnes & Teetcrs, New Horizons in Criminology, (I959), page 85- °Heroin, it is stated, is 5 times stronger than morphine, and may lead to » f criminal behaviour. See Mabel Elliott, Crime in Modern Society, (Harper) ” (1952). page I73· , 6 , Am H _ "F ananthol see ler " ` " in ecs,I3'lh-{ shed ii; the$U¤1iv(g¤yiW <>f1mi¢ gmc t ·( 12 ing" (organised conspiracy for exploitation)l. Such activi- ties, it is stated, may be indulged in by businessmen, leaders of organised labour, politicians, criminals or even lawyers, j but the purpose is exploitation of commerce and the public through circumscribing the right to work and do business. These do not, strictly speaking, fall within "white-collar 1 crime", because the "under-w0rld" takes an active part? , They might, however, encourage or give rise .to white-collar , . crimes (for example, corruption in the police). white-eeuer 24. As regards white-collar crimes by lawyers and other °”‘}‘°S bv 1 professional people, the following observations of Senator £;?,3;1°"a Kefauvera are relevant:- . "In Chicago, too, we gathered evidence of a disturb- ing phenomenon that we found repeated in other large . cities of the country. I refer to the active participa- tion——amounting almost to subsidization-in gang aHairs “ by a certain element of lawyers, accountants, and * tax consultants. As Judge Samuel Leibowitz, of Brook- lyn, an outstanding jurist, remarked in his testimony · - at our final hearings many months later, "There are cri- _ minal lawyers and lawyer- criminals". Judge Leibo- ‘ witz said it was one thing for a criminal lawyer to defend his client honestly and squarely and to see that _ he got his day in court according to our laws and our Constitution, but it was- "another thing to be in the hire of some gang to advise the gang how to operate, . ~ and to be at the beck and call of the gangster or act as .f his right-hand man". Nation-wide disclosures on this 'Y particular problem were so disturbing that the Senate ~_ Committee felt it would be desirable for local bar as- *° sociations everywhere to take a new look at how the canon of ethics _supposed1y governing conduct of mem- - bers of the bar was being heeded. On the federal — level, we felt it would be wise to tighten up the regu- lations regarding standards for admission of attorneys _ permitted to practice before federal courts and other United States judicial bodies.". Pricclcomrol 25. The question of violation of regulations relating to · prices, rents, and rationing has received detailed consi- ‘ ‘ ‘ deration in the U.S.A.*. , Regulations relating to price control were issued in the U.S.A. extensively during and after the Second World »_ . . War. Q.m’3¤§‘°§§5i£j’ iF}§?S§€Ysp?§§£‘.a‘é°“in“is‘f§i?‘?· ¤r;'$.£§2?P’ é;‘a}Z2""?..* America ", (1962), page 49. i ZC} Mabel Elliott, Crime in Modern Society, (Harper) (1952), page 47- ., ·’Kefauver, Crime in America (1953), page 57. · •Se i d,“ri`ino!i‘= · · m-my ., 1.m-.;·, €',f,‘2§, Amerign S!5$’F»'4¤$?@€ l’§[“‘§§§? Hm .£°2?& at pw 2 4- . · I3 The office of Price Administration was the main agency . charged with the implementation of these regulations. Apart from criminal prosecutions, action in other forms Q could be invoked against violators of such regulations in ‘ » various forms, such as, warning letters, monetary settle- ments, damage suits, suits for injunction and license sus- l pension proceedings. Damage suits are of three types, 5 first, suit by the Administrator for violation in the course E » of trade or business; secondly, suit by the Administrator f for violation at the retail level; and thirdly, suit by the _ consumer himself. In the first two cases, money paid as ; the result of the monetary settlement or suit is not deducti- V ble as a business expense for income—tax purpose. The maximum amount of damages is laid down by law. z V An interesting feature disclosed as a result of the study , of such crimes was, that the whole·sale dealers considered imprisonment to be a far more effective penalty than i iinesl. 26. We have dealt with white-collar crimes at length? WPi*°·€°u°‘ _ with reference to the importance which they have assumed §;H"£;,’° I , in some of the Western countries. We are not unmindful society. of one important fact, namely, that they are a peculiar feature of an acquisitive and affluent society. Our society , { is by no means affluent, but it is gradually becoming acqi— ‘ sitive, particularly in the urban areas. While white-collar crime may not exist in this country on the scale on which it seems to exist in England and in America, it is not totally absent. Corruption of administrative officers, eva- ' sion of tax (particularly income»tax) by persons who fall ' in the higher income group, smuggling of goods which are ‘ scarce in this country (such as gold, watches and transis- ‘ tor-radio sets) and deliberate breach of foreign exchange regulations, may be cited as instances of white-collar crime 2 in our country. Further, the problem assumes worse proportions when town populations pass the million mark. The power to iniiuence and the power to corrupt, and all the other evils associated with those powers, may not, at present, exist on the same large scale in India as in other more pros- — perous countries. But, with rapid urbanisation, these evils are bound to grow in intensity. That there is a marked association oetween crime and urbanisation is recognised in respect of crime generallyg, and in respect of the crimes with which we are concerned, it must particularly be so. 'Sce Clinardx "Criminiologica1 Theories of Violations of Wartime _ Regulations ", (1946), American Sociological Review 258, 260, foot-note ` ro and page 264. _ _ "Paras. 7 to 25, supra. f . gi ‘ 2 ’ ¢ m . "Sutherla¤d and Cresscy, Prinéiplqs (1954;), pgggp ;_$5,' . » é if qléiiél » ( 14 Economic CmM1·:s m Sovnar Russia E<=9¤¤mi¤ 27. Mal-practices in connection with business, profes- gg_;g1jS·¤ sion and office, thus, seem to have r_eceived spec1al tree; RusS€,_ ment in England’ and in the United States_of America .g t On the other hand, in Soviet Russia, the subgect of econo— J mic crimes has received special cons1derat1on°. gf 28. Many acts which would not be criminal in other z . countries are regarded as crimes m Soviet Russia. The sub- _ ject of "economic crimes" has received a most detailed at- tention in Soviet Russia and in other countries of Eastem Europe. Criminal law is viewed as political weapon and as an instrument of policyt; a . Apart from "counter-revolutionary crirnes"’, (which are l · . of 3 political nature), acts and types of behaviour like in- i eiiicient management, poor work, neglect of duties by an employee, non-performance of contracts and ineiiicient use of one’s property, are penahsed. Provisions as to economic crimes have existed for the last 40 years, and recent legis- lation increasing the penalty for such offences in certain cases and even imposing the death penalty°, would appear = merely to carry on the policy reflected in the earlier pl'0· visions. e _ \ I¤¤PS>1‘¢¤¤t 29. The number of "economic crimes" as known to Soviet, e gtggfgigf penal law is large, and some of them, such as "cou¤ter- mmm revolutionary crimes" and “crii1ies against the public _ i V administration" seem to partake of a po itical character. . * = T As these are not relevant for our present purpose, we S shall confine ourselves only tothe species which are purely of an economic character, of which the following may be noted: — — (i)_Manufa¤. The prohibition against manufacture of clothes, under· · Pm- wear, knit goods, hats, leather footwear goods, and articles ducts P"' made of non-ferrous metals, etc., being an essential feature ` of the economic policy, provisions were enacted to penalise the manufacture, etc., or sale of such prohibited p·noducts’. TParas. I4 tc; 18, supra. _ n , * Paras. rg to 25, supra. ‘ ° Paras 28 to- 33, zhfra. , , Gsovski and Gizybowski, Government, Law and Courts in the Soviet ~— Union and Eastern Europe, (1960), v0lu,2, page 937. (This will be hereafter, . eferred to as " G G, Government, etc., in the Soviet Union "). t~ ` ° See G 8: G, Goverment, etc., in the Soviet Union, pages 947 and 949- . 6 See note "Economic Crimes in the Soviet Union",]ourmi of the T . · International Commission of Jurists, (December, 1964), Vol. 5, N0. 1,. page 3 at pages 6 and ro. _ ’·‘ See G & G, ooy¤»¤¤s¤¤t,‘;t»§., Soviet Union, pages 947+—94g•. 5 ° G & G, Government, ctc.,i it Soviet Unio¤. P¤8¤ 9SI. * 15 r V "Speculation"--purchase and sale of goods_ and _othe1 g2n.SP°°“1““ _ objects with the intention of makmg a profit-1s pumshedl. Dissipation by a leaseholder or trustee of legal entity (iii) cont- _ (corporation) of governmental or public property given to ;;;*SGiW‘;’;;lj him under a contract is punishable. So is failure to per- mem form an obligation arising from a contract made with governmental or public office or enterprise, if, during a civil trial, the malicious character of the failure to perform is established? Violation of laws on nationalisation of land, committed in (iv) Private the form of overt or concealed purchase, sale, gift,,etc., ot ;;*i*E°¢¤°*:0 plots or land not allowed by law, and other transactions in 1,md_ng` J violation of such laws, are punishable°.- "Pseudo-co-operative" activities, i.e. founding or direct- (V) prime ( ing the activities of pseudo-Co·0peratives (organisations business g which are disguised under the form of a co-operative _in glziikthgf 3 order to secure privileges granted to co—0peratives, but which C§_Op,m_ · i are in fact private enterprises), is punishablei tive. ‘ G Release of products of poor quality, or of products in- (vi) Products i efficiently mmpleted or released in violation of the estab- °£aE:°' i lished standards, is regarded as an anti-State crime equiva- q y' _ lent to sabotage. The directors, chief engineers and chiefs Q of divisions of technical supervision of industrial establish- ‘ — ments are punishable for such 0i’fences°. Mismanagement by a person placed at the head of gov- (vii) root; ernmental and public offices and enterprises or of those en- m°¤*l***°¤'· trusted by them, oased upon A careless or dishonest atti- tude to the affairs entrusted, resulting in dissipation or irreparable damage to property of the office or enterprise, is ‘ punishable. So is dissipation of govemmental or public pro- PGNY, Paftiwlafly the entry into unproiitable business transactions by a person directing a governmental or public office or enterprise commttted by agreement with the party . to the contract of such office or enterprise? _ Giving faulty weights or measures to customers, using (viii) Weight wkiiong scales or measurement devices or weights, is punish- ¤¤d ¤¤°¤¤“!¤ a e'. ‘ _ 1 Article 154, R.S.F.S.R. Criminal Code, 1960. · · V * G & G, Government, etc., in the Soviet Union, page 955. ’ G & G, Government, etc., in the Soviet Union, pages 956. ‘ G & G, Government, etc., in the Soviet Union, pages 957 and 958. ‘ G & G, Government, etc., in the Soviet Umon, pages 957-958. ° G & G, Government, etc., in the,Soviet Union, pages 958 and 959, * ` V:}. »— n. e»·- ‘° G & G, Government, etcj in Union, page 959. , _" 1 “ i i e ~ g g , é _ 5 . o , ? 16 (ix) S°m¤$ Selling goods of inferior quality at the price for those of $$3; q?,;];:'; superior quality is punishable as theft from the customer E _ and fraud of the Soviet State‘. ‘ z (Xl E"°°“i"° Violating established retail prices for goods of mass p"°°s‘ consumption in shops, stores, stands, eating places, Gif;. and concealing from customers the prices of goods ind1· A cated in the price list, are punishable as theft from the con— e ; sumer and fraud of the Soviet Statel. T ; (Xi) Theft of Theft of public property is dealt with elaborately in g;'Q]‘° P"' Soviet Criminal Law. Broadly speaking, theft of Govern· y` ment property is punishable more severely than theft of "public property" (property of collective farms, co-opera~ A tives, etc.), and theft of public property is punishable more i _, severely than theft of private property?. Recently, even the , death penalty has been introduced for large-scale theft of ` State property or social property committed by dangerous ~ recidivists or persons serving sentences for special crimes“. (In fact, even previously under the law of August 7, 1932, , misappropriation of goods shipped by rail or water, Gov~ ernment property or property of collective farms and co~ . operatives was punishable with death. This position con- tinued up to 1947. when the death penalty was generally abolished on 26th l\/[ay, 1947. From that date, confinement , and confiscation of property were substituted for theft of public property‘). · P°‘;h PFWIY 30. Since the penalty of death can now be awarded for 4. Qgmlflsifojgf certain offences in Russia, it may be useful to summarise 5 mic C[i~Ings_ the important provisions on the subject. The death penalty F was abolished in Russia sn 1917, re-introduced some months Y “ later in 1918, re-abolished in 1920. and again re-introduced in 1920, i.e. in the same year. In May, 1947, it was abolished again, but in January, 1950, it was re-introduced for certain serious crimes (enemies of the regime, traitors, spies and ` subversive—diversionisis). In 1954, it was extended again to murder under aggravating circumstances. This position was repeated in the General Principles of Criminal Legis— 1 lation. laid down in 1958. Thereafter, in 1961-62, it was- extended to certain economic crimes'-'. * G & G, Government, etc., in the Soviet Union, page 959.‘ ' ’ G & G, Government, ctc., in the Soviet Union, page 960. ' ' Decree of 5th May, 1961, No. I9]2¤7. · 4 G & G, Government, etc., in the Soviet Union, ‘page 960. For the ‘ l i text of the law of 1947, see ibii, pages 961 and 962. _ 4 See- (i) G & G, Government, etc., in Soviet Union, page 939, text concs- S . ppdndmg ro foot-notes .39 and 4o, pages 940, and 941, para. 5; ~ ’ (ii') " Economic Crimes in the Soviet Union", (December, 1964), Vol. 5, Journal of the Internacional Commission of jurists, No. 1. p- s. nr pass , 1-¤¤d.8·. . ‘ Generally as to death soc "iaw in Eastern Europe, . No. 9, Soviet C1'1ID1I1B1gLB ", ,. lcldbrugge), (1964), g zo;-zog, zgo. i F : i —j_j . = ’;;—z€L%“? · Q., 17 I » 31. It has been statedk that the extension of the death Reason! for penalty in 1961 and 196;] to various economic crimes re- h¤;?£9lS*:m1__ » ilects the determination of the Soviet regime to take €X· ty_ treme measures against those who most iiagrantly violate ‘ the tenets of Communist morality. Some of the salient points that have been e1nphasised* are, that Soviet law- ; (i) regulates all aspects of economic and social life, · ’ (ii) remains at law of planned economy; and (iii) remains a law whose primary function is to discipline, guide, train and educate Soviet citizens to become dedicated members of a collectivized and mobi- lized social order. 32. An interesting feature of the Soviet Criminal Code Minimum which came into force on the 1st January, 1961, is the dis- P°““l“°‘· ( appearance of minimum penalties in many casess-4. · 33. On the basis of the brief discussion attempted above·‘, $°!¤° S*Ji°¤° we venture to draw certain general conclusions as to f°h°,;m;°:£_t° white-collar and economic crimes in the countries con- siomin ‘ cerned. England, gag;}. unda Russia. First, in England and in the U.S.A., an emphasis has l been placed on "white-collar crimes" (such as, frauds by corporations, rnanipulaticns in the stock exchange, com- mercial bribery, bribery of public officials, tax frauds, pro- fessional and business rackets, etc.). But, in the Soviet Russia and other countries of Eastern Europe, the emphasis placed has been on "economic crimes". In fact, having regard to the social and economic complex of those coun- tries, the importance of white·collar crimes (crimes by ’ persons of the upper strata) , seems to be limited; Secondly, the importance attached to each species of white-collar and economic crimes has varied from time to time. While one species of white-collar crime, such as pro- fiteering, assumes importance at one stage, at another stage ` » it might pale into insignificance, and another species of white—col1ar crime, such as tax fraud, might come into pro, · nwinence. t. _ Thirdly, there is no common factor binding white-· 2 , collar crimes as known in the West with economic crimes as- emphasised in Eastern Europe. 1 Harold Berman, " Soviet Law Reform ", Harvard Law Review (March 1963), 929, 948- ‘ Harold Berman, " Soviet Law Reform ", Harvard Law Review (March · 1963), 929, 930 and 93I- ° Feldbrugge, " Soviet Criminal Law, The Last Six Years ", Journal of Criminal Law, Criminology and Police Science (September, 1963), page 249, 255, righthand column. 4 ralvie, ` . " `F‘ '~. Crimi11‘;lr1l1av§$=:c(r960)`;;3Sl$;o£:¤<=°¢ have, been well expressed in a comment which we received °’P'°“h“‘ from one of the High Courts on the proposals under consi- V deration. We quote the relevant portion in extem:o”:- "In their Lordships' opinion, the proposal of the _ Committee to include these anti-social offences in the Indian Penal Code does not a pear to be practicable,. and, if followed, will create lhnurnerable difficulties,. apart from marring the struC!Z\1I‘€ of the Penal Code. Their Lordships further observe, that the Indian V . Penal Code deals withsuch actsagainst persons and* __ their property as are universally accepted as injurious ` *` in all cirvilized societies andfviith) acts which offend against the fundamental principles on which (the) existence of human beings as a society rests. These fundamentals are more or less of a permanent nature,. and will endure fora long time to come. In their Lord- ‘ ships' view, the offences dealt with in the Indian Penal' Code are of a different nature, and have a different con- tent, from social oifencos, and it would not be proper to include anti—social oifences in the Indian Penal Code. . _ The preamble of the Indian Penal Code also shows I ` that it was intended to be a general Pemzl Code for —- India. It was never intended, as section 5 of the Act . ‘ shows, to affect any special er local law by the enact- T ment of the Penal Code. The Opium Act, the Gambl- ing Act and a number of special and local laws were ‘ Para. 92, ez seq, infra. Q ’ Cf. Para. 38, infra. , I V , ’ Punctuation marks have bcch aélfd argh places. ` ` 20 sand are in force, which not only constitute but also punish some types of acts under circumstances men- tioned therein, and that method of dealing with offend- ing acts of a special nature or acts which require to be specially considered and dealt with, has been found to be working satisfactorily. Sometimes, while dealing . with particular offences, it has been found necessary ~ to provide for particular procedure or special rules of _ ‘ evidence also. Provisions for special sanction before starting investigation and prosecution, for raising pre- * sumption of guilt, for awarding minimum sentences, etc., have been made in somespecial enactments, e.g. Prevention of Corruption Act, Prohibition laws, etc. I The Penal Code, besides giving its own general explanations, definitions and general exceptions, i ‘ divides into and deals with categories of acts constitut-` N f ? ing offences on their basicfvmturc, e.g. offences against- the St_ate, against public tranquility, offences relating; · to public servants, affecting public health and morals; , affecting the human body, offences against property, , etc. Most of the principal offences defined and made ? punishable under the Penal 'Code have, unfortunately, continued to be committed and punished, but, except ; in a few cases (almost negligible), the occasion to delete any of them as obsolete has so farnot arisen. On the other hand, offences of new and complex types have ` come to the forefront, thenatureand the number of the ` offences constituting ..tlic‘basic structure of the Penal P i Code remaining {unaffected. These offences havenow ? - assumed such prbportions that it has become necessary 4; · to deal with them on a more scientific basis and to in- ; · corporate them into the penal law of the land. But, as ‘ i stated before, such offences require special treatment f and procedure in their trial, and, in their outer forms, are short-lived, though they reappear in different and perhaps more complicated guises later on. 'I'hese offences being the outcomeof changed and changing Q social conditions, would require repeated legislative , ·attention, and therefqre; silt would be appropriate if a they are made the subject-matter of special legislation i ‘ ' while the penal law of the land, i.e. the Indian Penal V i P ; Code, should be left substantially in its present form,". Penmncm 39. As has been pointedout in one articlei, some offences " i iofences go against the fundmnental structure of the society. On the _ j G? ;:}f"°‘ other hand, there are some activities which are regarded as _ ’ V pm¥,,,cCs_ offences becauseof a temporary dislocation of the economic ' structure. "Statuto1{y offences mainly belong to the second A » category. They areintended to counter-act passing pheno- ? mena. So long as human life is considered of value- -:1nd it be eternally so-—. taking away human life would be consi- l dered a crime. On the other hand, if things return to ‘_ *1 -6 iCal 0.17; Edt;. ·’ j} age; Egzlifgjialshorglf (N 4)¤pl8cg¢(= Z1 normal, there will be no necessity for any Guest Control j Order or for the matter of that any Control order.". T 40. As regards the argument that courts attach more Exapplg O; ~ # gravity to offences mentioned in the Penal Code, it has been Gueu Con- stated1——"An offence of, say, entertaining more than 100 g:’:d·O*'d°¥ _ guests in violation of the Guest Control Order cannot be looked upon by anybody as an offence as heinous as rape, even if it is enacted in the Penal' Code as section 376·A". y 41. Such offences are better left to be dealt with by Character of special and self-contained enactments which supplement :·P°°*°l°¤““= the "basic criminal law". Nl/e would, in this connection, °S‘ V like to quote the following observations of Stephen?:- . "Before undertaking either of these tasks I must endeavour to define what I mean by the Criminal Law. The most obvious meaning of the expression is that part of the law which relates to crimes and their punishment—a crime being defined as an act or omis- sion in respect of which legal punishment may be · inflicted on the person who is in default either by act- ing or omitting to act. ~ This definition is too wide for practical purposes. lf it were applied in its full latitude it would embrace _' all law whatever, for one specific peculiarity by which ` law is distinguished from morality is, that law is coer- cive, and all coercion at some stage involves the possi- bility of punishment. This might be shown in relation to matters altogether unconnected with criminal law, as the expression is commonly understood, such as legal . maxims and the rules of inheritance. A judge who wilfully refused to act upon recognised legal maxims would be liable to impeachment. The proprietory rights which are protected by laws punishing offences against property are determined »by the application of those laws.. If there were no such crimes as theft, forcible 4 entry, malicious mischief, and the like, and if there were no means of forging people to respect proprietory . rights, there would be no such thing as property by . ’ law. This is no doubt a remoteand abstract speculation. » The principle on which it depends may be displayed by A A more obvious and important illustrations. It would be a violation of the common use of language to describe the law relating to the celebration of marriage, or the Mer- chant Shipping Act, or the law relating to the registra- , tion of births, as branches of the criminal law. Yet the statute on each of these subjects contain a greater or ’ (1964-65) 69 Calcutta Weekly Notes (No. I4), page 57 (8th February 1965 Editorial note). _ E . ' che Hist f `iv"; E` ‘*' ory o (1883), Val, ; 22 less number of sanctioning clauses which it is dij”ic·ult , » to understand without reference to the whole of the , acts to which they belong. Thus, for instance, it is g reiony to celebrate marriage otherwise than according to the provisions of certain Acts of Parliament passed & in 1823 and 1837, and these provisions for·m_a connected system which cannot be understood without reference ' to the oommon law on thesubject. These illustrations 1 (which might be indefinitely multiplied) show that the definition of criminal law suggested above must either be considerably narrowed or must conflict with the common use of language by including many, parts of the law to which the expression is not usually applied". 42. The observations of Stephen relating to summary offences may also be qu0ted*:+—l _ ' "Such offencesz diifer in many particulars from those gross outrages against the public and against individuals which we commonly associate with the word crime. It would be an abuse of language to apply - ‘ such a name to the conduct of a person who does not F i sweep the snow from his doors or in whose chimney a · fire occurs.". M“°'1;*‘°;n_ - 43. Recent years have witnessed a growth in the volume gf" ° ° of criminal law and lntpsive multiplication of ° offences. Some of the offences with which we are concern- l ed seem to belong to a cl8SS which cannot be equated with the class of offences dealt with in the Indian Penal Code. This is an aspect well worth elaboration. We quote the following passage from the Encyclopaedia of Social Sciences“:— “ Treason, murder, certain sexual offences and some serious offences against property are fairly constant in the criminal laws of the world, with relatively similar e · definitions. , - ‘ In addition to these og;:nces_ however, the increas- ing complexity of social li has led to the creation by · the State of a vast number oi laws which strike at forms of conduct Peculiar to some particular type of social organisation. Roscoe Pound, in his Criminal Justice in‘America, T analysing the criminal laws of Rhode; Islglid the Revised Public _ Laws of 1882 rlefined _(lc1:imes, while the title of "Crimes and.Puz§ishmqnt’? of the general laws of 1923 defined 212. More than half of the offences that may be prosecuted bythe State and punished by line and imprisonment or both are contained inspecial laws » Jsrcphen, History of the.Crhnimi Law of England, (1883), V0!. v P¤z<= 4- . "'l'he reference is to "sumniary of offences". “ pages Mai °€$"’§‘é6 (c2‘€iii.£§"l‘l"c ·i@¥€.l‘}’§';mL%?’ ”“°"*'-’“"*·· 1 F Y°'* ‘ i 23 passed since 1872. dealing with such problems as the protection of workers, the regulation of motor vehicle traffic, the regulation of selling of securities and of merchandise and the enforcement of liquor prohibition laws .... " . . "Only the most serious offences against the law cause a stigma to be attached to the offender. Were it otherwise, the psychic burden of criminality carried by the average community today should be immense, for the multiplication of legal prohibitions has made it difhcult for any one of its members to lead a completely law abiding life,'. 44. Even as regards acts of an anti-social character Criminal law j belonging to a class which can be regarded as "unethical" M°'°‘ Q · it should be borne in mind that every act which is regarded 1 · ’ ; as immoral cannot be made criminal. The question of the » i relation between law and morality is a vexed one, and we need not enter into a detailed discussion thereofl. Stephen’s . observations on the subject, however, seem to put the sub— . ject in a proper perspective, and may be quoted2:— - . ~ "The first point then to be considered is the nature s of the popular and the legal conception of crime in general, their relation to each other and the inference which the existence of that relation suggests as to the nature and objects of punishments. The great difference between the legal and the popular or moral meaning of the word ‘crime’ is, that whereas the only perfectly definite meaning which a A lawyer can attach to the word is that of an act or omis- ‘ sion punished by law, the popular or moral conception adds to this the notion of moral guilt of a specially deep and degrading kind. By a criminal, people in general understand not only a person who is liable to be punished, but a person who ought to be punished ‘ because he has done something at once wicked and V obviously injurious in a high degree to the commonest interests of society. Perhaps the most interesting ques- tion connected with the whole subject is how far these . views respectively ought to regulate legislation on the subject of crimes_ ‘ought’, meaning in this instance how far it is for the go0d of thpse whose good is con- sidered in legislation that the view in question should be adopted, and ‘good’ meaning the end which the legislator has in view in his legislation. In other words, the question is, what ought to be the relation between criminal law and moral good and evil as understood _ by the person who imposes the law? (xm) alia gt aphy scc Dpvlmi E Morals, (1965), page g V · l SI€pl'lEl'l, History ofthe Cflmllgl Law of (1883% V3], ;, _ 3 ¤az<=¤76,17,78,79¤¤d8¤. ; s ‘» ». w- 47 Law-:;. _ 24 ...... In what relation ought criminal law to stand to morality when the effective majority of a great nation legislates for the whole of it, and when there are V i no other differences of moral standard or sentiment ? than those which inevitably result from individual . 5-; Q differences of opinion and unrestricted discussion on €?‘ V religion and morals? V The answer to this question is not quite simple. In " T the first place, criminal law must, from the nature of . the case, be far narrower than morality. In no age or nation, at all events, in no age or nation which has any similarity to our own, has the attempt been made to treat every moral defect as a crime. In different ages of the world injuries to individuals, to God, to the gods, _ I or to the community, have been treated as crimes, but I - { ‘ think that in all cases the idea of crime has involved y the idea of some definite, gross, undeniable injury to 1 M some one. In our own country this is now, and has been from the earliest times, perfectly well-established. No V temper of mind, no habit of life, however, pernicious, has ever been treated as a crime, unless it displayed itself in some definite overt act. It never entered into ` the head of any English legislator to enact, or of any English court, to hold, that a man could be indicted and punished for ingratitude, for hardheartedness, for the absence of natural affection, for habitual idleness, for avarice, sensuality, pride, or, in a word, for any ` vice whatever as such. Even for purposes of ecclesias- Q. i ~ tical censure some dennite act of immorality was requir~ . Q Q ed. Sinful thoughts and disposition of mind might be TT Q the subject of confession and of penance, but they were never punished in this country by ecclesiastical crimi- . nal proceedings. The reasons for imposing this great leading res- triction upon the sphere of criminal law are obvious. If it were not so restricted it would be utterly intoler- . able; all mankind would be criminals, and most of their lives would bepassed in _ trying and punishing each. other for offences which could never be proved. ` Criminal law, then, must be confined within narrow . l limits, and can be applied only to definite overt acts or omissions capable of being distinctly proved, which act; or omissions inlict definite evils, either on specific pen sons or on the community at large. It is within these. Y - limits only that there can be any relation at all between i T criminal law and morality. . The relation between criminal law and morality ig . V not in all cases the same. (u) The two may harmonize; (b) there may be a conflict between them, or (c) the ‘ may be independent. . In all common cases they do, and ;; . i¤ my opinion, ‘whemven and so far as it is , si r‘i i= thley ought to lharmdniie with, and support, ” ot er.". l 25 . 45. Sometimes, notwithstanding that an act is immoral, gig:,:;, it may be necessary to put it outside the criminal law ,_hin_ because it is difficult to enforce a law punishing it. The ‘ observations of an eminent judge‘ are of interest :— "The line that divides the criminal law from the · moral is not determinable by the application of any · clear-cut principle. It is like a line that divides land ' and sea, a coastline of irregularities and indentations. There are gaps and promontories, such as adultery and » _ fornication, which the law has for centuries left subs- tantially untouched. Adultery of the sort that breaks up marriage seems to me to be just as harmful to the social fabric as homo-sexuality or bigamy. The only W ground for putting it outside the criminal law is that a law which made it a crime would be too difficult to enforce; it is too generally regarded as‘a human weak- _ ness not suitably punished by imprisonment. All that . T the law can do with fornication is to act against its worst manifestations; there is a general abhorrence of the commercialization of vice, and that sentiment gives . strength to the law against brothels and immoral earn- ings. There is no 'logic to be found in this. The boundary V = between the criminal law and the moral law is fixed by balancing in the case of each particular crime the pros and cons of legal enforcement in accordance with the sort of considerations I have been outlining?. 46. The same eminent Judge? has made the point about Function of the proper function of the criminal law, as compared with °¤m’!°U*W the moral law, in these words: —— gf ! pared. "l have spoken of the criminal law as dealing with the minimum standards of human conduct and the moral law with the maximum. The instrument of the criminal law is punishment; those of the moral law ‘ are teaching, training, and exhortation. If the whole dead weight of sin were ever to be allowed to fall upon the law, it could not takeythe strain?. 47. In the course of our deliberations, we tried to analyse A°‘?1Y'iE°f » the common characteristics of the offences in question! $°`J.°::,“_; *· Many of the offences seem to have the following features in ° A common: —— (a) the offences are committed by the upper classes of society; (b) those upper classes themselves set the moral standards of society, and hence a serious view is not ` taken of these offences; , *Devlin, Enforcement ,of llxorals, @.3: and zz. · , , _ ’Devlm; Enforcement of oralsj I _,,4 23. ~ *·"· ’Par¤ 2, supra. A A is ¤ r . A 26 (c) the victims of the offences are unascertainable persons (usually, the State or the community), as contrasted with the majority of the offences under the Indian Penal Code, where, in most cases, the victim is an ascertained individual. _ But all these features are not shared but each of the ojfences (e.g. theft of public property and offences relating to taxes). Moreover, some of the 0ifences—e.g. theft of public property—are, even now, punishable under the Indian Penal Code. V ‘ . ANALYSIS or SPECIAL ENACTMENTS Analvsis of 48. What We would like to emphasise is, that most of the · special special enactments dealing with these offencesl possess _ , €¤¤¢*m°m$· some special features, and we proceed to state some of these special features. » These special features are briefly, special penal provi- sions, provisions modifying mens rea, provisions relating to liability of officers of companies, vicarious liability, special . rules of evidence, penalties by rjules, special powers, special provisions as to sanction, provisions for publicity, and similar provisions which illustrate the special character of the enactments? Specialpenal 49. We begin with one feature found in many of the provisions. enactments, namely, the existence of special penal provi- sions. These seem to take various shapes- __ . (a) There may be "Departmental" penalties (penalties which can be imposed by officers of the Department), as in the Income-tax Act and similar Acts, in the Customs Act and in the Stamp Act. (b) Again, action by way of confiscation of goods _ can be taken, an example of which is section $(2) of i the Imports and Exports (Control) Act, 1947, read with ~ the relevant provisions in the Customs Act'. (c) Even in respect of the traditional penalties . (such as imprisonment or fine), some of the special enactments contain special provisions. By way of example, we may refer to provisions relating to conti- I nuing of·fences*·°, provisibnsenliancin the powers of I Magistrates in respect of fines’ (for oéences under the · special enactments), and provisions for enhanced ` *Para. 2, supra. ` ’See paragraphs 49 to 81, infra. , ”Cf. F. N. Roy, v. Collector of Customs, A.I.R. 1957 S.C. 648, 650, para. 6. _ ‘ 4See section 24 (1)(i·v), Industries (Development and Regulation) Act, rssr (6s of msi)- c · , . ‘Asd0c0¤.ti!\ui ‘ s°"' U ;`V u" l " Rawaz Ram, A.I.R. l!g6;%::§c in M I C°°°°°ll v` °See section 2 A, I us es eg-QQ ’ · » (65 of 1951). 9 9 i mdk 1 ou) Am, I 27 l punishment in respect of subsequent offences, e.g. = section 16, Prevention of Food Adulteration Actl-”. (d) Then, revocation or amendment of licences may be provided for. An example is section 12(1) of V the Industries (Development and Regulation) Act? _ . 1951. . (e) Lastly, penalties may be provided for, not in I the enactment, but in the rules made theretmder. Thus, rules made under the Central Excises and Salt Act, 1944, contain extensive penal pr0vision‘-‘-°. In our ; opinion, if certain penal provisions of special enact- ments are removed while other provisions are allowed to continue in the special enactments, then the inte- grated scheme of the special enactments would be des- troyed without any compensating advantage. _ 50. It should also be noted, that the enactments relating Mznsgea I to some of the offences under consideration modify the re- m°¢`m*d· quirements of mens rea. thus standing in contrast with the Indian Penal Code. \ » _ 51. Forthe present purpose, it is not necessary to ana- Analysis of . lyse in detail the various special Acts in order to show how k*¤d* °f the mens rea, i.e. "some blameworthy conditions of mind"" '”°"’ "“‘ has been modified. But some broad points may be indicated. While dealing with mens rea, it would be convenient to group" the various crimes into four classes- ~ (i) Crimes in which the mens ·rea’ is found in an ( intention to commlt an illegal act. (General intention). (it) Crimes in which a particular intention'° is re- quired (c.g. in English Law, burglary is house-breaking by night with intent to commit a felony) .11. *Prevention of Adultezution Act, 1954 (37 of 1954). _l- ’Sce State v. Badri, A.I.R. 1965 Rai- KS2: P8I‘3.1I2. °The Industries (Development and R¢8¤l¤tion) Act, 1951 (65 of 1951) *0f-¤1cr`¤(d'th¢’. `Ind'Del- ‘ mm. and t§‘é§.$¤.€§3.E‘.>’A£? iiitié, §t°§’;’;)."""""" “’"‘°“‘ °" °" ‘Cf. A. A. Beeravoo v. Collector, atc., (1965) 2 Cr. L. J'. 279 (Kerala). °Sce also para 77 infra. _ V "Cf. Cave I. in Chisholm v. Doulton, (1889) 22 Q.B.D. 736, 741. ’The grouping is based on that given in Stephen, Commentaries on the Laws of England (1950), Vol. 4, pages 10-Iz, _ _ _°Stephcn’s_criticism of the expression "mem rea" will be found in . tus yudgment in R. v. Tolson, (t889) 23 Q.B.D. 168, 185, 187. *°"Know1edg " al b add . C. R. . H , 6 W-L-R. 4s¤4,°6¤,?*Z`I,,i,st‘(4,,§h, Ig, f " ·M Us s> 2, ¤cf.z>qab$,(me)z t1>-‘°;»“‘ ain.? L¤w (I957)3$P¤8¢ 672. Fu `q'm·'lQ**’d` qu? g` 28 " (iii) Crimes in which negligencel will suffice (e.g- management of vehicles in public streets); (iv) Crimes in which the requirement of mens rea , is reduced to a minimum (i.e. abducting a girl under 16 from her parents, though the girl is believed to be above . 16) =. , K · Strict 52. But, beyond these exampless, lie the cases where the 7 www- legislature has absolutely forbidden the commission of cer- tain acts under penalty of fine (or imprisonment in default of payment of fine)_ apart, altogether from the question of mens rev}. That the liability so created is of a quality different from that attaching to ordinary offences requiring mens rea is now well-recognised by the case-law and ex- tensive literature that has grown around these offences. It is not necessary to deal with these offences of "strict liabi- lity" at length. As has been said, strict responsibility "has been with us so long that it has become accepted as a necessary evil"". At the same time, a brief discussion is not out of place. 53. In this connection, we may quote the `following observations of the Privy Council in a recent case°:— "Where the subject-matter of the statute is the re- gulation for the public welfare of a particular activity- statutes regulating the sale of food and drink are to be found among the earliest examples—it can be and fre- quently has been inferred that the legislature intended that such activities should be carried out under the conditions of strict liability. The presumption is that the statute or statutory instrument can be effectively enforced only if those in charge of the relevant acti- ‘ vities are made responsible for seeing that they are complied with. When such a presumption is to be inferred. it displaces the ordinary presumption of mens- . rea. Thus sellers of meat may be made responsible for seeing that the meat is fit for human consumption and it is no answer for them to say that they were not aware that it was polluted. If that were a satisfactory answer, then as Kennedy, L. J ., pointed out in Hobbs 1For the present purpose, i is assumed that negligence is a type of mens rea. For a contrary view, see Glnnvilie Williams, Criminal Law-The General Part, (1961), pages IO; and 262. For 2 comprehensive discussion, gg? P. J. Fitzerald, "Cr1me, pm and Nedigenee" (1963) 79 L.Q.R. 351, “R. v. Prince, (I875) L.R. 2 C.CaR. 154. T V "Para. 51, supra. l 4Cf. Stephen, Commentaries on the Laws of England (rggo), V0], 4, · PSSC I3. _ PP. ]. Fitzgerald, in Block Revjew cf Qolin Howard, Strict Responsi- bnliry, (1964) 7 L¤wy·=r 41- I . . _ . ‘Lim hinA:'kv.Th_ un,·' =·· 1 _ 228 (RC.)? lr, `,t6¤s (96a) A1lBR,¤§e_, 29 _ v. Winchester Corporationl, the distribution of bad meat ‘ 4 (and its far-reaching consequences) would not be effec- tively prevented. So a publican may be made respon- h sible for observing the condition of his customers?. ‘ , In other words, these are cases in which—"Intention to i commit a breach of the statute need not be shown. The Q breach in fact is enough“-‘.". V 54. The passages quoted above‘ have been discussed at Knowledge V length in a recent decision of the Supreme Court of Ind1a°-° <>§]¤U;18¤b¤v which also deals with the question, how far mens rea in xlsvalga the sense of actual knowledge that the act done by the ‘ - accused was contrary to the law, may be requisite. It was pointed out there, that "starting with an initial presumptton in favour of the need for mens rea, we have to ascertain l whether the presumption is overborne by the language oi ¤ the enactment, read in the light of the objects and purposes of the Act, and, particularly, whether the enforcement of the law and the attainment of its purpose would not be - ‘ rendered futile in the event of such an ingredient being con- sidered necessary". . On the other hand, where it cannot be said that the · object of the Act would be defeated if mens rea is read as an ingredient, courts would be slow to dispense with it". 55. Examples of reduction or elimination of mens rea English case l are abundant in the case law in England regarding the Food °¤ '”°”’ "9 and Drugs Act,8—°-’°-“ and the Weights and Measures Actslz c“:1‘;‘;g"t:;_ ~ 1Hobbs, v. Winchester Corporation,. (1910) 2 K.B. 471. ’Cundy v. Le Cvcq, (1884) L.R. I3 Q.B.D. 207. “Cf. Lord Wright in McLeod' v. Buchanan, (1940) 2 All. England Reports 179, 186 (H.L.) (Case under s. 35, Road Tratiic Act, :930, requiring insurance against third party risks). 4See also para 59, infra. °Paragraph 53, supra. = °Szaze of Maharashtra v. M. H. George, A.I.R. 1965 S.C. 722, 736, 737, paragraphs 29 to 32, and 34 (Majority judgment). ’Cf. Nathulal v. State of M. P. A.I.R. 1966 S.C. 43, 45, para. 4; 1966 Cr. L. J. 71, 73. _ °Wil1iams, Criminal Law, The General Part, (1961), page 218, para. 77. ’ °Craies, Statute Law (1963), pages 540 and 545. 1°Halsbury, Laws of England, 3rd Edn.,V0l. 17, pages 484, 485, pm-a_ goo, 901, and page 506, para. 937. ¤See case-law reviewed in Hobbs, etc., v. Winchester, (1910) 2 K.B. 471, 478. 48¤- . 'Ch/mg-1l,:lr;l_glrIJ’e§?nmrr2;an Oil C0.; V. I K.B4 KI 4 S Vi?;..1;·s? 30 i Judicial construction in England of certain enactments passed for protection of the revenue also furnishes similar examples}-* 56. In India, a striking example of modification of the ordinary rule regarding mens rea is the Prevention of FGM} ; ’ E Adulteration Acts, section 19(1) of which provides, thi` gy (subject to certain qualifications), it shall be no defence ih ; Z a prosecution for an offence pertaining to the sale of any 5 adulterated or misbranded article of food, to allege merely ‘ that the vendor was ignorant of the nature, substance or _ quality of the food sold bv him, or that the purchaser, hav- ing purchased any article for analysis, was not prejudiced by the salet. It has been held“, that under this Act eve! the sale of any article to a particular customer on the under- _, standing that the customer is to use it only for animals, it f - . » punishable. In England also, provisions of the correspond * = . é ing statutes are given a wide interpretation'. , Offences 57. Another example of a provision dispensing with under the men.; rea is section 167(12A) read with section 52A of the . C“S‘°ms A°*· (old) Sea Customs Actt. The net result of these two provi- sions was, that if a vessel constructed, adapted, etc., for the · purpose of concealing goods, under section `52A, centered', V r etc., within the limits of India, the vessel would be liable ? to confiscation. The master of the ship was also liable to a penalty not exceeding rupees 1,000. It has been held’; that having regard itc the fact that this Sub-Section, as com trasted with other sub-sections, did not use the word . , "knowingly", etc., and having regard to the fact that impor- ii. g ‘ tation of the requirement of mens rea would nullify the if E . object of section 52A (to put. an end to illegal smuggling),. g"- ‘ the prohibition must be regarded as absolute. The guilty ‘ mind could rarely be established against the owners of ves= sels which are travelling on the high seas, and it may be difficult to prove the guilty knowledge even of the master of the ship. It absence of such knowledge was allowed to be pleaded as a defence. the owners and the master could very well plead that the alleged alteration, etc. was made _ without their knowledge, and it will be almost impossible to establish mens rea in such cases. t *C.f. Davie: v. Harvey, (1*874) L.R. 9 Q.B. 433. I ’For an analysis whidh has nowbecomc classic, sec Wright, ].’s iud§— V ment in Sherra: v. De Rutzeu, (1895) 1Q.B. 918, 921. *The Prevention of Food Adultention Act, 1954 (37 of 1954). . . 4See Mangalda: v. State of Mdaarashtra A.I.R. 1966 S.C. 128, 133, ` para. I4. J) ¤P. P. v. Palanisami, A.I.R. 1965 Mad. 98, 99 pm. 3 (Rarnakrishnur. f °The English cases are cited in Kenny, Outlines of Criminal Law (1962)»‘ page 42. 2 "See, now section 115 (1)(a), Customs Act, 1962 (52 of 1962).e. _ S I ·.n.4.».cum sw ` ·· sa 1., .1. . . ]I40, iu5o, 1153, I ng A 2 2 2 i i » · . i. 31 58. A recent decision of the Supreme Court‘ virtually 05,,,,,, establishes the same position in respect of offences under gder the the Foreign Exchange Regulation Act, 19472. r¤¤8¤ B¤ change Act. 59. Of course, the question whether the liability under a statute is absolute, is ultimately one of construction of the particular statute, and the answer will depend on the language employed in the statute’, the policy behind it*, and how far enforcement of the statute would suffer by adherence to the doctrine of mens rea". _ The examples cited above are merely intended to show that in relation to some of thle enactments relating to the offences in question, it woul be proper to say, that they ` . tix their attention on the acts themselves, irrespective of . the knowledge or intention? I 60. The above discussion’ will show, that it cannot be cpssiticationl asserted that all the eight classes of offences with which pfcifcnqcs we are concerned in this Report" stand on the same footing ‘:i‘L“;:g‘;f with reference to mens rea. In fact, the offences seem to mx to belong to four different categories. First, there are offences mmnea. in respect of which mens rea is undoubtedly required (such as theft of public property). Secondly, there are offences which, though requiring mens rea., possess a special charac- ter of their own (e.g. many offences falling under the cate- gory of black-marketing). Thirdly, there are offences which can, with_a fair measure of accuracy, be described as offences of strictyliabgitsy (suchhas, some offences regard~ ing ood and ,I'l1gS . Il , fourt __ Y, there are acts in Fes- pect of which their moral culpabiliy is a matter of contro- versy (e.g. tax avoidance?'. 61. We may, in this connection, also refer to certain Companies. special provisions concerning companies. The subject of (R {State v. )H. George, A.I.R. 1965 SV.C. 722, para. 40, 41 (May) eviews case- aw . *The Foreign Exchange Regulation Act, 1947 (7 of 1947). “Cf. Craies, Statute Law (1963), page 539. 4Cf.M0usell Brothers, Ltd. v. L. & N. W. Railways. (1917) 2 K.B. 836, 845 ; (1916-17) All E.R. Rep. IIOI, 1106 (per Atkm) J.), *C.L' Ch' A'k .The i (96) A.C. 6 s 063) W.L.R. 42 Q A.l;.R.l22;, th€I'€Ol1 in MOdCl`I1 Law Review 446. _ ‘See also para 53, supra. 7P31'2. 50 IO 59, Sllpfd. I “Para. 2, supra. L ,_ °Sec also para. 73, infra. ( _ *°Cf.gpms. I0O—II§I, mia.; ii V _ _____ 32 ‘ criminal liability of corporations is interesting one'-2, and we need not, for the present purpose, enter into a detailed discussion" of the subject. The subject has been discussed in detail in · England"-5-°—’. A In India, the point was referred to, but not decided, in _ one case before the Supreme Court? The question has recently been discussed in a Bombay case? Uabiliiv 0* 62. But the provisions that deserve especially to be men- ggggzgzg tioned in the present context are those which (subject toe ` certain qualifications), treat directors and officers of the · company as liable for the offences committed by the · Q company. , " 63. An example of such a provision is section l7(1) oi · the Prevention of Food Adulteration Act‘°—u, quoted below: ° ‘ "l7(l) Where an offence under this Act has ; been committed by a company, every person who at the time the odence was committed was in charge of, and I Was responsible to the company for the conduct of, the business of the company,.as well as the company, shall ( be deemed to be guilty ofthe offence and shall be liable _, T to be proceeded against and punished accordingly: , . Provided that nothing contained in this sub·section QQ ` shall render any such person liable to any punishment provided in this Act if he proves that the oifence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such oi?fence.". . 'See Halsbury, 3rd Edn., Vol. Io, page 281, para. 521 ; and Vol. 6, pages 440 to 442, paras. 853 and 854, dealing wih the criminal liability of the com- panies and also with the criminal liability of odicers, particularly page 441, ‘ footnote (f). . V. " ’See also Gower, Modern Company Law, (1957) (1963 Impression), ¤ pages 137 to 138. c . ’In England, the leading cme is R. v. I. C. R. Haulage, (1944) K.B. ssr 3(I944) _: A11 Hns- Rep. 691, 693» (C-QA-)- ‘ (Prosecution of company for common law conspiracy to defraud). ¢Welsh, " Criminal Liability of Corporation" (1946) 62 L.Q.R. 345. ”Russell on Crime, (1964), Vol. 1, page 96. °Ken.ny, Outlines of Criminal Law, (1962), page 70, para. 50. ’Glanville Williams, Criminal Law, The General Part, (1961), page 853, - gt seq. . ¤Motipur Zamindari C0. v. State of Bihar, (1953) S.C.R. 720 ; A.I.R. ` ` 1953 S.C. 320, 323, para. 9. ’State of Maharashtra v. Syndicate Transport Co.; A.I.R. 1964 Bom. 195, zoo, para. 17. (Paranipe J,). _ E _ ¤°The Prevention of Food ddtmbn 1954 (37 of I954)- ’_ j ¤Cf. P.fP. v. K. R. Cooper _ _h A.I.R.` 1964 Mad. 30I.l 33 ` Similar provisions are found in many English Actst 64. As has been observed’, "Recent years have seen ae ` further development whereby the rule that the acts of': directors are treated as those of the company is, in effect, applied in reverse, so that the acts of the company are treated as those of all its directors. Many modern statutes . and regulations provide that if an offence is committed by a company, every director or oiicer shall be guilty of that. offence unless he Droves that it was committed without his consent and that he exercised due diligence to prevent its- commission". Such provisions are so worded as to stop the loophole revealed by certain judicial decisions? 65. The practice of inserting such provisi0ns‘ has not escaped criticism. The comment of Upjohn J. in one case may be referred to. There the statutory provision in issue wass as follov.‘s:—— " ,.... Where an 0ffence`under this Act has been committed by a body corporate (other than a local authority), every person who at the time of commission of the offence was a director, general manager, secre- tary or other similar officer of the body corporate, or . was purporting to act in any such capacity, shall be deemed to be guilty of that offence, unless he proves that the offence was committed without his consent or · connivance and that he exercised all such diligence to »- prevent the commission of the offence as he ought to have exercised having regard to the nature of his func- tions in that capacity and to all the circumstances? The following observations were made on this . provisions g — "First of all, I have to bear in mind that this is a penal statute. It· indeed, I suppose, represents the high-water mark of the Parliamentary invasion of the traditional rights of the subjects of this realm. Not " only does it impose upon offenders substantial penalties. —-no objection could be taken to that-, but what is so ‘ serious from the point of view of the subject is, that where a body corporate has been found to be an 1For English Acts containing similar rovisious, see Glanville Williams,.,. - Criminal Law, The General Part, (1961; pages 866, et seq. *Gower, Modern Company Law, (1957), (1963 Impression), page 138. °E.g. Dean v. Hiesler, (1942) 2 All. Rep. 340 (person not duhr appointed as a director not liable under Regulation QI of the Defence) (Generali Regulations). ¢Para. 62, supra. _ — . 4 )°The Borrowing (Control and Guarantees) Act, 1946. Schedule para. ' 3 4 · · °L0nd0n and Company Co i rcidl’ Pr __ fe: Investment, Ltd., v.- Arwmey General, (mss) r Weezvbnw ism sr8. Ears. <¤=· D>r ‘ Upjohn ]'.). . e , is ‘ · — i 34 offender, then every director, general manager, secre- tary or other similar oflicer of the body corporate, m· cluding a person who was purporting to act in those capacities, is deemed to be guilty unless he proves that the offence was committed without his consent or con- nivance, thereby reversing the usual and traditional rule s of English law that a man is innocent until he is proved guilty. But not only that; for proof that he is innocent will not avail an accused person, because he must fun ther show that he exercised all such diligence to pre~ vent the commission of the offence as he ought to have exercised, having regard to the nature of his functions in that capacity, and in all the circumstances. How- ever, that is what Parliament has thought {it to enact, . and I abide, of course, by it. Nevertheless it is what Mr. Lindon described as a highly penal statute.". ( i 66. The question of vicarious penal responsibility also ' Y' falls to be considered, in this context. The rule at common law is that (subject to certain exceptions), a master is not vicariously responsible for the crimes of his servants‘—’-°. . 67. This common law rule‘ may undergo a modification Y ' in relation to special enactments. The liability so imposed . may be vicarious either in relation to the actus reus, or in relation to the mens rea. The method by which such modi- Hcation is achieved is tw0—fold. There may be statutory g provisions creating vicarious responsibility, by using words I · such as "no person shall eitherby himself oa- by anyservant ,` or agent" do some act5—*. 1 V 68. _Besides such statutory modificationsl, there may tls va modification as a result of judicial construction. ’ A statute may be so construedas to render a person criminally liable for the acts of his servants; and, such a construction might ¤Kenny,. Outlines of Criminal Law (1962), pages 38, 42, 43, 48 and 49- ’See discussion in Glenville W`¤Him1s, Criminal Law-—The General Part, (1961), pags 267 to 269, para. gz, ’See S. Preve;.-ei·’s article in 16 Modern Law Review 236, for a general V discussion. ‘ ‘Para. 66, supra. i · . __ "*1'·*"€$’*"* "*"‘*"""""""' ‘ ’"` "*"·"`* ’ =< ' ¤$ mple of English Acts cited in Gl `ll W`II' s C ` ' l Law, 'lpfliecxécneigl Part, (1961), page 269, foolnldies? 1 mm ’ mmml Gijompare section 9B, Opium Act (1 of I878), as inserted by Begg;] Act 5 of 1933. U "sec para. 67, W K 35 be more easily adopted in relation to special enactments. having regard to their subject-matter'-2-3-*. This seems to be particularly so in the case of "public·· welfare oiTences"“-°. Vicarious liability for statutory offences is, in many cases, justified on the Drinciple, that if a master chooses to— delegate the conduct of his business to a servant, then, if the servant in the course of conducting the business, does an act which is absolutely prohibited, the master is liable? On the other hand, where intent is a necessary element_ as in attempt, the doctrine of vicarious liability may be nega- tived8. The link between vicarious liability and absolute prohibition can be seen in the following observations:- "A master who is not participant in the offence can . only be liable criminally for the acts of his servant if the statute which creates the offence does so in terms which impose an absolute pr0hibition."." The following observations of Channell J. with refer- ence to a case under the Weights and Measures Act, 1878l°,. illustrate this aspectu :— 5 "[The Act] is within the class of statutes under which persons may be convicted for acts of their ser- vants in respect of which they are not in any real sense culpable. Mens rea is not an element in the ‘For the position in England, see=—·V (i) Cgossg and Jones, Introduction to Criminal Law, 1964, pages. 9 i 9 ; (ii) Kenny, Outlines of Criminal Law (1962), pages 38, 42 and 48, paras. 28, 32 and 35. (liz) Glanville Williams, Criminal Law, the General Part (1961),. pages 270-285. ‘ 2For the position in Australia, sce— (I) Prnudman v. Dayman and the judgement of Dixon J. therein,. (1953) 67 Commonwealth Law Reports, 536, 540 ; ` · (ii) Thomas v. R. (1937) 59 Commonwealth Law Reports 279, — 300, 305 (Dixon].); (iii) Note by Colin Howard in 67 L.Q.R. 547; and A (iv) Colin Howard, Strict Responsibility (1963) Chapter 7. “For the position in America, see Perkins Criminal Law, (1957), pages t 695 to 697. ‘For Indian case Law see Uzram Chand v. Emp; A.I.R. 1945 Lah 238, 246 to 248 (F.B.). · “See Glanville Williams, Criminal Law, The General Partf (1961), page · 282, middle. °See also Yeandel v. Fisher (1965) 3 W.L.R. IOOZ, 1007, (per Lord Parker C.].). . ’Cf. Barker v. Levinran (1951) 1 K.B. 342 ; (1950) 2 All E. R. 825, 827 (Lord Goddard C.].). °Gardner v. Akervyd, (1952) 2 All Eng. Reports 306, 310, 311. q C I >° Gardner y. Akeroyd (1952) 2 All E.R. 306, 310 (per Lord Goddard. . . . . t ; i ` s - * . )¤'I`he Weights and Measures l , {Q7 and 42 Viet. e.49, Y _ 25- . if ?` i1j'?= .¢ I? ¤Angla-American Oil Co., +rd.TM " 1 K.B. 536, 54;. { , 2 . . R 4 e . t . ,· . . i 36 3 ·0tTence ...... The offence is within that class where the legislature has absolutely prohibited certain acts being done, with the consequence that if they are done- although by a servant of the employe1‘—d0ne in any A sense in the course of the employment, so that for some ‘ purposes the maxim qui facit per alium, facit per se applies-the employer may be convicted although he is not in any way morally cu1pable.". _ 69. As was observed by the House of Lords in a recent ¤case‘, the number of statutes which may give rise to the ~.question of vicarious criminal liability is "regrettab1y great", and the language "very far from uniform". But the effect of the numerous cases on the subject appears to be, "that (subject to certain exceptions), where the scope and purpose of the relevant Act is the maintenanceof proper 5 rand accepted standards of public order in licensed premises » or other comparable establishments, there arises under the legislation what Channel! JP called a "quasi-criminal —ojlence", which renders the licensee or proprietor criminally liable for the acts of his servants, though there may be no mens rea on his part. · 70. An elaborate analysis of the methods whereby the statute itself may create vicarious liability is found in the judgment of Lord Morris*:— ' "It is open to Parliament to provide that a parti- cular act is wrongful and that a person who does the act is guilty of an offence. Ip, general our criminal law requires that there should be mens rea in order toe establish guilt. (i) Parliament may, however, enact that mens rea is not necessary. There may be strict l `liability. (ii) So also it might be enacted that a person is guilty of an offence if his servant or agent does some act and does it with mens rea. It might be enacted that a person is guilty of an offence if some other per- , son not his servant or agent does some act and does it , ‘with mens rea. it might be enacted that a person is V ’ guilty of an offence if there is mens rea either in him ‘ or in the person doing the act. (iii) It might be enact- ` ed that a person is guilty of an offence if an act is done » · `by some other person even though there is no mens rca s ; in anyone". - ., 7,l. This aspect cf special enactments creating "quasi- , scriminal offences" has been thus put by Lord Devlin‘:—— ,_ V _ "The first distinguishing mark of the quasi-criminal · law then, is that a breach of it does not mean that the A ll/one v. Yiannopoullos, (1964) 3 weekly Law Reports, 1218, 1228 ·(H.L.) (per Lord Evershed). 2Sce para. 72, infra. . ”Vane v. Yiannopoullog, (195 3 Weekly Law Reports, 1218, I230, (Per Lord Morristof (Numerals indicating items; t °De·vlin, Enforcement of Morals, (1965), page 30. · ; 4 . i r ii] ~ 37 _ offender has done anything morally wrong. The second - distinguishing mark is that the law frequently does not ‘ care whether it catches the actual offender or not. 3 Owners of goods are frequently made absolutely liable Q for what happens to the goods while they are under , e 1 their control even if they are in no way responsible for I the interference; an example is when food is contami- 1 nated or adulterated. Likewise, they may be made liable for the acts of their agents even if they have ex- pressly forbidden the act which caused the offence. » This sort of measure can be justified by the argument l that it induces persons in charge of an organisation to j take steps to`see that the law is enforced in respect of ‘ things under their control. In some of our colonies s where the police force is sparse and the population scattered, and the detection of crime exceptionally diffi- cult, the law provides for imposing 3 collective fine on a village where there has been disorderly behaviour. That helps to ensure that the inhabitants will keep order among themselves. In England a more refined form of vicarious liability prevails. The majority of quasi-criminal offences are committed in the course of trade or commerce, and the fines that are imposed in respect of them fall upon the shareholders of a limited company or the proprietors of the business.". 72. Really speaking, vicarious liability in this context is Vicgous BH aspect of strict liability. As has been observedh "By ii¤b tYf¤¤ the general principles of criminal law, if any matter is made @{2gmq 3 criminal offence, there is imported into it that there must ° be something in the nature of mens rea. Therefore, in ordinary cases a corporation cannot be guilty of a criminal . offence, nov- can a master be liable criminally for an offence . , committed by his servant. But there are exceptions to this 4 . rule in the case of quasi—criminal ojfences, as they may be ' termed--acts forbidden by law under 3 penalty, possibly even under the penalty of imprisonment, at any rate in · — default of payment of a Hne—because the legislature thought it so important to prevent the act being committed that it forbade it absolutely to be done in any case. It seems to ` me that exactly the same principles apply to a corporation — doing such a thing. If it does an act which is absolutely forbidden it is liable for a penalty.". 73. The above analysis of mens rea“, and vicarious crimi- Obiect of they nal liabilitys, is not intended to imply that all the enact- ¤¤¤l¥’** ments dealing with the eight categories of the offences 5Q§:d,l§,{ ‘Pearks, Gunszan and Tee Ltd. v. Ward, (rgoz) 2 K.B. 1, rr ; (1902) i I A.E.R. Reprint 228, 232 (per Channel], J.). °Para. 5o to 60, supra. ~ ‘ · " `“ ‘ " ` °Para. g66 to 72, suprq. i I · i 1 38 which are the subject-matter of this Reportl, create offences of "strict liability". Many of them do require mens rea”. The analysis is only intended to bring out the position, that at least in respect of some of them, there has been a modi- . iication of mens rea. j The analysis is also intended to demonstrate, that sta- tutes creating new crimes represent the attempts of the Legislature to give effect to the criminal policy of the moment. "The Legislature is therefore primarily concerned to find the best method of dealing with the particular mis- chief which it is, at that moment, seeking to repress, and its decisions, aimed at a narrow target, are not as a rule reached by any careful regard for general principles of an . abstract kind"". Further, it will also show, that "as things are, the sta- ~ tutory crimes, as a whole mass, cannot be brought under a _ simple schemes of general principles of criminal liability"”. Representing, as they do, efforts of the Legislature to repress anti-social conduct of a particular variety prevalent ‘ at the particular moment when the Legislature is confront- ed with the problem, these enactments, therefore, may not tit in with the Scheme of the PenalCode. A synthesis of ` the principles on which most of the crimes in the Penal ' Code are based (on the one hand), and the principles on · which some of the crimes dealt with by these special enact- L _~ ments are based (on the other hand), would be difficult to ' achieve. In so far as mens rea is eliminated or modiiied, ' these special offences are "quasi-criminal"’ rather than criminal. Special rules 74. Besides provisions modifying mens rea.5, and similar °f°"*d°¤°°· provisions there are special rules of evidence laid down in . respect of many of the offences in question. An example ‘ is section 14 of the Essential Clommodities Act°, which pro- vides that where a person is prosecuted for contravening ‘ any order made under section 3 (oi the Act), being an order . ` which prohibits him from doi A any act or being in posses- . sion of a thing, without lawfd? authority or without a per- * _ mit, licence or other document, the burden of Proving that i he had such authority, permit, licence, or other document A ' shall be on html. 1 1P3l'2. 2, supra. . 2See para. 60, supra. I “Russel on Crime, (1964)»vVo1. 1, page 65. ·Cf. Mausell v. L. N. W. Rly. Cc. (1917) 2 K.B. 836 ; (1916-17) All E.R. Rep. 1101, 1106, (see judgment of Viscount Reading C.].). “Para. 50-6o, supra. · _ °Secrion 14, Essential Qomm oditieg $55 (10 of 1955). ’Foi- an exhaustive disissioi of >s$tQit0rj§ réversels of onus, see Glenville Williams, Criminal Law, he Qerlemi, VQ} @961;, page 896, at seq. pan. 292 and page 867,para. 2j4; i fi A . 4 39 7.5. Another familiar example of a special rule of evi- dence is section 123 of the Customs Actl, which applies To "gold, diamonds, manufactures of gold or diamonds, watches and other notified goods". Under this section, where such goods are seized under the Act [section 110 read with sec- tion 2(34)], in the reasonable belief that they are smuggled r goods, the burden of proving that they are not smuggled goods shall be on thc'person from whose possession they were seized? I 76. It should, next, be noted, that many of the eI13f_crl °$·==B. ·z¤¤e·¤s·¢w` .¢, ze $-,8 8 ·s. Now an me Lawiltcsutmrm ` 'Q H, _ MWA. A ·ré»··l2€ L,. . · l ( I · . 40 . difference, it would be very difficult to define, codify and incorporate what can be social and economic offences in the Indian Penal Code. For illustration, we may examine black-marketing, hoarding, trafficking in licences and permits, etc. The question of black- marketing arises only when the price of any commodity is fixed statutorily. Similarly, a person can be said to · s hoard any article and thus commit an offence only when he boards more than what he is permitted to, under the law. N ecessarily, black-marketing and hoard- ‘ ing cannot take place in respect of a commodity when its supply position is comfortable, and when, as a re- sult no restrictions are placed. Such restrictions are usually imposed, when necessary, under specific enact- ments, and the circumstances of the case are bound to · vary with the commodity and the position prevailing at the time. Trafficking in licences and permits takes ` place when these are transferred without the permis- _ sion of tho competent authority though such transfers . are prohibited by tho law, or when a premium is charg- ed on such transfers in spite of a prohibition under the aw. Here also the circumstances of the case and the ~ severity of the anti·social activity vary with the differ- ‘ ent classes of licences , and permits, necessitating punishments varying in séverity.". . Provisions are left to statutory rules and orders, because . varied and recurring action by way of subordinate legisla- tion is required, particularly in connection with essential commodities. Tho following points seem to be worthy of notice:- _ V (.1) It often becomes necessary to issue more than one order under an Act. ·By way of illustration, we ( may refer to the large number of orders issued in con- i , nection with control of sugar‘-"-”. These were issued under the Essential Com- modities Act. In 1963, an order on the subje¢t‘ was . issued under the Defence of India Rules, 1962. * Reference may also be made to orders issued under , . the Sugar (Regulationbf 'Production) Acts. » 1The Sugar (Control) }Ordcr, ,1955. ,(S.R.O. r86z—Ess. Com., Sugar. { dared the 27th August, IQSS). "See Divan Sugar etc. Mill: v. Union of :3 India, (:959) 2 S.C.R. (Simp) I;3 ; k.I.R. 1959 S.C._ 626. 7 · ¤The sugarcane (Control) Order,' 1955, (S.R.O. 1863—Ess.‘ Com. sugarcane, dated the 27Ill August, ,1955). i ’ ( - a ’The Sugarcane Prcssmud Control Order, 1959 (G.S.R. 55I/Ears.- Com/Press-mud, dated the 29tlg Apgjils {959)- . _` A ,, ~ **1*he Sugar (Conner) ’{QSR_676,i_dizgd 1963). e _. _ ¤_ , ,- . .. ·. I write sugar (R¤gfn¤tiq¤ of *96* ($5 °f **6*)* 41 , (b) Even more than one Act may have to be en- ‘ ¢acted to deal with one commodity, e.g. sugar *-2. (c) Changing circumstances require frequent amendments in statutory rules and orders. Thus, the Inter-Zonal Wheat Movement Control Order, 1957“ f was, between 1957 and 1961, amended seventeen times, before it was rescinded'. . Particulars of the amendments are given in the foot- 1n0te°. *See, for example- (0 the Sugar (Regulation of Production) Act, 1961 (55 of 1961); (ii) the Sugar Export Promotion Act, 1958 (93 of 1958); _ (iii) the6 Sugarcane Control (Additional Powers) Act, 1962 (39 of I9 2) ; _ (iv) the Sugarcane Act, 1934 (15 of 1934), which has been repealed in some States by local Acts ; (v) section 4, Sugar (Special Excise Duty) Act, 1959 (58 of 1959). V ’For history of some of the laws regarding sugar, see Tika Ramji v_ State, ([956) S.C.R. 393 ; A.I.R. 1956 S.C. 676. °’l`he Inter-Zonal Wheat Movement Control Order, 1957, (S.R.O. ‘ ·‘#€ 1986, dated the 13th June, 1957), (Gazette of India Extraordinary, Part II, s. 3, page 1985, dated the 13th June, 1957). _ 4The Order was rescinded by S.R.O. $03, dated the 5th April, 1961. A fresh order—the Inter—Zonal Wheat and Wheat Products (Movement) Congrol Order, 1964-—W8S issued later (GSR 511 dated the 23rd March, 1964 . 5The notifications amending the orders were- SRO. 2464, 27th July, 1957. SRO. 2630, 14th August, 1957. 4 SRO. 4043, 14th December, 1957 (published on 21-12-1957 ). ._ 5 _ SRO. 399, 25th January, 1958 (published on 1-2-58). ‘ GSR. 346, 5th M3Y,_I958 (published on IO-5-$8). GSR. 242, 15th April, 1958. GSR. 609, 12th July, 1958. I ~ ·GSR. G2§,`I2Ih July, 1958 (published on 19-7-58). GSR. 171, 7th February, 1959. ii GSR. 347, Iglh March, 1959. ·GSR. 641, 27th May, 1959. - GSR. 925, 29th July, 1959 (published on 8-8-59). A A GSR. 121, 2ISt January, 1960 (published on 30-I-60). GSR. 1117, 20th September, 1960 (published on 24-9-60). GSR. 1407, 24th November, 1960. _ I I csa. 1, gra January,. req. Y __ ‘ ‘ GSR. 35, 7th January, 1961. 42 (d) Amendments in an order' may sometimes become necessary in view of criticism of the order made by the Committee on Subordinate Legislation. (e) Further, under an order issued in pursuance of the Essential Commodities Act,2 it may become necessary to issue subsidiary orders. ‘ . ‘ l Thus, under clause 14(b)(2) of the Cotton Control Order, 1955, more than 4,000 orders were issued in 1958**. (gf) Again, it may become necessary to add to the very list of essential eommodities in the Essential Commodities Act'. , ' ` ` i This has been done in respect of several com- , modities, by notified orders‘·y°-"-°-°-1°. The above illustrations will show, that a degree of flexi- bilityis required in regard to` control over commodities, which cannot be had eunder the Indian Penal Code. V amines by ,77. In connection with delegated legislation? it may be R¤l¢S· pointed out, that it may be neressary to frame rules im- posing different requirements for different situations. An example is a rule mad under at , Prevention of Food l=}<=l"» whereby the specm¢s?1¤ts‘ to ids "Ghee’¥ must con arm » were laid down differently for dHerent areas, having re- gard to the fact that the "Reichert" value of pure gheeis not constant, but is dependent on several faetors, such . as——what is the breed of the cattle in an area, whether the cattle are fed on pasture or on stall, and so on"-1*. A Spwial 78. Another special feature to be noted is the conferment P°"°"· of special powers. An example is section 10 of the Preven- *Sce, for example Sixth Report of the Committee on Subordinate Legislation (Second Lol: Sabha) (9th September, 1959), page 2, para. 7. , °The Essential Commodities Act, 1955 (10 of 1955). I A 'Scc Committee on Subordinate Legislation, Sixth Report (Second Lok Sabha) (oth September, ross), new -=9~=r·p§ sions intended to add to their deterrent effect. The most f°' ¥’“bl‘°'*Y· apt illustration in this context is at Dfovision for publicity. "rhus, the Australian Act regarding b1ack—mark¤ti¤s°r makes elaborate provisions for, giving publicity to convic- A tions for black-marketing. _When a person has been con- victed of the oifence of black-marketing, then, under the Act,— (11) the court shall require the person convicted to exhibit, outside his place of business, a notice, contain- ing particulars relating to the conviction andto keep it exhibited continuously for not less than three months; (ii) the court muy require him to print on the invoices, accounts and letter-heads to be used by such person in business, during a period of not less than three months, a notice regarding his convictionl con- taining such particulars as the court determine; (iii) the Attorney-General may direct that the ‘ ¤ »- particulars regardingthe conviction may be broadcast; 3 0 1The Prevention of Food Adultcration 1954 (37 of 1954). ”Narasiinharaa v. Stare of Andhra` Pradesh, A.I.R. 1964 Andhra ’ >Pradesh 501, 503, para. 14. °Section 107, Insurance Act, 1938 (4 of 1938). I 4As to this section, see Raghubar Singh v. Emp. A.l.R. 1944 F.C. .25, 29. ` ‘ ‘Section 20, Prevention of Food Adultcration Act, [9544 (37 of . 1954). °Section I5 (2), Drugs (Control) Act, 1950 (26 of 1950). ' A __ *Section 280, Income-tax Act, 1961 (43 of`1961). °Section 137, Customs Act, 1962 (52 of 1962). · •The (Australian) Black-madteting Act (49 of 1942), sectiom"`12,13. mu *4* T V ' . 44 (iv) particulars regarding the conviction are to be published in the Gazette,and, if so directed by the. Attorney—Genera1, also in a newspaper. , Somewhat similar provisions are found in the Act that was in force on the subject in West Bengalk y Provisions for publicity are found in some Central Acts. also?-5-". A $P=°*¤l <=h¤· 81. The features enumerated above° amply show, that ‘ ';;°;°c:m°f 3* the enactments in question are of a special character, and. °n ' stand apart from the general criminal law of the country embodied in the Indian Penal Code. P°”*bg*Y °f 82. While taking a decision about transferring the I ?:“f;,€m?°°s provisions of special enactments to the Indian Penal Code, I we should bear in mind a practical aspect, namely, that. 1 with the passage of time, new and fresh offences under · the head "anti-social oifences" will come into existence, and those new offences may, in the light of practical needs, · necessitate their own special rules of evidence and proce- dure", as well as special provisions as to maximum anch minimum punishment. The manifestations of human · ingenuity cannot be predicted, and special provisions may become necessary to tackle them. On the other hand, it. may be that several of the offences dealt with in the special t enactments now in force may, in course of time, become- obsolete or lose their importance. In view of these consi- derations, it would-be more practicable to keep provisions. relating. to such odences in special enactments, as they, are at present. In this connection, we may also point out, that besides- the offences listed by the Santhanam Committeeb, there are several other offences which could be regarded of an= s anti-social character, and that these are all dealt with in. special lawsl. ; Lik¤1ih<><>d_ 83. We would also point out, that with the passage of $3E gcc""' Fl°"" time, new and fresh devices to evade the existing taxation coming . . . . . , imc cm_ or economic laws might come mto being, and the more * sence. convenient course would, therefore, be to deal with them~ Q in the relevant special enactments rather than in the- Indian Penal Code. ` *Sections zo and 21, Wes Bezgal ·- ' (repealed by West Bengal At: E3 of rg? mmmmg Act (32 of 1948) -. {See section 16 (2.), Prevention of Food Adulterution Act, 1954 (37 of . I954 - *See also section 287 of the Income-mx Act, 1961 (43 of 1961), and the recommendation made in the Report of the Direct Taxes, etc., Com- mittee, (1958-59), pages 186-187, para 7-87, 7-88. 4See also section 35, Drugs and Cosmetics Act, IQ40 (23 of 1940). ‘Paras. 48 to 80, supra. ° °Parag1·sph 2, supra. . . s A "See Appendix 1o. I C j ° 45 84. As has been statedl, "The race between the evaders of the law and the authorities who enforce the law may, in some fields (like techniques and methods), be one (continuous process, in which each tries to get the better of the other. In such circumstances, the Legislature _» and the Government may try to equip the enforcers of the l' law at any time with powers required at that time, consi- dering the prevailing circumstances, the nature and extent of actvities of evaders and extent of power requi- _ site for the officers enforcing the law, including rules and notifications to deal with the evaders." 85. We also made an attempt to study the genesis of Genesis of some of the special enactments, and the study bears out Spggalcnts what we are endeavouring to emphasise, namely them m ` "special" character“ of the relevant enactments. Thus, the Prevention of Food Adulteration Bill was introduced, for the following ;·easons“:— "Adulteration of foodstuffs is so rampant, and the evil has become so widespread and persistent, that nothing short of a somewhat drastic remedy provided for in the Bill can hope to change the situation. Only a concerted and determined onslaught on this most anti-social behaviour can hope to bring relief to the nation/’ . , Notwithstanding the existence in the Indian Penal Code of certain sections punishing adulteration‘, the enactment of a separate law was proposed, because that was consider- ed the only adequate way of dealing with the problem. 86. Similarly, the Prevention of Corruption Act, 1947 was passed5, because the opportunities for bribery and corruption had been enormously increased by war condi- tions, and because it was anticipated that post-war recons- truction would involve disbursements of very large sums of Government money. The enactment of a specialprovi- sion whereunder, possession of a sudden accretion of wealth should constitute an offence was (apart from proce- dural changes) the main innovation introduced by the · Act. The section creating the offence was framed in the terms in which it is now found (section 5), because it was felt that the correct legal course was to create a new _ offence of "criminal misconduct". J " r’ ¤Shreeram Durgaprasad (Private) Ltd. v. D. C. Customs Department, A.I.R. 1965 A.P. 294, 302, para. 33 (per Anantanarayana Ayyar J.) (August). _ 2Para. 81, supra. ”See Statement of Objects and Reasons, Gazette of India (1950), Part II, section 2, page 522. 4Sections 272-276, Indian Penal Code. 5Cf. Statement of Objects and Reasons, Gazette of India, (1946), Part V, page 374. °Cf. section 9 (1), Criminal Law Amendment Ordinance, 1943, and . nection 2 (1), Criminal Law Amendment Ordinance, 1946. 46 87. Again, the Railway Stores Actl was passed in 1955 to replace the Railway Stores (Unlawful Possession) Ordi- nancez, and to extend its provisions to Part B States? The Ordinance itself was promulgated on the 13th May, 1944, with a view to preventing persons from having unlawful - possession of articles of railway stores, a thing of frequent occurrence towards the end of the last war. The Act creates a new offence of "unlawful possession of railway stores"". The offence is more drastic than theft and allied offences, inasmuch as, under the Act,- I (i) it is enough if there is a reasonable suspicion that the stores are stolen or unlawfully obtained_ and (ii) it is for the accused to account satisfactorily how he came by such stores. 88. The Telegraph Wires Act! was enacteds, because thefts of copper wires used in telegraph lines had been so rampant, that tele-communications in several parts of the country were considerably dislocated during the two years preceding the passing of the Act". Many offenders had escaped only due to the failure to prove in court that the wires found in their possession had been stolen from the Posts and Telegraphs Department. Since copper wires used in telegraph lines were of distinctive gauges, it was felt that it would not be unreasonable to presume that any person found in possession of wires of these gauges came into their possession unlawfully (except in the case of persons who purchased them from the Disposal stock). Later, by an amendment in 19537, sale or purchase of any quantity of telegraph wire [as defined in section 2(b)] was prohibited except with the permission of the prescrib- ed authority. 89. Similarly, the Imports Act“ was enacted, because it was considered" that the measures of control imposed under rule 84 of the Defence of India Rules and subse- quently extended under the Emergency Provisions (Con- tinuance) Ordinance, 1946 (20 of 1946) would have to be continued for some time longer, in order to avoid any dis- turbance to the economy of the country during the transi- tion from war time to peace time conditions. At the same 1The Railway Stores (Unlawful Possession) Act, 1955 (51 of 1955). * )2The Railway Stores (Unlawful Possession) Ordinance, 1944 (19 of 1944 · 3See the Statement of Objects and Reasons, Gazette of India, (1954), Part II, section 4, page 374. 4Section 3. ` °The Telegraph Wires (Unlawful Possession) Act, 1950 (74 of [950). °Gazette of India, (1950), Part II, section 2, page 402. ’See section 4A, Telegraph Wires (Unlawful Possession) Act, 1950 (74 of mso)- °The Imports and Exports (Control) Act, 1947 (18 of 1947). Put zieemthe 8%tatement of Objects and Reasons, Gazette of India, ([947), 47 time, penalties had been "conside`rably reduced to suit peace conditions? 90. In this connection, it may be noted, that some of anerarion; the sections of the Indian Penal Code dealing with offences igxégglan relating to trade marks, were repealed or amended by bg Spam? special legislation which dealt comprehensively with the cmctmcmg subject. Thus, section 478, Indian Penal Code (Definition of trade—rnark) and section 480, Indian Penal Code (Using a false trade-mark), were repealed by, and sections 482, 483, 485 and 486 were amended by, the Trade and Merchan- dise Marks Act, 19581. 91. The study of the genesis of many of the special enact- Special Eu- _ ments", thus, shows, that they were either enacted to deal accmems and with problems which arose temporarily -but survived g’°Pl°*?*; longer than expected, or with problems that were Confined b°;?5,;l£_ to particular trades or industries or particular kinds of public properties, or otherwise to deal with particular species oi acts regarded as harmful. These laws are, thus, properly described as "special". Even though some of the acts proposed to be penalised by them" were already punishable under the Indian Penal Code, yet a special law had to be passed. Carrczoiw l——‘C,7F'FENCES Panvmrriwc ECONOMIC nnvmroemmr 92. Vi/e now proceed to consider, in detail, the various OH€,,c€sp,,,_ categories of offences mentioned in the Report of the San- venting eco- thanam Committee? The first of these is the following:- EEE mem V "Offences calculated to prevent or obstruct the (Categbry x). economic development of the country and endanger its economic health.". This appears to be 3 very wide and all-embracing category. The test being the economic development of the country and its economic health, enactments relating to public finance, control in trade, control on industry, control of power and resources and the like, would all fall under that category. It_fact, it is wide enough to cover many of the ottences mentioned in the other categories listed by the Committee, for example, evasion of taxes, and profiteering. But, as the other categories have been separately mentioned, the present one would have to be Confined to what is not Covered by them, ' We have listed separately some of the existing laws that seem to have some bearing on such that ¤Thc Trade and Merchandise Marks Act, 1958 (43 of 1958) “Parus. S5—90, supra. °E.g. theft. 4Pa1u. 2, supra. ‘Scc Appendix 1. 48 list being illustrative only and not intended to be exhaus- tive. So far as transferring the penal provisions of these laws to the Indian Penal Code is concerned, we think that it would not be a feasible proposition. It would, in the - first place, tremendously increase the bulk of the Code. Secondly, the penal provisions in these enactments are in- extricably woven with the other provisions or with the statutory rules issued thereunder, By way of example, we may cite the Industries (Development and Regulation) Actl. The penal section in that Act is section 24, which punishes a contravention etc., (i) of the provisions of several sections mentioned therein, or (ii) of directions or orders issued under the sections mentioned therein, or (iii) of any rule the contravention whereof is made punishable. The Act also contains provisions regarding burden of proof (section 28), and procedure and jurisdic- ` tion (sections 27, 29, etc.), All these provisions would become incomplete if the penal sections are transferred to i the Indian Penal Code. The same can be said of many other Acts, like the Foreign Exchange Regulation Act, 1947 and the Imports and Exports (Control) Act, 1947. 3?;°cr,§;gQ°' 93. We next come to the question whether addition of mentioned by any new provisions is called for under this category. At Santhanam another place in the Report*, the Santhanam Committee C°mm'“°°· gave an indication of the white-collar and economic crimes which it had in mind. After observing that such crimes rendered the enforcement of the laws more difficult, and that this type of crime was more dangerous not only because the financial stakes were higher but also because irreparable damage to public morals was done, the Com- mittee stated, that tax evasion and avoidance, share- A pushing, mal-practices in the share market and administra- tion of companies, monopolistic controls, usury, under- invoicing or over-invoicing`, hoarding, profiteering, sub- standard performance of contracts of construction and supply, evasion of economic laws, bribery and corruption, election offences and mal-practices, were some examples of white-collar crimes. Now, of the examples so given by the Committee, most, if not all, would be covered by the existing enactments on the subjects in question‘, which include certain provi- sions relating to economic offences also? Monopolistic controls and sub-standard performance of contracts are_ of course, important items. But the former has already been ;The Industries (Development and Regulation) Act, 1951 (65 of 1951 . “Repo1ts of the Santhanam Committee, page 11, para. 2‘I3. °As to under-invoicing, etc., see also Report of the Santhanam Com- mittee, page 253, item (xxii). 4See Appendices 1 to 8. ‘S¢e Appendix 1. 49 the subject-matter of consideration by a separate Commis- sion‘, whose report has been submitted recently, and it is unnecessary to discuss it in detail. The latter will be dealt with separately? 94. Economic crimes have received elaborate treatment Whether in countries in Eastern Europe"—‘. But certain observations ¤d<>1>ti<>p 0f- in relation to the laws in force in those countries penalis- °;§_:;’;’“§0m, ing such crimes may not be out of place. First, they seem Qastcm ` . to incarnate the economic and social philosophy of the Europe · group of countries concerned. Secondly, they include fcasibie- some activities which are, as a rule, not punishable else- wherei eg. speculations? Thirdly, many of the formula- tions of the offences are of a sweeping character. The lan- guage employed is generall, so that the provisions may » lead to varying interpretations at different times and l` places. 95. For the reasons given below, we do not think that I provisions of the general and sweeping character found in the laws of countries of Eastern Europea can be incorporat- ed into the Indian Penal Code:— (a) The concepts of economic policy and ideology on which they are based have first to be accepted, before they can be incorporated into the criminal law. _ (b) Even if those concepts and ideology are ac- · cepted, putting such provisions in the criminal law might lead to "bad judicial legislation", in view of their generality. In a country like India, with numerous High Courts, such provisions are likely to lead to conflicting interpretations and consequent un, certainty in the law,—a risk which should be under- taken only where compelling reasons exist. (c) Even if such provisions are to be enacted as a part of the Criminal law, they would appear to be of a special or temporary character. It is doubtful if they ' can be properly put into the Indian Penal Code, which is the basic penal law of the country. ` 96. One of the comments received by us suggest, that Poms sug- under the first category°, the following offences should be g¢S¥¢di¤ -.€& -+- _._ comments, _, 1The Monopolies Commission. 4 _ "Sce paragraph 126, infra. *See para. 29-34, supra. 4See also Appendices 16 and 21. °Cf. Mannheim, Criminal Justice and Social Reconstruction (1946), page 138. °Para. 29, supra. ’See Appendix 16, sections 225 and 227 (Hungarian Criminal Code). “Para. 94, supra. °Para. 92, supra. 50 made penal by inserting g Chapter in the Indian Penal Code: —— (il) smuggling across the Indian border; (ii) trafficking in foreign currency and bullion; (iii) any move, open or subtle, purported to obstruct any foreign aid; (iv) any move to incite the peasants in any area to abstain from cultivation; (1;) inciting strikes calculated to paralyse any transport or communication system, such as Railways, Port or road transport, etc.; (vi) under-invoicing export and over—invoicing import; (vii) export of manufactured goods, handicrafts or raw materials, in quantities below the specified stan- 1 dards. 97. We are not able to accept the suggestion. Some of the offences, e.g. smuggling. and trafficking in foreign cur- rency, are already covered by special enactments‘. A few. like “any move to obstruct any foreign aid" or "a¤y move to incite the peasant to abstain from cultivation" appear to be too wide. Assuming that such provisions would be · constitutional——a point on which we do not express any opinion,--they might cover many innocent activities. For example, a person who expresses an honest difference of opinion in regard to the policy followed as to foreign aid may find himself within the four corners of the suggested offence of "any move to obstruct any foreign aid". The rest, such as inciting strikes, etc., can e more appropriately dealt with in legislation relating to industrial disputes. Caroony 2.—EVASION AND Avoimmcis or Tax vgyirsion, etc- 98. The second category of oifences mentioned by the qcaigory 2)_ Santhanam Committee is- "Evasion and avoidance of taxes lawfully imposed". At another place in the Report“, the Committee dis- cussed in detail the topic of evasion and avoidance of income-tax, and enumerated certain sections of the Income-tax Act, 1961, which appeared to the Committee to offer scope for avoidance and evasion? The Committee observed, that the Department itself should examine and take suitable steps to plug loopholes on these matters; it suggested certain administrative measures, as Well as two 1See Appendix 1. ”Report of the Santhanam Committee, page 271 and page 272, items (vii) and (viii). °Th0se sections are listed in Appendix IO to this Report. 51 changes of a legal nature, namely, (i) making the in- come-tax offences of illegal evasion and avoidance cogniz- able and non—compoundable, and (ii) a provision that the . punishment should be imprisonment for at least three Ar years, and the amount found to be evaded or avoided. should be liable to forfeiture. lt nay also be noted, that so far as evasion of customs ` duty is concerned, the Report of the Committee contains a detailed discussion as to smuggling. 99. It is U¤¤€€€$$9Y}’ to elaborate here the distinction "Evasio¤"’ ordinarily understood between "evasion" and "avoidance". f‘f;$Oidancc,,__ , The former denotes a defect in the enforcement of the » laws, while the latter denotes a defect in the law itself. The latter has to be tackled by a detailed study of the provisions of the relevant enactments. 100. The following extract from the Report of the Income-tax Investigation Commissiorf, which was pre- sided over by Sir S. Varadachariar, former Judge of the Federal Court, lucidly explains the distinction between the two:- V ‘lt remains to add a few observations relevant to , ( the problem of avoidance and evasion. According to ’ well-established usage, the term “aV0idance" denotes the utilisation of loopholes to effect tax saving, within - the letter though perhaps contrary to the spirit of the law. It is rendered possible by defects in the framing of the law or in its drafting, as a result of which cases within the intendment of the law have not been brought in by clear or apt words, or cases which ought to be fairly comprised within the policy of the law have been omitted by oversight or for other reasons. Leak- p age of tax in this way has to be prevented by making the law clearer or wider; but there will never be an j end to attempts at income-tax avoidance. Though a l _ Lord Chancellor some years ago referred in terms of A disapprobation to the efforts of tax dodgers and to "the professional gentlemen who assisted them in the matter”" (Latillq v. Inland Revenue Commis$ione*r"— ,• Law Reports 1943 Appeal Cases at page 381), popular · or professional opinion does not seem to share that view but is prepared to regard such attempts as a "commendable exercise of ingenuity". As courts are- slow to construe tax laws according to their "intent" K (as distinguished from the letter of the law), occasional i —~_;.__m. > 281 *Report of the Santhanam Committee, page 19, para. 3·15 and page ` puafggport of the Income-tax Investigation Commission, (1949), page 7,. at p;’;g¢Q;· cuss that question in the abstract. Any specific recom- "'“°“‘ mendation must await specific proposals for amendment. 120. In one of the comments received by us, 3 Sl1gg€S·'I-’oints wg- tion has been made that the suppression of income, or gcsrcd in suppression of information relating to sale and purchase, °°‘“"'°‘“”· should be made an offence, either by including it in a Chapter in the Penal Code intended to deal with social and economic oifences, or by inserting a new section 47'{B. The matter, however, seems to be amply covered by the provisions in the various enactments relating to taxation‘, and a new provision does not appear to be called for. 121. Regarding "avoidance", it is obvious that the Avoidance changes, if any, will have to be made not in the penal law f'°‘é;° b' but in the taxing enactmentsl. That is outside the scope °° °’ of this Report. Carrconv 3.—MISUSE or PUBL1c Posrrion BY PUBLIC Sznvlmrs 122. The third category of offences mentioned by the Misuse of Santhanam Committee is the following:-— Elictirbposi- I0 y "Misuse of their position by public servants in vubiic ¤¤¢- making of contracts and disposal of public property, ff ) issue of licences and permits and similar other cg Y 3' matters". The Committee observedl that where there was power and discretion, there was always the possibility of abuse, more so when the power and discretion had been exercised in the context of scarcity and controls and pressure to spend public money. It also referred‘ to dishonest prac- tices like the system of "speed money" (money paid to speed up the process of movement of files, etc.) and to the corruption prevalent in contracts of construction, pur- chases, sales, etc.? 123. There are numerous provisions regarding misuse Existing ' of position by public servants in various enactments? Mis- £;;1"’“'°”’ use of such position in the making of contracts or disposal y"d‘ of property is not separately dealt with in any of these enactments. If by such misuse the public servant con- cerned obtains any valuable thing or pecuniary advantage, the offence would be covered by section 5(1) (d) read with ' See Appendix 2. 2 Cf. Para. 99-100, supra. 3 Report of the Santhanam Committee, page 9, para 2-9. * Report of the Santhannm Committee, page 9, para. 2-ro. ‘ Report of the SanthanamOo¤¤1ittee,.p•ge ro, pan 2-::. ° Sec Appendix 3. ' f`} 62 section 5(2) of the Prevention of Corruption Actl-2, the relevant portion of which is quoted below‘:— "5(1). A public servant is said to commit the oifence of criminal misconduct in the discharge of his duty if he, by corrupt or illegal means or by otherwise abusing his position as public servant, obtains for him- _ self or for any other person any valuable thing or pecuniary advantage. 5(2). Any public servant who commits criminal misconduct in the discharge of his duty shall be punishable with imprisonment for a term which shall _not be less than one year but which may extend to seven years and shall also be liable to iine: Provided that the court may, for any special , reasons recorded in writing, impose a sentence of im- prisonment of less than one year.". ` Qéggft 124. What remains is the misuse of such position with- bmcm out obtaining any such beneyit. Such cases would be rare, and if they do happen, it would be difficult to ascribe a criminal intention to the person concerned in such cases. Eggggin 125, It has been suggested in one of the comments re- commmm ceived by us, that a new section—section l64A—-should be inserted in the Indian Penal Code to penalise the misuse of position by public servants in the making of contracts, etc. The matter, however, seems to be sufficiently cover- ed by section 5 of the Prevention of Corruption Acta. CArEc;oRY 4.—D1zL1vERY or cooos NOT IN ACCORDANCE WITH CONTRACT I%°HV€¥g’»¤t¢· 126. The fourth category of the offences listed by the E, fc‘;gr§_"°t Santhanam Committee is the following:- ¤¤¤¤ with "Delivery by individuals and industrial and com- €g2g;*1;y4) rnercial undertakings of goods not in accordance with ` agreed specifications in fulfilment of contracts entered into with public authorities". _ At another place in the Report‘, the Committee observed, that frequently it was the dishonest contractors and suppliers who, having obtained the contract by under- cutting, wanted to deliver inferior goods or get approval for sub-standard work, and, for this purpose, were prepar- ed to spend a portion of their ill-earned profit. In an Annexure to the Reports, the Committee discussed in de- tail how favours could be shown by passing and accepting 1 The Prevention of Corruption Act, 1947 (2 of I947). ’ For a detailed analysis, see Appendix 23. “ The Prevention of Corruption Act 1947 (2 of 1947). ‘ Report of the Santhanam Committee, page 10, para 2-11. (B, ‘ Report of the Santhanam Committee, Annexure VII, page 236, i:e.n 63 goods which were not strictly in accordance with the specifications laid down in the accepted tenders, or by not applying the penalty clause in respect of rejected goods, or by not strictly applying all the terms of the contract, or by giving wrong certificates about completion of inspection or actual despatch of goods. 127. We have listed separatelyl some of the existing Exisqipz provisions which have a bearing on the mal-practice in §;21';§“ question the most important of these are sections 415 and ' 420, Indian Penal Code, which run as follows:-— *415. Whoever, by deceiving any person, fraudui Cheating. lently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat". E'xplanation.—A dishonest concealment of facts is a deception within the meaning of this section.’. "420. Whoever cheats and thereby dishonestly in- g;;*g;’£s“d duees the person deceived to deliver any p1‘0p€1‘tY t0 mauemg y any person, or to make, alter or destroy the whole or delivery of any part of a valuable security, or anything which is PT0P€!'YY· signed or sealed, and which is capable of being con- verted into 8 valuable security, shall be punished with imprisonment of either description for a term which irinay extend to seven years, and shall also be liable to 11C.,,. 128. We considered carefully the question whether the “Ch¢¤ti¤8” offence in question is covered by section 415—420, Indian :?d£°g;v;?; Penal Code. "Cheating", as defined in section 415, g ’ ' requires- (cz) deception of a person, plug (b) fraudulently or dishonestly inducing the person so deceived to deliver any property etc. OR · (a) deception of a person, plus (b) intentionally inducing the person so deceived to do or omit any thing which he would not do or omit if he were not deceived, and which act or omission causes, etc., damage or harm to that person in body, mind, reputation or property. *Scc Appendix 4. ’Pam. I27, supra. 64 The section, thus, falls into two parts! Under the first part, the act must be done fraudulently, etc., and must re- sult in delivery, etc. Under the second part, there must be intentional inducement, etc., and the act or omission in- duced must cause damage or harm. Deception, is, how- ever, common to both the parts. 129. Deception generally is "to lead into error by caus- ing to believe what is false or to disbelieve what is true'". The following observations of Buckley J.“ as to the meaning of "deceive" are interesting:-— "To deceive is, I apprehend, to induce a man to be- lieve that a thing is true which is false, and which the person practising the deceit knows or believes to be ` false. To defraud is to deprive by deceit: it is by deceit to induce a man to act to his injury. More tersely it may be put, that to deceive is by falsehood to induce a state of mind; to defraud is by deceit to induce ‘ a course of action.". (The aspect of likelihood of injury, as an ingredient of "intent to defraud", is not relevant for the present _ purpose)‘. N;°°m8 °§ 130. The first ingredient of cheating is, thus, "deception’ . °°°pn°° ' The point whivh requires consideration is, whether there is "deception" when a person delivers sub-standard goods, without making any express representation that the goods are in accordance with the contract. The argument that may be advanced is, that the contractor does not deceive any person, where he makes no representation that the goods are in accordance with the contract. We are not inclined to accept this argument. Though decided cases dealing with this specinc point are few? it would appear, that in such case .q representation to the above effect could be implied. It may be pointed out, that., as provided by the Explanation to section 415, Indian Penal Codez-”, a dishonest concealment of facts is "deception". Illustrations (h) and (i) to section 415 also emphasise the same aspect. *Cf Ramji v. Harshadrai, A.I.R. 1960 Bom. 268. I) ’See P. P. v. Vedanmm, A.I.R. 1952 Mad. 183. para. 4 (Subba Rao ’Re London and Globe Finance Corporation Ltd. (1903) 1 Ch. 728, 732-733 approved in R. v. Wines, (1953) 2 All Eng. Reports 1497, 1498 (Court of Criminal Appeal). *As to this, see- (i") R. N. Gooderson, “Preiudice as a test of Intent to defraud ", (1960) Camb. Law Journal 199, 201. (ie)Q. E. v. Abbas, I.L.R. 25 Ca!. 512 (F. B.), (iiz)Q. E. v. Sushi Bhushan, (r898) I.L.R. I5 All. 210, 217 r 'See Appendix 24. 'See also para. 127, supra. ’Sur¢ndra v. Bai Narmada, A.I.R. 1963 Gui. 239.. 65 131. As has been observed', "The practice of dleceptiorl implies the practice of fraud and falsehood. If`or, t ere can be no deception without fraud, and falsehood 1S a specws 0 fraud implied in deceit. Now, fraud is hydra-headed, and its ways of attack are insidious and innumerable.,) It may consist of words, acts or conduct, or all combined. . 133 In practice, the pointz may often be academic, as cgfmi in respect of huge contracts where detailed bills are to be presentation submitted, the bills will have to describe the goods sup- acadcmm plied in great detail, so that the contractor cannot avioid . making an express representation at some stage or other . 133. Where the defect in the goods is discovered before Agtempt to payment, it would be an attempt to cheat‘-5-°. ° can A 134. Another point which we had to consider was, whe- 3,°g¤f§é¤g;Y ther cases where the officer receiving delivery andthe and Umm offender are acting in compl1c1ty, are covered by sections dgI·g_ 415-420, Indian Penal Code. We think that they would be covered. In fact, this seems to have been assumed in a recent decision of the Supreme Court", and in cases of cer- tain High Courtss-°. 135. In England, at common law, short delivery was held Position in not to be "cheating" (in the absence of use of false mea- E¤ghShl°"· sures, etc., as a general course of dealmg, or to many cus- tomers or unless there is a conspiracy to cheat)1°—“. The act was regarded only as an unfair dealing. It was stated, that fraud, to be the object of a criminal prosecution, must be calculated to defraud numbers. 1 Gour, Penal Law of India, (1962), Vol. 3, page 2225. 2 Para. 13o, supra. I ° Cf. Billinghum: v. Emp. A.I.R. 1924 Cal. 18, 41, 43 (Sanderson C. J. and Richardson ].). 4Billmghu sr v. E p. A.I.R. 1924 Cal. IS 4I 43 (S d 11 C. I. and Richardsoh J.). m , , an USO 5R. v. Lighz, (1915) 84 L.].K.B. 865 ; (1914-15) A11. E.R. Rep. 659 (C.C.A.). ° Ha1sbu1·y’s Laws of England, (3fd Edn.), Vol. IO, page 828, footnote (h) and page 931, para. 1602. ’Cf Banwari Lal v. The Union of India, A.I.R. 1963 S.C. 1620. 8 See in re 9*. S. Dhas, A.I.R. 1940 Mad. 155, 157. ’ The decision in Sheanarayan v. Sraze of Bihar, A.I.R. 1953 P t. . 228, 229, para. II (S. K. Das J.) can be distinguished on the facts.a 225/ if R. v. Wheazly, (1761) 2 Burr. 1125, 1127, cited in Archbold, Criminal leadmgs, etc. (1962 Edn.), para. 2001. *1 See also Russel on Crime (1964), Vol. 2, pages 1163 and 1164. 66 This rule of the common law was altered, to some ex- tent, by section 32, Larceny Act‘—i. The relevant portion of the section runs as follows.- **32. Every person who by any false pretence (l) with intent to defraud, obtains from any other per- son any chatfel, money, or valuable security, or causes or procures any money to be paid, or any chattel or valuable security to be delivered, to himself or to any other person for the uSe or benefit or on account of himself or any other person; ....... . .............,...n ·.·...............................·.··.·@:{••;,'.•,¤'•`_••~•·••··-· shall be guilty of a misdemeanour and on conviction thereof liable to imprisonment for any term not exceed- ing tive years}`. The e>:p=:cssion "false pretence" includes a pre- tence by get or conduct without words spoken? Kirlds ¤§ 136. In one of the coznmentst received by us, it has been m¤l¤*==¤<·¤·=S· stated that there aie three kinds of malpractices that have come to notice—»— {cr) The contractor, in collusion with the inspectors of Governinenp committed illegal acts in getting stores of an inferior quality passed as if they were of the specifications specified in the contract, and supplied the same and induced the Government to part with the valuc thereof. (ZJ) The contractor, after getting the stores passed by the inspectors, despatched unpassed stores in place of passed stores, and thus defrauded the Government by inducing it to part with the value of the passed stores. (c) The contractor, by furnishing false particulam and quoting nctitious numbers of Railway Receipts, cheated the Government and obtained 90 per cent. price of the goods without supplying them. M\gce section 32,A ACty_l9I6 (6 and 7 Geo. 5iC. 5o). 2Sce Russell on Crime (IQ64)> Vol. 2, pages 1165 and 1166. °Ru ssell on Crime @964), Vol. 2, page 1176. 4The comment,-however, adds that practically all these are covered by the existing penal provisions in s. 415 and 410, read with sections mg and 120-B, ndia Penal Code. 67 137. In view of the fact that the volume of contracts Proposed · with Government and other public authorities has increased $°°¤°¤- tremendously and is likely to increase further, and also having regard to the fact that the point was raised before us, we propose a specific provision on the subject‘ though we think that the existing law covers it. Before, however, it is enacted into law, one practical aspect which we have indicated separatelyg, will have to be examined by the Government. _138. Some of the comments received by us objected to 50193 we- treating undertakings in public and private sectors differ- ontly in this respect. It has also been stated,-that some- ` times goods are not delivered in accordance with agreed specifications, for reasons beyond the control of the parties concerned, and it has been suggested that it should be clear- ly laid down that mis-delivery or wrong-delivery should be · considered an offence only if done deliberately. So far as the first point is concerned, we think that a fraudulent breach of contract with the Government or a public authority can be regarded as standing on e different footing from a fraudulent breach of a private contract. So far as the second point is concerned, the provision proposed by us" has been so framed as not to take in any such honest defaulters. 139. We should, however, state here, that we have not P’°P°S°d considered the question whether the proposed section‘ fg°E2" Im would deter honest contractors from entering into contracts enacted with the Government and other public authorities. An wirh5>¤r_ · apprehension to that effect has been expressed in one of the E‘;‘;§‘d°;f‘g comments received by us on the subject. Before the propos- pcrcxssionp ed section is enacted, this aspect of the matter, which is a practical one, will have to be examined by the Government. CATEGORY 5.—HOAR¤1Nc; AND PROFITEERING 140. The fifth category of the offences mentioned by the Hoarding Santhanam Committee is—"Profiteering, black—marketing ,§:;r£?n";' and hoarding; . (Category 5)_ · 141. The existing laws relating to these offences are Existing listed separately. As will be seen, the details of the policy F’*”°;’}S‘g“’ laid down in these laws have tc be worked out by orders ana’S° ° and rules issued under those laws. The provisions that emerge, as a result of those laws read with such statutory *Appen:lix 31, section 42OA, Indian Penal Code (Proposed). " Para. 139, infra. 3 Appendix 31, section 42oA, Indian Peml Code (Proposed) 4 P3!'2. I3'] Supfd. l ° Sec Appendix 5. 68 orders or rules, are bound to vary in respect of each com- modity or group of commodities. There is a whole struc- ture of legislation and sub-legislation which has come into existence as a result of the exercise of various powers by various authorities as to the control of essential commo- dities. We do not think that the transfer of the offences against such legislation to the Penal Code would be conve- nient. It should also be noted, that there are special rules of evidence and procedure enacted by some of these enact- ments. For example, section 11 of the Essential Commo- dities Act1‘ bars the court from taking cognizance of an offence under that Act, except on a written report of a pub- lic servant. Again, section 14 of that Act enacts a rule as to burden of proof. It is obvious that the Indian Penal Code cannot, be encumbered with these provisions. ‘ Hiwfy Of 142. Another aspect to be emphasized is that these ;;gfi;‘]t'°;°O offences are essentially of a temporary and special character. com-roigof The conditions of scarcity prevailing in respect of each essential _ commodity are bound to differ from time to time and from °°mm°dm€¤· place to place, and for that reason, their transfer to the Indian Penal Code would not lead to any practical benefit. The history of the legislation on the subject may be noted. During the Second World War, provisions on the subject , were contained in the Defence of India Rules. In 1946, the Central Legislature passed the Essential Supplies (Tempo- _ rary Powers) Acti under Entries 27 and 29 of List II of the ` Government of India Act, 1935, "Trade and Commerce within the Province" and "pr0duction, supply and distribu- tion of goods" as altered by the India (Central Government and Legislature) Act. 1946* (hereinafter referred to as the English Act). 143. The effect of the English Act was to empower the Central Legislature to make laws with respect to trade and commerce in, and production, supply and distribution of, certain specified goods‘, for a temporary period mentioned in section 4, and the Essential Supplies Act came into force on the 19th November, 1946. The Act was to expire on the expiry of the period mentioned in section 4 of the English Act. But, by the combined effect of the public notification issued by the Governcr—Genera1 under section 4 of the English Act, and the resolutions passed from time to time by the Constituent Assembly acting as the Dominion Legisla- ture, the life of the Essential Supplies Act was further ex- tended upto the 26th January, 1955. Before the Act expir- ed, the President promulgated the Essential Commodities 1The Essential Commodities Act, 1955 (10 of 1955). 2The Essential Supplies (Temporary Powers) Act, 1946 (24 of 1946). *The India (Central Government and Legislature) Act, 1946 (9 and IO Geo. 6 c. 39). 4Se: Basu, Commentary on the Constitution of India. (1964) Vol. 5, ~•ge 50 . 69 Ordinance!, which was replaced by the Essential Commo- dities Acti, which is the Act now in force. Detailed history of the various resolutions of the Constituent Assembly and the notification issued by the Governor-General would be found in the undenmentioned decisions“-"-5. The brief historical resume given above will show the special character of the legislation on the surbject. 144. One comment received by us suggests that ih€S€ P°i¤*’ $*18- offences should be included in a new Chapter in the Indian gggg U1; Penal Code. The comment also offers a definition of pro- ' iiteering as "selling a thing at a rate in excess of its con- trolled price", and a definition of hoarding as "storage in excess of a permissible quantity". It also points out, that the meaning of the term "Black-marketing" is obscure, and emphasises that the definition of that expression should in- » clude suppression of facts relating to the acquisition or dis- posal of things controlled by different special laws. The definitions suggested in this comment, however, themselves postulate the existence of special laws containing the neces- sary substantive provisions. For this very reason, such pro- visions cannot be inserted in the Penal Code. 145. In this connection, we may refer to the West WW B<=¤8•l Bengal Black-marketing Act, 19486 (now repealed). Sec- ACL tion 2 of that gave a very wide definition of "black- marketing", but almost every clause of that definition assumed the existence of another (special) law, i.e. a law which fixed prices, provided for rationing, or regulated the supply, distribution, sale, disposal, etc., of goods, or their storage, production or manufacture, acquisition or movement, etc. Thus, section 2(a) spoke of "selling or purchasing for purposes of trade any goods at a greater price than the maximum price fixed by or under any law, notification, or order for the time being in force for the sale of goods". Section 2(b) began thus—"otherwise than in accordance with any law, etc. selling or disposing of any articles rationed, etc.", 146. As regards the addition of new provisions con- Addition of cerning the offences of hoarding, black-marketing and ¤9W Dw- profiteering, an amendment of the Indian Penal Code "‘s‘°“‘· would not be convenient. The details of the stock which 1The Essential Commodities Ordinance, 1955 (1 of 1955). *The Essential Commodities Act, 1955 (IO of 1955). ’Khashed Ali v. The King, A.I.R. 1950 Cal. zoz. 4Ramananda v. The State, A.I.R. 1951 Cal. 120. ‘Sm:e v. Him Lal, A.I.R. 1951 Bom. 369. , I9;g'lEl0V;e;;p Black-marketing Act, :948 (Went Bengal Act 3zof 70 can be lawfully possessed (hoarding), the conditions sub- ject to which transactions may be entered into (black- marketing), and the maximum prices that could be charg- ed (profiteering), would vary in respect of each com- modity, and, therefore, a general and sweeping provision { cannot conveniently be incorporated in the Indian Penal Code. We may also point out, that in respect of matters on which the existing provisions are found to be inad- equate, it is open to Government to initiate amendments thereto or to introduce further special legislation, when- ever necessary]. Cixrisoony 6.——Aoor.r1·:aAr1oN , Adultcration 147. The sixth category of offences mentioned by the . (€¤¥°80¥Y 6)- Santhanam Committee is——"Adulteration of foodstuffs and drugs". Exlsimg 148. The existing provisions as to these offences are °r°vm°ns' listed separately? Some provisions on the subject are contained in sections 272 to 276, Indian Penal Code. But special enactments on the subject that are now in force, — are much more important, and prosecutions are usually filed under the special enactments. ‘ Transfer not 149. The Prevention of Food Adulteration Act’ contains f°°”’°*°- elaborate provisions of a substantive, procedural and evi- denciary character, which cannot possibly be transferred to the Indian Penal Code. Section 2(1 ) of the Act contains an elaborate definition of the expression "adulterated", and clauses (j), (lc) and (I`) of that definition refer to the "prescribed" extent of colouring matter or preservative, or the "prescribed" standard of quality or purity, etc. The standard of quality and purity and limits of colouring matter can thus be ascertained only from the rules made under the Act. Section 19 bars the raising of certain defences by the vendor to the effect that he was ignorant of the nature, substance or quality of the food sold by him (except in certain cases). Section 16(2) empowers the Court to cause the offenders name etc., to be published where the offender is a second or subsequent offender. Again, sec- tion l3(5) contains a rule of evidence as to the report of the public analyst. Section 21 confers higher powers upon Magistrates of the First Class in relation to the sentences that they can pass for offences under the Act. It would, obviously, be impracticable to transfer all these sections to the Indian Penal Code. It would not be convenient to 1See, for example, the Supply and Prices of Goods Act, 1950 (70 of 1950) which was repealed by the Rcpealing and Amending Act, 1957. ’Soe Appendix 6. *'I`h• Pnvention tof Food Adulzeration Act, 1954 (37 of I(9j4). ih split them also, that is, to transfer the substantive provi- . sions to the Penal Code, and to leave the remaining proce— aural provisions in the Act, as that is bound to create confusion. 150. A study of the Drugs and Cosmetics Actl will also show, that its penal provisions cannot be transferred to the Indian Penal Code. There are vast rule`-making powers under sections 12, 16(2) and 33 of the Act, and breach of the rules may attract penalty under sections 13 and 27(a) read with sections 17(e), 17A(e) 18(a)(ii·l), 18(a) (vi), 18(b), etc. Then, there are special rules of evidence in sections 19 and 25(3). There are special provisions as to jurisdiction and procedure in sections 15, 32 and 36. There are provisions for enhanced punishment on second or subsequent conviction, in sections 13(2) and 30, and also a provision regarding offences by companies in section 34. Finally, there is provision for publication of particulars relating to sentences in section 35. To transfer the penal provisions to the Indian Penal Code would, in view of · these special provisons, mean a virtual disintegration of _ the Act. 151. As regards the addition of new provisions, that is Additi<>¤ 9f a matter concerning amendment of the relevant Acts. ;£;S}"°“' 152. The fact that we are not recommending transfer Ad¤Ii9f¤t§¤¤ to the Indian Penal Code of the provisions as to adultera- :"?¤£?h° tion“ does not, of course, mean that we under·rate the P ' gravity of the offence of adulteration. In fact, public opinion on the subject appears to be strong. A comment · signed by several citizens residing. in West Bengal has suggested, that persons guilty of adulteration of medicines . should be punished with the death sentence along with confiscation of property, that persons guilty of adultera- · tion of food should be punished with life imprisonment along with confiscation of property, and that in all cases of conviction, wide publicity through the Press, the cinema and the radio should be given. Another comment has suggested, that the relevant Acts may be amended so as to provide compulsory rigorous imprisonment and also fine, to be imposed on the convicted persons. One com- ment suggests, that sections 272 and 274 of the Indian Penal Code should be suitably amended, and that the maximum punishment for adulteration should be hanging, as such adulteration may sometimes cause death, and that the offence should be made cognizable. If any amendments pertaining to sentence are requir- ed, those will have to be made to the relevant enactments relating to food and drugs. _ 1The Drugs and Cosmetics Act; I§4D (23 of 1940).- , 1. 'Para. 149-150, supra. ` 47 Law—6. ` 72 Fanurgof 153. The failure of prosecutions under the Prevention · prosecutions of Food Adulteration Act is often put forth as a matter deserving serious consideration. And no doubt it is so. But such failures are not due to a defect in the penal provisions or in their being dealt with in special laws. The causes are to be found elsewhere. 154. Thus, prosecutions may fail because of defective reports of the Public Analystl or delay in the examination of samples?. Sometimes, the rules as in force up-to-date are not brought to the notice of the court? Complications may also arise where the procedure prescribed by the Act for taking samples is not followed? The same diiiiculty may arise if the provisions of the Act requiring complaint by a particular person are not complied with? 155. In this connection, it must also be pointed out, that higher courts have not failed to impress upon the magis- tracy the importance of legislation relating to adulteration of food, and the need for ensuring that mere technicalities . do not hamper or defeat the cause of justice? CArmGoRY ’7.——Tu£:Fr AND MISAPPROPRIATION or PUBLIC PRo- PERTY AND FUNDS. — Theft and 156. The seventh category of the offences mentioned by misappro- the Santhanam Committee is—"Theft and misappropria- priarivn of tion of public property and funds". . public pro- _ Egtgs and The existng provisions as to these oifences are listed (category 7), separatelyl. The offences are mainly dealt with- (i) in the Indian Penal Code; (ii) in the Prevention of Corruption Act, 1947; and (iii) in special enactments relating to particular subjects. Transfer to the Indian Penal Code of the provisions . contained in the Prevention of Corruption Act, 1947, is not Y practicable, as the Act contains its own rules of evidence and procedure? ¤Cj€ the cases cited in State v. Gunjlal, A.I.R. 1964 Pun. 475, 476, 477, paras. 2 and 6. ’Municipal Corporation of Delhi v. Surja Ram, (1965) 2 Cr. L. J. 571. °CjZ Melo Singh v. Stale, A.I.R. 1964 Pun. 332, 333. 4Cf Food Inspector v. P.Kannan, A.I.R. 1964 Kerala 261. °Cf. State v. Ishzvzr Saran, A.I.R. 1964 _Al1. 497. °See Delhi Municipality v. Jai Doyal, A.I.R. 1964 Pun. 520, paras. I1 and I2. 'See Appendix 7. ‘ 'Sec sections 3, 4, 5, 5A and 6, Prevention of Corruption Act, 1947 (2 of r9s7>· »- B 157. Transfer to the Indian Penal Code of the provisions Transfer not of other special enactments under this category does not f°¤S*bl°· appear to be feasible, as the provisions are a part of the . integrated schemes of the particular enactments. 158. The addition of new ofences under this category Addition of is a matter which need not be considered until any deii- new pro- ciency in the existing provisions is brought to notice. "*S1°”S· 159. We, however, think that the punishment for the P¥°V1Si°é*f theft of public property should be enhanced, so as to pro- §fQ§°g‘t? °r vide a more stringent check on such thefts. We propose public pro- an amendment to the Indian Penal Code on the subjectl. perry. Theft is punishable under the Indian Penal Cod_e (section 379), and aggravated forms thereof have also been dealt with in the same Code (sections 380, 381). It would not, therefore, be against the scheme of that Code to place the proposed provision in that Codez. 160. As regards misappropriation of public property, the offence, if committed by a public servant, would, in most cases, fall under section 409, Indian Penal Code (Criminal breach of trust by a public servant, or by banker, merchant or agent). The maximum punishment for that I offence is imprisonment for life or imprisonment of either description upto ten years, and also fine, which seems to be sufficiently deterrent. We do not, therefore, propose any increase in the punishment. 161. One of the comments received by us also states, P°imS §“8· that the offence of theft (or misappropriation) of public Eg$°:,c1:m property is much graver than the same offence in respect ` of property of an individual or company, and should be 3 adequately punished. Cnrooiw 8.--Tmr-rrcxmc IN r.rcENcEs 162. We now come to the eighth category of the offences Traffwkins mentioned by the Santhanam Committee, namely, "TrafHck- g;¤g§;¤°::é mg in licences, permits etc. . (Category 8)_ There are no direct statutory provisions creating a specinc offence of this nature. Some of the important enactments dealing with the control of industries, imports and exports and foreign exchange“, seem, however, to imply, that ordinarily a licence, permit or similar other document issued under those enactments cannot be trans- ferred for pro1’it, at least where the competent authority imposes such conditions in the licences, etc. 1See Appen 31, section 379A, I.P.C. (Proposed). ’See also para . 160 infra. ’For details , see Appendix 8. é e B 163. The subject has been dealt with in the Report of the Committee at various places. The Committee has Cl1S- cussed the procedure for the scrutiny of applications receiv- ed under the Industries (Development and Regulation) Act, 1951*, and illustrated the unfair practices that may arise in the absence of Held verification of progress reports, eg., the licensee utilising the services of sub-contractors instead of setting up the factory himself? The Committee has made certain recommendation? regarding import and export control also. It has observed, that corruption in that sphere arose from (t) issue of licences or quota certi- ficates in fictitious names, (ii) issue of licences to actual users on forged certificate and without proper scrutiny nf documents, (ith issue of licences to prospective exporters on the basis of false or forged orders of foreign suppliers, ¤ (tv) theft of blank licences, etc. by the staff and supply of . the same to parties for value, (2:) theft of issued licences ` by the staff at the time of the despatch or when returned by parties for revalidation, etc., and sale to other parties, (vt) applying for licences even after changes in the cons- titution or ownership of the importer’s business, (vit) trafficking in licences, (viii) applying for licences in the name of fictitious firms, (ix) soliciting of licences, etc*. As regards import licences granted as export incentives, the Committee was told, that they were transferable and this caused serious damage to the domestic market and foreign exchange resources? (It also referred° to the mal- practice of material allowed to be imported for use in manufacturing exportablc goods being sold for huge pro- fits, and recommended that such offences should be punishable with imprisonment of at least 3 years and a fine which would be twice the market price of the import- ed goods). f”°‘*“l.”g. ‘{f 164. The Committee has not su ested an definition agamcgggts of traflicking. A definition of "tr§fficking" stlggestea in suggested in one of the comments is, "the outright sale of licenses and comments. permits and allowing any other person besides 'the one intended, to enjoy the fruits of such licences and permits.". Another comment states, that "trafIicking" takes place when a licence is transferred without the permission of the competent authority, though such transfers are prohibited by law, or when a premium is charged on such transfers in spite of a prohibition under the law. 'Report of the Santhanam Committee, p¤g€ 247- ¤Report of the Santhanam Committee, pages 247 and 249. 4Rcport of the Santhanam Committee, a , ' cm. cw, co. mv, cum, em, ae, (.xx·vig§$1i12€¤?xtf:€iz)?54, pm " "°"" "Report of the Santhanam Committee, page 254; pam. 9; mepm or the smthmm Committee, pm =s8. pm ne sMEN·r or rm; COUNTRY AND ENDANGER Irs ECONOMIC nmAL·1·n_ Acts listed inside- (1) The Customs Act, 1962 (52 of 1962). (2) The Atomic Energy Act, 1962 (33 of 1962). (3) The Coifee Act, 1942 (7 of 1942). (4) The Imports and Exports (Control) Act, 1947 (18 of 1947). , (5) The Essential Commodities Act, 1955 (10 of 1955). (6) The Indian Standards Institution (Certification Marks) Act, 1952 (36 of 1952). (7) The Industries (Development & Regulation) Act, 1951 (65 of 1951). (8) The Tea Act, 1953 (9) The Coir Industry Act, 1953. (10) The Foreign Exchange Regulation Act, 1947. (11) The Oiliields (Regulation & Development) Act, 1948 (53 of 1948). (12) The Reserve Bank of India Act, 1934. , (13) The Forward Contracts (Regulation) Act, 1952 ‘ (14 of 1952). (14) The Mines & Minerals etc. Act, 1957 (67 of 1957) (15) The Securities Contracts etc. Act, 1956 (42 of 1956). . 1 Bl V _ s APPENDIX 1 ` Name of the Act Section Gist ofthe Section -5 - Number ` (2) 1. The Customs Act, 1962 (52 135 Without prejudice to any action that may be taken under this Act, if any per- of 1962).. · t t son- _ _ (As to coniiscation and penal- (a) is in relation to any goods in any way knowingly concerned in any fraudulent ties, see sections 111 and 112 evasion or attempt at evasion of any duty chargeable thereon or of any et seq. As to false declaration prohibition for the time being imposed under this Act or any other law S see section 132. for the time being in force with respect to such goods, or ,, . (b) acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or 1n any other manner dealing with any goods which he knows or hasireason to believe are liable to confiscation under section 1 1 1 , he shall be punishable,- " (i) in the case of an oifence relating to any of the goods to which section 123 applies and the market price whereof exceeds one lakh of rupees, with imprisonment for a term which may extend to five years and with fine: Provided that, in the absence of special and adequate reasons to the contrary, to be recorded in the judgement of the court, such im- _ prisonment shall not be less than six months; APPENDIX 1 (contd.) (1) (2) The Custom Act, 1962 (contd.) (ii) in any other case, with imprisonment for a term which may extend to two years, or with fine, or with both. (As to offences under the Act being regarded as "economic crimes", and the need for punishing severely such offences, see State v. Kumari Dhrupati Bhawnani, A.I.R. 1965 Bombay 6.) 2. The Atomic Energy Act, 1962 24 The section makes contravention of orders made under seczions I4, 17 and 18 (33 of 1962). punishable with imprisonment for a term which may extend to 5 years. Section 14, inter alia, provides that the Central Government may, by order, _ ‘ prohibit, except under a licence, the production, possession, use, disposal, export or import of prescribed substances or other minerals, or of any plant ‘ designed for development of atomic energy etc. _ _ 3. The Coffee Act, 1942 20 Section 2O provides that no coffee shall be exported from India otherwise than L (7 of 1942). by the Board or under an authorisation granted by the Board, and the pro- visions of the Sea Customs Act have been made applicable to any violation of this provision. The Board is constituted under section 4. Section 2I deals with import of exported coffee. . 4. The Imports and Exports 5 Section 5 makes the contravention or attempts at contravention of any order (Control) Act, 1947 made under the Act punishable with imprisonment for a term which may (18 of 1947). extend to one year. If any person contravencs or attempts to contravene, or abets a contravention J of`, any order made or deemed to have been made under this Act, or any condition of`. a licence granted under any such order, he shall, without pre- judice to any confiscation or penalty to which he may be liable under the provisions of the Sea Customs Act, 1878, as applied by sub—section (2) of section 3, be punishable with imprisonment for a term which may extend to one year, or with fine, or with both. (As to the need for punishing such offences severely, see Szaze v. Kumari Dhrupati, A.I.R. 1965 Bombay 6). 5. '1`he Essential Commodities 7 The section makes contravention of orders made under section 3 as punishable Act, 1955 (I0 of 1955) ( with imprisonment which varies from one year to three years in Certain specified circumstances and also gives discretion to the court to make an order imposing a sentence of fine alone. Section 3 give.: powers to the Central Government to control production, supply and distribution of essential commodities. 6. The Indian Standards Insti- 13 The section provides penalty for contravention of the provisions of section 5 tution (Certification Marks) and section 6 of the Act. Section 5 prohibits improper use ofthe standard Act, 1952 (36 of I9$2). mark or any colourable imitation thereof. Section 6 prohibits the use _ without previous permission of the Institution, of any name resembling the S name of the Indian Standards Institution, etc. 7. Industries (Development & 24 This section makes contravention or attempts at contravention of provisions Regulation) Act, 1951 of sections 10, 11, IIA, 13(1), ISQB and 18_G and 29B(2) or direction or order (65 gf 1951). made thereunder pumshable with imprisonment which may extend to 5 months or with fine. Section 3 makes it obligatory for every owner of existing industrial undertaking to have it registered in the prescribed manner. Section IO requires registration. Section II prohibits every person from establishing a new industrial undertaking except under a licence issued by the Central Government. Section IIA makes it obligatory on every owner of industrial undertaking to obtain a licence for producing or manufacturing a new article. Similar provisions are contained in section 13. Section 24A punishes false statements. _ APPENDIX 1 (concld.) (r) (2) (s) Industries _(D€V€l0pInent and 18G Section 18G gives powers to the Central Government to COHIYOI supply, Regulauon) Act, 1951 (ggmd,) distribution and prices of certain articles. 8- The Tea, Act, 1953. ‘ 3 The section makes the breach of the provision of section I8(i) & (ii) punishable as if it were an offence under the Customs Act. Section 18 provides that . no consignment of tea shall be exported except under a licence by the Central Government or the Tea Board. 9- The C0if Industry Act, 1953, zo The section makescontravention of the provision of section I2 pul‘liSh2bl€ with nne which may extend to Rs. 500/-. Section I2 prohibits the export of coir . fibre, coir yarn and coir products except under a licence issued by or on . . behalf of the Coir Board. Q ` _ I0- F01`€ig11 Exchange Regulation 23 The section makes a person contravening the provisions of` SSCGOHS 4, 5, 9 or _ ‘ · ACB I947· V sub-section (2) of section I2 or of any rule, order, direction made therein, , - liable to penalty not exceeding three times the value of the foreign exchange ; in respect of which contravention has taken place, or Rs. 5,000/- whichever is more, as also punishable upon conviction with imprisonment for a term which may extend to two years, or with line, or with both. Contravention . . of provisions of section I9 is also punishable with imprisonment for a term . ~ which may extend to two years, or with fine, or with both. Section 4 places restrictions on persons resident in India on dealing in foreign exchange. Section 5, inter alia, places restrictions on persons resident in India from mak- ing any payment to or for the credit of any person resident outside India. V Section 9 empowers the Central Government to purchase any foreign exchange in the possession of any person resident in India at a price fixed by the Govern- . mem itself. ' Section IQ empowers the Central Government to direct owners of foreign ex- change or foreign securities to make a return thereof to the Reserve Bank within such a period as may be specified. The Central Government or the Reserve Bank may also require any such person to furnish to the Government or the Bank any information, book or other document as may be required by the order to be so produced or furnished. I1. The Oiliields (Regulation & 9 Section 9 provides, that the contravention of any rule made under the provisions Development) Act, 1948. of the Act, shall be punishable with imprisonment which may extend to six months, or with fine which may extend to one thousand rupees, or with both. _ Section 5 empowers the Central Government to make rules for regulating the grant of mining leases, or for prohibiting the grant of such leases, in respect A · of any mineral oil or any area. ' Section 6 empowers the Central Government to make rules for the conservation is and development of mineral oils, and, inter alia, for regulating drilling, re- drilling, deepening, plugging and abandoning of oil wells, and for the limitation ‘ or prohibition of such operations, and for taking of remedial measures to ` prevent waste of or damage to oil. 12. The Reserve Bank of India Act, 32 The section makes contravention of provision of section 3I as punishable with 193+ line which may extend to the amount of the bill, hundi, pyonote or engagement in respect whereof the offence 1S committed. Section 31 I i 1 prohibits any person in India from drawing, accepting or making or t issuing any bill of exchange in the promissory note or engagement for the payment of money, payable to bearer on demand. — E N APPENDIX 1 (concld) Cr) lz) 13. Forward Contracts (Regulation) 20 The section, inter alia, penalises the person who is a member of any A€f> I953 association, other than a recognised association to which a certificate of registration has not been granted under the Act. The penalty pro- vided for the offence is with imprisonment which may extend to one year, or with fine of not less than Rs. I,OOO/·, or with both. I4. Mines & Minerals (Regulation& 2I This section makes contravention of provisions of sub—section (1) of D¢V€10pm€I1t) Act, 1957. section 4 punishable with imprisonment for a term which may cXt€Hd to six months, or with fine which may extend to one thousand rupees, or with both. Section 4(I) prohibits any person from undertaking any prospecting or min- _> . ing operation in any area, except under or in accordance with the terms f and conditions of a prospecting licence, or a mining licence [granted r under the Act. · · 15. Security Contracts (Regulation) 23 The section makes it an offence for a person to own or keep a place 1 1 Act, 1956. other than a recognised stock exchange for use for the purposes of ‘ entering into any contracts in contravention of the provisions of the Act. It further provides penalties for entering into any contract in contravention or the provisions of sections 13, 16, I7 and 19, and ilfor canvassing or advertising for any business connected with con- tracts without being a member of a recognized stock exchange. I3 Section I3 empowers the Central Government to notify that contracts other than between members of a recognized stock exchange, shall be illegal in any area to which the said notification may apply. Section 16 empowers the Government to prohibit contracts to prevent undesirable speculation in specified securities. Section 17 empowers the Government to make it obligatory on persons in areas that may be specified to take a licence for dealing in securities. I9 Section I9 prohibits persons from being members of any stock exchange other than a recognised one for the purposes of assisting in, entering into/or performing contracts in securities. 8 , . . .4 i J- in 86 APPENDIX 2 EXISTING sTATUToRY PROVISIONS REGARDING EVASION on AVOIDANCE OF TAX OR DUTY AND THE CONSEQUENT PENALTY TH1-11=zEo1··. 1. The Indian Penal Code s. 177, 181, 191, 192, 198, 199 read with s. 136, Income Tax Act, 1961 etc. 2. Indian Stamp Act, 1899 (2 of 1899) (Section 62). . 3. The Central Excises and Salt Act, 1944 (I of 1944). (Section 9, 17 & 24). 4. The Estate Duty Act, 1953 (34 of 1953) Sections 59 and 60. 5. The Terminal Tax on Railway Passengers Act, 1956 (69 of 1956) (No provision). 6. The Central Sales Tax Act, 1956 (74 of 1956) Sec- tions 9(3), 10, 13(5). 1 7. The Wealth Tax Act, 1957 (27 of 1957) Sections 17, 18, 36. 8. The Expenditure Tax Act, 1957 (29 of 1957) Sections { 16, 17, 32. 7 9. The Gift Tax Act, 1958 (18 of 1958) Sections 16, 17, 35. 10. The Income Tax Act, 1961 (43 of 1961) Sections 276, 277, 278, 281. 11. The Customs Act, 1962 (52 of 1962) Section 135 (This Act repeals the Sea Customs Act, 1878 and the Land Customs Act, 1924). 12. Super Profits Tax Act, 1963 (14 of 1963) Sections 10, . 11, 19 and 22. 13. The Companies (Profits) Surtax Act, 1964 (7 of 1964) Sections 8, 20, 21, 22. 1. THE INDIAN PENAL Coma: (45 or 1860) The following sections of the Indian Penal Code are relevant in connection with evasion of taxes- Section 177 Section 181 , [' Read with section ` 136, Income Tax- Section 191, 192, Act, 1961, and simi- 199 lar provisions in other enactments relating to tax ation. 87 APPENDIX 2 (contd.) 2. Tm; INDIAN STAMP AcT, 1899 (2 or 1899) Section 62,- Penalty for executing, etc., instrument not duly stamped. " (1) Any person- (a) drawing, making, issuing, endorsing or trans- ferring or signing otherwise than as a witness, or pre- senting for acCeptance or payment, or accepting, pay- ing or receiving payment of, or in any manner nego- tiating, any bill of exchange payable otherwise than on demand, or promissory note without the same being duly stamped; or (b) executing or signing otherwise than as a wit- ness any other instrument chargeable with duty with· out the same being duly stamped; or (cc) voting or attempting to vote under any proxy Q not duly stamped, shall for every such offence be punishable with fine which g may extend to five hundred rupees: Provided that, when any penalty has been paid in respect of any instrument under section 35, section 40 or section 61, the amount of such penalty shall be allowed in reduction of the {ine (if any) subsequently imposed under this section in respect of the same instrument upon the person who paid such ’ penalty.; V (2) If a share-warrant is issued without being duly ‘ stamped, the company issuing the same, and also every person who, at the time when it is issued is the managing director or secretary or other principal officer of the com- pany, shall be punishably with fine which may extend to live hundred rupees. 3. THE CENTRAL Excrsms AND SALT Acr, 1944 (I or 1944) Section 9.—Whoever commits any of the following oifen- ces, namely:- (b) evades the payment of any duty payable under this Act, shall for every such offence be punishable with imprisonment for a term which may extend to six month.; and with line which may extend to two thousand rupees or with both. . Section 17.—Any owner or occupier of land or any agent of such owner or occupier in charge of the man- agement of that land, who wilfully connives at any offence against the provision.: of this Act or of any rules made thereunder shall for every such offence be punishable with imprisonment for a term which may extend to six months, ~ ’ or with fine which may extend to fiye hundred rupees, or both. 2 47 Law—7. · 88 APPENDIX 2 (contd.) Section 24 ·—When any excisable goods are carried b5— sea in any vessel other than a vessel of the burden of three hundred tons and upwards, the owner and master of such : vessel shall each be punishable with imprisonment for a term which may extend to six months, or with fine which _ may extend to one thousand rupees, or with both. 4. Tm; Esrarn Dorv Aer, 1953 (34 or 1953} Section 56 deals with grant of representation. Section 59.——Prope1·ty escaping assessment: If the Con- troller,—- (a) has reason to believe that by reason of the omission cr failure on the part of the person account- able to submit an account of the estate of the deceased under section 53 or section 56 or to disclose fully and truly all material facts necessary for assessment, any - property chargeable to estate duty has escaped assess- ment by reason of undervaluation of the property in- . cluded in the account or of omission to include therein any property which ought to have been included or of y ; assessment at too low a rate or otherwise, or (b) has, in consequence of any information in his possession, reason to believe notwithtanding that there has not been such omission or failure as is referred to _ in clause (cz) that any property chargeable to estate duty has escaped assessment, whether by reason of undervaluation of the property included in the account or of omission to include therein any property which ought to have been included, in the or of assessment at too low a rate or otherwise, he may at any tune, subject to the provisions of section 73A, require the person accountable to submit an account as required under section 53 and may proceed to assess or re- assess such property as if the provisions of section 58 applied thereto. _ Secticm 60.—Penalty for default or concealment: (1) If the Controller, the Appellate Controller or the Appellate Tribunal, in the course of any proceedings under this Act, is satisiied that any person- (ct) has without reasonable cause failed to deliver the account of the property of the deceased under section 53 or section 56 or to comply with any requisi- tion of the Controller under section 55 or section 59 or has without reasonable cause failed to deliver or sub- mit any of the accounts or statements required under any of the sections aforesaid within the time allowed and in the manner required; or t T 89 APPENDIX 2 (contd.) (b) has without reasonable cause failed to comply with a notice under sub-section (2) of section 58; or `ZI (c) has concealed the particulars of the property . of the deceased or deliberately furnished inaccurate particulars thereof; or , (cl) being a company referred to in section 20A 1 fails without reasonable cause, to pay the amount of Q estate duty due from the company under that section within the time specified in this behalf, he or it may, by order in writing, direct that—such person shall pay by way of penalty-- (i) in the case referred to in clause (0.) or clause (d), in addition to the amount of the estate duty pay- able by him; a sum not exceeding twice the amount of such duty, and (ii) in the case referred to in clause (b) or clause _ (cl in addition to the amount of estate duty payable by him, a sum not exceeding twice the amount of the estate duty, if any, which would have been avoided if the principal value shown in the account of such person had been accepted as correct. \»” (2) No order shall be made under sub-section (1) un- ' less the person concerned has been given a reasonable opportunity of being heard. 5. THE TERMINAL TAx ON RAILWAY PASSENGERS Acr, 1956 (Acr 69 or 1956) This Act contains no provision as to evasion or avoid; ance of Tax. - 6. THE CENTRAL SAI,us TAX Acr, 1956 (74 or 1956) Section 9—Levy and collection of tacc and penalties; • (3) The authorities for the time being empowered to _ assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India and subject to any rules made under this Act, assess, collect and enforce pay- ,· ment of any tax, including any penalty, payable by a · dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, appeals, reviews, revisions, references, penal- ties and compounding of offences, shall apply accordingly: Provided that if in any State or part thereof there is no general-sales tax law innforce, the Central Government 90 APPENDIX 2 (contd.) may, by rules made in this behalf, make necessary pro- vision for all or any of the matters specified in this sub- section, and such rules may provide that a breach of any rule shall be punishable with fine which may extend to five hundred rupees; and where the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues. Section 10.-Pcmzltéesz If any person—· (a) fails to get himself registered as required by section 7; or (b) being a registered dealer, falsely represents. when purchasing any class of goods that goods of such class are covered by his certificate of registration; or (c) not being a registered dealer, falsely repre- sents when purchasing goods in the course of inter- State trade or commerce that he is a registered dealer; or _ (cl) after purchasing any goods for any of the w purposes specified in clause (b) of sub-section (3) of section 8 fails without reasonable excuse. to make “ use of the goods for any such purpose; (e) has in his possessio any form prescribed for the purpose of sub-section 114) of section 8 which has not been obtained by him or by his principal or by his agent in accordance with the provisions of this Act or any rules made thereunder; (f) collects any amount by way of tax in contra- vention of the provisions contained in section 9A,· he shall be punishable with simple imprisonment which may extend to six months, or with fine, or with both; and when the offence is a continuing offence with a daily fine which may extend to fifty rupees for every day during which the offence continues. Section 13.——P0w¢¢s to make rules: (5) In making any rule under this section the State Government may direct that a breach thereof shall be punishable with fine which may extend to five hundred rupees and when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continue. 7. THE Wmuru-Tax Act, 1957 (27 or 1957) Section 17.-Wealth escaping assessment: If the Wealth Tax Officer — , _fq) has reason to believe that by reason of the omission or failure on the part of the assessee to mak; 91 A APPENDIX 2 (contd.) q return of his net wealth under section 14 for any assessment year or to disclose fully and truly all material facts necessary for his assessment for that year, the net wealth chargeable to tax has escaped assessment for that year, whether by reason of under- assessment or assessment at too low a rate or other- wise; or (b) has, in consequence of any information in his possession, reason to believe, notwithstanding that there has been no such omission or fatlure as is re- ferred tn in clause (a), that net wealth chargeable to tax has escaped assessment for that year, whether by reason of under-assessment or assessment at too low a rate or otherwise he may, in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that assessment year, serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 14, and may proceed to assess or reassess such net wealth, and the provisions of this Act shall, so far as may be, apply as if the notice had issued under that sub-section. Section 18.—Penalty for concealment: (1) It the \Vealth-tax Officer, Appellate Assistant Com- missioner, Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person-- (#1) has without reasonable cause failed to furnish the return of his net weal·th which he is required to furnish under sub-section (1) or sub-section (2) of , section 14 or section 17 or has without reasonable cause failed to furnish it within the time allowed and in the manner required; or (b) has without reasonable cause failed to comply with a notice under sub-section (2) or sub-section (4) of section 16; or _ (c) has concealed the particulars of his assets or deliberately furnished inaccurate particulars of his assets or debts, A he or it may, by order in writing direct that such person shall pay by way of penalty- _(i) in the case referred to in clause (a), in addition to the amount of wealth-tax payable by Him, a sum not exceeding one-and-a-half times the amount of such tax, and (ii) in the case referfcd to in clause (b) or clause (c) in addition to the amount ccf wealth-tax payable ~ by him, a sum not exceeding :me&and—a—haI£ timesjhe amount of the tax, if any, which would have been 92 APPENDIX 2 (contd.) avoided if the net wealth returned by such person had oeen accepted as correct. (2) No order shall be made under sub-section (1) unless the person concerned has been given reasonable opportu- nity of being heard. (3) No prosecution for an offence under this Act shall be instituted in respect of the same facts in relation to which a penalty has been imposed under this section. (4) The Wealth-tax Officer shall not impose any penalty under this section without the previous approval of the Inspecting Assistant Commissioner of Wealth—tax. Section 36-Prosecutions: (1) If a person fails without reasonable cause- (ci) to furnish in due time any return mentioned in section 14; (b) to produce, or cause to be produced, on or before the date mentioned in any notice under sub- , section (2) or sub-section (4) of section 16 such ‘ accounts, records and documents as are referred to Y in the notice; (c) to furnish within the time specified any statement or information which such person is bound to furnish to the Wealth-tax Officer under — section 38; ' he shall, on conviction before a magistrate, be punish- able with fine which may extend to ten rupees for every day during which the default continues. (2) If a person makes a statement in a verification mentioned in section 14 or section 23 or section 24 or sec- tion 26 which is false, and which he either knows or believes to be false, or does not believe to be true, he shall bepunishable with simple imprisonment which may extend to one year, or with fine which may extend to one thousand rupees, or with both. (3) A person shall not be proceeded against for an offence under this section except at the instance of the Commissioner. ' (4) The Commissioner may either before or after the institution of proceedings compound any such offence. Ea;plrmation.——For the purposes of this section, "Magis- trate" means a Presidency Magistrate, a Magistrate of the first class or a Magistrate of the second class specially empowered by the Central Government to try offences under this Act. * 93 APPENDIX 2 (contd.) B. Tm; Exrmrmironr. TAX Acr, 1957 (29 or 1957) Section 16.—Expenditu*re escaping assessment; lf the Expenditure-tax Officer.- (a) has reason to believe that by reason of the omission or failure on the part of the assessee to make a return of his expenditure under section 13 for any assessment year, or to disclose fully and truly all material facts necessary for his assessment for that year, the expenditure chargeable to tax has escaped . assessment for that year, whether by reason of under- assessment or assessment at too low a rate or other- wise; or (b) has in consequence of any information in his possession reason to believe, notwithstanding that there has been no such omission or failure as is refer- red to in clause (a), that the expenditure chargeable to tax has escaped assessment for any assessment year, whether by reason of under-assessment or assessment ` at too low a rate or otherwise, he may, in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that assessment , year, serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 13, and may proceed to assess or reassess such expenditure, and the provisions of this Act shall, so far as may be, apply as if the notice had issued under that sub-section. Section 17.—Penalty for concealment: If the Expenditure Tax Ofiicer, appellate Assistant Commissioner, Commissioner, or appellate Tribunal in the course of any proceedings under this Act is satisfied that any person- (a) has without reasonable cause failed to furnish the return of his expenditure which he is required to furnish under sub-section (1) or sub-section (2) of section 13 or section 16, or has without reasonable cause failed to furnish it within the time allowed and in the manner required; or (b) has without reasonable cause failed to comply with a notice under sub-section (2) or sub-section (4) of section 15 or (c) has concealed the particulars of any expendi- ture or deliberately furnished inaccurate particulars thereof, he, may by order in writing direct that such person shall pay by way of penalty .... Section 32.—P1·osecuti0ns: ·(1) If a person fails without reasonable cause- (a) to furnish in due time anyreturn mentioned `in section 13; 94 APPENDIX 2 (contd.) (b) to produce, or cause to be produced on or before the date mentioned in any notice under sub- section (2) or sub-section (4) of section 15 such accounts, records and documents as are referred to in the notice; (c) to furnish within the time specified any state- ment or information which such person 1S bound _to furnish to the Expenditure-tax Oiiicer under section 34; he shall, on conviction before a Magistrate, be punishable with fine which may extend to ten rupees for every day during which the default continues. (2) If a person makes a statement in a verification mentioned in section 13, section 21, section 22, or section 24, which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be . punishable with simple imprisonment which may extend to one year or with fine which may extend to one thousand rupees or with both. (3) A person shall not be proceeded against for an I offence under this section except at the instance of the Q Commissioner. r V (4) The Commissioner may either before or after the institution of proceedings compound any such offence. · Expla,nation.—For_the purposes of this section "Magis- trate" means a Presidency Magistrate, a Magistrate of the iirst class, or a Magistrate of the second class specially em- powered by the Central Government to try offences under this Act. A 9. Tm: GIFT-TAX Acr, 1958 (18 or 1958) Section 16.—Gtft escaping assessment; _ (1) If the Gift-tax officer- ` (a) has reason to believe. that by reason of omis- sion or failure on the part of an assessee to make a · return under secticin 13 for any assessment year or`to disclose fully and truly all material facts necessary for his assessment for that year, any taxable gift has escaped assessment for thdf. year, whether by reason of under-assessment or assessment at too low a rate or otherwise; or » (b)_ has, in consequence of any information in his possession, reason to believe, notwithstanding that there has been no such omission or failure as is refer; red to in clause (a), that any taxable gift has escaped assessment for any yeaywhether by reason of under- arségssment or assessment at too low a- rate or other-- 95 APPENDIX 2 (contd.) he may, in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that assessment year, serve on the assessee a notice containing all or any of the requirements which may be included in a notice under A sub-section (2) of section 13, and may proceed to assess or reassess any taxable gift which has escaped assessment, and the provisions of this Act shall, so far as may be, ` apply as if the notice had issued under that sub-section. (2) Nothing containing in this section limiting the time within which any proceedings for assessment or re-assess- ment may be commenced shall apply to an assessment or re—assessment to be made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 22, section 23, section 24, section 26 or section 28. Section 17.-Penalty for default and Concealment. _ (1) If the Gift—tax Officer, Appellate Assistant Com- missioner, Commissioner or Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person- (a) has without reasonable cause failed to furnish the return which he is required to furnish under sub- section (1) or sub-section (2) of section 13, or section 16 or has without reasonable cause failed to furnish it within the time allowed and in the manner required; or (b) has without reasonable cause failed to comply with a notice under sub-section (2) or sub-section (4) of section 15; or (c) has concealed the particulars of any gift or deliberately furnished inaccurate particulars thereof, he or it may, by order in writing, direct that such person shall pay by way of penalty- (vi) in the case referred to in clause (ei), in addi- tion to the amount of gift-tax payable by him, a sum not exceeding one and a half times the amount of such tax, and V (ii) in the case referred to in clause (b) or clause (c), in addition to the amount of gift—tax payable by him, a sum not exceeding one and a half times the ` amount of the tax, if any, which would have been avoided if the return made by such- person under sec- tion 13, section 14, or section 16, as the case may be, had been accepted as correct. (2) No order shall be made under sub-section (1) unless the person concerned has been- given a reasonable oppor- - , , tunity of being heard. ' ‘ ~ 96 APPENDIX 2 (contd.) (3) No prosecution for an offence under this Act shall be instituted in respect of the same facts in relation to which a penalty has been imposed under this section. (4) The Gift-tax Oflicer shall not impose any penalty under this section without the previous approval of the inspecting Assistant Commissioner of Gift-tax. Section 35.-Prosecution. (1) If any person fails without reasonable cause- (a) to furnish in due time any return of gifts under this Act; (b) to produce, or cause to be produced, on or before the date mentioned in any notice under sub- · section (2) or sub-section (4) of section 15, such accounts, records and documents as are referred to in ~ the notice; (c) to furnish within the time specified any state- ment or information which such person is bound to furnish to the Gift-tax Officer under section 37, ` he shall, on conviction before a Magistrate, be punishable with fine which may extend to rupees ten for every day during which the default continues. (2) lf a person makes a statement in a verification in any return of gifts furnished under this Act or in a verifi- cation mentioned in sections 22, 23 or 25 which is false, and which he either knows or believes to be false, or does not believe to be true, he shall onconviction before a Magis- trate, be punishable with simple imprisonment which may extend to one year, or with fine which may extend to rupees one thousand or with both. (3) A person shall not be proceeded against for an offence under this section except at the instance of the Commissioner. Explanation For the purposes of this section "Magistrate" means a Presidency Magistrate; a Magistrate Of the first class or a Magistrate of the second class specially empowered by the Central Government to try offences under this Act. 10. Tun Incoiviis-mx Acr, 1961 (43 or 1961) Section 276.-Failure to make payments or deliver returns or statements or allow inspection: If a person fails without reasonable cause or excuse- (a) to grant inspection or allow copies to be taken in accordance with the provisions of section 134; 97 APPENDIX 2 (contd.) (b) to furnish in due time any of the returns or statements mentioned in section 133, sub-section (2) of section 139, section 206, section 285 or section 286; (c) to produce, or cause to be produced, on or before the date mentioned in any notice under sub- section (1) of section 142, such accounts and docu- ments as are referred to in the notice; (d) to deduct and pay tax as required by the pro- visions of Chapter XVII-B or under sub-section (2) of section 226; or (e) to furnish a certificate required by section 203, he shall be punishable with fine which may extend to ten rupees for every day during which the default continues. As to penalties imposable by Income Tax Officers, see Sections 270 to 274 Income Tax Act, 1961. Section 277.——False statement in declaration, (As amended by section 41 of the Finance Act, 1964-Act 5 of 1964): If a person makes a statement in any verification iuider this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable with rigorous imprisonment for a term which may extend to two years; Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the court, such imprisonment shall not be for less than six months. Section 278.——/—lbetment of false return, etc. (As amended by the Finance Act, 1964 section 42): If a person abets or induces in any manner another person to make and deliver an account, statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe to be true, he shall be punishable with rigorous imprisonment for a te`rm which may extend to two years: Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the court, such imprisonme`nt shall not be for less than six months. Section 281.—Transfers to defraud revenue void: Where, during the pendency of any proceeding under this Act, any assessee creates a charge on or parts with the possession by way of sale, mortgage, exchange or- any other mode of transfer whatsoever, of any of. his assets in favour of any other person with the intention to defraud the j 98 APPENDIX- 2 (contd.) revenue, such charge or transfer shall be void as against any claim in respect of any tax of any other sum payable by the assessee as a result of the completion of me said proceeding: Provided that such charge or transfer shall not be void if made for valuable consideration and without notice of the pendency of the proceeding under this Act. 11. Tm: Cosroivis ACT, 1962 (52 or 1962) Section 135.——Ez:asion of duty or prohibitions: Without prejudice to any action that may be taken under this Act_ if any person- (a) is in relation to any goods in anyway know- ingly concerned in any fraudulent evasion or attempt · at evasion of any duty chargeable thereon or of any prohibition for the time being imposed under this Act 4 or any other law for the time being in force with res- pect to such goods, or (b) acquires possession of or is in any way con- cerned in carrying, removing, depositing, harbouring, I keeping concealing, selling or purchasing or in any ‘ other manner dealing with any goods which he knows t or has reason to believe are liable to confiscation under section 111, he shall be punishable- (i) in the case of an offence relating to any of the goods to which section 123 applies and the market price whereof exceeds one lakh of rupees, with im- prisonment for a term which may extend to five years and with fine: Provided that in the absence of special and ade- quate reasons to the contrary to be recorded in the judgment of the court, such imprisonment shall not be for less than six months; (ii) in any other case, with imprisonment for a term which may extend to two years, or with fine, or with beth. 12. SUPER Pnorirs TAx Acr, 1963 (14 or 1963) Sections 10, 19, 21 and 22 may be seen. 13. Tun COMPANIES (Pnorrrs) SURrAx Acr, 1964 (7 or 1964) Section 8.—Projits escaping assessment: If- (41) the Income-tax Oihcer has reason to believe that by reason of the omission or failure on the part 99 APPENDIX 2 (contd.) of the assessee to make a return under section 5 for any assessment year or to disclose fully and truly all material facts necessary for his assessment for HHY assessment year, chargeable profits for that year have ` escaped assessment or have been under-assessed or assessed at too low a rate or have been made the sub~ . ject of excessive relief under this Act, or (b) notwithstanding that there has been no omis— sion or failure as mentioned in clause (cz) on the part of the assessee, the Income-tax Officer has in conse- quence of information in his possession reason to believe that chargeable profits assessable for any assessment year have escaped assessment or have been under-assessed or assessed at too low a rate or have been the subject of excessive relief under this Act, _ he may, in cases falling under clause (al at any time, and in cases falling under clause (b) at any time within four years of the end of that assessment year, serve on the assessee a notice containing all or any of the requirements which may be included in a notice under- section 5, and may proceed to assess or re-assess the amount chargeable to surtax, and the provisions of this Act, shall, so far as may be, apply as if the notice were a notice issued under » that section. Section 2U,—FaiLure to deliver returns etc. If any person fails without reasonable cause to furnish in due time any return under sub-section (2) of section 5, or to produce, or cause to be produced, any accounts or documents required to be produced under section 6, he shall be punishable with fine which may extend to five hundred rupees. and with a further line which may ex- -. tend to ten rupees for every day during which the default continues. Section. 21.—Fol.e:e statements: If a person makes in any return furnished under sec- tion 5, any statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable with simple imprisonment which may extend to six months, or with fine which may extend to one thousand rupees, or with both. Section 22.—Abetme1tt of false returns, etc. If a person makes or induces in any manner another M person to make and deliver any account, statement or dec- laration relating to chargeable profits liable to surtax A which is false and which he either knows to be false or does not believe to be true, he shall be punishable with ‘ simple imprisonment which may extend to six months, or with fine which may extend to one thousand rupees, or ( with both. — APPENDIX 3 EXISTING STATUTORY PROVISIONS PENALISING MISUSE OF POSITION BY PUBLID SERVANTS (OTHER THAN THEFT, BRIBERY, MISAPPROPRIATION AND BREACH OF TRUSTT, OCCURRING IN VARIOUS STATUTES Offences regarding misuse of position, etc. The Act Section number Gist of the Section I 2 3 I. The Prevention of Corruption Act, 1947 5(1)(d) & 5(z) If a public servant, by corrupt or illegal means or by (2 of 1947) otherwise abusing his position as public servant, ob- tains for himself or for any other person, any valu- able or any other pecuniary advantage, he shall be .. deemed to have committed the offence of "criminal mis- conduct in the discharge of his duties" as defined _1n . section 5(I)(d) and shall be punishable under section S $(2) with imprisonment for a term wh;ch S shall not be less than one year, but which may extend · , to 7 years, and shall also be liable to line; provided _ that the court may, for any special. reasons recorded — Q in writing, impose a sentence of imprisonment of less 1 than one year. " 2. The Indian Penal Code (45 of 1860) . (i)168 Public servant unlawfully engaging in trade. » (ii)169 Public servant unlawfully buying or bidding for pro~ perty. (iii)217 Public servant disobeying directions ofthe law with intent to save person from punishment or property from ; forfeiture, 1S liable to imprisonment which may - extend to two years, or with fine, or with both. · 1 (iv)218 Public servant framing incorrect record or writing with _ intent to save person from punishment or property ‘ from forfeiture. (V)2I9 Public servant in judicial proceeding corruptly making report, order, verdict or decision which he knows is contrary to law. (vi)22o i Whoever, having legal authority to commit persons for trial or to confinement, or to keep persons for con- finement, corruptly or maliciously commits any person for trial or confinement or keeps any person in confine- ment in the exercise of that authority, knowing that in so doing, he is acting contrary to law, is punishable with imprisonment which may extend to seven years, or with fine, or with both. (vii)221 Intentional omission to apprehend on the part of public servant bound to apprehend. ` (viii)222 Intentional omission to apprehend on the part of the public servant, bound to apprehend person under ‘ _ sentence or lawfully committed. . (ix)225A Omission to apprehend, or sufferance of escape on part of public servant, in cases not otherwise provided for in the Indian Penal Code. 3. 'l` he Indian Post Oflice Act, 1898 (6 of (i)54(c) Whoever, being an ofiicer of the Post Oflice, being en- 1898). trusted with the delivery of any postal article, know- ingly demands or receives any sum of money in respect of the postage thereto which is not chargeable t under this Act, shall be punishable with imprisonment for a term which may extend to two years, and shall V also be punishable with fine. _ (iv)56 An Officer of the Post Oiiice, who sends by post, or G puts into any mail bag, any postal article"`upon]which postage has not been paid or Ycharged in the manner prescribed by this Act, intending thereby to defraud APPENDIX 3 (contd.) 1 2 3 The Indian Post Office Act, 1898 (6 of 1898) (ii)56 the Government of the postage on such postal article, -—c0nzd. is made punishable with imprisonment for a term which may extend to two years, and is also made punishable with fine. A (iii)60 Whoever, being appointed to sell postage stamps — (zz) takes from any purchaser for any postage stamp or quantity of postage stamps, a price higher than that fixed by any rule made under section 16(3)(a), shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to Rs. 200/-, or with both; or S (b) commits a breach of any other rule made under sec- N tion 16 (such as regarding fixation of price of postage stamps, regulating the custody, supply and sale of postage stamps and prescribing the duties and remunerations of persons selling pos— tage stamps etc. etc.), shall be punishable with fine which may extend to Rs. 200/-. 4. [`he Prison Act, 1894 (9 of 1894) . . 42 (later part) An officer of a prison who, contrary to any rule under section 594of the Prisons Act, knowingly suffers any » prohibited article to be introduced into or remove from any prison, to be possessed by any prisoner, or to be supplied to any person outside the limits of - the prison, or communicates or attempts to commu- nicate with any person or abets in such an offence, is made liable to imprisonment for a term not ex- ceeding six months, or to fine not exceeding rupees 200/-, or to both. ` Q; 5_ The Rgformatory $chOO]s Act, 1397 Seerien 27 (later Any officer or person incharge of a reformatory school -3 (8 Of 1397) part). who, contrary to any rule made under section 26 ol r·* this Act, knowingly suffers any prohibited art1cle’°t0 Q be introduced into or removed from any reformatory I school or contrary to any such rule, communicates gb or attempts to communicate with any youthful offender outside the limits of the reformatoryschool V or abets in such offence; is made liable to imprisonment » — ; ·· ·» Y · ` * · ' ` T*-i for a term not exceeding six months,·or with fineénot exceeding Rs. 220/-, or to both. 6, The Income~Tax Act, 1961 (43 of 196x) Section 280 read with A public servant who discloses any particulars, the section 137(2). disclosure of which is prohibited by section j137,` rs made punishable with imprisonmentwhich j may 1ex=¤ tend to six months, and also to fine. _ ~ ’ 7_ The Customs AQ;, 1952 (52_0f r96;>`>__V _,._ (i) 1gt$(1) If any officer of Customs enters into or acquiescesiiff W ` I " · » ° * ‘ ’— ‘ ` any agreement to do, abstain from doing, permits, ‘ conceals or connives at any act or thing whereby any § duty of customs leviable on any goods or things pro- hibited for the time being, enforced under this Act; may be evaded, he is made punishable with imprison*· , ment for a term which may extend to two years, or Q · »=* with fine or with both. * »··_ ‘ · ‘ _ A A . ‘ _ (ii) 136(2) lf any officer of Customs corruptly requires any ‘person · ‘ ‘ ` ` t ’ 9 " i to be searched for goods liable to consfication or any document relating thereto, or wrongfully arrests any person or wrongfully searches or authorises any other — . e · * — `· ·1 officer of Customs to search any place, heis made - punishable with inprisomnent for a term which may A _ extend to six months, or with fine, or with both. (iii) 1g6(3) If any officer of Customs wrongfully discloses any = - " particulars learnt by him in his official capacityin _ ._ » , V i _ respect of any goods, he is made punishable with APPENDIX 3 (concld.) 1 2 3 The Customs Act, 1962 (52 of 1962)—-cond. imprisonment for a term which may extend ttvth months, or with line, or with both. 8. The Manipur (Sale of Motor Spirit & 27 If any officer or person exercising lmdét Wale Lubricants) Taxation Act, 1962 (55 of Act, wrongfully enters or searches, or catises Wblbi 1962). entered or searched, any building, vessel, vehicle or building; or vexatiously or unnecessarily seizes the property of any person; or vatatiouslyind sun- . necessarily detains or searches any person, he*ls made punishable with iinewhich may extend to Rs»J§¤dI—~. . A 9. The Indian Forest Act, 1931 (16of19z1) 6: Any forest otlicer or police orlicer viho ¥ ( and unnecessarily seizes any an · ` ’ of seizing property liable to-confiscation under this . Act, is punishable with imprisonment which any ‘ extend to six months, or with time with Wnq extend to Rs. 500/-, or with both. xo. The Factories Act, 1948 (63 ol`1948) . 96 Whoever (including a public servant) `¤@·litIi¤ or discloses to any person the results of of the Government Analyst, made under section *91 except in so far as they may be necessary forithepdrt- poses of a prosecution for any ofeuce ‘p(rt|H!MIIB under this Act; his made punishable with 'itlillhtltbli-· ment which may extend to three months, lll! with . line, or with both. II- Th¢ ESUW Duty A01, 1953 (34 or I953) 80 The provisions of section 54 of the old Indian Income- tax Act, 1922 which made penal the disclosure by any public servant of any particulars contained in any statement made or return furnished or accounts ' or documents produced under the provisions of that Act or in any evidence given or atiidavit or deposition made in the course of any such proceeding under that Act or in any record of any assessment proceed- ing or any proceeding relating to the recovery on demand prepared for the purposes of that Act, had been made applicable to the Estate Duty Act, I 1953- T3-. The Wealth Tax Act. 1957 (27 of 1957) 42(l) This is similar to section 80 of the Estate Duty Act and makes the provisions of section 54 of the (old) Indian Income-tax Act, 1322 applicable to this Act. ‘ 13-, The EXpcndit\1rc Tax Act, IQS7 (29- of 38(1) This is similar to section 80 of the Estate DIR! 1957)- Act and makes the provisions cf section 54 of the old Indian Income-tax Act, B22 applicable to this Act. !4· Th¢ Gift T8! A95 1958 (18 of 1958) . »4¤_(¤’) This is similar to section 8o of the Estate Duty Act and makes the provisions of section 54 of the old Indian Income—tax Act, 1922 applicable to this Act. P Q h APPENDIX 4 V EXISTING STATUTORY PROVISIONS REGARDING 0FFENcEs IN THE NATUREWQF BREACHES or CONTRACTS RESULTING IN DELIVERY OF GOODS NOT ACCORDING TO SPECIFICATIONS. ‘ There are no direct provisions penalising suCh breaches of contracts for delivery. But these may be noted:—— Section 420, Penal Code -— Punishes “cheating"’. Rule 125(3)(dd), Defence of Authorises the making bythe Govern- India Rules, 1962. ment of an order for securing the pro- , duction, manufacture, supply or sale, ' according to the prescribed standards and specifications of any article or thing which appears to the Govern- ment as essential to any of the pur- ` poses specified in Rule 125(2). _ The various enactments relating These would be relevant for the use of ' to weights and measures (listed false weights or measures. I in the Second Schedule to the Standards of Weights and Mea- sures Act, I966). I Section 5, Indian 4_ Standards This would be relevant for goods falsely Institution Act, 1952 read with bearing the standard mark. section 13. See also the Agri- cultural Produce (Grading and ' Marketing) Act, 1937 and the Drugs Act, 1940. I ‘. Sn Bnnwari Lal ·v.State A.I.R. I963 S.C. 162. ·· ·‘ 106 . . 1 I 4.:: . .0E • l 7O I; a 1 ., ,;O21: l. > ,::>¤-·E¤-¤U ¤gj . .:1 : s ::0; . € v ¤¤2 E§3?G e ¤.> 2;;.] $...58 a g_4.»+ »-T » fg 2 ; E, §DB¤_,_‘ <;J » E: I .2,-·m¤ ?` r 1 [> · U +-• (+‘ Q L %é_{g¢.3mgg m? ¤. ;¤ :égL¤ e ¤·é3¤$§ » 4% . 2 c.. E >»¤ · · m B E Q) .U N-4L f :J @2 O rv ; E! % € ¤5 = ¤ ;més.. Q? z ga 2s§z ia ¤¤¢¤ s . I 5; I i Z) g,g€w C1 _ >< Q U¤·E lg; (})0 { 1 .-· ¤ U U 83 3.8 §. D 3 E <€ eu z E3 ¤3 =%¥ é8 M W 6 2 Z gw & .€s é$ é>I¤, & Q §§§%Z gg § 5 E v,a 駧;., (/J •.: { -4 QD q_) gi gg € ¤,# § g? Wg: §€;§ ;§ as Ewgg gb? SSM; §§..2:z.€IJ I 4 » • ¤ E Té § :¤>. E:8 O w »-40 ..· .-¤E O,,,¤_·_ U Ugg E . EO >,;OO .-4’§fbl)<0 ; oJ;J * U ..¤q_,g·¤ ¤.>·Q¤¤ EOgs.. .¤¤ m ¤T¤ ¤ E S 2w¤¤¤ ara ?TC, 5s w E . §$§¤,.gE ,__§ g ;:,.2ég ¥§»·- 1-{5 j g F £ § 5$5 é2£ B· ¤. : E.§ €€E < s.. Y on ,`u ..¤ ~v ¤.¤ w> G ¤M ¤>. ¤¤ [.4 ·Q¢u 1 H U 0;:3 hli s.·E,¤s.. :;; s r$?8=5 Q2 8_¤·»§ pg 4rE i ,_ =-· ,2; =¤o . Z <¤¤ q ¤g M; v¤ ¤¤s, . E ¤ fg V ,.,2¤§ ;:J g ¤•9g € ·¤° v:<¤ D s.· y . A .¤¤¤c¤» v nd 3, 8s §> # M o@, . .Q h,' ,.P e if < ¢ ¤ E 2 . a J: ¢ P ca . , O .(jV1 a r nv P4 — S § .., l Z go { i @,:2 Z; E Eg ¢ 2 . . .. Q 2 %. i |n .¥g 2 , . } [ ff E . . $,1 : { i . { L . s$. , I ..£ ? i, { w L E ; 3 H . : { i I , APPENDIX 5 (contd-) 1 1 3 4 The Bsendal Commodities Act, Section 3(I)-· lgss (10 gf {ess)-(myj,) "If the Central Government is of the C opinion that it is necessary to do so · for controlling the rise in prices, or preventing the hoarding of any foodstuff in any locality it may, by notification, direct that ' notwithstanding anyting contained in sub-section 3, the price at which, afoodstudfshallbe soldinthat locality in compliance with an order 'é` - ‘ made with reference to clause (f) of sub—sectipn 2, shall be regulated in accordance with the provision of the sub-section. 1. The Industries (hevdnpit I5 Section I5 empowers the Central Govern- Section 24 prescribes peuhies ¤¤d.R¤$¤1AliiQ¤.A!:i,} {Q5! {65 ment to conduct an investigation into the for violation of such direc- of 1951). affairs of a scheduled industry under cer- tions: imprisonment extending tain specified contigencies. upto six months or with fine extending to Rs. 5,000 or Section I6(I) provides that if by virtue of with both, An additional {ine such investigation, the CentralGovernment may be levied for continuing is satisfied that some action is desirable, it contravention. may issue directions to the said industries which may include "controlling the prices, or regulating the distribution of any article er class of articles which have been the oubiect-matter of the investigation? A Sectoin 18-A provides that where such a direction is not complied with or where it is considered to be detrimental to the scheduled industry or to the public inte- rest, the management of the industry may be taken under the control of the Govern- ment. rl-G (I) The Central Government, if it considers necessary or expendient for securing the erauitable distribution and availability at fi r prices of any article or class of articles, may provide for regulating the supply and distribution thereof and commerce . therein. (g) ln particular, the Central Government may order for controlling the prices at which any such article or class thereof may be bought or sold ; for regulating by li- · cenccs, permits or otherwise the distribu- tion, transport, disposal, possession of ’ any such article; for prohibiting the with- drawal from sale of any such article or class thereof ordinarily kept for sale ; for » requiring any person manufacturing, pro- ducing or holding in stock any such article to sell the whole or part of the article to such persons as may be specified in the order; ior requiring ¢xhibiri¤n of the price-list cre ` " ````` ` " " ’ · APPENDIX 5 (could-) ‘ I 2 ' A 3 4 3- The T€aAcr, 1953 (29 of 1953) 30 Section 30 of this Act closely follows the Section 41(I) prescribes similar ' provisions ofthe Industries (Development punishment as is prescribed & Regulation) Act, 1951 as referred to under section 24 of the Act 65 above. of 1951 referred to above with _ ` » this dilference that this Act does not prescribe additional · penalty for continuing con- ' . travention. 4. The Cotton Cloth Act, 1918 ._[lThe object of the Act is to encourage and , (23 0fI9I8)· ‘* maintain the supply of cloth to poorer classes at reasonable rates. § ` 4(2) Section 4(Z) empowers the Collector to issue Section 8 prescribes punishment · I orders inter alia requiring any persongwho for contravention of section 4 ordinarily manufactures cotton cloth, to with imprisonment upto six manufacture standard cloth in such quam- months or with line or with T tity and of such quality as the Collector both. may direct and fixing the prices to be paid to the manufacturer for standard icloth. 9{1) Section 9(I) empowers the State Govern- Section ]O(2)pl1I‘tlSl‘1€S those con- mentto ."fix the price at which alone a travening sub-section IO(I) standard cloth or any class of standard with imprisonment which may Z L. cloth shall be sold to the public". extend to six months or with 4 fine or with both. ¤ (1) No-person shall sell-orkeep or offer sor ex- 'pose.for· sale to the public, standard cloth otherwise than at which price as may be fixed by the State Government .... . ` V - . liivf . - » · _ »J.¥`··r— - _5. :[;helCoffee_Act, 1942 (7 of 16 The Central Government may fix the prices Section 3o(1)»_prescribes penalties ,l__ 19L12)_.¤; ___ A _ L. J. _, V which coffee be sold wholesale or retail for · violation inter alia * ‘**· “``i " i` `*' Mh F ·? in the Indian market. No one can sell sections I·6·I7. . The punlslze coffee at a price higher than the one hxed ment may ext end upto a fine ` Q _ under this section. of Rs. 1,000. 25 Section 25 provides that any excess coffee Section 38A prescribes punsish— produced, shall be delivered to the Board ment for violation of section _ forinclusion in thesurplus pool. 25(1) : fine upto Rs. 1,000, ¥- _ and the excess produce may e also be confiscated. 6. The Preventive Detention Act, 3(1)(a)(iii) The Central Government or State Govern- 1950 (4 of 1950). ment may, with a view to prevent a per- · · son from acting prejudically to "the main- . _ _ . _ 3: __ tanance of supplies, and services essential - .5 _ ,\__ _ _; [jo the community", direct that such a per- ` V ` son shall be detained. Section 3(2) . - enumerates some other competent au- _ , thorities to exercise similar powers. ., _ _ 7. The Rubber Act, 1947 (24 of I3 Section I3 empowers the Government to Section `1.3(3) states that any V 41947), ~ »·i·`—) ` fixthe maximum or minimum prices or person who buysor sells rub- [ _: an . , ,·, _p·-_ .;e·i.:=.¤*{`» ’tf¢".=&?‘ the maximum and minimum prices to be ber at a price `wliichis more charged in the course of a business of any than the maximum price or ‘° · ·· - — e ·‘ ~ class of rubber specified in the order. less than the minimum price, .1 shall be punishable with im- . A ' prisonment for at term which §"*‘?'*°‘ » - ‘ `*—¤"*r···•‘w- ··<· *2 » - may . CX¥CHCl to ORC year Of with line or with both. APPENDIX 5 (concld.) i-I,,,,,,,`- - .t.. r.. t __. ..... ·-·-- ?·•*·\ 1 2 3 4 $, The Drugs (Control) Act, 4 Section4empowers the Chief Commissioner Section 13(1) prescribes that if x950(26 of 1950). to fix, in respect of any drug, the maxi- any one vriolatgea the pmylalou "` mum price or rate to be charged byadealer of the Act, shall be pnnishe or a producer; the maximum quantity able with imprisonment for a which may, at any time, be possessed by term which may extend to 3 a dealer or a producer. years, or with fine, or with both. 5 Section 5 prohibits sale of such drugs at a Section I3(2) further empowers price higher than the fixed rate or to hold the competent Court to order · more than the quantity ofthe drugs ex- the forfeiture. ceeding the maximum quantity fixed by ` the Chief Commissioner under section 4. _ ' 7 Section 7 requires that excess stocks i should be reported to the Chief Com- missioner. 8 Section 8 prohibits the refusal to sell within the quantity prescribed. 9. Act, 1934 g Section 3 empowers the State Government Section 5 states that whoem; _ rg of ww ro declare any area to be controlled area, purchases su cane at a lenei " "’ ‘ fix a minimum or maximum price of su- price than tlguone. prescribed, garcane etc. shall be punished with (ine which may extend to R;. Q 2,000. gg. The I); of {qi! jeg; {eration 3(2)(37) empowers the*gCentral Gov- rg; (g Aqfvggz), ernment to frame rules for "the preven- ' tion of hoarding, proiitcering, black-mar- keting, adulteration or any other unfair graetices, in relation to any goods procured Ay or supplied to the Government or noti- fied by or under the rules as essentialto the life of the community". Rules 125(2) . (a)(b) (bb) (bc) (c) of the Defenceof India Rnlcs, 1962 may be seen. APPENDIX 6 EXISTING STATUTORY PROVISIONS RELATING TO ADULTERATION or FOOD AND DRUGS 1. Indian Penal Code (45 of 1860) Section Marginal note Relevant text 272 Adulteration of food or Whoever adulterates any article of food drink intended for sale. or drink, so as to make such article noxious as food br drink, intending to sell Such article as food or drink, I or knowing it to be likely that the same will be sold as food or drink, shall be punished with imprisonment of either description for a term which may extend to six months, or with . fine which may extend to one thou- sand rupees, or with both. 273 Sale of noxious food or Whoever sells, or offers or exposes for drink. sale, as food or drink, any article which has been rendered or has become noxious, or is in` a state unfit for food or drink, knowing or having reason to believe _that the-same is noxious as food or drink,"shall—be punished with imprisonment of either description for a term which may extend to 6 months or with fine which { may extend to one thousand rupees, or with both. · 274 Adulteration of drugs. Whoever adulterates any drug or ma- dical preparation in such a man` r as to lessen the efficacy or charge the operation of such durg or medioal preparation, or to make it noxiois, intending that it shall be sold `Gr used for, any medicinal purposeygsqif it had not undergone such adggter- ation, shall be punished witheiii- prisonment · of either descripiia for a term which may extend to$§§ months, or with fine which jjziay extend to one thousand rupeegfgsr with both. i ·-· 4 `Wi WT.·E' 114 ’ "" JABPENDIX 6‘tc¤¤¢d-A Section Marginal note A Relevantkext 275 Sale of adulterated drugs. Whoever, knowing any drug or me- dical preparation to have been adul- terated in such a manner as to lessen its efficacy, to change its operation or to render it noxious, sells the same, or offers or exposes it for sale, or issues it from any dispensary for medicinal purposes as unadulterated, or causes it to be used for medicinal purposes by any person not knowing of the adulteration, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may ex- tend to one thousand rupees, or with both. 4476 Sale of drug asadifferent Whoever knowingly sells, or ofl`ers or , drug or preparation. exposes for sale, or issues from a dispensary for medicinal purposes, A - .. any drug or medical preparation, as . - _A . » a different drug or medical preparation V » shall be punished with imprisonment A , A _ A r of either description for a term which _ ‘ A ·_ A_ ‘ _A ‘,V_ ` may extend to six months, or with A ’ f__ fine which may extend to one thou- A A " _ A sand rupees, or with both. 284 Negligent conduct ewith Whoever, does with any poisonous respect to poison0usfsub=` substance, any act in a manner so stance. 2 · rash or negligent as to endanger A A human life, or to be likely to cause · 2 A » ‘ hurt or injury to any person, A or knowingly or negligently omits to e ` take such care with any poisonous , A substance in his possession as is " _ A sufficient to guard against any pro- ‘ _ { bable danger to human life from such A A ‘ Ai poisonous substance, _ ` shall be punished with imprisonment . . of either description for a term which ·_ , ‘ * A A _ ‘ may extend to six months, or with A A __ A A _ fine which may extend to one thou- ·· x ‘ ’ ‘A _ sand rupees, or with both. , no * C (wntd.) ;. Prevention of Food Adultcranbn Act, _;9y (sv cf I9S4) Section Marginal note Relevant text 16 Penalties (1) If any person- (a) Whether by himself or by any person on his behalf imports into India or manufactures for sale, or stores, sells or distributes any article of food in contra- vention of any of the pro- visions of this Act or of any ‘ rule made there under, or (b) xxx xxx (c) xxx xxx (d) being a manufacturer of . an article of food, has in his _ possession, or in any of the Z premises occupied by him, any material which may be employed for the purpose of adulteration, or (4) being a person in whose safe custody any article of food has been kept under sub-section (@0f section ro, tampers or in any other manner interferes with · ¤u¢h or (f) zu uu (g) 1¤¤: he shall, in addition to the pen- alty to which he may be liable under the provisions of section 6, be punishable- (O for the first offence , with ’ imprisonment for a term which may extend to one year, or with fine which may extend to two thousand rupees, or with both. · (iz') for a second onence, with _ V imprisonment for a term which -‘ may extend to two years and i with ine : my APPENDIX 6 muws) $¢¢€i0¤ Marginal note Relevant text 16 Pcnalcics Provided that in the absence of special (conrd.) (comd.) and adequate reasons to the contrary » to be mentioned in the judgement of the court, such imprisonment shall not be less than one year and such line shall not be less than two thou- sand rupees, (iii) for a third and subsequent offences, with imprisonment for a term which may extend to four years and with fine: Provided that in the absence of special and adequate reasons to the contrary to be mention- ed in the judgement of the court, such imprisonment shall not be less than two years and such line shall not be less. than three thousand IUPRSS. ‘ (2) Ifany person convicted of an Odence under this Act commits a like offence afterwards it shall be law- ‘ ful for the court before which the second or subsequent conviction takes place to cause the oifender’s name and tpllace of residence, the ofence and e penalty imposed to be published at the oil`ender’s expense in such newspapers or in such other ~ manner as the court may direct. The expenses of such publication shall be deemed to be part ofthe cost attending the conviction and shall be recoverable in the same manner as a ine. T7 Offences by companies. (1) Wherever an offence under this Act has been committed by a company every person who at the time the A oifence was committed was in charge ol; and was responsible to the company for the conduct of rh:. Q of the company, • Kr he APPENDIX 6* (cofrtii.`) Section Marginal note Relevant text ‘ 17 Offences by " as the company, shall be deemed `(cvntd.) companies to be guilty of the offence and (comd.) » shall be liable to be proceeded ` against and punished accordingly: Provided that nothing contained in this sub—section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due dili- ` gence to prevent the commission of such offence. (2) Notwithstanding anything con- tained in sub-section (1) where an offence under this Act has been ' committed by a company and it is _ proved that the offence has been ` .. committed with the consent or . connivance of`, or is attributable to any neglect on the part of, any director, manager, secretary or — _ ` ‘ other officer of the company, such ¢` director, manager, secretary or o " other officer shall be liable to be f¥` e .. ` proceeded against and punished ` ` _ .» . accordingly. Explanati0n—For the ‘ ' i ’ · “ purposes of this section- _ ( ‘ ' _ ‘ (a) "Company" means any body (A _ " corporate, and includes _ ( a firm or other association of individuals ; and 4 1 (b) "director" in relation to ’_ A ` *·"* a firm means a partner in the firm. 18 Forfeiture of property. Where any person has been convicted _ ( _ underthis Act for the contravention of , _( any of the provisions of this Act or _ (_ . _ . * j A ,_ of any rule thereunder, the article of ( A , . _ _ A . food in respect of which the contra- ;,( A. _ (_ _ ( __ . _ ‘ _ ·` vention has been committed may be _’__, __ ( _;_ 4 ._ o. ((‘_ forfeited to the Government. 119 _ APPENDIX 6 (contd.) 3. Dangerous Drugs Act, 1930 (2 of 1936) · Section Marginal note Relevant text . ~ 6 Control of Central Govem- (1) No one shall manufacture any manu- ment over manufacture factured drug, other than prepared of manufactured drugs. opium, save in accordance with rules P made under sub-section (2) and with the conditions of any licence for that purpose which he may be re- quired to obtain under those rules. (2) The Central Government may make rules permitting and regula~ ting the manufacture of manufac- tured drugs, other than prepared opium, and such rules may prescribe the form and conditions of licences for such manufacture, the autho- rities, by which such licences may be granted and the fees that may be ‘ charged therefor, and any other matter requisite to render effective the control of the Central Govem- ment over such manufacture. (3) Nothing in this section shall apply to the manufacture of medicinal opium or of preparations containing morphine, diacetylmorphine or co- caine from materials which the maker is lawfully entitled to possess. I2 Punishment for contra- Whoever, in contravention of section vention of section 6. 6, or any rule made under that section, or any condition of a licence granted thereunder, manufactures any manu- factured drug, shall be punishable with imprisonment which may extend to three years, with or without fine. 16 Enhanced punishment Whoever, having been convicted of an for certain offences af- oifence punishable under section 10, ~ ter previous conviction. section I2, section 13, or section I4 , is guilty of any offence punishable · under any of those sections, shall be subject for every such subsequent oifence to imprisonment which may eutend to four years, with or without the. 47 Law—9. · f ·· ~t ·· · _ 120 AFTQENIBIJX ‘6 mma.) 4. Act, 1`S57 (13 of 1857) Section Marginal note Relevant text fit Confgiscation of adulterated When opium delivered by a cultivator opium. either to a receiving officer, or at the sadar factory, is suspected of being adulterated with any foreign substance it shall be immediately sealed up pending examination by the Opium Examiner, and notice _ of such intended examination shall be given to the cultivator. I If upon such examination the opium shall be found to be so adulterated the Agent on the report of the Exa- miner may order that it be confiscat- ed, and the order of the Agent shall , be final and not open to question in any Court. 5. Drugs (Control) Act, 1950 (26 of 1950) None. 6. Poisons Act, 1919 (12 of 1919) 1 None. 7. Drugs Acz, 1940 (2s of r94<>> T2 Power of Central Govern- (1) The Central Government may, after ment to make rules. consultation with the Board and after previous publication by notiiica- tion in the Oiiicial Gazette, make rules for the purpose of giving effect to the provisions of this Chapter : Provided that .... said rules. (2) Without prejudice to the generality I . ‘ of the foregoing power, such rules may-- (a) xxx xxx xxx (b) prescribe the methods or test or analysis to be employed in determining whether a drug is of ; standard quality; , 121 _ APPl$NDlX 6 (coma.) ,......~ ;.._—.-—-— Section {__ mal note Relevant text 52 Power of Central Govern- (c) xxx xxx xxx (conzd.) ment to make rules (cantd.) (d) xxx xxx xxx _, (e) xxx xxx xxx " ' » (f) xxx xxx xxx ’ / .. 1 (g) xxx xxx xxx (h) xxx xxx xxx (i) xxx xxx xxx \ (j) xxx xxx xxx (k) prescribe the conditions to be observed in the packing in bot- tles, packages or other contai- ners, of imported drugs; (I) xxx xxx xxx (m) prescribe the maximum propor- tion of any poisonous substance which may be added to or contain- ed in any imported drugs, prohibit the import of any drug in which that proportion is exceeded, and specify substances which shall be deemed to be poisonous for the purposes of this Chapter and the rules made thereunder; (n) xxx xxx xxx (0) xxx xxx xxx I3 Offences . . . (1) Whoever contravenes any of the provisions of this Chapter or of any rule made thereunder shall, in ad- dition to any penalty to which he may be liable under the provision of section II, be punishable with im- ' prisonment which may extend to one year, or with fine which may extend to five hundred rupees, or ` , with both. , (2) Whoever, having been convicted under sub-section (1), is again con- victed under that sub—section shall, in addition to any penalty as afore- _ said, be punishable with imprison- . ment which may extend to two years, or with fine which may extend to one thousand rupees, or with both. (NOTE :—Section- II relates to powers ( of Customs Oilicers under ’ · V Sea Customs Act, 1978). — 4 " M" ` ` l " ` IZQ APPENDIX 6 (contd.) x , Section Marginal note Relevant text --__ I4 Coniiscation . . Where any oifence punishable under section I3 has been committed, the consignment of the drugs in respect ‘ of which the offence has been com- mitted shall be liable to confisca- tion. I7 Misbranded drugs . For the purposes of this Chapter a drug shall be deemed to be misbranded— I (a) if it is an imitation of, or substi- * tute for, or resembles in a manner ¢ likely to deceive, another drug or bears upon it or upon its label or container the name of another drug, unless it is plainly and con- spicuously marked so as to re veal its true character and its lack y of identity with such other drug; or “ (I2) if it purports to be the product of a place or country of which it is not truly a product ; or (c) if it is sold, or offered or exposed for sale, under a name which be- longs to another drug ; or (d) if it is so coloured, coated, powdered or polished that damage is con- cealed, or if it is made to appear of better or greater therapeutic value than it really is ; or (e) if it is not labelled in the pres- cribed manner 5 or · (f) if its label or container or anything accompanying the drug bears any statement, design or device which l makes any false claim for the drug or which is false or misleading in any particular 5 or (g) if the label or container bears the name of an individual or company purporting to be the manufacturer or producer of the drug which individual or company is ficti- tious or does not exist. W APPENDIX 6 (contd.) Section Marginal note Relevant text 18 Prohibition of manufac— From such date as may be fixed by the ture and sale of certain State Government by notification in drugs. the Odicial Gazette in this be- half, no person shall himself or by any other person on his behalf- (a) manufacture for sale, or sell, or stock or exhibit for sale, or dis- tribute- (i) any drug which is not of stan- dard quality; (ii) any misbranded drug; (iii) any patent or proprietary medi- cine unless there is displayed in the prescribed manner on the label or container thereof the true formula or list of ingre- dients contained in it in a manner readily intelligible to the members of the medical profession; (iv) any drug which by means of any statement, design or device ac- companying it or by any other means, purports or claims to prevent, cure or mitigate any such disease or ailment, or to have any such other effect as may be prescribed; (·v) any drug, in contravention of any of the provisions of this Chap- ter or any rule made there- under; »(b) sell, or stock, or exhibit for sale, or distribute any drug which has been imported or manufactured in contravention of any of the pro- visions of this Act or any rule made thereunder; (C) ·•» * »•· ·•· ·•» Provided that .... the medicine) _ ·? APPENDIX 6 (contd.) Section Marginal note Relevant text 27 Penalty for manufacture, Whoever himself or by any other person sale, etc. of drugs in on his behalf manufactures for sale, contravention of this sells, stocks or exhibits for sale or dis- Chapter. tributes any drug- (a) deemed to be misbranded under clause (cz), clause (b), clause (c), clause (d), clause (f) or clause (g) of section 17 shall be punishable with imprisonment for a term which shall not be less than one year, but which may extend to three years and shall also be liable to line: Provided that the Court may, for any special reason to be recorded in writ- ing, impose a sentence of imprison- ment of less than one year; (b) other than a drug referred to in clause (a) in contravention of any of the provisions of this Chapter or any rule made thereunder shall be punishable with imprisonment which may extend to three years, or with line, or with both. 28 Penalties for giving false (1) Whoever in respect of any drug warranty or misuse of sold by him gives to the purchaser a warranty. false warranty that the drug does not in any way contravene the provisions of section 18 shall, unless he proves that when he gave the warranty he . had good reason to believe the same to be true, be punishable with ( imprisonment which may extend to one year, or with fine which may ex- tend to iive hundred rupees, or with both. (2) Whoever applies or permits to be i applied to any drug sold, or stocked or exhibited for sale, by him, whether on the container or label or in any other manner, a warranty given in respect of any other drug, shall be pu- nishable with imprisonment which may extend to one year, or with {ine which may extend to five hundred rupees, or with both. APPENDIX 6 (comd.) S ection Marginal note Relevant T€Xt 30 Penalty for subsequent (1)_;Whoever, having been convicted of an offences. offence- (ez) under clause (a) of section 27 is again convicted of an offence under that clause, shall be punishable with imprisonment for a term which shall not be less than two years but which may extend to five years and shall also be liable to fine. Provided that the Court may, for any special reasons to be recorded in writing, impose a sentence of less than two years; (b) under clase (b) of section 27, is again convicted of an offence under that clause shall be punishable with imprisonment for a term which may extend to five years, or with fine, or with both. (2) Whoever, having been convicted of an offence under section 28 or sec- 1 tion 29 is again convicted of an offence under the same section shall be punishable with imprisonment which may extend to two years, or with fine, or with both. (NOT12.—Section 29 deals with penalty for use of Govt. analysis report for advertising). 31 Confiscation (1) Where any person has been con- victed under this Chapter for con- travening any such provision of this Chapter or any rule made thereunder as may be specified by rule made in this behalf, the stock of the drug in respect of which the contravention has · been made shall be liable to con- » fiscation. (2) Without preiudice to the provisions contained in sub—section (1), any drug in respect of which the Court is satisfied, on the application of an Inspector or otherwise and after such inquiry as may be necessary, that the drug is not of standard quality or is a misbranded drug, shall be liable to connscation. =1~26 APPENDIX 6 (contd.) Section Marginal note Relevant text 32 Cognizance of oifences (1) No prosecution under this Chapter shall be instituted except by an Ins- pector. (2) No Court inferior to that of a Pre- sidency Magistrate or of a Magistrate of the first class shall try an offence punishable under this Chapter. (3) Nothing contained in this Chapter » shall be deemed to prevent any per- ' son from being prosecuted under any E other law for any act or omission which constitutes an offence against this Chapter. ‘ 34 Offences by companies Same as section 17 of Food Adulteration Act, 1964. . 35 Publication of sentence (1) If any person is convicted of an ' passed under this Act. offence under this Act, it shall be lawful for the Court before which the conviction takes place to cause the- oifender’s name, place of residence, the offence of which he has been convicted and the penalty which has been inflicted upon him, to be pub- . lished at the expense of such person in such newspapers or in such other ‘ manner as the Court may direct. (2) The expenses of such publication shall be deemed to form part of the costs relating to the conviction and shall be recoverable in the same manner as those costs are recover- able. ’ - APPENDIX EXISTING STATUTORY PROVISIONS AS TO THEFT AND MISAPPROPRIATION or PUBLIC PROPERTY AND FUNDS The Prevention of Corruption Act, 1947 _ Name ofthe Act Section Gist of the section Penalty number · Y M +_, ____________i__________,_;_____;_t .,.___._._-,—_..-- (r) (2) (s) ‘ (4) 1. The Prevention of Corruption 5 Section 5(1)(c) provides that a public ser- Section 5(2) punishes such a < _ Act, 1947 (2 of 1947). vant will be considered to have com- person with imprisonment for mitted the offence or criminal misconduct a term not less than one year if he dishonestly or fraudulently mis- but it may extend to seven- appropriates or otherwise converts for years and shall also be liable his own use any property entrusted to to fine. A discretion IS, how- him or under his control or allowing any ever, given to the court to other person so to do. award a sentence less than one year for any special reason to ~ be recorded in writing. Accord- ing to section 5(2)A, the amount . * ` involved in such a misappro- » priation, will have to be taken into consideration in iixing the line. APPENDIX 7 (contd.) (r) (2) (2) (4) The Prevention of Corruption Act, 5(3) Section 5(3) introduces a presumption that 1947 (conzd.) where an accused or any person on his behalf is in possession of pecuniary re- sources or property disproportionate to his known source of income, he will be deemed to be guilty of misconduct unless he has satisfactorily explained. ` 2.. The Criminal Law (Amend— 61 Section 61 empowers the State Govern- ment) Act, 1962. ment to appoint special judges to try cor- ( ruption and misappropriation cases under ,__, sections 161-165 and 165A, Indian Penal _§ Code and section 5(2) of the Prevention of Corruption Act, 1947. 3. ·The Indian Postr Office ·Act, 52 - Section 52 states that any officer who com- 1898 (6 of 1898). mits theft or dishonestly misappropriates any postal article shall be punished with imprisonment for a term which may ex- . tend to seven years and shall also be punishable with fine. Postal article is defined in s. 2(I). Ditt0— ,56 Section 56 makes it an offence for those The punishment may extend to _ postal employees who post or put into imprisonment upto two years any postal article without paying the re- or with fine or with both. quired charges, intending thereby to de- fraud the Government of the postage. 4. The Railway Stores (Unlawful 3 Section 3 provides that if any person is A Possession) Act, 1955 (51 of found in possession of any article of rail- 1955). way stores, reasonably suspected of being , stolen or unlawfully obtained and cannot account satisfactorily for the same, shall be punished with imprisonment for a term which may extend to live years or with fine or with both. 5. The Navy Act, 1957 67 Section 67 prescribes that any person sub- (62 of 1957). ject to naval law, who breaks bulk on board any vessel taken as a prize, with intent dishonesty to misappropriate any- thing therein, shall be punished with im- prisonrnent for a term which may extend to two years. 6. The Air Force Act, 1950 (45 36B Section 36B states that any person, subject ,__ of 1950). to this act, breaks into any house etc. in search of a plunder, shall be punished with imprisonment for a term which may extend to I4 years or such less pun- ishment as is otherwise provided in this Act. If the offence is committed while not in active service, the maximum pun- ishment that can be awarded is seven ' years. 52 Section 52 provides that any person subject to this Act, who commits any of the follow- ing offences, that is to say- (a) commits theft of any property be- longing to the Government or to any Military, Naval or Air Force mess; ·or APPENDIX 7 (contd.) (r) (2) (2) (4) The Air Force Act, 1950 (45 of 1950) (b) dishonestly misappropriates or con- (conza'.) verts to his own use any such pro- _ perty; or (c) commits criminal breach of trust in respect of any such property; or (d) dishonestly receives or retains any such property in respect of which any ` of the offences referred to above, knowing or having reason to believe the commission of such offence .... , _ V shall be punished with imprisonment G V _ extending upto ten years or such less ° punishment as in this Act is men- 3 t _ tioned. Ditto 67 Section 67 makes an attempt to commit any ‘ such offence punishable for a term which may extend to one half of the longest term 1, . provided for that offence or such less punishment as is mentioned in this Act. But for an attempt to become an offence, some act should be done towards the commission of the offence. 7. The Army Act, 1950 (46 of The Army Act contains almost similar pro- 1950). visions as in the Air Force Act, 1950. _ See section 36B, section 52 and section 66, - 1 I 8, The Assam Rifles Act, 7 "Q" Section 7 "Q" makes it an offence if a rifle The punishment may extend to 1941 (5 of tgp), man plunders, destroys or damages any one year or with fine up to property of any kind. Rs. 200 or with both. g, The Central Reserve Police 9] Section 9] provides, inter alfa, that every Force Act, 1949 (66 of 1949). member of the force on active duty, who breaks mto any house or other place for . plunder or plunders, destroys or damages property of any kind, shall be punishable with transportation for life etc. I4 Section I4 provides that whenever any wea- pon, part ofthe weapon or ammunition is lost or stolen, the Commandant may im- pose a collective fine upon subordinate officers and men of such unit whom he ~ s- conichers to be responsible for such a loss gg or r e z. · Ie. The Indian Forest Act, 1927 33(I) Section 33(1)_prov1des for certain offences (I6 of I927)_ some of which partake of the character of theft and misappropriation of public pro- perry. The ptmishment may extend to six m0nths’ imprisonment or fine up to Rs. 500 or with both. :1. The Indian Reserve Force 6 Section 6 states that if a person belonging to Act, 1888 (4 of 1888). the Reserve Forces, fraudulently obtains · any pay or other sum,§contrary to any rule ‘ ’ · or order, shall, onfconviction by Court- Martial, be punishablqasjthe court under ‘ APPENDIX 7 (contd.) (r) (2) V (s) (4) The Indian Reserve Force Act, 6 the Army Act can award. But this 1888 (€0m`d·) punishment shall be short of death, _ transportation. or imprisonment exceeding one year., . 12. Administration of Evacuee 32 Section 32 states that any person who un- Property Act, 1950. lawfully converts to his own use any evacuee property, shall be punishable with imprisonment for a term which may extend to three years or with ine or with _ both. I3- Th€ I¤di¤¤ El€¢tr‘i¢itY Act, 39 Section 39 states that whoever dishonestly IQIO (9 of191o). abstracts, consumes or uses any energy, shall be deemed to have committed theft within the<‘ meaning of the Indian Penal Code andthe existence of artificial means for such an abstraction shall be presumed to be evidence of such an abstraction. _ 49 Section 49 extends the application of section 39 to cases where the energy is supplied to works belonging to Central or State Governments. 14. The Indian Penal Code (45 389 Section 389 provides that whoever, being a of 1860). clerk or servant, commits theft in respect 4 of any property in the possession of his master or employer, shall be punished with imprisonment of either description for a term which may extend to 7 years and shall also be liable to fine. 405 Section 405 provides that whoever, entrust- Section 406 prescribes punish- ed with property, dishonestly misappro- ment for criminal breach of priates or converts to his own use that pro trust: imprisonment of either ` perty or dishonestly uses or disposes of description for a term which the property in violation of any direction may extend to 3 years, or with of the law etc., he will be deemed to have fine, or with both. committed criminal breach of trust. One of the illustrations given under this section is: "A, a revenue officer, is entrusted with public money and he is directed by law, or bound by a contract, expressed or implied, with a Govermnent to pay into certain treasury all the public money which he holds. A dishonestly appropriates the I money. A has committed criminal breach of trust.” K 407 Section 407 provides that whoever, being entrusted with a property as a carrier, wharfinger or warehouse-keeper, commits c criminal breach of trust in respect of such property, shall be punished with impri- sonment of either description for a term which may extend to seven years and shall also be liable to fine. 408 Section 408 states that whoever, being a clerk or servant, entrusted in such capacity ‘ with property commits criminal breach of APPENDIX 7 (concld.) (r) (2) (2) (4) The Indian Penal Code (45 of trust in respect of that property, shall be 1860) (contd.) punished with imprisonment of either 4 description for a term which may extend J to seven years and shall also be liable to {ine. 409 Section 409 provides that whoever, being in any manner entrusted with property in his capacity of a public servant etc., commits criminal breach of trust in respect of that property, shall be punished with impri— S sonment for life or imprisonment of either description for a term which may extend to ten years, shall also be liable to line. 15. The Indian Telegraph Act, 25 If any person intending, {mer alia, to commit Punishment may extend to im- 1885 (13 of 1885). mischief} damages, removes, tampers with prisonment upto three years, or touches any battery, machinery tele- or with fine, or with both. graph lines etc., it is an offence. 25A Section 25A makes provision for punishment and fine against those who wilfully or negligently damage any telegraph mater- _ ial. . 27 Section 27 punishes telegraph officers who, The punishment may extend to with an intention to defraud Government, imprisonment upto three years, send messages without paying the required or with {ine, or with both. e charges. _ 33 Section 33 malR0v1s10Ns RELATING TO TRAEF1cI<11 (2) IO(3) Excludes from total income receipts of casual and non—recurring nature (un- less they are capital gains or receipts arising from business or exercise of a profession or receipts by way of addition to the remuneration of an employee). 1O(4) Excludes from total income in the case of non—residents income from interest etc. on bonds issued by the Central Government under a loan agreement with the international bank etc. or bonds similarly issued by a Financial Corporation etc. II Excludes from total income (subject to the provisions of sections 60 to 63) income from property held for chari- table or religious purposes. rg Excludes the application of section II in certain cases (roughly speaking in respect of property held for a private religious purpose, where the trust does not ensure for the bene- fit ofthe public, and trust or charitable institution created for the benefit of any particular religious community or caste or for the author of trust or his relative). 3-; Allows expenditure (subject to certain - exceptions) laid out or expended wholly and exclusively for the pur- poses of the business or profession. I3 . I4O APPENDIX II (contd.) (1) (2) 5; Deals with acquisition of capital asset from an assessee, where the pers0I1 acquiring is directly or indirectly - connected with the obiect of avoidance or reduction of the liability of the assessee under section 45. Section 45 provides for charge of income-tax or capital gains. 60 Provides that all income—arising by virtue of a transfer whether revo- “ · cable or not, shall be chargeable to income-tax as the transferor’s income where there is no transfer ofthe assets (as to the meaning of " transfer ", see section 63). 64 Provides that in computing the total - income of any individual, there . shall be included all such income as ` arises directly or indirectly to the spouse or minor child of such in- dividual through membership of a iirm or from assets transfered to the spouse or minor child. 67 Deals with method of computing a part11er’s share in the income ofthe firm. 68 Deals with cash credits. 69 Deals with unexplained investments. 73 Deals with losses in speculation business. . 74 Deals with losses imder capital gains. 92 Contain special provisions relating to 93 avoidance of tax, mainly in relation to 94 . non-res1dents and in relation to sale or purchase back of securities, and other transactions involving securi- ties. I04 Deals with super tax on undistributed income. APPENDIX 12 ·SUM.l\/IARY or cER*1·A1N POINTS AS TO TAX EVASION EIC., D1ScUssE1> IN THE ' Rizponr or INCOME—TAX INVESTIGATION COMMISSION, 1949 PRESIDED OVER BY Sum VARDACHARIAR The Incomc—tax Investigation Commission, constituted under the _ Taxation on Income (Investigation Commission) Act (30 of 1947); was required to investigate and report on all matters relating to taxa- tion on income, with particular reference to the extent to which the existing law etc.. was adequate to prevent the evasion thereof. Ques- tions 33 to 37 of the Questionnaire issued by the Commission (pages 269 and 270 of the Report) specifically dealt with certain matters concerning evasion. In its Report the Commission dealt with evasion - and avoidance at various places. The important points are sum- marised below: Page of the Report Gist 7 ...... Distinction between avoidance and " evasion " 79 to 83 (paragraphs 181 to 183) Avoidance and evasion. k See also page 21, paras. 47, 86, Undepstatement of income on re- and 193. turns described as one ofthe principal ways of practising fraudulent eva- sion. Pages 103 to 105, paras. 231 t0 236 Income-tax offences. b A 141. APPENDIX I3 ` Po1NTs AS TO EVASION AND AVOIDANCE DISCUSSED IN THE REPORT or THE TAXATION Euoonzv COMMISSION (1953-54) <¤> <¤> Report, Vol. II, pages 189 and 190, Evasion i.e. deliberateldistortion of paras. 1 to 6 (contain a general facts after the liability 1S·1HCLlI`1'€d discussion on the subject), as to and avoidance 1.e. so arranging one’s income tax. affairs before the liability IS incurred so as to prevent its occurrence or ( to reduce the incidence of the tax have been discussed. Avoidance, though legal, wasregarded. as anti—social. It was suggested, that the Department should _l Report, Vol. II, pages 189 and 190, (ii) Special arrangements for dealing pgygg t t()6—((;071[d_) with cases of substantial eva- ` i ` sion; , (ii:`) legal provisions for enforcing ‘back duty’, i.e., section 34 of the Income-tax Act, etc.; (iv) public censure as a remedy for evasion; _ (zz) proper representation in income- tax proceedings; (vi) strict enforcement of collections; and (vii) voluntary disclosure of conceal- ments. Report, Vol. II, page 202, paras. 36 Recommendations were made to in- and 37(Incomenax.) crease the maximum limit of penalty to three times the amount of tax. evaded and to provide that abetment or instigation to evasion should be made an offence punishable as the main offence. It was also observed, _ that prosecutions under sections SI . and 52 of the Income-tax Act, 1922 were seldom resorted to in actual practice. Report, Vol. II, page 320, para. II Certain recommendations were made (Customs duties). I as to the law relating to smug- gling. _ Report, Vol. II, pages 353—361, Summarisesthe various recommenda- paras. 142 to 197. tions relating to evasion and avoid- dance. Most of these concern ad- ministrative matters or topics. Report, Vol. III, pages 72, 73, 74, Discusses the reasons for evasion and paras. 19,20,21 (Sales Tax). avoidance of sales-tax. (See also pages 49 and 65, para. 5). At page 72, para. 19, the practice of show- ing the sales—tax separately in the cash memo is also discussed as a source) of evasion. At page 74, the following categories of methods' of evasion are listed:- (1) Manipulation of accounts; omis- sion of some of the taxable; sales from books and records; suppression of other transactions 144 _ APPENDIX I3 (concld.) <2> Report, Vol. III, pages 72, 73, 74, (eg. purchases) in the light of paras. 19, 20, 21 (sales Tax) (eomd.) which the sales can be verified; under—estimation of production, imports and sales by manufac- turers and importers; falsified, entries in declaration forms and certificates; showing separately sales of bullion and sales of ser- vices even when ready—made go1d_ and silver ornaments are sold; and (2) Carrying on business without re- gistration; splitting up of business so that the turnover may be below the taxable limit; changing place of business, name of firm, etc., when assessment becomes due, or disappearing _ altogether from the jurisdiction I ' of the particular State. ZRep0rt, Vol. III, page 99, para. I2 Observes that since stamp duty is (Stamp duties). levied on the instrument, it is theore- ‘ tically possible that the party may refrain from executing the instrument, but the scope of such evasion is very limited, as an instrument would later be required as legal proof. But undervaluing the transaction is a com- mon method of evasion. Another common method was to show a type of instrument which was not · in conformity with actual facts (e.g. pro-note instead of a bond). Prac- . rice of blank transfers was mentioned as an example of "avoidar1ce". APPENDIX 14 SUMMARY or THE POINTS MADE IN "IN1:•1AN TAX REFORM" BY Mn. KALDoa, DEPARTMENT QF Ec0NoMrc Armies, M1N1s- TRY or FINANCE, GOVERNMENT or IN1>1A (1956) One of the problems dealt with in the Report of Mr. _ , Kaldor was the problem of tax evasion. The matter‘ was ‘· dealt with at pages 103 to 115 of his Report. The possible / remedies, considered by him are summarised below:- (i), his proposals or resubmission of a single per- . sonal tax, with a number of diiferent taxes which were bound to reduce the "incentive to evade". 1 (Page 106, para. 189 of the Report). (ii) Proposal for the submission of a comprehen- sive return concerning the personal income of each _· tax—payer and the introduction of a reporting system * on all capital transactions by means of tax vouchers. (Page 109, para. 194 of the Report). (iii) Compulsory auditing of accounts of tax- payers whose income exceeds a certain minimum. (Page 107, para. 197 of the Report). (iv) Status and obligations of auditors. (Page 111, para. 198 of the Report). 0 - » Mr. Kaldofs Report ( (v) Scrutiny of accounts by the Department. (Page 112, para. 201 of the Report). (vi) Prevention through deterrents. (Page 113, para. 202 of the Report). · (mz) Improvement of standards of administra- uon H1 the Department (Page 114, para. 205 oi the Report). (viii) Gold hoarding and tagation. - (Pages 115 to 120, paragraphs 206 to 218 of the ’ Report). ‘ _ APPENDIX 15 *3 ( TAX W*‘~S¥°>i‘—P¤°$FP¤UT1°NS IN ron-—Ex¤ » CQmm1ttcd . I. . . , 7 . . . . {60) (8) wah harmful into circulation an article for general consumption injurious Pmvcmian articles of to health, shall be punished with loss of liberty not exceed- of Food, general _ ing one year. etc. Aer, CODSUIDp[1OH. I9S4_ (2) Whoever puts into circulation the article defined in para. (1) shall be punished with loss of liberty not exceeding three years. (3) Whoever commits by negligence the crime defined in para. (2) shall be punished with loss of liberty or correc- tional-educational work not exceeding one year. 1 Section 19`8 Trafiic in (1) Whoever makes, procures, keeps or puts into circula- d’“gs· tion a drug suitable for pathological enjoyment by infring- ing or evading the prescription of the authorities, shall be punished with loss of liberty not exceeding one year. (2) Punishment shall be loss of liberty not exceeding three years, if the crime was committed- (a) professionally, l P (b) by a recidivist, or (c) in criminal partnership. 149 APPENDIX 16 (contd.) Section 224 g (1) Whoever infringes his duty based on law or on a dis- Ixiifgintgcmignrr 4 position issued on the strength of law, which duty relates to gomigon the production, utilization, circulation, declaration, putting with the at disposal, keeping on stock. or handling of products or economy. i produce and by doing so causes considerable economic pre- _ ° judice, shall be punished with loss of liberty not exceeding three years. Cj. Section (2) Punishment shall be loss of libéfty Témging fmm Six (3$)(6X’i» months to five years if the crime- Defence of _ {gg; Rules (o) was committed by a recidivist, ~ Q (b) in respect of a considerable quantity of products or produce or of products and produce of considerable _ value. _ (3) Punishment shall be loss of liberty ranging from two years to eight years, if the interests of the people’s economy were gravely prejudiced by the crime. (4) Whoever committed the crime by negligence shall be punished with si iine and if the interests of the people’s eco- nomy were gravely prejudiced with loss of liberty or correc- ,. tional-educational work not exceeding one year. . V Section 225 (1) A worker, authorized to take dispositions indepen- Wasteful dently, of a state organ, social organization or co-operative, Husbajidw-~ who gravely or systematically infringes the requirements oi rational economy, displays an economic activity involving considerable waste of money, material, power or labour, shall be punished with loss of liberty not exceeding three years. (2) Punishment shall be loss of liberty ranging from two years to eight years, if the interests of the people’s economy were gravely prejudiced by the crime. (3) Whoever commits the crime by negligence, shall be _ punished with loss of liberty or correctional-educational work not exceeding one year and, if the interests of the people’s economy were gravely prejudiced. with loss of liberty not exceeding three years. Section 226 (1) Whoever misleads the competent organ of the peo- Mis] ggdjpgl plels economy by supplying untrue data, concealing data, the organs l or in any other manner, in order to obtain the granting of °f df, an investment or credit or the approval of the economic §§g§,Qy_ plan, or to influence the distribution of fixed and circulating funds, the fixing of a price or to obtain permission of the foreign exchange authority, shall be punished with loss of liberty not exceeding three years. 150 APPENDIX 16 (contd.) (2) Punishment shall be loss of liberty ranging from six emonthg to live years if considerable economic prejudice was caused by the crime. (3) Punishment shall be loss of liberty ranging from two years to eight years, if the interests of the people’s economY were gravely prejudiced by the crime. Section 227 Obmuctmg (1) Whoever misleads the organ entitled to carry out ° {economic economic control or to collect economic data by supplying ¤<>¤¤*<>¥ mi untrue data on the management, by concealing data or in ggggitéffg of any other way, or refuses to comply with the obligatory data_ supply of data or of reports, systematically fails to keep the prescribed accounts and registers or presents in them the prescribed data systematically falsified, or attempts in any ‘ l other way to frustrate control, shall be punished with loss j of liberty or correctional-educational work not exceeding one year. { (2) The same punishment shall be inflicted on a person, who takes a hostile measure against a worker for having supplied correct data to the organ mentioned in para. (1). . Section 228 (l) Whoever sends abroad or publishes in Hungary ` without the permission prescribed by law an invention, or other exploitable technical idea, shall be punished with loss of liberty not exceeding three years, if no graver crime was committed. (2) Punishment shall be loss of liberty ranging from two years to eight years, if the interests of the peop1e’s economy were gravely prejudiced by the crime. Section 229 -(3,-gmc (1) Loss of liberty not exceeding one year shall be in- =~iF§fri}18§¤g_ flicted on { discipline in ·1¤v¢Stm¤¤rS a person who infringes or evades a duty or prohibition and 6““"“· defined in the statutory provisions on the credit system, money circulation and on investment and renewals by- (a) grant-ing directly or indirectly an unautho- rized credit or making use of such credit, (b) using for another purpose a credit granted for a definite purpose or the funds granted for a defi- nite investment or renewal, (c) realizing an investment without permission, an investment or renewal with funds from a not per- mitted source or a renewal with funds to be used for smother purpose, ’ 151 APPENDIX 16 (contd.) (ol) diverting totally or partly the cover of the credit, preventing enforcement of the securities of the credit (lien, mortgage, statutory priority to satisfac- tion, assignment, suretyship, etc.) or frustrating in another way satisfaction of the creditor from the cover, n A (e) arranging that wages be paid not to the debit of the wage fund, or that some other payment than P wages be made to the debit of the wage fund. (2) Punishment shall be loss of liberty not exceeding three years. if interests involved in the order of invest- ments and money economy were gravely prejudiced by the crime. ‘ f Section 230 (1) A worker in a managerial position or responsible £‘:g{£i;‘;*° tor quality control of an industrial or commercial enter- an industrial prise or co-operative, who acts in such a manner that an product of industrial product of bad quality be put into circulation Wd quality. as a good quality product or does not prevent the putting into circulation of such product in this manner, though . obliged so to do by his sphere of activity, shall be punished with loss of liberty not exceeding one year, if no graver crime was committed. (2) Punishment shall be loss of liberty not exceeding l three years, if the crime was committed in respect of a considerable quantity of industrial products or industrial products of considerable value. (3) Punishment shall be loss of liberty ranging from I months to live years, if the interests of people’s economy were gravely prejudiced by the crime. (4) Whoever commits such a crime by negligence, shall be punished in the case defined in para. (2) with loss of liberty or correctional-educational work not exceeding one year and in the case defined in para. (3) with loss of liberty not exceeding three years. _ __.;,g"g<’i J ··, , . Section 231 (1) Whoever infringes the rules relating to the fixing l’¤¤i¤g of the quality of industrial products, shall be punished with :5** 9** loss of liberty or correctional-educational work not exceed- ,,,d:;1,°;;1°H ing one year, if, as a consequence, a considerable quantity produc; or of industrial products or industrial products of consider- bad q¤¤lirY· able value had been put into circulation included in a - higher quality category than laid down by a standard of the Hungarian People’s Republic or by another binding prescription. (2) Punishment shall be loss of liberty not exceeding three years, ii the interests of the peoples economy were gravely prejudiced by-the crime. ( _ 47 Law—1l. · J 152 APPENDIX 16 (contd.) Section 232 (1) An industrial product, for which quality require- an industrial ments are fixed by a standard of the Hungarian. People’s Pr<>d¤¢r of Republic, shall be deemed to be of bad quality, 1f it does bad q“ah‘Y· not comply even with the lowest quality requirements defined in the standard. (2) lf the quality of an industrial product is not fixed by a standard of the Hungarian People’s 'Republic, it shall be deemed to be of bad quality if it does not even comply with the lowest quality requirements defined in the tech- nical specification approved by the superior organ or organ otherwise competent for such approval. (3) If in foreign trade the quality of the industrial pro- duct is fixed not on the basis of the standard of the Hunga- , rian People’s Republic, such product shall be deemed to be of bad quality if it does not comply with the contrac- . tual stipulations, provided that it is for this reason com- pletely unsuitable for performing the conditions of the contract or made suitable only by causing considerable economic prejudice. A ( 4) In addition to the cases referred to in the above paragraphs such an industrial product shall be deemed to , be of bad quality, which cannot be used for its proper ‘ purpose or whose usefulness is considerably reduced. Section .233 False at- (1) Whoever attests in a quality certificate or in an- t¢St¤}i<>¤ <>f other document guaranteeing quality untrue data on the q““l"Y· quality of products or produce, shall be punished with loss of liberty not exceeding three years. (2) Whoever commits the crime by negligence shall be punished with loss of liberty or correctional-educational work not exceeding one year. Section 234 5“m“l‘;{i;’;*° Whoever puts into circulation products or produce with Cf- S- 5,6 Pgodum a quality mark, standard mark or other mark, with which *3 ’ ' (Pmdugg) the product or produce does not comply or puts into cir- Sméznnds P{°Vid¢d culation or causes to be put into circulation the product or exc. Act, 56 :l'2‘:k° m" produce provided not with the mark of the real producer, 0f 1962- · ` but with that of another, shall be punished with loss of K liberty or correctional-educational work not exceeding one year, if no graver crime was committed. U Section 235 Bribery. (1) Whoever asks, demands or accepts an advantage for infringing his duty in his sphere of activity with a state enterprise, other state economic organ or co-operative, shall be punished with loss of libe1·ty‘not exceeding three . Y°”"· ( l l , - , l . 153 APPENDIX 16 (contd.) (2) Punishment shall be loss of liberty ranging from six months to five years if- (a) the perpetrator is a recidivist; (b) considerable economic prejudice was caused by the crime, (c) the provisions of section 154 shall also be applied to bribery. ' Section 236 (1) Whoever.- Q SD¢¢¤l¤ti<>¤· (a) carried on commercial activity or maintains an industrial enterprise without a proper licence, (b) carried on unjustified intermediate trade with goods or speculates with them in any manner leading “ to profiteering, shall be punished with loss of liberty not exceeding three years. ( (2) Punishment shall be loss of liberty ranging from six months to five years, if speculation was committed- (a) professionally, h (b) by a recidivist, P (c) in criminal partnership, (d) in respect of a considerable quantity of goods or of goods of considerable value, (e) was camouflaged to give the impression that the economic activity involved by it had been carried on by a state enterprise, other state economic organ or co-operative within the scope of its regular activity. (3) Punishment shall be loss of liberty ranging from two years to eight years, if the interests of the peop1e’s economy were gravely prejudiced by the speculation and if in this case the crime also falls under para (2), punish- ment shall be loss of liberty ranging from five years to fifteen years. . (4) In the cases defined in para (2) and para (3) confis- cation of property may also be applied as supplementary punishment and a recidivist may also be punished with expulsion from certain places of the country. Section 237 (1) Whoever carries on foreign trading activity with- Unauthorised out being properly authorized so to do, shall be punished f°’?‘$“ ¤`*d° with loss oi liberty not exceeding three years. a°¤v"y‘ - (2) Punishment shall be loss of liberty ranging from two years to eight years, if the inerests of the peop1e’s economy were gravely prejudiced b flié crime. . · 154 APPENDIX 16 (contd.) (3) Whoever commits the crime by negligence shall be punished with a fine and, if the interests of the people’s economy were gravely prejudiced, with loss of liberty or correctionaleducational work not exceeding one year. I Section 238 Pmamemg (1) Whoever,- (a) demands, stipulates or accepts for goods a price higher than that fixed by the authority, or (b) in the absence of a price fixed by the authori- _ ty demands, stipulates or accepts a price including Cf. Section profits in excess of an equitdbte gain, EX? shall be punished with loss of liberty not exceeding three ;,.y(;)k3)$, years. E¤¢¤¤::mks Y (2) Punishment shall be loss of liberty ranging from 6°§j%69%5)_ six months to five years if profiteering was committed-— (ii) professionaly, (b) by a recidivst, , (c) in criminal partnership, (cl) in respect of a considerable quantity of goods . or goods of considerable value. (3) Punishment shall be loss of liberty ranging from two years to eight years, if the interests of peop1e’s econo- my were gravely prejudiced by the crime. _ (4) In the cases falling under paragraphs (2) and (3) confiscation of property may also be inflicted as supple- · mentary punishment and if proiiteering is committed pro- fessionally by a recidivist, he may also be expelled from certain parts of the country. (5) A person committing the crime by negligence shall be punished with a fine. (6) The act of a person, who does not exceed the guid- ing price fixed by the authority, shall not be subject to -para (1) clause (b). . / Section 239 Dcfraudins (1) Whoever defrauds the customers in reta-il trade g1‘;r§““°‘ by false weighing, counting or by injuring the quality of ' goods, shall be punished with loss of liberty not exceeding _ one year. { (2) Punishment shall be loss of liberty not exceeding three years, if the crime was committed-- (a) professionaly, (b), by a recidivist or P A T (c) if the crime involved considerable loss to the purchaser. ‘ " · · · ‘ ‘· 155 APPENDIX 16 (contd.) Section 240 1 Crimes (1) Whoever, to the prejudice of public supplies ;{;E’;gs;_ (a) destroys, makes useless, hides, conceals or pl‘“‘ utilizes the stock of products or produce at his disposal despite a prohibition by law or by violating the rules of proper economy. (b) stores, in relation to his requirements, an excessive quantity of products or produce and there- by creates difficulties for others in obtaining them. L_ icenoes. (c) obtains by misleading conduct a licence for the acquisition, putting into circulation or transport of products or produce or speculates with such licence, shall be punished with loss of liberty not exceeding three years. (2) Punishment shall be loss of liberty ranging from six months to five years, if the crime was committed- (a) by a recidivist, V (b) in respect of a considerable quantity or pro- ducts or produce or products or produce of consider- able value. , (3) In the cases falling under para (2) confiscation of property may also be applied as supplementary punish- ment. ~ (4) VVhoever commits the crime by negligence shall be punished with a fine. Section 241 Money for? (1) Whoever,- mg. (a) counterfeits or forges money in current tender for the purpose of putting it into circulation, (b) acquires money counterfeited or forged by an- other for putting it into circulation, or (c) puts into circulation false or forged money, shall be punished with loss of liberty ranging from two years to eight years. (2) Punishment shall be loss of liberty ranging from five years to twelve years, if money forging was committed (a) in criminal partnership, (b) in respect of a great quantity of money or money of great value. (3)Punishment shall be loss of liberty ranging from six months to five years, if coins were counterfeited or if the quantity or value of the false or forged money is not con- siderable. { [ 156 I APPENDIX 16 (contd.) (4) For money forging, confiscation of property may also be iniiicted as a supplementary punishment. Section 242 , M (1) lf in the case falling under clause (c), para (1), mgmy fm? section 241 the perpetrator had lawfully acquired the false ' or forged money in the belief that it was genuine, and subsequently recognized that the money was false or forged, punishment shall be loss of liberty or correctional- educational work not exceeding one year. (2) Punishment shall be loss of liberty not exceeding three years, if the crime was committed in respect of a great quantity of money or money of great value. Section 243 1 Money Whoever carries out an act of preparation for money . forging. forging, shall be punished with loss of liberty or correc- tional-educational work not exceeding one year. M Section 244 OXIC forging (1) For the application of section 241 such alteration of money withdrawn from circulation, that it should have the appearance of money in circulation, shall be consider- I ed counterfeiting of money in circulation, application or removal of a mark serving to show that the money is only valid in a certain country shall be con- sidered money forging, reduction for the precious metal content of money shall also be considered as for ing. g (2) In applying sections 241 to 243 money shall mean metal or paper money and bank notes. (3) Securities issued by the State and other bearer’s securities—if in general circulation—shall be adjudged in the same way as paper money. (4) Foreign money and securities shall be granted the same protection, as Hungarian money and securities. Section 245 g,;?,£_ (1) Whoever counterfeits or forges stamps with the aim of putting them into_ circulation or for use, or acquires stamps counterfeited or forged by another person. for the same purpose, shall be punished with loss of liberty not exceeding three years. (2) The same punishment shall be infiicted on a person · who puts into circulation or uses false, forged or already used stamps as genuine or unused ones. (3) Punishment shall be loss of liberty ranging from six months to five years if stamp forging was committed- (ri) in criminal partnership, · 157 APPENDIX 16 (contd.) (b) in respect of a great quantity of stamps or stamps of great value. (4) Punishment shall be loss of liberty not exceeding one year, if the quantity or value of the stamps utilized or put into circulation is not considerable. Secvion 246 (1) In applying section 245 the word stamps shall ggnmigl comprise: (a) stamps intended for postal or financial use, which are in circulation, withdrawn from circulation, or not yet put into circulation, (b) stamps in circulation, withdrawn from circu- lation, or not yet put into circulation, intended for use in any field of activity of the post, postal meter cancellation impressions, special and other overprints, international reply coupons, postal receipts, further any inscription of mark applied by the post in connec- tion with postage, . (c) state administration prints under strict con- — trol, both with stamp impressions and without such impressions, (d) official marks or seals, serving for taxation, to prove the nature and content of metal, acceptance, quality or quantity of material, or applied by a {inan- cial authority or organ, (e) sta-mps and seals, used by the office of weights and measures for certifying, gauging, and examination of measuring devices and for marking the volume of barrels. (2) In applying section 245 putting into circulation shall also mean putting into circulation for stamp collec- tion, and forging shall mean any unauthorized alteration of stamps for collection. (3) Foreign stamps shall be granted the same protec- tion as Hungarian stamps. Section 247 (1) Whoever infringes or evades a duty or prohibition Crimes defined in statutory provisions on foreign exchange control violating and in statutory provisions regulating possession and cir- f°"Eg“ culation of precious metals and objects made from precious gggtxgc metals, shall be punished with loss of liberty not exceeding three years. (2) Punishment shall be loss of liberty ranging from six months to five years, if the crime was committed. (ct) professionally, (b) by a recidivist, (0) in connection with considerable value. ‘ 158 S l APPENDIX 16 (contd.) (3) Punishment shall be loss of liberty ranging from two years to eight years, if foreign exchange contro} interests were gravely prejudiced by the crime. (4) In the case falling under paragraphs (2) land (3) confiscation of property and expulsion from certain parts of the country may also be applied as supplementary punishment. (5) Whoever commits the crime by negligence in con- nection with considerable value shall be punished with a fine. Section 248 (1) Whoever,-- Tax F'““d‘ (ct) presents untruly or conceals before the autho- . rity a fact (data) of importance in determining his liability to tax and thereby or by any other type of conduct reduces Tax cvmom (b) by deceiving the authority takes advantage of exemption from taxation or tax allowance, to which _ h·e is not entitled, · ` (c) in the absence of the condition fixed by law, or without official permission, diverts from inland revenue control, a product or produce reserved to in- land revenue or acquires, hides or helps to alienate for pecuniary profit a product or produce diverted by another shall be punished with loss of liberty not exceeding three years. (2) Punishment of the crime shall be loss of liberty ranging from six months to five years, if committed by a recidivist. (3) In applying this section, it shall be deemed to in- clude duties. S Section 249 (1) Whoever,- Cus _ (a) diverts dutiable goods from customs duty dm;°c‘;_};m_ control or makes to the authority a false declaration relating to circumstances essential for customs of the dutiable goods (smuggling), (b) acquires, or hides for pecuniary profit smug- gled dutiable goods or co-operates with the same purpose in alienating smuggled dutiable goods (receiv- ing smuggled goods) shall be punished with loss of liberty not exceeding three years. _ (2) Punishment shall be loss of liberty ranging from six months to five years if the perpetrator is a recidivist. 159 A APPENDIX lf} (contd.) Section 250 (1) ln cases of infringement of dutiés in COD¤§CfSl0¤ Confismtion, with economy, speculation, profiteering, crimes relating to public supplies, crimes violating foreign exchange control and of tax fraud as defined in clause (c), para. (l)_, section ‘ 248, money or other objects with which the crime was committed and belonging to the perpetrator, shall be con- fiscated. (2) Coniiscation may also be applied, if the money or other object is not the property or the perpetrator, but the proprietor had previously known that the crime would be committed. (3) In cases of a customs duty crime the goods in res- pect of which the crime was committed shall be confiscated; goods being the property of a state organ or of a co-opera- tive cannot be confiscated. (4) —If the money or other object, in respect of which the crime was committed, cannot be confiscated, the perpe- trator shall be obliged to pay the value of the object subject to confiscation. (5) The Court may omit confiscation or the obligation on the perpetrator to pay the value subject to confiscation, if that would mean for the perpetrator an inequitable prejudice not in proportion with the nature of the crime. Section 251 Criminal proceedings for the crimes enumerated below Infommiom. may only be instituted on information lodged by the organ defined in a statutory provision: infringement of duties in connection with the economy (section 224), wasteful husbandry (section 225), misleading the organs of the people’s economy (section 226), obstructing economic control and collection of economic data (section 227), misuse of inventions (section 228), crimes infringing disci- pline in investment and finance (section 229), putting into circulation and industrial product of bad quaIity( sections 230 to 232) unauthorized foreign trade activity (section 237), tax fraud (section 248) and customs duty crime (section 249). Section 252 In applying this chapter- E I mm ( 1. Price fixed by the authority shall mean the price Pifdjvfsionsfy prescribed by the authority or to be applied by virture of a disposition of the authority. 2. Goods shall be deemed also be include industrial or other services of an economic character and price shall be deemed also to include the equivalent (fee) of such ` services and in general also any valuable consideration of . pecuniary value due for the. goods (performance). ~ ‘ 160 APPENDIX 16 (contd.) Section 291 Th°f‘ Whoever removes the property of another with an un- lawful intent commits a theft. Section 292 Embezzle . Whoever unlawfully appropriates the property of ‘“°‘“· another entrusted to him or disposes of it as if it were his own commits an embezzlement. Section 293 Fraud Whoever for unlawful gain induces or keeps another in error or ignorance of the facts and causes thereby _ prejudice commits a fraud. l Section 294 M,j,,c,smO¤ Whoever being entrusted with the management of another’s property causes, violating his duty under such a commission, damaged in such property, commits a malver- sation. _ Section 295 > Punishment (1) Whoever commits theft, embezzlement, fraud or . <>f Yhchs malversation to the prejudice of social property shall be d punished with loss of liberty ranging from six months to and malver- EVE Y9aI`s· xéjrlldfgethc (2) Punishment shall be loss of liberty ranging from Of s<>¢i?1 two years to eight years if the crime was committed proper y. (a) by a recidivist, (b) in criminal partnership, (c) in a place where it caused public danger. · Punishment shall be,- (a) loss of liberty ranging from five years to twelve years if particularly grave prejudice was caused by the crime; (b) loss of liberty ranging from ten years to fifteen years or death if particularly grave prejudice was caused by a crime committed in criminal partner- ship or by a recidivist. Section 308 Cgmmiggion (I) Whoever obtains credible knowledge that the com- ro_ rcporr a mission of a wilful crime to the prejudice of social property <>¤¤!1¤d$° ¤h¢ is under preparation or that such crime not yet detected g;°;gc§1° has been committed and does not report this to the autho- pmpm, rities as soon as possible, shall be punished with loss of liberty not exceeding one year. ‘ 161 APPENDIX 16 (concld.) (2) Under para. (1) a relative of the perpetrator cannot be punished. VI ‘ seam ass _ (1) Whoever, being entrusted with the management I:i cm_ or supervision of social property infringes or neglects the ` duty ensuing from this commission and thereby causes damage and prejudice to such property, shall be punished with loss of liberty not exceeding one Year. (2) Punishment shall be loss of liberty not exceeding three years, if particularly grave prejudice was caused by _·. the crime. ‘ (3) Whoever manages the property of another by virtue of an official commission or approval (guardian, curator) and while doing so, infringes his duty by negligence, thereby causing a loss in the value of the property, shall be punished with loss of liberty or correctional-educational work not exceeding one year.., APPENDIX 17 _ Exrimcr or CERTAIN sEcT1oNs or THE PENAL Com?. or Noaway ("NonwAcrAN PENAL Co1>E", 1961) Puamsmzn nv mr V ty AMERICAN Simms or Foamcu PENAL Comazs. 88. Anybody who, in time of war, fails to fulfil a con- , tract relating to the supplies or the transport of the military forces or a matter of importance to military or civil defence, or is accessory thereto, shall be punished by imprisonment up to ten years. If the act has caused heavy damage to the defence of the country, or the death or serious injury to body or health of another, a maximum of life imprisonment may be imposed. If the breach of contract results from negligence, the perpetrator shall be punished by fine, or jailing or im- prisonment up to six months. ' Anybody who commits such an act against a state allied with Norway, or at war with a common enemy, shall be similarly punishedl. (12-15-1960). ` _7 123. If a civil servant misuses his office to violate some- ’ body’s rights by undertaking or omitting an official act, he shall be punished by fines or loss of office or by imprisonment up to one year. If he has acted for the purpose of obtaining an unlaw- ful gain for himself or another, or if the felony has pur- posely caused serious injury or a violation of rights, imprisonment up to five years may be imposed. 1For a study of " White Collar Crime in Norway," see Aubert, " Collar Crime and Social Structure ". American ]'ou.mal of Sociology (1952-53), page 265, cited in Reckless, The Crime Problem (1965), page 224. 162 APPENDIX 17 (contd.) 153. Anybody it ho by breach of assumed obligations or by spreading of false rumours, brings about famine or scarcity of necessities, or is accessory thereto, shall be punished by imprisonment up to eight years. 273. Anybody who spreads incorrect or misleading information in order to influence the prices of goods, securities or other objects, or is accessory thereto, shall be punished by imprisonment up to four years. Fines may be imposed together with imprisonment. Under extreme ly extenuating circumstances, fines alone may be imposed (5-11-1951) APPENDIX 18 Exrmicrs or csivrain szcrions or THE Aaomnriiu PmNAI. Coon: , TAKEN rRoM THE TRANSLATION PUBLISHED in THE AMERICAN Snnnss or Foreman PENAI. Conms (1963). 249. Any public official who illegally omits, refuses to do or delays any act of his office, shall be punished by a line from one hundred to one thousand pesos and special disqualification from one month to one year. 300. Jailing from six months to two years shall be . imposed on: 1. anybody who causes the price of any merchandise to be raised or lowered, bond or security to be raised or lowered, by means of false news, fictious negoiiiations or by connivance or coalition among the principal holders — of any merchandise or product, with the purpose to sell it only for a faced price; _ 2. anybody who, disguising or concealing true facts or circumstances, or affirmatively stating or suggesting false facts or circumstances, offers any bond or security of any corporation or society; 3. any founder, president, manager, or receiver of any corporation or co-operative or any other commercial estab- lishrnent, who publishes or authorizes a false or incomplete balance or report regardless of the purpose he had to publish it. APPENDIX 19 ENGLISH LAW RELATING TO SPREADING rms: nUMoURs ro Armor mucus, mrc. At common law, every practice or device by act, cons- piracy, words or news to enhance the price of victuals or other merchandise was held to be unlawful. These prac- tices came under "forestalling" (practices to enhance prices) including ingrossing (buying up standing corn, etc.} for regrating i.e. selling at monopoly prices and 1hTi APPENDIX 19 (contd.) · I similar oiences. Spreading false rumours was also one example of such practices. The bare ingrossing of a whole , P commodity in order to sell it at an unreasonable price was # also an oifencel. By a statute of 18442, the several offences of badgering (buying up corn, etc., and carrying them elsewhere for re·sale), ingrossing, forestalling and regrat- _ ing were abolished. But section 4 of that Act preserved the common law offence of spreading false rumours to enhance or abate the prices of vendible commodities. The section is quoted below :— "Nothing in this Act contained shall be construed to apply to the offence of knowingly and fraudulently · j. spreading or conspiring to spread, any false rumour, ` with intent to enhance or decry the price of any goods or merchandise, or to the offence of preventing, or endeavouring to prevent, by force or threats, any goods, wares, or merchandise being brought to any fair or market, but that every such offence may be inquired of, tried. and punished as if this Act had not been made/’ APPENDIX 20 . POSITION AT ENGLISH LAW REGARDING CERTAIN OFFENCES ” Bribery and c0rrup1;i0n.—-It is a misdemeanor at com- A mon law for an oiiicer who has a duty to do something in which the public are interested, to receive a bribe either to act in a manner contrary to his duty or to show favour in the discharge of his functions? The offence is punishable by fine and imprisonment, whether the bribe is accepted or not. The matter is now provided for in greater detail by several enactmentsi including- . (i) The Public Bodies Corrupt Practices Act, 1889 (52 and 53 Vic., c. 63). (it) The Prevention of Corruption Act, 1906 (6 Edw. c. 37). ` (iii) The Prevention of Corruption Act, 1916 ~ (6 & 7 Geo. 5, c. 64). 7 (iv) Section 9, Customs and Excise Act, 1952 (15 & 16 Geo. 6, c. 44). (v) Section 123(2)‘, Local Government Act, 1933 l. (23 8; 24 Geo. 5, c. 51). (vi) Sections 171 and 99, Representation of the People Act, 1949 (12. 13 & 14 Geo. 6, c. 68). iusselllon Crim: Vol. 2, pa;r688. 4; 4 orestalling, regrating, etc., Act, or Conspiracy Act, 1944 (7 & 8, · 24) (now repealed). chbold (1962), para. 3483. - . .. V V . lg. =hb<>1d 0962), pm 2482, 3484» 3996 md 3953- 164 APPENDIX 20 (contd.) C0nspiracy.—A person may be convicted of "criminal conspiracy" even where the act conspired to be committed would not be an offence if committed by a single person. It is from this point of view that the offence of criminal l conspiracy assumes some importance. The generally accepted definition of conspiracy is that given by Justice Wilkes on behalf of all the Judges, is one case}, namely, an agreement of two or more to do an unlawful act or to do a lawful act by unlawful means?. The case—law that has developed on this subject has brought out the wide scope of this offence. Of interest for the present purpose are the following conspiracies held to be criminal- (t) conspiracy to injure the public health, as by selling unwholesome food*; , (ii) conspiracy to combine to violate the provisions. of a statute or statutory rule, etc., where the violation ' of such statute or statutory rule would be a mis- E demeanour at common law or criminally punishable in ` some specified mannerf. _ (iii) conspiracy to do acts contrary to the public amorals. The latest case on the subject is that of _ Shaw‘. Conspiracy to cheat and dcfraud.—It is stated, that it is · 3 really criminal to conspire to commit frauds in trade or ` public cheats, whether the fraud or cheat, if done by an individual without conspiracy would give only a ground for civil remedies at law or in equity, or would be crimi- nally punishable. Examples of this conspiracy are combi-- nation of bankers or officers of companies to deceive and defraud their shareholders by publishing false balance- sheets, or`by concealing the insolvency of the bank, and agreements to take part in deceptive schemes in order to raise the price of stocks and shares above their true value, or to raise the price of commodities by fictious sale'-". Conspiracy to prevent, obstruct, pervert or defeat justice.—This falls under three classes: ' (i) conspiracy to make false accusations of ci imes or unfounded civil claims; (ii) conspiracy to threaten to make false accusa- . tions or claims; and ‘Mucahy v. R., Law Reports (1868), 3 H.L. 306, 317. ’See discussion in Russell on Crimes (1958), Vol. I, pages 213 and 2I5. ”Russe1l on Crime (1958), Vol. 2, page 1703. 4Russel1 on Crime (1958), Vol. 2, page 1700, and Archbold (1 para 4o53. °Shaw v. Direcmr of Public Prasecugizm (1961), 2 W.L.R. 897. CHR relating to the Ladies Directory). ’ °See cases cited in Russell on Crime (1958), Vol. 2, pages 1712, I7. 1715. » 7See also Archbold (1962), para 4058. l — 165 APPENDIX 20 (contd.) (iii) conspiracy to interfere with a fair trial of pending procecdingsl. Of particular interest is a recent case’ where the alleged conspiracy by certain police officers to take rewards to hinder prosecutions by not bringing the offenders before _ the courts or by warning persons concerned of intended prosecutions was in issue. Conspiracy or combination affecting trad€.—These have been the subject-matter of legislation particularly in rela—· tion to trade disputes. Subject to such legislation, a criminal conspiracy in restraint of trade which has been defined as an agreement between two or more persons to do or procure to be done any unlawful act in restraint of trade (eg. violence, threats, fraud, or c0ercion"-‘) is punish- able. How far combinations to monopolise or divert trade would fall within this definition is a moot question. Criminal prosecutions do not seem to have been under- taken in England in respect of such combinations as being conspiracies in restraint of trade? Che-:ating.—This is an offence at common law in many cases? It is unnecessary to enumerate the various cate- gories. Akin to this offence is an offence of obtaining good; by false pretences governed by section 32 of the Lzirceny Act, 19161 (6 and 7 Geo. 5 c. 50). Conspiracy.~—See above. Embezzlement.——Sec section 17 of the Larceny Act, 19168 (6 and 7 Geo. 5, c. 50). There are several other special Acts also. · False pretenccs.—See under cheating. F00d.—At common law it is a misdemeanour to sell food or drink with the knowledge that it is dangerous or unfit for human consumption? The Law on the subject is now contained in Food and Drugs Act, 1955 (4 & 5 Eliz. 2 ch. I6), which consolidates the previous Acts *Russell on Crimes (r958), (/ol. 2, page 1707. in ZR. v. Hammersley (1958), 42 Criminal Appeals Reports, 207 cited in Archbold (1962), para. 4062. °Russel1 on Crime (1958), Vol. 2, page 1719, et seq. ‘Russell on Crime (1953), Vol. 2, page 1678. ‘Russcll on Crime (1958), Vol. 2, page 1679. °Russell on Crime (1958), Vol. 2, pages 1322 to 1344. {Russell on Crime (1958), Vol. 2, page 1336 ; Archbold (1962), para K9 2. °Archb01d (1962), para. 170r. °Archb0ld (1962), para. 3735. 166 APPENDIX 20 (contd.) of 1938. 1950 and 1954 and certain other enactments. $4-;c— tions 1 to 12 of the Act are mainly of interest as dealing with ollences committed in the preparation and sale of injurious food and adulterated drugs, falsity in libel and advertising in food and drugs and sale of goods unfit _for human consumption. (The common law offence IS classified either as a public nuisance or as a common law cheating)} Fc1·gery.——The main provisions relating to forgery are contained in section 3 of the Forgery Act, 19132. There are numerous enactments relating to forgery of documents. Of these a few may be noted_ namely, section 302 of the Cus- toms and Excise Act, 1952*. (15 & 16 Geo. 6 c. 44). Sec- tion 36 of the Criminal Justice Act, 1925 (15 8: 16 Geo. 5 c. 86) relating to forgery of passport*, frauds relating to stamps are dealt with by section 13 of the Stamp Duties Amend- . ment Act, 18915. (54 & 55 vic. c. 38). Forgery of several I public documents is specifically dealt with the section $(2) · and 3(3) of the Forgery Act, 1913 (3 & 4 Geo. 5 c. 27). Malicious Damage is dealt with in detail by the Mali- cious Damage Act, 1861. . Misconduct by public servants (other than bribery).- Neglect by public oflicers‘ duty imposed on them at c0m— . mon law or by statute is indictable, and the remedy of A criminal information is of interest in this connection! Misconduct by judicial officers in the nature of malfeasance or culpable non—feasance has figured in several cases?. Abuses in respect of honours are specifically dealt with by the Honours (Prevention of Abuses) Act, 1925** (15 & 16 Geo. 5 c. 72). _ Pr0titeering.——See Prices of Goods Act (1939) section 1, later Goods and Services (Price Control) Act, 1941 (4 & 5 Geo. 6 c. 31). Public mischief.——The offence of conspiracy to commit a public mischief is an offence which has a very wide scope and its definition is not laid down by statute. Its exact scope is indefinite, but until the decision in Newland, it was understood that many acts such as dissemination of rumours calculated to cause widespread alarm, and building ¤Russell on_Crime,r (1958), yo!. 2, pages 16o6, 1589, 1322. W ’Archbold (1962), para. 2166. ‘ ” ”Russell on Crime ( 1958), Vol. 2, page r465. ‘Ruscll on Crime (IQSS), Vol. 2, para. 1467. ` . 5Russr-ll on Crime (1958), Vol. z, page r463. °Archbold (I962), paras. 311 and 3334. . ’Archbold (1962), para. 3491. / _ _· r°Archbold ({962), para. 4000. · 107 APPENDIX 20 (contd.) defective air—raid shelters and making to the police false statements concerning imaginary crimes, fall within the offence of public mischiefl. In the case of Newlandz, it was held that these offences were part of the law of conspiracy. If the act is committed ~ by an individual and not in conjunction with others, then it is indictable only if it is an olfence in itself at common law or by statute. Sabotage.—See "Malicious Damage". Share pushing.——See section 13 of the Prevention of Fraud (Investments) Act, 1958 (6 & 7 Eliz. 2'ch: 45). Roughl stated, it punishes a person who, by publ1shmg a misleadzing statement, promise or forecast or by any dis— honest concealment of facts o1· by reckless statement, etc. induces another person to enter into an agreement for acquiring or subscribing for securities, etc}. Smuggling.—See the Customs and Excise Act 1952, sec- tion (45) (1) and section 394*. Tax.—As various enactments relating to taxation con- tain penal provisions, it would not be possible to summarise them here. But apart from statute, the making of false . statements relating to income-tax with intent to defraud the Revenue has been held to amount to a common law misdemeanour“-*-7. Section 5 of the Perjury Act, 1911 (1 & 2 Geo. 5 c. 6) which is quoted below, is also of interest:- "5. False statutory declarations and other false statements without oath.—If any person knowingly and wilfully makes (otherwise than on oath) a statement false in a material particular, and the statement is made—— · (al in an statutory declaration; or (b) in an abstract, account, balance sheet, book, C Certificate, declaration, entry, estimate, inventory, I;m£,°Q°I;; notice, r€‘D0rt return or other document which he Indian Peml is authorised or required to make, attest, or verify, C<>d¢- by any public general Act of Parliament for the time being in force; or *Archb¤» 1>¤¤¢= ¤¤93—1096. 175 APPENDIX 21 (concld.) 3 Yugoslavia ` In Yugoslavia the Criminal Code of 1951, sections 213 to 248 (Criminal Offences against the National Economy) deal with economic crimes. The important provisions are 2- (a) sellers giving special favours to individual buyers (section 228); (b) barter (section 229); (c) failure to fulfil the contractual duty of delivery of a_ fixed quality of products to Government (section 236); (dl) owner of land failing to cultivate the land or reducing his livestock (section 238); . (e) members of agricultural cooperatives opposing the management of the affairs of the cooperatives (sec- tion 240); (f) illegally carrying on a trade as a professional practice, or illegally selling, purchasing or bartering goods or articles the traffic in which is forbidden or limited; or illegally keeping such goods or articles for commerce or producing or processing goods the produc- tion or processing of which is forbidden (section 226): ‘ (Coniiscation of the goods can also be ordered), APPENDIX 22 TAX EvAs1oN PROVISION in U.S.A. (Smcrrou 7201, INTLRNAL Rmvimum Cons) There is a general provision as to tax evasion in section $¢<¤i°¤ 7201 of the Internal Revenue Code of the United States of {::;.1 America, and it will be of some use to deal with it in Revenue detail: 'I`he section is quoted below:- Code. "7201: Any person who wilfully attempts in any Attempt to manner to evade or defeat any tax imposed by this ¢=V¤d¢ <>r titlel or the payment thereof shall, in addition to other :13:* penalties provided by law, be guilty of a felony, and, ' upon conviction thereof, shall be lined not more than $10,000:00 or imprisoned not more than 5 years, or both, together with the costs of prosecution." ‘Summarised from G & G, Government Law, etc., in Soviet Union, pages_112o to nzz. The taxes covered by the various sub-titles of the Internal Revenue Code are—— A. Income Taxes ; B. Estate & Gift Taxes; C. Employment Taxes; D. Miscellaneous Excise Taxes; E. Alcohol, Tobacco and certain other Bxciso Taxes. _ 176 APPENDIX 22 (contd.) There is another section dealing with wilful failure. to tile return, but we are not concerned with that section here} 1 This section replaced section 145 (b) of the In- ternal Revenue Code, 1939, which in its turn had replaced section lO1'?(b), Revenue Act, 1924. The old section was regarded as the "capstone of a system of sanctions which singly or in combination were calculated to induce prompt and forthright fulfilment of every duty" under the, income tax law? The important words in the section are "wilfully attempts in any manner to evade or defeat any tax". The constitutional validity of the section (with refe- rence to the due process clause) appears to have been upheld? ’ _ Prosecutions under the section have been instituted · 1 mainly in the following situations (if the requisite f 1 intent is proved) :— ` (a) substantial understatement of income; (b) substantial overstatemcnt of deductions; · (c) attempted evasion of tax by ‘ evading joint income-taxes of spouses (where the spouse or spouses charged are party to the fraud); (d) lawyers and accountants participating in tax · frauds; (e) ofiicials of corporations attempting evasion of the tax payable by the corporation concerned; (f) false claims to exemption. 1Section 7203 of the Internal Revenue C· de is quoted below :— "72<` 3, Wil ful failure to file return, supply information, or pay tax.—Any - person required under this title to pay any estimated tax or tax, or requir- ed by regulutiors made under authority thereof to make a return (other than a return required under authority of section 6o15 or section 6o16), keep any records, or supply any information, who wilfully fails to pay such estimated tax, make such return, keep such records, or supply such information, at the time or time required by law or regu- ° lations, shall, in addition to other penalties provided by law, be guilty A of misdemeanor and, upon conviction thereof, shall be fined not more than $ i<—,ooo, or imprisoned not more than 1 year, or both, together with the costs of prosecution." * Spies v. United States (1943), 317 U. S. 492, 497. V ‘ U.S. v. Skidmore, 123 F. 2d, 604 cert. denied (1942) 315 U.S. Soo. ` * A husband and wife can tile a joint return. Tax is computed on half the combined income and multiplied by two. Sections 2(a) and 60r3(a), Intercnal Revenue Code. V _ i _ .177 I APPENDIX- 22 (coaitd.) We may first take up the word "wilful" in the section. This requires proof beyond reasonable doubt of a specific intention to evade or defeat the tax or'1ts payment. A bona fide belief in a particular legal pos1t1on would take awav the case out of "wilful"‘. _ Intent The intent must be specific, that is to say, a mere general intention to perform an illegal act 1S not sufficient. Nor is it presumed or inferred merely from the filing of an incorrect or understated tax return. The concealmentof an obligation known to exist, as distinct from a genuine misunderstanding of what the law requires, is essent1al’. ‘ It something more than "intentional1y" and requires an evil motive as well as want of justification. Honest mis- take and belief in good faith are complete defences to a prosecution for evasion. And negligence can never amount to wilfulness. But since intention can never be gathered by direct evidence, all relevant circumstances are taken into account, including the background and education of the accused, the nature of the acts involved, his professional experience etc°. ll Mere possession of large amounts of unaccounted cash, while it may be some evidence, does not always establish . the taxability of the amounts involvedt It has been held by the Supreme Court that an "affirmative act" is required in proof of "wilful evasion". This, it is stated, is implied from the word "attempt"‘. » Many of the "afTirmative" acts have been enumerated A“¤¤•*i*`• by the United States Supreme Court in the Spies casei, °°"‘ though the court took care to observe that what it enun- ciated was merely by way of illustration, and pointed out that Congress had not defined or limited the methods by which a wilful attempt to defeat and evade might be accomplished and, that perhaps the Congress did not define lest its effort to do so result in "some unexpected limita- tion". The illustrations given by the Supreme Court in the Spies case are quoted below. " ...... aiiirmative wilful attempt may be inferred from conduct such as lceeping a double set of books, making false invoices or documents, destruction of 1 Cf james v. U.S., (1961) 366 U.S. 215. ' 345 Srazes v. Martell, 199 Federal 2d .670, cert. denied (1953) 593 ' Capone v. U.S,, 56, Federal 9d 296, cert. denied (1232) 286 U.S. 353 btgnitgdz-States v. Nunan, 236 Federal 2d 576, cert, denied (1957) Z gpies v. U.S. (1943) U.S. 492, 498. ' . U ' d S , · ' mu. , ..1avfZ.’ég”¤.c 2“,§$m‘“é?‘a$é’“e0.’.3§7 ”""°" S. "“ ‘” °""°“ 178 APPENDIX 22 (contd.) books or records, concealment of assets or covering up sources of income, handling of one’s affairs to avoid making the records usual in transactions of the kind, and any conduct, the likely effect of which would be to mislead or conceal.; If the tax—evasion motive plays any part in such conduct the offence may be made out ........ " Besides the enumeration given in the Spies case, the following have been used as evidence of wilful intent to defraud :-— ’ (a) use of large amounts of currency} (b) a much visited safety deposit box;’ (c) purchase of property in the names of other|;* b (d) bank accounts in fictitious names; ‘ (e) diversion of funds from business; and (f) failure to keep books and records coupled with under statement of income! ve‘»ei·¢mr¤. Since the illustrative list given in the Spies case does · [ not say anything about filing false income-tax return, the question has been raised whether that would amount to attempt to evade tax. The question seems to have been answered in the affirmative by Appellate Courts. The Supreme Court has also held, that the positive act of wil- fully filing a false claim in order to defeat the tax supports _ a charge under this section‘. The question, however, ” cannot be regarded as absolutely settled. ` Underwire- Mere understatement of income does not support an m·=¤¤· inference of wilfulness, etc., but a consistent pattern of under—reporting large amounts of income may support it'. Attempt. As regards the expression·"attempt" to evade tax, it has been decided’ that the attempt need not consist of conduct which would have culminated in a more serious crime but for some impossibility etc. The prosecution can only be for the attempt. The attempt itself is an independent crime. Nothing is added to its criminality by success or · consumation. A Visthuermann v. United States, (1949) 174 F 2d 397; certiorari denied 338 U.S. 831. _ ` ’Ibid. *Ibid. *Halland v. U.S., (1954) 348 U.S. 121, 137 & 139. •A¢hili v. United States. (1957) 358 U.S. 373. •Hol1and v. U.S. (1954) 348 U.S. 3 IZI. _, _ "Syies v. United States, (1943) 317 U.S. 491. 179 APPENDIX 22 (contd.) Though both the words "evade" and "defeat" have been nE;?&f“t.._ used, and they are divided by the conjunction "or", the two are usually treated as synonymous, and indicate cheating on taxes by any devise. It must be added that an attempt to defeat the payment of taxes by obstructing the processes for collection has also been regarded as evasionl. Failure to pay tax by itself, however, is not "evasio¤" ’. Similarly, mere failure to file return would not ordi- Failurcto narily amount to an offence under this secti0n“, in the absence of some affirmative act showing "wilfulness". A mere passive neglect of the statutory duty of tiling a return . V- does not fall under section 7201. Prior failure is, however, sometimes regarded as evidence of an attempt to evade, though the position on this point is not very clear. Courts usually treat section 7201 as one intended to secure enforce- ment of the substantive provisions of the tax law, and sec- tion 7203 as one intended merely to secure the enforcement of its administrative provisions. Prosecutions under section 7201 are mostly in respect of Taxes income-tax, but prosecutions have been instituted for ¤V<>id•d· attempted evasion of the following taxes, namely, excess profits tax, social security taxes, estate duties, admission taxes, etc. The limitation period for prosecution is six years‘ from the date of the wilful attempt. Ordinarily, the filing of the false return is the mode of evasion charged, and the time therefore runs frpm the date of the return. While penalties for making false or fraudulent returns with intent to defeat or evade tax have been there in American law since the first Income-tax Law passed on 5th August, 1851, the two World Wars focussed attention on the need for an eiiicient machinery for investigating tax frauds. The Intelligence Bureau of the Internal Revenue was formed in 1919. In 1924, wilfully attempted tax evasion was changed from a misdemeanour to a felony. The discovery of rackets in business and operations in black-market after the Second {World War led to increased activities in prosecution of offenders for tax evasion also. In recent years, the investigating staff of the Internal Revenue Service has been strengthened. A prosecution for evasion of tax is not ordinarily insti- Pfi¤¤iPl¢ tuted, unless (i) there is a proof that the tax-payer is f°u°""d· United States v. Bardin, 224 Federal, 2d 225, cert. denied in (1956) 350 U.S. 883. Intcrgailtgziltpe ygydgax or tile return may however fall under section 7203, °Spiea v. U.S. (1943) 317 U.S. 492. A . *Secti0n 6531 of the Internal Revenue Code. V C 180 APPENDIX 22 (contd.) guilty beyond reasonable doubt, and (ii) there isa reason- able probability of securing a conviction. “C1V1l” penal- ties charging extra tax can also be imposed, and in most cases only the civil penalty is applied. The distinction between civil and criminal fraud may depend on the. flagrancy of the offence, the available evidence and the Government’s burden of proofl. Administrative Machinery ijttlminima- The` Internal Revenue Service (an Agency of the fm _ Treasury Department) collects the taxes imposed by the ‘“°l“““Y· Internal Revenue Code. Its headquarters are in Washing- ton, and it has 9 regional offices, 64 district offices and ' , over 1,200 sub-offices? So far as the question of investigation of frauds is concerned, its hierarchy is as follows“:- (1) National ofice at Washington Intelligence Division- (a) Tax Fraud Branch; (b) Special Investigations Branch. l (2) Ojfice of the Chief Counsel- Assistant Chief Counsel (Enforcement). (3) Office of the Regional Commissioner- Regional Commissioner. Regional Counsel. (Chief Counsel’s Oflice). Assistant Regional Commissioner (Intelli- gence), (4) District Di·rect0r’s Ojice- (a) District Director; · (b) Assistant District Director, Intelligence Division- (a) Tax Fraud Branch; (b) Special Investigation Branch. _ Criminal cases relating to tax evasion are investigated · by the officers of the Internal Revenue Service, scrutinis- ed by the Enforcement Division of the Regional Counsel and prosecuted by the Tax Division of the Department of Justice. That Department has a full-fledged Criminal Tax Section, having several Attorneys. I Crockett, Federal Tax System of United States, (1955), Page 136. ’ Crockett, Federal Tax System of U.S., (I955), page 136. • Based on information given in Cnockett, Federal Tax System of U.S., (ross). vases 243• 246. ‘ · i - 181 APPENDIX 22 (contd.) In each district, there is a District Director of Internal Revenue, controlled by the Assistant Regional Commis- sioner, Intelligence. Ordinarily speaking, the District Director, acting through the Chief, Intelligence Division, is in charge of investigation of criminal violations of the Revenue laws. Special officers of the Intelligence Divi- sion (called "Special Agents") investigate cases of frauds, and the District Director, with the concurrence of the Chief, Intelligence Division, recommends prosecution and sends the recommendations to the Assistant Regional Commissioner (Intelligence). If the latter agrees with the recommendations, he transmits the papers to the Regional Counsel, and the case is assigned in the latter`s office to an Attorney in the Enforcement Division_ who determines whether the evidence shows guilt beyond I reasonable doubt and a reasonable probability of convic- tion. He then sends the case to the Criminal Tax Section . of the Department of Justice. _ Important cases are scrutinised by the Chief Counsel, Enforcement Division at Washington. The Tax Division of the Department of Justice, through · its Criminal Tax section, is the final authority to decide whether to proceed with the prosecution or not? Its attorneys are highly specialised in tax frauds work. If a tax-payer asks for discussion at a conference, the request is granted. The object of this conference is not settle- ment; it is intended to give the tax-payer an opportunity to explain suspicious circumstances. Tax-payers are allowed to appear through Counsel in such conferences. Actual prosecution is conducted by a United States Attorneyi. Where there is no intent to defeat a tax, a compromise might be entered into; otherwise it is not entered into. The civil liability is discussed only after the criminal case is disposed of, unless the court directs otherwise. The judi- cial determination of the amount of the proposed civil liability is supplied to the tax payer. but settlement of the civil liability is not discussed until the penal case is decidedi This course is adopted in order to render futile any attempt to offer to pay the civil tax liability and get the criminal case dropped. It is also believed. that since prosecution is a graver penalty, it must be disposed of first. Lastly, a prosecution in order to achieve its deter- _ rent object, must occur at a time close to the date of the offence. 1 Casey, Federal Tax Practice, (1955), Vol. 4, Paragraph 15-3 and 15·4. ’ Casey, Federal Tax Practice, (1955), Vol. 4, para. 15-5. ’ Casey, Federal Tax Practice, (1955), Vol. 4, para 15-6. 182 APPENDIX 21 (concld.) Other Apart from section 7201 of the Internal Revenue Code, ’°°“°¤s· there are certain other sections in the Internal Revenue Code which deal with wilful failure to collect etc. tax or to file a return or to pay tax or to keep records etc. Further, section 287 (false claims for refund), section 371 (conspiracy to defraud), section 1001 (false statement) and section 1621 (perjury) of the Criminal Code (U.S. Code 18) can also be used for punishing various types of offences relating to tax. It is not, however, necessary to quote them here. APPENDIX 23 Tma P1zNAi, Com; AND T1-uz; Pm=:vr·:NT1oN or CORRUPTION, » mc., Acr The Prevention of Corruption Act, 1947 creates only I one substantive offence, namely, "criminal misconduct", _ ` which is defined in section 5(1), The main object of the Act was to deal with the kind of "misdemeanour in which , Government servants or public ofiicers with no ostensible means of support or inadequate support are living ob- , viously above their income and are in a position to invest · in property, which it appears on the face of it to be im- possible that they should have had the money to acquire or at any rate that they should have got those resources ` honestly"]. It was felt that it was difficult to pin down, because in such cases all that the Government or the police could find was that the Government servant could have no ostensible source, which could be accounted for as the basis of extravagant expenditure. No specific action could be alleged against him or proved in the way of accepting a bribe or obtaining the money by corrupt means. The object of section 5 was to make it possible to detect and punish officers who had "managed to evade detection in that way"'. The proposal for enacting the Act arose out of the recommendation made by a Committee appointed in Bengal in 1944, which suggested that legislation was necessary to tighten up the law relating to bribery and corruption. The Provincial Government of Bengal referred the matter to the Central Government, suggesting Central legislationi The recommendation was, that :1 new offence should be created to provide, that if a public servant was in possession of accretion of wealth, he should be deemed guilty of the offence of criminal misconduct, etc., unless IS cech f M. , , ' a s dated 2,% m.§my,‘i91Z$I’%2i.$’F‘§‘iE. €$°,5$§‘2'%gO°‘l$‘“E€q.°f S““° D°" *° ’ 'Ibid. _ ’S cch of Mr. ‘ , `. 3 »· I947 V0£cI,NO.5,pag° Ilggrtér ugoiuicil of tat: Debates, 25th February 183 APPENDIX- -23 (contd.) ne could prove that the accretion was honestly. obtained. Now, it was not possible to frame a substantive clause creating such an offence. The only way in which the object (of making the unaccountable possession of more money than a public servant ought to have an offence) could be achieved, was the enactment of the presumption in section 5(3). Clause (c) was put to make it clear, that of the various ways by which a public servant could im- properly acquire wealth, this was onei. It may not_ be possible to pin a public servant down that he has received a money as a bribe or by misappropriation or by abuse. All that could be proved was, that the public servant had been buying property or acquiring a fleet of motor cars, etc., beyond his means. That explains the form of section 5. While bribery is a form of curruption, the long title of the Act makes it clear that other forms of curruption are also sought to be checked by the Act. As it is a socially useful measure conceived in the public interest, it is to be liberally construed so as to bring about the desired object of preventing corruption among public servants and at the same time, harassment of the honest among them? Though four classes of misconduct are mentioned in section 5(I) (er) to (d), apparently a charge merely under section 5(Z) would suiilce? The ingredients of the offence are described in section $(1), and the penal provision is in section 5(2)‘. It would be useful to note the points of difference between the Indian Penal Code and the Prevention etc. Act. The latter Act contains various special rules of evidence, investigation and procedure which show how the provisions of the Act diifer from the Indian Penal Code. The most important provision of the Act is section 5(3), under which possession of pecuniary resources or property disproportionate to the known sources of income raises a rebuttable presumption that the accused is guilty of "criminal misconduct"? Another presumption is that enacted in section 4 about motive, etc."-’. —G.E——`~""`"""`“` ` “ “ M. Narayanan v. State ofKerala, (1963). 2 Crim, L,]. 186. ’ Compare Sayjan Singh v. State of Punjab, A.I.R. 1964. S.C. 464. ‘ Ram Sugar v. State of Bihar, (1964) 2 Criminal Law journal 65, 68, para. 8 (Supreme Court). * Sajjan Singh v. State af Purjab, A.I.R. 1964 S..C. 464. ° see Same of Madras v. Vaidyam¢7m»,,A.I.R. 1958 S.C. 61. ’ In fe P.S. Ardvamudht, A.I.R. I960. Mad. 27 (kamaswhmy J). 47 Law—13. 18l APPENDIX -23 (contd.) [As to section 4(I) of the Prevention etc., Act, it may be pointed out that the presumption under that is obli- gatoryl-2]. The points of difference as to substantive provisions are analysed below. CHART No. 1 (Obtaining gratification) Section 161, Indian Penal Section 5 (1)(a), Prevention Code. etc., Act. Off`ence can be committed by Offence can be committed only a person who is or expects to by a public servant. be a public servant. An isolated act is enough. . There must be habitual accept- ance, etc., of gratification. Y The punishment is imprison- The punishment is imprisonment ( .ment upto 3 years or fine up to 7 years, and also fine. ' or both. Further, the imprisonment shall not be less than one year in the absence of special _ reasons to the contrary. A Section 5 (.2). As regards fine, ¤ ’ the court must take into ` consideration the various factors mentioned in section 5 (zA). Crum No. 2 (Obtaining valuable thing without consideration) Section 165, Indian Penal Section 5 (1)(b), Prevention, Code. etc., Act. An isolated act is enough . There just be habitual accept- ance, etc., of any valuable thing without consideration, etc. Punishment is imprisonment Punishment is imprisonment l upto 3 years or fine or upto 7`YCHTS, and also jine. both. Imprisonment should not be less than one year in the absence of special reasons to the contrary. Section 5(2). 1 Regarding fine, the factors mentioned in section 5 (2A)= should be considered. 1 Dharwantrai Desai v. Smte of Maharashtra A.I.R. 1964 S.C. 575. ’ State of Gujarat v. Madhav_Bai, A·.I.R. I964 .Gujarat 206. " On S. 5 (1) (a) generally. See Ram Krishna v. State, A.l.R I944. S. C; 476. · - · " 185 APPENDIX 23 (contd.) · . Cntmr No. 3 (NIz'sa;>j>rojJriazion, etc.) Section 405, Indian Penal Section 5 (1)(c) Prevention, Code. etc. Act. There must be dzshonest mis- It is enough if there is "dis- appropriation or conversion honest" or "fraudulent·" for own use or use or dis- misappropriationl or otherwise posal in violation of law, etc., conversion for own use?. under section 405. Regarding use or disposal, it This is not necessary. must be in violation of a direction of law or legal con- tract. The public servant must be The property must be entrusted " entrusted " with property to the public servant, or must or with any " dominion " be under his control as a public over it. servant. lf the public servant does not It is sumcient if he allows commit the misappropriation another person to do so. himself, it is requisite that he must "wiUul@ suffer " any other perSOn to do. ‘ Punishment is imprisonment Punishment is imprisonment upto to years and also fine. upto 7 years and also fine. Imprisomnent must be for at least one year etc., section 5 (2). (By corrupt, ctc., means or abuse of position obtaining any valuable thing, etc.) No provision in Indian Section 5 (1)(d) Prevention, Penal Code. etc., Act. The offence of obtaining etc. 5 a valuable thing or pecuniary, advantage by " corrupt or illegal means or by other- wiseabusing his position as a public servant " (and thus com- mitting criminal misconduct) is new. * Cf. Om Prakash v. State ojTU. P., A.I.R. 1957 S.C. 458. “ Lending Government money to others is also covered. Munna Lalv. lJ.P., A.I.R. 1964 S.C. 28, para ro. ‘ · “ Publk Prosecutor v. Pachiripilli. A.I.'R.· 1955 Mad. 2x4. " 186 APPENDIX 23 (contd.) No. provision in Indian Section 5 (1)(d) Prevention, Penal Code. etc., Act. The words " pecuniary ad- vantage" include cash pay- ment alsol. Section 5 (1)(d) is not confined ` to direct benefit, and covers cases where a public servant causes wrongful loss to the Government by benctiting a third party'. I It may be noted that section - 5 (1)(d) does not require ; habitual acceptance of bribe} The clause has been interpreted in the under-mentioned I case‘. Section 5(1) (d) has two main ingredients, first, the I means adopted, and the second, the end attained. The means adopted are described as- ' (i) currupt, or (ii) illegal means, or (iii) otherwise abusing his position as public servant. The expression abuse of position is not defined, but "dishonesty", it has been held,° is implicit in the word "abuse". As regards the end to be obtained, it is provided that the public servant must have obtained- (a) for himself, or (b) for any other person, a valuable thing or pecuniary advantage. It is not necessary that the public servant must do something in connection with his duty.°-' * Mahfug Ali v. The StateTA.I.R. 1953 All.4 110 (B. biukerii I.) (S C') M. Narayanan Nambiar v. State ofKerala (1963) 2 Crim, L,]. 186 ’.Mahfuz Ali v. State, A.I.R. 1953 A11. 110, 112, para. 15. ‘ Bhagwan Sakai v. State of Puriab, A.I.R. 1960. S.C. 487; 5 M. Narayanan v. State of Kerala (1963), 2 Cr. L.)`., 186 (S.C.) ° Dhanerhwar v. Delhi Administration. A.1'.R. 1962 S.C. 1965. — " In reK. V. Ayyaswangy, A.I.R. 1965 A.P. 105, ‘ __ 187 APPENDIX 23 (concld.) Section 5(1) (d) is thus wide enough to cover- ` (a) almost all acts which would be offencesunder section 5(1) (a) to (c), or the relevant Section of the Indian Penal Code, and (b) many acts which would not be offences under section 5(1) (a) to (c) APPENDIX 24 SUBSTANDABD GOODS AND CHIATING The point for consideration is whether, where a person has supplied goods of inferior quality, or goods which are not according to specification, or of lesser quantity than stipulated, his act comes within the scope of section 420, Indian Penal Code. (1) There is only one reported Indian case in which the matter seems to have been directly dealt withl. The facts were these. The accused contracted to deliver to Rau Brothers 260 "do}cras" of fully good, machine—ginned cotton. In pursuance of this contract, the accused deliver- ed 260 "dokras" largely composed of cotton-seed, kapas and rubbish, carefully packed into the middle of the dokras, while all around the sides was placed good ginned cotton. The admixture of inferior stun? was found in all the "dokras", and it varied from 6 to 15 per cent against the quantity of it or 1% which might be expected ordinarily to be found in dokras. It was held, that the accused was guilty of the offence of cheating under section 420 of the Penal Code. ( (2) Of course, the general rule ist that a mere breach of contract cannot give rise to a criminal prosecution. The distinction between a case of mere breach of contract and one of cheating depends upon the intention of the accused at the time of the alleged inducement, which may be judged by subsequent acts; but the subsequent act is not the sole criterion of this intention? Where there is no clear and conclusive evidence of the criminal intention of the accused at the time the offence is said to have been committed and where the party said to be aggrieved has an altematiive remedy in a civil court, the matter should not be allowed to be fought in the criminal co·m·ts”. (3) As has been held‘, the representation can be implied from conducts. "??i`T`“‘*— 669 ;}5::¤ £13(1:)jD· I4 Bom. L.R. 137, I4 Indian cases ’Sl¤ . ., . .. , ' Ah D (mk%Or<1ss6> 37 age). 38 (Patna High c¤un>(1¤az1. “SecA.I.R. 'I`¤ph 8. W Qshahya A£•i¤i,I.L.R. 32 Ca. 941 947 (Paging and °C_L tb has in M.A.K•1uh v. Em). A.I.R. 1927 Mad. 544. . 188 APPENDIX 25 Soivir PROVISIONS or HINDU LAw REGARDING HIGH rmcrs AND ADULTERATION Provisions penalising adulteration and high prices were known to ancient Hindu law-givers. By way of ex- ample one may refer to certain texts of "Yajnavalkya‘ "— False weights He who abstracts one-eighth share (of an article sold) by a (false) measure or balance, shall be fined two hundred (panas). Where a greater or lower (share is abstracted), a proportionately (higher or lower fine should be imposed). j Adultemtion ( He who adulterates with inferior (articles) vendible medicines, oils, salt, perfumes, corn, coarse sugar and the like, shall be made to pay sixteen panas. , When (by some operation) inferior earth, hide, gem, yarn, iron, wood, bark, or cloth is made (to appear to be ¤ of) a superior kind, the fine is eight-fold of the (commo- ' dity) to be sold. ` Polming ojf He who pledges or sells a sealed casket (fraudulently) substituted (for a superior casket shewn) or the counter- feit of a natural vessel shall be fined (in the following manner). " (When the value of the thing palmed on the buyer, or a pledge is) less than a pam, the iine is fifty (panas) (when) a pana one hundred (panas), (when) two panas, two hundred (panas) when the value is higher, (the fine is) higher. Prices ` For those knowing whether (the price set by them) is higher or lower (than the maximum rates fixed by the kind) unite in fixing a price too heavy for Karus (workmen) and Siplins (artisans) the fine is the highest. For those traders who conspire to obstruct (the sale of a commodity by demanding it), or selling it at an im- proper price, the highest fine is laid down. The sale or purchase (of articles) should every day be made at the rates fixed by the king, the profit derived in this manner is declared (to be) propitious for traders. *Scn-Gupta, Evolution of Ancient Indian Law, (1953), page 316. { 189 APPENDIX 25 (concld.) A trader shall make five per cent as profit on commo- dities of the same country, and ten (per cent) on the foreign, if the purchase and sale take place immediately, (i.e. on the same day as that of the purchase). The rates should be so fixed (by the king) as to be , advantageous both to the buyer and the seller after add- ing to be (cost) value of the commodity, the expenses in- curred." APPENDIX 26 Fooo Amrrraaaiiox Lawkffor soME COUNTRIES A list of the laws relating to adulteration of food (food legislation) in some of the countries of the world is given below:- Australia . In Australia each State has its own Pure Food Act. But uniformity is secured after the creation of the Na- tional Health and Medical Research Council which makes recommendations for- uniformity in legislation?. Burma Tl Food and Drugs Act, 1928 is the main law. Canada _ The present law in Canada regarding pure food is con- tained in the Food and Drugs Act, 1953, which_ is a federal statute. The Department of National Health and Wel- fare is responsible for the administration of the Act through the Food and Drugs Directorate. The Directo- rate, besides its headquarters establishment, maintains district and regional offices. High priority is given to activities involving a hazard to health; second priority is given to hygienic violations relating to filth, decomposi- o tion of foods etc. and third priority to mere frauds and other economic violations. The validity of the Act as falling under "criminal law" F `bas been upheld“. ~· . Ceylon Q Food and Drugs Act, 1949 is the main law. V ‘Note prepared mainly on the basis of information contained in (a) Food and Agriculture Organization (United Nations) pamphlets relating to "Food Additive Control" in Canada Denmark, Germany, U.K. and France, and (b) in the Report of the F.A.O. Regional Seminar on Food Legislation for Asia and Far East (27th August to 3rd September, 1962), F.A.O. Report No. 1582 (Rome 1962). A “See "Pure Food and Pure Food Legislatio¤"—cditcd by Amos (But- terworth). ‘ — , . 3Stan;lard Sausage Co. v. Lee, (1934) 1 D.L.R. 706. ` " ‘ ·· 1190 APPENDIX 26 (contd.) Denmark As far back as 22nd October, 1701, an Order concerning the Administration of the Police directed that the Com- missioner of Police should not permit the offering for sale of food or beverages that were tainted or unwholesome or might cause sickness. Later Ordinances and Regula- tions covered certain aspects of purity of food. On lst May, 1860, a Milk Control Order was issued. First law on the examination of food was passed on 9th April, 1891. In 1910 an Act for the examination of food was passed. Subsequent amendmen dealt with certain aspects of food purity. gj Enforcement of fodd `laws is by the local health autho- rities, the local public health medical officer, the police, , the customs, the National Veterinary Service etc., and the · National Control Board for Dairy Products. The National ’ Health Service deals with the subject. A National Food ` Institute was established under an Act of 5th June, 1959. The Institute is to look after the work of the various laboratories and also have a Central Laboratory for food * control and an independent labouratory for food toxico- I logical research. ` ‘ England It is said that England was the first country in the English speaking world to have a separate law for Adul- teration of Food in 1860*. In fact, in the 15th Century, steps to deal with adulteration of food were initiated not by the Government but by the important Merchant com- panies of London who managed to obtain oiilcial regula- tions or lxislation to check frauds in the particular arti- cles handl by them. In the 18th Century, the excise authorities took interest in the matter and legislation regarding purity of food was enacted in the interest of the revenue. It was the extensive application of the microscope to the examination of food by A. H. Hassall that gave a neva? turn to the subject. Parliament a ihted a Com- mission to consider the question of adultpegation and its report in 1860 led to an Act for the Prevention of Adul- teration of articles of Food and Drugs in 1880. The Act of 1875 (Sale of Food and Drugs Act, 1875) made compulsory the appointment of public analysts by local authorities. Thereafter a number of enactments dealing with special articles of food followed. The main Act now in force is the Food and Drugs Act, 1955 (for England), and it consolidates almost all the previous enactments. In England, the Food and Drugs Act, 1955 (4 Eljz 2c. 16) is the main Act dealing with adulteration of food and "'Pme Food and Pure Food Loge 1¤:iou"-edited b Amos - woah) (Papa: of the 1960 celebrations for cemcuary of the Ayer). (Bum- 191 APPENDIX 26 (contd.) drugs. The general penal sections are sections l06_ and 107 in the 1955 Act. There are certain special punishments provided for in sections 5(3), l8(4), 22(1), 23(1). (3), 27(I), 52(4), 55(1), 57(1), (3), 59, 60, 69(2), l00(5) and l05(l), (3). Certain additional punishments are provided for in sections 8(4), 12 (2), 68(3), and Schedule II, para- graph 5. (There are separate Acts for Scotland etc.) Duties of administering and enforcing the Act are en- trusted to the local "F0od and Drugs authorities" i.e. the Common Council of the City of London, the Councils of · many larger boroughs and urban districts and the country councils. Each food and drug authority has to appoint a duly qualified public analyst with the approval of the appropriate Minister. Sampling officers are also appointed by these authorities. In matters of general interests of consumers, the Minister of Agriculture and Food may also direct a departmental officer to procure samples. Samples are divided into three parts, one part being given to the seller, the other part being given to the Public Analyst and the third retained for possible future com- parison. The Public Analyst analyses with all due expe- dition the samples, and gives to the sampling officers a certificate showing the result of the analysis. The seller is entitled to a copy of the certificate on nominal fee. A certificate showing that the sample does not comply with the law does not necessarily lead to a prosecution, as the public health inspector (under whose instructions the sampling oiiicer usually acts) may ask the seller or manu- facturer for observations on an adverse report, and the explanation offered may be considered before a prosecu- tion is undertaken. The decision to take proceedings usually lies with the public health comrnittee or the medical ofiicer of health of the local authority. On the request of a party, the court may cause the retained part of the sample to be sent to the Government Chemist for analysis and his certificate can be used in evidence. Besides the Act of 1955, the Therapeutic Substances Act, 1956 is also of interest. France A The basic law in France is the law of lst August, 1905 for the prevention of fraudulent practices. The purpose of this law is to check frauds perpetrated in connection with all merchandise, i.e., all deception or attempt at deception intended to mislead the buyer as to essentials. It also provides for checking adulteration of foods, drinks and drugs etc. As early as the year 1268, a Code was drawn up by the trade guilds of Paris containing regula- tions applicable to producers and dealers. of foods. The- 152 APPENDIX 26 (contd.) Code was approved by Provost Etiennee Boileau. Addi- tion of unauthorised seeds injurious to the human body to spices from the East was also prohibited. Fines, confisca- tion, whipping, pillorying of e vendor of rotten eggs and of the seller of adulterated butter was ordered. A person who sold watered milk was to have a funnel placed in his throat, and the watered milk was to be poured down until a doctor or a barber declared that the man could not swallow any more without danger. Articles 423, 318 and 475 of the French Penal Code of 1010 contain somewhat scanty provisions regarding adul- teration. But, towards the middle of 19th Century, adul- toration and falsification of food became increasingly frequent, as fraudulent operators learnt to exploit skil- fully the progress made by chemistry to cover their un- } lawful activities. Numerous international congresses on public health, medicine etc. discussed the question of . adulteration of foodstuffs. Ultimately in 1905, it was decided to intensify and centralise the controls of foods, which had been left for long to the mercies of insufficient- I ly skilled municipal officials. Enforcement of the law is mainly under the charge of = ‘ the Technical Activities Division of the Ministry of Agri- I culture whose Inspectors carry out inspection.- There are specified contingents whose jurisdiction is nation-wide. They exercise special and very strict control over certain products, such as fruits and vegetables for export_ wines, Hour. textiles etc. Laboratory service is extensive, con- sisting of three Government laboratories and about 100 other approved laboratories, the latter doing part-time work for prevention of fraud. There are specialised labo- ratories for dairy products, wines, fertilizers, seeds, etc. The inspection branch has 270 officials and 110 agents, and about 200 scientific personnel. In addition, in Paris, the Police Department has the Inspection Corps (70 persons) and there is the Paris Municipal Laboratory (25 persons). Control of medicine and drugs is exercised by the phar- macy inspectors; military supplies are checked by special staff; wholesomeness of water is checked by departmental V inspectors of public health and so on. The perfects are responsible for transmitting to the Public Prosecutor files containing reports of violations and official laboratory results indicating frauds, adulteration, or a breach of regulation. The Public Prosecutor may- (i) file the matter, if there is no offence; or (ii) place it before the court, if the evidence is sufficient, or (iii) send it to the Examining Magistrate if further information is necessary or if the party concerned claims the right to submit expert ,counter—evidence. 193 APPENDIX 26 (contd.) Fraud and adulteration are punishable__with imprison- ment (three months to 2 years) or by fines. Where adulteration is injurious to health, imprisomnent is mandatory. Germany In the Federal Republic of Germany, the Food Act of 1927 and th-e Colour Act of 1887 are the two main laws; the former has been extensively amended by the Food Act of 21st December, 1958. Various rules (called Ordinances) under the two Acts deal with matters of detail. Apart from the Federal Health Department, the German Research Association (through its Food Additive Commissions) and ` the Fed-eration of Food Law and Food Science do useful work in preparation of relevant legislation. The German Research Association has done considerable work on Food colouring and food preservatives. The Federation for Food Law and Food Science consists of members of major food producing and food trading corporations, and holds a "mediatory" position between the "stringent demands" of the Government and the interests of the food industry. Th-e Amendment of 1955, section 4(b), sub-section 4 specifically prohibits sale of foods in which there are resi- dues of insecticide, pesticides, herbicides etc. exceeding the maximum permissible amount. There are institutes financed by the Federal Ministry of Food which analyse food and determine food additives. There are such separate institutes for grain, fish, food pro- ducts, dairy fat, etc. Hongkong Public Health and Urban Service Ordinance, 1960 is the main law. . India In addition to the Prevention of Food Adulteration Act, 1954, reference may be made to the Agricultural Products (Grading and Marketing) Act, 1937. The Fruit Products Order of 1955 and Vegetable Oil Products Control Order also regulate the concerned products. Japan Main laws are Farm Products Inspection Law, Agricul- tural Standard Law and Export Inspection Law; Law for the Control of Food and other Articles, 1900; Food Sanita- tion Law, 1947. Food legislation is administered by the Ministry of Health and Welfare. Fraudulent sale in any commodity, including foodstuffs, is dealt with by the Fair Trade Commission under the Anti-Monopoly Law, -1947. 194 APPENDIX 26 (concld.) Korea Food Sanitation Law (20th January, 1962), is the main law. Malaya Sale of Food and Drugs Ordinance, 1952 is the main law. APPENDIX 27 Basic PRINCIPLES mon rum: roon uws The two main objectives of food legislation are- (i) to check adulteration; and (ii) to prevent frauds. { In the minds of the public, "pure food" means food that j is wholesome and free from anything that is in any way harmful to health and free from the addition or substrac- tion of anything which might impair wholesomeness, and present to the public in a forthright and factual manner? I The consumer has to be safeguarded against dangers to his health as well as against commercial frauds. [ Foods are by their very nature products of many differ- ent varieties, composition and degrees of purity, and are subject, with respect to production, transportation and distribution, to many different nutritional, hygienic and labelling requirements. Thenefore, the basic law can only lay down broad general principles, while regulations must contain detailed provisions governing different categories of products? In modern times, the minimum standards below which food should not be sold live also been emphasised, as these grade standards are important in featuring the produce of a country and thus gaining a reputation for it. Thus pure food laws deal with (i) health, (ii) frauds, (iii) marketing. At the Regional Seminar on Food Legislation’, the important requirements for facilitating enforcement were thus described:- " (a) definitions of such key words as food, label, advertisement, adulteration, sale, package, misbranding, ` warranty and unsanitary conditions, etc., rather than rely on the common or dictionary meaning of such words; . (b) procedures for sampling and analyses; ‘F.A.O. Regional Seminar on Food etc. Report, (1962), page 7, “Ibid, page 7. _ “F.A.O. Regional Seminar on Food ctc. Report, (!962), page 8. 195 APPENDIX 27 (contd.) I (c) powers of inspection and the procedures to be followed; (d) penalties; (e) warranties and guarantees; (f) prohibition of the importation of articles not complying with the law.". The Seminar recommended 1 that each country should have same law on the basis of basic principles given in its Report, that maximum and minimum penalties be prescribed depending on the nature and gravity of the offence; that detailed standards for new, traditional and processed foods may be prescribed; and that each Government should set up a Statutory Co-Ordmating Committee on Food Control, consisting of representatives of the various Government Departments responsible for the many aspects of food legis- lation (Agriculture, Industry, Trade, Health ctc.) and of trade and manufacturing interests. The Seminar also stressed the need for immediate steps in establishing appro- priate training programmes for the field staff, laboratory technicians and other personnel. As regards enforcement, its recommendations may be quoted in detail”:— "6. Governments should pay attention to the enforce- ment of food legislation in places where food is produced or manufactured in order to ensure at the source that food is not exposed to health hazards or subjected to adultera- tion or fraud. 7. Governments should take steps at an early date to set up or strengthen their marketing organizations, taking the necessary legislative action so as to be able to progressively grade and quality-mark according to well-defined standards, all important food articles produced or manufactured in the country for sale or distribution, and thus facilitate the enforcement of food laws and make them effective. 8. In view of the important role of the consumers amd consumers assxziation in the enforcement of food legisla- tion, Governments provide for the education of consumers and of those involved in the handling of foods, and assist consurnersf associations in becoming acquainted with the food legislation and control measures. 9. Governments keep the Legislation Research Branch, F.A.O. Headquarters, Rome, Italy, regularly informed on any new food legislation enacted or rules framed there- · under or any amendments to existing laws or regulations and supply, when possible, English or French translations oi the texts. This would enable the F.A.O. to act as the ‘F.A.O. Regional Seminar on Food, etc, Report, ({962), page I7· i 'l".A.O. Regional Siminnr on Food; cth., Report, (:962), page 18, Paras. 6-9. _ 196 APPENDIX 27 (concld.) _ Central body for the exchange of information on food legis- lation between the countries in the Region with the aid of promoting further improvement and harmonisation of ‘ their food legislation". The variety and complexity of food legislation justify these observations:-— "Sound food legislation must deP€¤d upon know- ledge in several different fields.". Of these fields, three are of outstanding importance- the agricultural and veterinary sciences concerned with raw materials, the chemical sciences concerned with prepa· ratory measures, and the biological sciences concerned with the effects of food} It should be realised, that "the price of pure food is. eternal vigilance on the part of the Food Chemists in indus— try and the Public Analyst".“ APPENDIX 28 V PROVISIONS IN TASMANIA (AUSTRALIA) REGARDING ANTI- SOCIAL, ETC., o1·*F1:Nc1:s 1 2 Evasion and avoidance of (I) Stamp Duties Act, 1931 taxes lawfully imposed. Section 23, subesection. i (5) (4), <¢> ¤¤d U)- (2) Deceased Persons’ Estates Duties Act, 193Ii. Section 38. (3) Land and Income Taxation Act, 1910. Sections 195, 197 and 198- (Extracts attached). Adulteration of foodstuffs Public Health Act, 1962. and drugs. Sections 90 to 98, and 100 (Not copied). Theft, etc. Sections 226 to 234 Criminal Code Act 1924. Misuse of their position by Criminal Code Act, 1924. public servants in making of Sections 83 to 87, 100, 115,. contracts and disposal of 265, 266 and 297. public property, issue of (Extracts attached). » licences and permits and similar other matters. · ’A.C. Frazer in "Pu1·e Food Cgi Pure Food Laws" (Edited by Amos) 153.155- I - . ~ 1 A “].i-I. Hamence in “Pute Food apd:Pure·· Food Laws" etc. (Edited by Amos), 5, at page zo. - 197 APPENDIX 28 (contd.) Copy of sections 195, 197 and 198 from the Land and Income Taxation Act, 1910. "195. (1) Any person who- ` OH¢¤<>¢¤— (a) fails or neglects to duly furnish any return or information, or to comply with any requirement of thc Commissioner as and when required by this Act, or by the Commissioner; , (b) without just cause shown by him, refuses or neglects to duly attend and give evidence when requir- ed by the Commissioner or any officer duly authorised by him, or to truly and fully answer any questions put to him, or to produce any book or papers required oi him by the Commissioner or any such olhcer; (c) makes or delivers a return which is false in any particular, or makes any false answer, whether verbally or in writing; or (d) aids or assists any other person in any manner whatsoever to commit an offence against paragraph (c) of this sub-section, shall be guilty of an offence. Penalty.--Not less than two pounds nor more than one hundred pounds. (2) A prosecution in respect of an offence against para- graphs (cz), (c), or (d) of sub—section (1) of this section may be commenced at any time. (3) Any person who, after conviction for an offence against this section_ continues to fail to comply with the requirements of this Act, or of the Commissioner, in respect of which he was convicted, shall be guilty of an offence and pumshable as provided in section one hundred and ninety- eig t. ( 4) It shall be a defence to a prosecution for an offence against paragraph (c) of sub-section (1) of this section if the defendant proves that the false particulars were given, or the false statement was made, through ignorance or 1nadvertence. 197. If, in any prosecution under paragraph (c) of sub- Under- section (1) of section 195, it is proved that the tax—payer has S;?E°m°¤‘ wilfully made or delivered a false return with intent to ° '“°°m°" defraud. the amount by which his actual income for the year in respect of which such return was made. exceeds the amount of income shown in such return, shall be deemed to be income tax payable by the tax-payer; and may be recovered accordingly. ‘ 198 APPENDIX 28 (contd.) Avoiding 198. Any person who, by any wilful act, default, or “**“‘*°”· neglect, or by any fraud, art, or contrivance whatever, avoids, or attempts to avoid, assessment or taxation, shall be guilty of an offence. Pe1taZty.——Not less than fifty pounds nor more than five hundred pounds, and in addition an amount not exceeding double the amount of tax payment whereof he has avoided or attempted to avoid." Copy of sections 83 to 87, 110, 115, 265, 266 and 297 of the Criminal Code Act, 1924. Corruption "83. Any person who— `gingggfc U (ti) being a public officer, corriiptly solicits, re- ceives, or obtains, or agrees to receive or obtain, any E property or benefit of any kind for himself or any other f person on account of anything done or omitted, or to ( be done or omitted, by him in or about the discharge ‘ of the duties of his office; or (b) corruptly gives, confers, or procures, or pro- * mises or offers to give, confer, or procure, or attempt , to procure, to, upon, or for any public officer, or any [ other person, any property or benefit of any kind on account of anything done or omitted, or to be done or omitted, by such officer in or about the discharge of the duties of his office, is guilty of a crime. Charge:- Under (cz): Official corruption. , Under (b): Bribery of a public officer. Tasmania Extortion by 84. (1) Any public officer who, under colour of office and public _ otherwise than in good faith, demands, takes, or accepts gmcigsgion from any person for the performance of his duty as such pp ` officer, any reward beyond his proper pay and emoluments, is guilty of a crime. Charge:-—Extortion as a public officer. (2) Any public officer who, in the exercise or under colour of exercising his office, wilfully and unlawfully in— flicts upon any person any bodily harm, imprisonment, or other injury is guilty of a crime. P Charge 1 —~Oppression. · Public 85. (1) Any public officer who knowingly holds, Omcc,-S directly or indirectly, any personal interest in any crm- , Interested tract made by or on behalf oi the Government of this —¤ °°¤¤‘¤¤*· State concerning any public matter is guilty of a crimet 199 APPENDIX 28 (contd.) A Chem-ge:~ Being interested in a contract as a public ofiicer. (2) A person is not deemed to beinterested in any such contract as aforesaid because he 1s a shareholder in a company of more than twenty members which IS a party thereto, unless he is a director of such company. 86. Any person appointed to act as a valuator or arbi- OEQQEEEQ? trator to determine the value of any land, or of any in- jury done to any property who- _ (cz) having to his knowledge any substantial in- terest in such property acts as such valuator or arbi- trator without disclosing the fact that he holds such interest to the person appointing him; or (b) acts corruptly or dishonestly as such valuator or arbitrator, { is guilty of a crime. _ Charge:—Dishonest dealing as a valuator or as an arbi- trator. , 1 87. Where by any statute any person is authorised or ggigcry required to certify to any fact, any such person who gives Cem, a certificate which to his knowledge is false in any iicates. material particular is guilty of a crime. Charge;—Giving a false certificate. 110. Any public ofiicer who discloses (except to some DiSd<>$ ( person to whom he is authorised to publish or communi- ;’€;m“ cate the same) any fact which comes to his possession, ` by virtue of his office and which it is his duty to keep secret, is guilty of a crime. Charge;—-Disclosing otlicial secrets. 115. (1) Any public officer who wilfully and without Omission lawful excuse omits to do any act which it is his duty to bv Publw do as such ofhcer is guilty of a crime. g?_‘€;;;‘° d . (2) No person sha-11 be prosecuted under this section my without the consent in writing of the Attorney—General. Chm·ge:—Omitting to perform duty as a public oihcer. 265. Any public officer charged with the receipt, cus- False ~dy, or management of any part of the public revenue accou ng property who knowingly furnishes any false state- by Pub ° ·t or return of any money or property received by him °m°°' entrusted to his care, or of any balance of money in possession or under his control, is guilty of a crime. Jharge:—Falsely accounting as a public oifcer. ,? t W ` , 2DU APPENDIX 28 [contd.`1 ¤§3;°j,E,m__ 266. (1) Any person who- °mm5‘ (cz,) corruptly gives or agrees to give, or offers to ‘ an agent, or to any other person on his behalf; or , (li) being an agent, corruptly solicits, receives, obtains, or agrees to accept for himself or any person other than his principal, v_ any gift or consideration as an inducement or reward for ·»" ~_,, doing or forbearing to do, or for having done or forborne . ¢ to do, any act in relation to the principals affairs or busi- ness, or for showing or forbearing to show favour or dis- favour to any person in relation to the same, is guilty of a crime. Ch.orge:—Corruption in relation to business. (2) Any person who knowingly gives to an agent, or any agent who knowingly receives or uses with intent to deceive his principal, any receipt, account, or other do- ` cument in respect of which his principal is interested or which relates to any dealing, transaction, or matter in which his principal is interested, and which contains any statement which is false or erroneous, or defective in any material particular, is guilty of a crime. Chc1·rge:r~Coi·ruptly using a false document. (3) For the purposes of this section- (tz) "agent" includes any person employed by or acting for another, and' any person serving under the Crown or under any corporation or public body; (b) "consideration” means any kind of valuable consideration; (c) “principa1" includes any employer. ` (4) In any proceedings under this section, where it is proved that any consideration has been solicited or re- ceived by an agent from, or given or offered to an agent by, any person having business relations with the prin- cipal, the burden of proving that such consideration was not solicited, received, given, or offered in contravention of the provisions of this section shall be on the accused. In any such proceedings as aforesaid it shall be a defence to prove that the consideration was solicited, received, given, or offered with the principal’s knowledge, and Eat j he was aware of all factsmaterial to the transaction. }/ ·“ C¤¤S1>€¢¤¢:F 297. (1} Any person who conspires with anotherj, (tz) to kill any person, whether a subject of pflis Majesty or not, and whether he is in this State ,0:* elsewhere, under circumstances which, if he were · killed in this Sta-te, would constitut.e murder; 201 APPENDIX 23 {concldj {in) to obstruct, prevent, pervert, or defeat the due course of justice, or the administration ot the law, whether such purpose is to be eiiected in this State or elsewhere; (cl to commit any crime; (ci) to cheat or defraud the public, or any porti- culor person, or class of persons; (e) to extort, by any means, any property what- ever from any person; (fj to inflict by any unlawful means any injury or harm upon the public, or any particular person or ’ class of persons; (gf: to facilitate the seduction or a woman; (lr.) to do any act involving, and known to be - likely to involve, public mischief; or (i) to do any act without lawful justincation or C excuse with intent thereby to injure any person, · is guilty of a crime. l Charge: ——Conspiracy. ‘ (2) A husband and wife are not criminally responsible for any conspiracy between themselves only. {3) Nothing in this section shall atiect the provisions of the Trades Unions Act, 18-5*9, or of the Conspiracy and Protection of Property Act, 1BS9." _ APPENDIX 29 » 1 Csirnnian Laws as T0 emxx-socrar., mc. ommrtcms 1 (1) Economic Crimes ` (1} Revised Statutes of Canada, 1952, Ch. 314, The ` Combines Investigation Act. (2) Evasion of Taxes [il Revised Statutes of Canada, 1952, Ch. 58, The Customs Act. · (ii) Revised Statutes of Canada, 1952, Ch. BU, The Customs Tariff Act. I (iii) Revised Statutes of Canada, 195-2, Ch. 99, The , 1 Excise Act. , ·’ {io) Revised Statutes of Canada, 1952, Ch. 1-48. Income-tas Act. (3) Misuse of position by public servants (vi) Canadian Criminal Code-Sections '-_w3‘ F (extracts attached) - - 292 APPENDIX 29 (contd.) ` (4) Deli-very of sub-standard goods - (rl) Canadian Criminal Code—section 2, sub- section (36), sections 36[L-363. (extracts attached] (5) P-rojiteeri-ng etc. Not cognizable as offences in Canada. (6) Adulterotion of food etc. (i) Revised Statutes of Canada, 1952, Ch. 123, Food and Drugs Act. (ii) Revised Statutes of Canada, 1952, Ch. 126, Fruit, Vegetables and Honey Act. (iii) Revised Statutes of Canada, 1952, Ch. 17'T, The Meat and Canned Goods Act. { (These Statutes deal with the processing, packaging, inspection and control of sanitary conditions as well as . purity of the products concerned), (T) Theft, etc. Canadian Criminal Code—section 269, 280, 233. ' (3] Trojjiclcing in licences, etc. No specific provision exists except general provi— sions as to misuse of position by public servants. Exrmcrs mom Csnsnisn Cnimmst Coos, 1955 Sections 99-103 99. In this Part, . Q (ti) "Evidence" means an assertion of fact, opinion, belief or knowledge whether material or not and _ whether admissible or not; (Ta) "Government" means {-i) the Government of Canada, _ (cli.) the Government of a province, or (iii) Her Majesty in right of Canada or in x right of a province; ` (c) "Judicial proceeding" means a proceeding (il) in or under the authority of a court oi - _ justice or before a grand jury, ‘ , (ii) before the Senate or House of Commons - of Canada or a Committee of the Senate or House of Commons, or before a legislative council, legis- lative assembly or house of assembly or a com- . mittee thereof that is authorized by law to admi- ‘ bister an oath, ,3,:-{iii) before a court, judge, justice, magistrate `wper. , i S 203 APPENDIX 29 {contdl p l (iv} before an arbitrator or umpire, or a person or body of persons authorised by law to make an inquiry and take evidence therein under oath, or ` l [jo) before a tribunal by which a legal right or legal liability may be established, whether lor not the proceeding is invalid for want of jurisdic- tion or for any other reason; (cl) "Oftlce" includes (i) an onice or appointment under the govern- ment, (iir a civil or military commission, and (iii) a position or employment in at public department; l (e) "OHicial" means a- person who (il) holds an olllce, or ‘ (ii) is appointed to discharge a public duty; and I ll} “Witness" means a person who gives evidence orally under oath orby affidavit in a judicial proceed- ing, whether or not he is competent to be a witness, and includes a child of tender yea-rs who gives evidence but does not give it under oath, because, in the opinion of the person presiding, the chi-ld does not understand the nature of an oath. 100. [1) Bnbery of Judicial Ogj-icers, etc.—Every one who l (ol being the holder of a judicial oifice, or being a member of the Parliament of Canada or of a legis- lature, corruptly (i) accepts or obtains, (ii) agrees to accept, or j (iii) attempts to obtain, any money, valuable ` consideration, oilice, place or employment for him- self or another person in respect of anything done P or omitted or to be done or omitted by him in his official capacity; or (ln) gives or offers corruptly to a person who holds a judicial office, or is a member of the Parliament of Canada or of a legislature, any money, valuable con- sideration, oflice, place or employment in respect of anything done or omitted or to be done or omitted by him in his official capacity for himself or another ·· person, is guilty of an indictable offence and is liable to imprisov ment for fourteen years. (2) Consent of Attorney General-—No procemngs against a person who holds a judicial oiiice shallllm S lg tuted under this section without. the consent in g O the attorney General of Canada. ,- V _//' . .¤ . 204 APPENDIX 29 (coma.) 101. Every one who . I (ol Bribery of O]jllC€TS—bElD_g a justice, police commissioner, peace officer, public officer, or officer of a juvenile court, or being employed in the adminis- tration of criminal law, corruptly (i) accepts or obtains, _ (it) agrees to accept, or (iii) attempts to obtain, for himself _ or any ` other person any money, valuable consideration. oiiice, place or employment with intent _ (io) to interfere with the administration of justice, , t (11) to procure or facilitate the commission of an offence, or , I · (vi) to protect from detection or punishment ‘ a person who has committed or who intends to commit an offence; or I (b) Idcm——gives or offers, corruptly, to a person mentioned in paragraph (ct) any money, valua-ble con- “ sideration, office, place or employment with intent that L the person should do anything mentioned in sub-para- l graph (io), [tv) or (vi.) of paragraph (cn), is guilty of an indictable offence and is liable to imprison- ment for fourteen years. 102. (1} Fmwis upon the G0oemment—Eve17,r one com- mits an offence who (cr.) Offer or gift to influence ojtciu.l—directly or i indirectly (i} gives, offers, or agrees to give or offer to an oiiicial or to any member of his family, or to . any one for the benefit of an official, or dit) being an official, demands, accepts or oilers or agrees to accept from any person for him- self or another person, a loan, reward, advantage or benefit of any kind as consideration for co- ‘ operation, assistance; exercise of influence or an S act or omission in connection with (iii) the transaction of business with or any matter of business relating to the government, or (io) a claim against Her Majesty or any bene- fit that Her Majesty is authorised or is entitled to bestow, whether or npt, in fact, the official is able _ to co-operate, render assistance, exercise influence - or do or omit to do what is proposed, as the case may be; . m,,Q`*g) Giving reward oi-icommission to ojicial with- sent-having·dealiJhgs of any kind with the 205 APPENDIX 29 (contd.) government, pays a commission or reward to or con- fers an advantage or benefit of any kind upon an em- pioyee or official of the government with which he deals, or to any member of his family, or to a-ny one for the benefit of the employee or official, with respect to those dealings, unless he has the consent in writing of the head of the branch of government with which he deals, the proof of which lies upon him; (0) Acceptance of Commission or Gift without consent-—being an ofncial or employee of the govern- _ ment, demands, accepts or offers or agrees to accept from a person who has dealings with the govern- ment a commission, reward, advantage or benefit of any hind directly or indirectly, by himself or through a member ot his family or through any one for his benc- fit, unless he has the consent in writing of the head of · the branch of government that emp oys him or of ` which he is an ofiicial, the proof of which lies upon him; _ (dt} Compensation for procuring settlement of - claim, etc.—ha·ving or pretending to have influence with the government or with a minister of the gov- ernment or an official, demands, accepts or offers or agrees to accept for himself or another person a re- ward, advantage or benefit? ofany kind as consider- ation for co-operation, assistance, exercise of influ- ence or an act or omission in connection with (i) anything mentioned in sub-paragraph (iii) or (iv) of paragraph (tr), (ii} the appointment of any person, including himself, to an ofhceg or _ fe) Ojer of reward for-appointment—offers, gives or agrees to offer or give to a· minister of the govern- ment or an ofhcial a reward, advantage or be-nent of any kind as consideration for co··operation, assistance, exercise of infiuence or an act or omission in connec- tion with . (vl) anything mentionedin sub-para-graph (iii] or (iv) of paragraph (ci), or I (ii) the appointment of any person, including himself, to an oiiioe; or ff} Reward for withdrawal of tender-—having ·’ made a tender to obtain a contract with the government (i) gives, offers or agrees to give to another prson who has made a tender, or to a member Lr h1S family, or to another person for benefit that person, a reward, advantage or benefit {th'; kind as consideration for withdraw;}" tender of that person, or ·‘ ‘ 2GB APPENDIX 29 [contd.) (ii) demands, accepts or agrees to accept from another person who has made a tender a reward, advantage or benefit of any kind as consideration for the withdrawal of his tender. [2) Contractor subscribing to election j‘und.—Every one commits an offence wht-, in order to obtain or retain a contract with the government or as a term of any such contract, arhether express or implied, directly or indirectly subscribes, gives, or agrees to subscribe or give, to any person any valuable consideration (ai for the purpose of promoting the election ot a candidate or a class or party of candidates to the Par- liament of Canada or legislature, or [lm) with intent to iniiuence or affect in any way the result of an election conducted for the purpose of electing persons to serve ir: tlc Parliament of Canada or a legislature. (3} Punishment.—Ex=ery one who commits an offence under this section is guilty of an indictable offence and is liable to imprisonment for ive years. 103. Breach of Trust oy Public O§·icer.—Every official who, in connection with the duties of his oflice, commits fraud or a breach of trust is guilty of an indictable offence and 1S liable ng imprisonment for live years, whether or not the fraud or breach of 11`ust would be an offence if it were committed in relation to a private person. Exrnacrs mom Cananrm Q1-UMINAL. Coma. Section 2(3G) and sections 360-363. 2. (36) "Pnbl1Lc stores" includes any movable property that is under the care, supervision, administration or can- trol of ia public department or of any person in the service of a public department; 360. [1) Applying or re·mocing marks without autho- rify.———Every one who, (al without lawful authority, the proof of which · lies upon him, applies a distinguishing mark to any thing. or P V (b) with intent to oatmeal the property of Her Majesty in public stores, removes, destroys or obli- \ terates, in whole or in part, -a distinguishing mark, is guilty of an indictable offence and is liable to imprison- ment for two years. _ _ Unlawful transactions in public stor2s.+—Every one mmwithout lawful authority, the proof of which lies upon Stmésseives, possesses, keeps, sells or delivers public of ‘·t' he knows bear e disting11ishing mark is guilty Z9'? APPENDIX 29 (contd.) (aj an indictablg offence and is liable to imprison-· ment for tivo Years, or (bl an oifence punishable on summary conviction. (3) "D·istingt:ishing morl·.c".—For the purposes of this section, “‘distinguishing mark“ means a distinguishing mark that is appropriated for use cn public stores pursuant to section 359. 361. (1) Selling defective stores to Het- M¢1jesty.—Every one who knowingly sells or delivers detective stores to Her Majesty or commits fraud in connection with the sale, lease or delivery of stores to Her Majesty or the manufacture of stores for Her Majesty is guilty of an indictable offence and is liable to imprisonment for fourteen years. , (2) Ojences by ojicets and employees of co1··pomtions.— . Every one who being a director, oflicer, agent or employee of s corporation that commits, by fraud, an offence under sub-section (1), (tt) knowingly takes part in the fraud, or fb) knows or has reason to suspect that the fraud . is being committed or has been or is about to be com- mitted and does not inform the responsible government in- a department thereof, of Her Majesty, is guilty of an indictable offence and is liable to imprison- ment for fourteen Fears. 362. Unlawful use of military ttnijorms or certificates.- Every one who without lawful authority, the proof of which lies upon him, (rz) wears a uniform of the Canadian Forces or any . other naval, army or air force or a undorm that is so - similar to the uniform of anyof those forces that it is likely to be mistaken therefor. tb) wears a distinctive mark relating to wounds re- ceived or service performed in war, or a military medal, ribbon, badge, chevron or any decoration or order that is awarded for war services, or any imitation thereof or any mark or device or thing that is likely to be mis- taken for any such mark, medal, ribbon, badge, chevron, decoration or order, (ci has in his possession a certificate of discharge, certificate of release, statement of service or identity ` card from the Canadian Forces or any other naval, army or air force that has not been issued to and does nt belong to him, or ADI (il) has in his possession arommission or wate- or a certiiicate of discharge, certidcele of or ment of service or identity card ssued to ,·¤#’ . l ,/I 208 APPENDIX 29 [concld.) i person in or who has been in the Canadian Forces or any other naval, army or air force, that contains any- alteration that is not verified by the initials of the oibcer thereto lawfully authorised, is guilty of an offence punishable on summary conviction. 363. (I) Mil.itm·y sto·res.—Every one who buys, receives or detains from a member of the Canadian Forces or a deserter or absentee without leave from those forces any military stores that are owned by Her Majesty or for which the member, deserter or absentee without leave is account- able to Her Majesty is guilty of (cr,) an indictable offence and is liable tg imprison- ment for Five years, or (ii) an olfence punishable on summary conviction. I (2) Exception.—No person shall be convicted of an » offence under this section where he establishes that he did j not know and had no reason to suspect that the military ‘ stores in respect ei which the offence was committed were owned by Her Majesty or were military stores for which the member, deserter or absentee without leave was I accountable to Her Majesty. APPENDIX 30 Consemscv TO COMMIT PUBLIC M1sr:H1EF—EN¤L1sn mw. 1. A brief discussion of the offence of conspiracy as known to English law appears to be useful, first, because it has been used often to punish a conspiracy to defraud, and secondly, because its wide scooe is illustrated by certain recent decisions'. 2. 'I`he following statement in one text-bookz seems to - sum up the law neatly: —— "An agreement by two or more persons :— (1) To commit a crime; or (2} Subject to possible qualifications mentioned ` _ in the explanationf, to commit any other unlawful s act; or , (3) To do any act which is [iz) immoral or (HJ) tends to the public mischief; is a common law misdemeanour punishable with .a fine and imprisoiimentd'. "ee Shaw c. D.P.P. {1961) 2 A.E.R. 446 (1961} 2 W.L.R. 897 (HL.) ¤'1·:_& Jones, Introduction to Criminal Law (1954), 297, article 90. p=1h*P‘~*·iu.1i|im` ti rated` t dneenactthardm dhmd uid, Crrm W ·-¤i1y1;gIl¤l·m_invf1vi(itgtnee1T£r¤ offmuclecgdd of baba. Immducuonto Crinsliual ,_ (1964),·pagez99. 209 APPENDIX 30 (contd.) 3. The offence covers not only a conspiracy to commit. a breach of statute, but also an agreement to contravene a law, whether statute—rnade or otherwisel-2. 4. That the offence has not become obsolete, will be shown by the charges of conspiracy framed in connection with the recent Great Train Robberys, and the charges of "conspirac5r to pervert the course of justice" framed against Detective Sergeant Challer1or* (later found to be insane and unit to plead), and the case-law relating to conspiracy t¤ commit summary oi’fences*. 5. Certain species of the offence of conspiracy in crimi- nal law have become controversial? Of these, the cons— piracy "to corrupt the public morals" and to commit a pub- lic mischief is one?. The recent decision of the House of Lordss-” leaves no doubt that the law recognise; such a conspiracy‘"-*1. 6. Some important instance of conspiracy to defraudiz may be noted. Agreements to do the following things have been regarded as punishable as conspiracy to de- fraud— IS R. .].»b.1 rAtlE .R .S;( )K.B. ;SBS1'- i eitomslbunialr, r§; andgdlscussionlifheidtld Tami? v. Kingignp., All};. 1945 Nag. 218, 221 (Vivian Bose ].). °See also R. v. Starsky (1944) 2 All Eng. Rep. 333 (C.C.A.) and Hals bury, 3rd Edu., Vol. IO, page 311, para. 569 (middle), ’See R. v. Field (1964), 3 W.L.R. 6o5, 607, 603 (C.C.A.). *·R. v. Pedrini, (September, 1964), 7 Current Law, 366-a, Notes of recent cases (C.C.A.). *See R. v. Blamfrrs Trumpet: Services Ltd. (1963) 3. A.E.R. 170; (1963) 3 W.L.R. 496 (C.C.A.). _ ”Soe the discussion in G-lamrille Williams, Criminal Law, The Genera] Part (1961), Chapuer 15. S "For earlier cases, see Stallybrass, ‘Pub|i<; M.ischief’ (1933) 49 L.Q.R 3, I9I. *Shcr.u v. D.P.P. [1961) I2 A.E.R. 466; (1961) 2. W. L.R. 897 (I-LL) discussed exhaustively by Goodhard. "The Shaw case; the law and public mgral5" (1961) 77 Modern Law Review 560. ¤See also C.C. Turpin, "C¤:1spiracy_bc• Corrupt Public Mora,ls"(1g6r) Camb L.]`. 144. 1°Other cases relevant to this are- (ajn R. v. Newland (1933) I2 AU Eng. Rep. 1o67 (C.C.A.). (b)Bam·d nf Trade v. Owen: {I9§7], A.C. 602; (195-7) 1 All Er Rep. 4tt (I-LL.) (Discusses history of the offence in detail). · _ { l1For earlier cases see Stallybrass "l’ublic 1vlisehief" (1933), 4t tag, IQI. _ I e Halsbitry, 3rd Edu., V¤L;1¤, Disp 83¢l•;f00m0U€ (11). f ; . zi 210 APPENDIX 30 (concld.] (il to raise the price of. public funds on a parti- -r-cular day by false rumoursl; ., (oi) to make and publish a false balance-sheet, the shares of a company on the official list of stock exchange, in order to give a fictitious value to such · share“; (iii) to induce a false belief among investors that there is a bono fide market for certain shares; by making sharn sales, etc., at high prices? (tv} to make and publish a false balance-sheet, misrepresenting the financial condition of companyi [ta) to defraud a railway by obtaining non-trans- ferable excursion tickets and selling them to other? 7. The common law oifence of conspiracy can be used efor frauds in relation to passports, it seems? 8. As to conspiracies and strikes, see discussion in the 5 e under—mentioned study?. — ; 9. In New Zealand?-“, the offence of conspiracy has been narrowed down to specific classes of conspiracy. An important feature of the crime of conspiracy to , defraud is that it does not require "false pretence"'. As · has been pointed outm, the crime of obtaining by false pretences requires ea false pretence, but conspiracy to de- fraud does not. · Another feature worth noting is that the obtaining t of property or execution of some kind of document, which is necessary for the offenc` obtaining by false pretences in English law, is not necessary for conspiracyu. ` Thus, where the buyer of a mare entered into plan with another person to deceive the seller into supposing that the mare was unsound (so that thc seller agreed to accept less than the price originally Fixed), the plan- was held to be punishable as conspiracy to defraud the seller of the balance of price, though no properliy was obtained]? Bzrangar (ISI4), 3 M 8: 67. Sec Tumor and Armitage; · - Ctzcs) on Criminal Law (1964), page IGI (as explained in R. v. Aspimi, _. in a.. _ " - _ = R. tr. Awami! (1816}, z Q.B.D. 48, so (C. A-). ‘ =*.S'c¤:a: ·.·. Broan etc. C¤."_(rS92j, 2 Q.B. 124 (C.A.). ·¤R. v. Burch (1865} 4 F.& 'F, 401. °R. v. Absolvnér Clark (1859), 1. F 8: F. 49E. °See I-Ialsbury, 3rd Edu Vol. 7, page 265. 7K. W. Wdderbum, "Int:imidatio¤ and the right to strike" @964), 27 - Modern Law Review 257*, 261. ¤Sec sections t55, 116,257,30;, 31o (New Zealand) Crimes Act, 1961. · ¤. l$ee also sections 43, r;4, :35,412, 558 to 561, Criminal Code of Western W13. · 690* ;LGlanville Williams, Criminal Law, The General Part (1961), page `*‘C¤¤¤yillc Williams; Crirninal Law,TI1e General Part, page-s 690, 691. ' H°l“b“°"3 "·*s4}, D¤an,·CaC.’ 33-7; :69 1E.R 75o. (C.C.R.). see V0l;.1o,pagc S35. _, 211 . APPENDIX 3ll [concld.) These two features also show that_ a conspiracy tc-* defraud is criminal even if the act wh1ch it is agreed to do may not be criminal if done by only one nersonl-*. In .5 recom case". an agreement by a debtor (entering into a scheme of arrangement) to confer a fraudulent preference upon one creditor was regarded as punishable as conspiracy. Though the actual decision does not go to the length of holding that it was a conspiracy to defraud, the cases cited in the arguments for the Crownt throw a good deal of light on the subject, and also show that ultimately such agreements are “‘bottomed in fraud, which is a species of in1mota]ity*"', APPENDIX 31 Paoeosars ns si-town IN THE Foam: or DRAFT ALIENDLIENTS ro rm; Inorasr PEN.»·.L Conn p i (This is a tentative draft only} iu of ,B60_ 1. After section 379 of the Indian Penal Code (herein- after called "the Code"), the following section shall be inserted, namelyz- $¤·¤fi¤¤ "3TQA- Whoever commits theft in respect of any The? if 9-79 A- _ pabtic property shall he punished with i·mp-risonment ggggsn ’*ii Section or either- description rchtch may extend to se1=en(N._,w)_y years, and shall also be liable to fine. Ex lanatiun.—In this section. " ablic ro crt " means Cj. section P P P P U the property of the Gcmernment, ancl includes the property §I;J_;`“'°'m" . Ul" lndiari »g (ai a corporation esfablimed by or under q Cen- 5;:13* ` trol, Promncial or State Act; mib; by { (ti) c Government company as defined in section Avi 40 P I ° '95“· 517 of the Companies Act, 1.955; and GY *96+ (cj a local authority." 2. After section 420 of the Code, the following section shall be inserted, namelgrs.- * _ _ "eE.{lA. -“?.l1D€?.7B'P`, in pursuance of any contract Section Cf-. 5·¤<.;¤¤¤ jo-r the delivery of any goods, the construction of any 420 A; - 25-.]***1*5** building or exec-ation of other work, cheats the Goo- Cmqung . ' Pe lilodc . . public —. bxgulmm ernment or other publrc authority- · surhoi-im;. , ` J · (al in- the case of o contract for the delivery [N°“') · E of goods, by supplying. goods which are less in s y q-aantmy than, or dnfenor in quality to, those he 7 ` K, contracted to deliver, or which are otherwise not t in accordance with the contract, or *12. v- tWa'.rcéer (19145, 5 KB. 1235 {C.C.[=·l.}. _ illalsbuqr, 5::1 Edu. Vol. ro, page 313, para 57o. BR, v Potter, {1953), 1 All Eng. Reports, 296. i 4Sec the:a.rgumentsofV&a1c, Q.·C.fm·¤he Grown. , ‘CJZ Cnakshozt v. Berman (17%). :2. Term Rc, 76;, too English Re- ports 4 11. E if- _ _ 212 _ ‘ . APPENDIX 31 (concldj (b) in the case of ‘a contract for the construc- tion of a building or execution of other work, by using goods which are less in quantity than, or inferior in quality to, those he contracted to use, or which are otherwise not in accordance with the contract, - shall be punished with imprisonment of either des- Cyi _ cription for a term which may extend to seven years, S¤¤¤¤¤d_ and shall be also liable to fine. Ifggéhiflloégén Explanation.--In this section, "`public anthority" ` means- (a) a corporation established by or under a Central, Provincial or State Act; (b) a Government company as defined in 1 9* I956- Crt action section 617 of the Companies Act, 1955; and ‘ :1, we t , clause tc) a local authority. . Indian Penal ‘ , Code: as APPENDIX 32 amended by ,5,;; 49 PROPOSED AMENDMENTS TO THE CODE OF CRIMINAL - or 1964. Pnocsuuiuz, 1898. * [This is a tentative draft only) In the Second Schedule to the Code of Crirninal Pro- 5 ¤F IB'}? cedure, 1898*,- - (i) after the entry relating to section 379, the following entry shall be inserted, namelyz-- 1 z 3 4 5 6 . 7 3 ` 3;.-95 Theft of May Warrant Not Not com- Irnprison- Ang: public arrest bail- pound- ment of Magis- property without able able either des- trate Warrant crlptibn for '7 '}'E2.TB and line I - (ii) after theentry relating to section 420, the following entry shall be inserted, namely:- r 2 5 4 s 5 7 S l 420;%. Cheati-g May Warrant Bail- Not Imprison- Court of public arrest able oom- ment of Session authori- without pound- either Presidency . ties. warrant able descrip- Iviagistrate ‘ tion for or Magis- jr years {rate ofthe and line. First class. anienclments are consequential on those proposed in the Indian Perlal Code. I (;MGIPND—T.5.$,-,4; M. ot'Law—3-1-68-1,850.