The Economic Offence Wing is a nodal agency of the State Government, typically constituted inside the Criminal Investigation Department. The Economic Offence Wing, as its name implies, handles offences that are related to the economy and finance. The phrase Economic Offences is extensive and encompasses a wide range of activities. Now, the question arises as to which offences are normally regarded by the Economic Offence Wing for investigation? Is there a specific threshold or limit? What is the makeup of it? What abilities does it possess? These questions continue until we go into the intricacies of the Economic Offence Wing.
Economic offence refers to any illegal activity or wrongdoing that is related to economic or financial matters.
Can we classify Economic Offence as a form of corruption? The response is unequivocally negative. The word Economic Offence encompasses a broader scope than it initially appears. Corruption can be classified as a form of Economic Offence, although it cannot be considered synonymous with it.
Once again, the question remains unresolved as to what Economic Offence is if it is not corruption.
Economic offences encompass a wide range of illegal activities, including fraud, tax evasion, financial crimes performed by banks, money laundering, illicit capital havens, securitiesrelated crimes, chit fund scams, bribery by public officials, influence peddling, cheating, embezzlement, and more.
These economic crimes can inflict significant social and economic harm. The likelihood of it impacting the state treasurer, as well as the general public and domestic organisations and institutions, is significant. Indeed, it should be noted that this damage cannot be quantified, and it is impossible to determine the exact number of individuals impacted by the majority of the crimes that have taken place.
The Economic Offence Wing (EOW) is a specialised division within law enforcement agencies that focuses on investigating and prosecuting economic crimes.
The jurisdiction of the Economic Offence Wing is solely with the State Government. The department in question is a subdivision of the Crime Investigation Department (CID), which operates under the State Government's Act and is part of the Indian State Police.
The economic offences that occurred around the 1970s. The establishment of Wing was mandated in every State in response to the increasing occurrence of Economic Offences, recognising the necessity for a specialised unit.
Financial crime Wing is commonly referred to as EOW, which is an abbreviation for its name.
The Economic Offence Wing performs the following functions:
The EOW is conducting an investigation into cases of fraud, misrepresentation, and cheating involving government funds. The probe covers multiple government departments, organisations, and organisations.
The State Government has the authority to assign its agency, the Economic Offences Wing (EOW), to handle cases involving private individuals, companies, or corporations, based on the severity of the offence committed.
The EOW also examines government income cases and alerts the government to take necessary and mandated actions in the event of any losses.
The Economic Offences Wing (EOW) also investigates cases related to Non-Banking Financial Companies (NBFCs), Chit fund scams, counterfeit stamp papers, multilevel marketing schemes, Ponzi schemes, and other similar fraudulent activities. EOW is authorised solely to engage in, examine, and inquire into grievances and First Information Reports (FIRs) that have been assigned to the agency by the Home Department.
EOW is a key agency of the State Government responsible for sharing information with the Central Economic Intelligence Bureau (CEIB). EOW serves as the representative of the State Government in the Centre in various ways, including coordinating activities, sharing information, and preventing economic offences. Section 8(1)(H) of the Right to Information Act, 2005 pertains to the EOW and exempts the revelation of information that could hinder the investigation, prosecution, or capture of offenders.
The following are examples of illicit activities: 1. Corruption 2. Fraud 3. Cheating 4. Invoice Manipulation 5. Smuggling 6. Cyber Crimes 7. Bogus Imports 8. Credit Card Frauds 9. Counterfeiting 10. Money Laundering
The constitution and organisational structure of the Economic Offence Wing mostly rely on the State Government and the Criminal Investigation Department (CID) of that particular state. However, there is a general structure that is typically a shared characteristic among the Economic Offence Wings of all states.
The Economic Offence Wing is led by the Director General of Police. Typically, each District in the State has its own specialised Economic Offence Wing. Each State has a single Headquarters, typically located in the State's Capital. There may exist specialised cells that are specifically assigned to handle specific issues based on the needs of the State. These cells are overseen by the Deputy Inspector General of Police, who is also responsible for appointing the Superintendent of Police.
The hierarchy of police ranks includes the Director General of Police (DGP), Assistant Director General of Police (ADGP), Deputy Inspector General of Police (DIGP), Superintendent of Police (SP), Legal Advisors, other necessary Special Officers, and Sergeants/Hawaldars.
The Economic Offence Wing (EOW) requires a minimum pecuniary value of Rs. 50 Lakh for filing a complaint. This means that EOW will only handle cases with a pecuniary value of Rs. 50 Lakh or more. The initial value was Rs. 10 Lakh, which was increased to Rs. 25 Lakh in 2013, and has now been further modified to Rs. 50 Lakh.
Nevertheless, the amount of EOW may vary depending on the state, as it is regulated by state regulations. Additionally, different states have unique requirements, which can result in modifications to this amount. For instance, the minimum threshold for initiating a legal lawsuit in Mumbai is Rs. 10 crore, while in UT Chandigarh, the Economic Offences Wing (EOW) requires a basic monetary restriction of only Rs. 50 lakh to submit a complaint.
The Federal Bank Ltd. accused M/S Succespath Marketing Pvt Ltd and its Directors Anurag Sharma and Hitesh Kumar of availing a Rs. 2.5 crore loan from the bank for business purposes. The loan was secured through a mortgage of property plot and residential flat. The borrowers defaulted on repayments and their account became nonperforming on 29/03/2018. The bank discovered that M/S Dena Bank had also initiated measures under the SARFAESI ACT for the same property. The accused, a 12th standard pass, engaged in multiple small businesses and later became a partner with Anurag Sharma, another accused in the E-Rickshaws business. A special team was formed to arrest the accused, and Hitesh Kumar was arrested on 28.07.2023.
A reputed NBFC company was accused of cheating and fraud by a DSA, Amrit Mann, along with Nilanjan Majumdar, Sales Manager, and Nitesh Kumar, who were supposed to source genuine proposals for loans against property. The alleged DSA, who also ran a sales agency 'FUNDWIZZ', sourced deals from firms seeking loans against properties. One of the arrested accused persons, M/s Sewaa Apparels, applied for a loan of Rs. 5 Cr and was sanctioned on 31/08/2017. The loan was taken against the equitable mortgage of a property in Roop Nagar, Delhi.
During investigation, property documents submitted by Mrs. N (mother of the accused Vikas Sharma) with the complainant company were found forged, and it was found that Mrs. N sold the property to a buyer. The documents of Gaurav Sharma and M were misused, and their signatures were forged on the loan documents and the account opening form of the bank account where the loan amount was received and later siphoned out. The accused person Vikas Shandilya got incorporated a Partnership firm, M/s Sewaa Apparels, in the name of his mother N and his wife M as partners and obtained a loan of Rs. 4.11 Cr on the basis of forged and fabricated documents of a property located in Roop Nagar, Delhi from the NBFC and thereafter, misappropriated the same.
A team of Insp. Kishanvir Singh, Insp. Shikhar Chaudhary, ASI Mukesh Kumar, HC Anuj, W/Ct. Jyoti and W/Ct. Phoranti was constituted under the leadership of Virender Kadyan, ACP/EOW, and overall supervision of Anyesh Roy, DCP/EOW. Further investigation is in progress.
The complainant, Sh. Ved Singh Dhankar, A.R. of M/s Indiabulls Housing Finance Limited, alleges that the accused, Ashok Goel, and Vandana Goel, were directors of M/s Jaipuria Buildcon Pvt. Ltd., which launched a project called "Jaipuria Apartments Crossing Republic" in Ghaziabad, UP in 2007. The complainant alleges that the accused took a loan of Rs. 5.6 crore from M/s Indiabulls Housing Finance Limited on 24 units and mortgaged the same units multiple times with different financial institutions. A dedicated team was formed to arrest the accused, who were later arrested in Pune, Maharashtra. The accused are a graduate from SSV College, Hapur, and a post-graduate from CCS University, Meerut. They were also involved in several cases, including FIR No. 174/11 U/s 409/420/120(B) IPC PS EOW, 53/16 U/s 420/406/120(B) IPC PS Barakhamba Road, and 790/15 U/s 420/467/468/471/406/120(B) IPC PS Badarpur. The general public is cautioned not to get trapped without verifying the details of land ownership and approval from Govt Agencies.
The case FIR No. 221/2018 was registered on the complaint of Sh. Deepankar Sinha, Asst. Manager, Karvy Finance Services Ltd. alleging that Mrs. Anjana Jain and Jitender Jain had been sanctioned a loan of Rs 2.6 Crores against their residential property from the company in 2014. They mortgaged the property and obtained loans from A.U. Finance and Central Bank of India by mortgaging the same property. During the investigation, it was revealed that the accused persons procured a loan of Rs 25 Crore by mortgaging the same property at Bahajanpura, Delhi with seven different banks/NBFCs. The modus operandi of the accused persons was to obtain the loan on the basis of forged and fabricated Sale Deeds of the property being offered as collateral security with the banks. The loan amount was then disbursed into different bank accounts operated by the accused persons. The accused persons were absconding from their declared place of residence since July 2016 and were continuously changing their addresses and mobile numbers. The Hon’ble Court granted three days Police Custody remand of the accused persons Jitender Jain and Anjana Jain for sustained interrogation. Further investigation is in progress.
A case was registered against Sharad Nagre, a 56-year-old civil engineer, for fraudulently withdrawing Rs 6.25 Crore from Amity University's account. The cheated amount was transferred to different accounts, including NS Infrastructure and NS Construction. The accused, who was previously the project manager at Amity University, was later found to be involved in the crime and connected to other accused persons. The investigation revealed that the alleged five shell firms did not exist at the addresses mentioned in the bank accounts. The accused also allegedly kept Rs 42 lakh from the cheated amount as his share. A team comprising Inspector Satyabir Sigh and HC Amit Kumar of EOW was constituted for arrest, and the Hon'ble Court granted one day Police Custody Remand for Nagre's sustained interrogation. Further investigation is in progress. Nagre is a 56-year-old with a Bachelor in Civil Engineering from NIT Bhopal and is currently a partner in NS Infrastructure and NS Construction.
In this instance, the perpetrator was a Stock Broker employed by Standard Chartered Bank (SCB) who engaged in a transaction with many other banks, including Bank of Karad (BoK), Metropolitan Cooperative Bank (MCB), and HSBC Bank. The SCB did not receive the bank receipts or securities from April 1991 to May 1992, which covers a full financial year. In June 1992, the Bank lodged a case with the CBI, acknowledging that the Broker (Accused) had purportedly defrauded them of Rs 1,239 crores through deceptive transactions and the provision of counterfeit securities to several institutions. The court ruled in favour of the SCB and the Accused was sentenced to a 2-year jail for the securities scam.
This case is alternatively referred to as the "Bombay Stock Exchange Scam". In this instance, the perpetrator was a Stock Broker named "Hiten Dalal", who was widely recognised as the prominent figure in the Dalal street. He was accused of participating in a large-scale stock manipulation scheme funded by valueless Bank Receipts (BR), which his company utilised to participate in Ready Forward (RF) transactions with other banks. The defendant manipulated stock investors by instilling a sense of uncertainty and persuaded them to participate in the stock market. The securities seller issued a Bill of Receipt to the securities buyer, which serves as confirmation of the sale. It served as a document acknowledging the funds received by the bank, commonly referred to as a Bank Receipt. In this manner, he proceeded with the operation including banks such as BoK and MCB. The scam's overall value in this instance was roughly Rs 4000-5000 crores, and it occurred at the Bombay Stock Exchange (BSE). In addition to Harshad Mehta, another individual implicated in this fraudulent scheme was Ashwin Mehta, who happens to be the brother of the primary suspect. Notably, he is facing a total of 27 criminal counts, and the most recent case is still being tried.
It refers to a legal matter involving Ketan Parekh. Following the Harshad Mehta scandal, the Stock Market experienced a void in the absence of a competent stockbroker, necessitating the need to find a replacement. Ketan Parekh, also known as KP, filled the vacant position and became the new Stock Broker on Dalal Street. Ketan Parekh was alternatively referred to as K-10. The rationale for this is that at his prime period (1998), he managed a portfolio of 10 stocks that became known as K-10. Some of the companies that were referred to as K-10 stocks included Global Tele systems, Zed Telefilms, HFCL, Silverline, Satyam Computers, Aftek Infosys, DSQ Software, Ranbaxy, Penta media Graphics and Visual Soft, Digital Global, and SSI. In 1998, traders were unable to purchase shares of firms such as WIPRO and INFOSYS, and their promoters were uncooperative. Subsequently, the defendant made the choice to develop his own stock or trade indication, for which he obtained financial resources from managers and Foreign Institutional Investors (FIIs). Simultaneously, the promoters had challenges with the liquidity of funds, as the banks shown inflexibility by refusing to grant loans, so impeding their ability to obtain capital. Subsequently, Ketan Parekh engaged in market manipulation by artificially inflating share prices and offering the necessary funds to support the interests of the company's promoters, so generating substantial profits.
He operated this enterprise from 1998 to 2001, and in the latter year, he was apprehended and taken into custody. On March 1st, 2001, immediately following the completion of the Union Budget, the Bombay Stock Exchange (BSE) had a decline of 176 points. Following the significant decline in the BSE, the NDA administration was requested to investigate this market response. Following that, the Reserve Bank of India (RBI) declined to approve the pay orders issued by Ketan Parekh to the Bank of India (BOI) due to their suspicious nature. The Reserve Bank of India (RBI) initiated an inquiry into Ketan Parekh. Ketan Parekh attempted to evade penalty by strategically disposing of the K-10 shares, but encountered resistance from a group of bear brokers in Mumbai. Ketan Parekh, having no other alternatives, liquidated all of his holdings in K-10 equities to Madhavpura Mercantile Cooperative Bank (MMCB) and Global Trust Bank (GTB). As a result of this dumping, the share market had a significant decline the next day, causing substantial financial losses for large-scale investors and other promoters. Finally, Ketan Parekh was apprehended and the exact magnitude of the fraudulent activity in this particular instance remains undisclosed. Ketan Parekh was prohibited by SEBI from participating in the Stock Market, although despite this restriction, he continued to engage in stock market activities by investing through alternative entities, using his considerable influence. In 2009, he was finally apprehended by the Central Bureau of Investigation (CBI) on charges of fraud and subsequently received a two-year prison sentence from the specialised court.
The Saradha Scheme was initiated by the Saradha Group, who conducted their operations through a network comprising over 100 enterprises. The group was established in 2006. The group employed brokers or agents who carried out their directions and received a commission of approximately 25-40% of the business for their services. Mr. Ramakrishna Paramhamsa operated the entire chit fund organisation, which he named after his wife, Saradha Devi. He and his wife were esteemed figures, renowned for their significant influence and commanding respect from the populace of Bengal. The group initiated the process of gathering funds from the participants in the schemes and offered them a guarantee of substantial profits. The program quickly extended to additional states such as Odisha, Assam, and Tripura, resulting in a rise in the number of participants to 1.7 million. The company astutely utilised the funds obtained from the new investors to reimburse the old investors (who were previously enlisted), rather than relying on the earnings created from investments. Notably, numerous MLAs and MPs belonging to the Trinamool Congress (TMC) were implicated in this scandal and subsequently interrogated by the Central Bureau of Investigation (CBI). In addition to these persons, Congress politician Matang Singh and Assam BJP leader Himanta Biswa Sharma, who was affiliated with the Congress at that time, were also implicated in this scandal. In 2012, the Securities and Exchange Board of India instructed Saradha to cease soliciting and receiving funds from investors and mandated that they acquire the regulator's certification in order to continue their operations. In 2013, there was a discrepancy between the entrance and outflow of cash, leading to the exposure of the fraudulent plan conducted by the Saradha Group. This scam caused significant harm to the public, resulting in many becoming victims. Put simply, the "Scheme was a Scam". The magnitude of money involved in this fraudulent scheme was estimated to be around 1200-4000 crores.
Vijay Mallya is a renowned figure in India, known for his success as a businessman and his previous role as a Member of Parliament in the Rajya Sabha. Vijay Mallya, a prosperous business magnate, previously owned Kingfisher Airlines (now defunct), the Royal Challengers Bangalore cricket club, and was a former co-owner of the Force India Formula1 team. Additionally, he held the position of former Chairman of United Spirits and was involved in the Alcohol Industry. The primary charges against him include fraud and money laundering up to Rs 9000 crores, which he failed to repay to the banks from where he borrowed the funds. The State Bank of India (SBI) was the leader of all these banks. Mallya was indicted for the offences of fraud, money laundering, criminal conspiracy, and cheating. Organisations such as ED, CBI, and SEBI have levied charges against Mallya under several sections of Acts, which are listed below:
The Enforcement Directorate (ED) has charged him under Section 3 (offence of Money laundering) and Section 4 (Punishment for Money laundering) of the Prevention of Moneylaundering Act, 2002 for the loans he obtained. The sum totalled approximately Rs 3,500 crores.
The Central Bureau of Investigation (CBI) has invoked Sections 120B (Criminal Conspiracy) and 420 (Cheating) of the Indian Penal Code (IPC), 1860, as well as Sections 13(1) and 13(2) of the Prevention of Corruption Act, 1988.C These sections pertain to criminal misconduct by a public servant and the corresponding punishment for such misconduct.
The Securities and Exchange Board of India (SEBI) has imposed a ban on his access to the stock market until 2021.Vijay Mallya fled to the UK in order to avoid punishment and consequences for the claims brought against him by the aforementioned organisations. The Supreme Court of India subsequently proclaimed him a Fugitive Economic Offender under the Fugitive Economic Offenders Act (FEO), 2018.
Nirav Modi was a prosperous entrepreneur mostly involved in the diamond industry. He served as both the goldsmith and the designer of the gems. Nirav Modi, along with his maternal uncle Mr. Mehul Choksi, a few cousins, and several employees of the Punjab National Bank (PNB), were the culprits involved in this fraudulent scheme. The bankers employed counterfeit Letters of Understandings (LoUs) in perpetrating this fraudulent scheme. The bank established its own branches exclusively in select locations to facilitate the import of pearls and diamonds for a duration of one year. In this manner, the import was conducted and the foreign branches of the Indian banks disregarded the guidelines established by the RBI. This resulted in the inability to share documents between the overseas end and PNB, which were necessary for obtaining credit from PNB. Nirav Modi obtained his initial fake guarantee certificate from PNB in March 2011 and thereafter acquired over 1200 certificates. As a consequence, fraudulent financial transactions occurred, resulting in the accused collecting an approximate sum of Rs 10,000 crores. In late January, the scandal gained public attention and subsequently, PNB lodged a charge with the CBI against Nirav Modi, alleging the use of fraudulent Letters of Undertaking (LoUs) to transfer funds between locations. PNB identified three diamond companies: Diamonds R Us, Solar Exports Diamonds, and Stellar Diamonds. In May 2018, the monetary value implicated in this fraudulent scheme amounted to Rs 14,000 crores. Shortly after the scandal emerged, Nehal Modi, the brother of Nirav Modi, deleted all transaction data from devices, media, and even the server situated in the UAE. Prior to the exposure of the scandal, Nirav Modi had already absconded from India along with his family, similar to how Vijay Mallya evaded legal consequences and fines.
These scams are often quite obvious and the large amount of money involved can have a detrimental effect on the economy, instilling fear in people's minds and discouraging them from investing in any form of securities or shares, including the government sector and stock exchange markets. The citizenry will also lose confidence and reliance in the Justice Systems as they are unable to penalise the Offenders due to insufficient evidence or proof against them.
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