This is a motto that the police love to pursue with all vigour for as far as they are concerned arrest is the final step in their realm. Conviction in a court of law has always been the least of their botheration and such a tendency has been nurtured by a host of factors, including the lethargic pace of our legal process and the inherent lack of both the material and intellectual wherewithall with the police for the handling of sphisticated white collar crimes.
None can dispute the fact that the act of cheating falls very much within the purview of the police, but the current imbroglio in the finance sector is not merely a case of simple cheating that can be easily dealt with lathis and jackboots. Apart from the magnitude of the mass fooling orgy that has been enacted right under the nose of the authorities and with the unwitting patronage of the media, there is also a qualitative aspect to the whole scam which has wider ramifications and transcends the CrPC.
Dealing with it calls for a lot of expertise besides a holistic approach that is based on knowledge of the financial laws, understanding of how the system operates, an acute sense of discretion when sifting information and effective coordination with the other arms of law. But knee-jerk reactions like reckless arrests are bound to be counter productive to all, more so for the depositors whose only concern should be the safety of their monies.
Unlike other crimes where punishment to the guilty is of utmost importance, in this case the recovery of the investors’ money is paramount and the authorities will necessarily have to factor in this aspect before embarking on any precipitate action.
But unfortunately such caution does not seem to weigh down on the minds of the police, whose immediate goal is to demonstrate their efficacy by effecting a few arrests and thereby dispel the popular notion that they have been inactive. In the process, the larger purpose of recovering the money of the depositors is lost sight of and in most cases, even investors’ bid to get their dues back is jeopardised.
Why would a CEO, who values his reputation but has been forced to walk in to a jail, be it for just a night, ever want to honour his commitments to the investors? Does it not suit him better, having already suffered the ignominy of a jail term, to allow the law to take its own course, as has been made fashionable these days by our politicians?
While genuine businessmen who have been wrongfully arrested would feel justifiably indignant, the conmen would actually prefer the relatively safer custody of police to the endless harassment of the public whom they have conned.
In any case they can walk free at a later date by securing a bail. In fact, one learns that quite a few of those who paid state visits to the central jail are now free birds with no trace of the monies that they had swallowed. So much for the arrests.
The legality and judicial prudence of these arrests is also debatable. Section 41 of Chapter5 (that deals with arrest of persons) of the Code of criminal procedures, 1972 stipulates when the police can arrest without a warrant. The section states that ‘any police officer may, without an order from a warrant, arrest any person who has been concerned in any cognizable offence or against whom, a reasonable complaint has been made or credible information has been received or a reasonable suspicion exists of his having been so concerned’.
Sure, such provisions automatically confer the power to arrest on the police, though there are the usual riders on the circumstances under which a person can be held, which are primarily subjective and calls for the judgement of the police. And this is where the problem arises for when such discretionary powers are vested with the police, they possibility of their misuse is also quite high depending on the compulsions and pressures faced by them as is happening currently. For instance, one learns that a finance company headed by an influential ex-cop that is reported to have made quite a harvest during the season, is now defaulting on its deposits, but the police are stilll undecided on acting against their alumni!
A legal buff informs me of an observation of the Supreme Court in the Joginder Kumar case on the issue of arrests. The apex courts has said that,’the existence of the power to arrest is one thing; the justification for the exercise of it is quite another. The police officer must be able to justify the arrest apart from his power to do so.
Arrest and detention in police lockup of a person can cause incalculable harm to the reputation and self-esteem of a person. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person.
It is prudent for a police officer in the interest of protection of the constitutional rights of a citizen and perhaps in his own interest that no arrestshould be made without a reasonable satisfaction reached after some investigationof its genuineness and bonafides of a complaint and a reasonable belief both as to the person’s complicity and even so as to the need to effect arrest. Denying a person of his liberty is a serious matter.’
Now nobody is trying to defend the constitutional liberties of conmen. But the question is are the police exercising due diligence while making the arrests? Does it serve any purpose and on the contrary, is it not unfair, that persons who were not responsible for the day to day management of a defaulting company or those who have long resigned as officers of such company or who are still continuing on the boards as merely nominees or as consultants should also be dumped along with the guilty?
Then what of the cunning CEO’s who are actually conmen but were intelligent enough to keep their names out of the company records and instead operated through unwitting remote controls? There is already one such instance, where the prima donna of a benefitless fund now dares the authorities to show his finger prints to prove his complicity even as he had amassed huge personal wealth at the investors’ expense!
While it is an absolute must that guilty persons who have either illegally gained on account of the offence committed by the company or who are in possession of any ill-gotten monies should be strictly proceeded against, it is equally important that the liberty of the other persons who are not connected with the commission of any offence, is punished.
In fact, section5 of the Tamilnadu Protection of Interest of Depositors(in Financial Establishments) Act, 1997 seeks to punish only persons responsible for the management of the affairs of the Financial Establishment, in the event of the default of the payment of interest or the deposit.
If the present action is taken to its extreme, one wonders whether even persons nominated as directors of a company by Public Financial Institutions will also face the prospect of arrest on the ground that some fixed deposits were taken by the company during their tenure.
Besides creating an avoidable scare amidst the business community it also militates against the evolving concept of corporate governance that stresses the importance of independent directors in companies to bring in more professionalism as also to enhance shareholders’ interests.
En masse arrest of the entire board of directors can at the most be deemed a popular action for the unpopular and desperate police but certainly lacks any legal basis. More importantly, it jeopardises the interests of the investors instead of protecting them. Some remedies kill faster than the disease!
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