Economic offences are offences involving financial dishonesty, usually investigated by the Economic Offences Wing of the Delhi Police, the Enforcement Directorate or other agencies. This page explains how such matters generally proceed.
Offences commonly involved
- Cheating and dishonest inducement under the Bharatiya Nyaya Sanhita, 2023 (formerly Section 420 of the Indian Penal Code)
- Criminal breach of trust and misappropriation by employees, partners, directors or agents
- Forgery and use of forged documents
- Offences under the Prevention of Money Laundering Act, 2002
- Offences by companies and the liability of directors and officers in charge of the business
How a matter usually proceeds
A complaint is made to the police or the Economic Offences Wing, and an FIR is registered where the information discloses a cognizable offence. A preliminary enquiry under Section 173(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) is not automatic: it is available only for cognizable offences punishable with imprisonment of three years or more but less than seven years. Investigation, summons and, where applicable, arrest are followed by a charge sheet. The court then decides whether to take cognizance, frame charges or discharge the accused, and the matter proceeds to trial.
Stages at which the law offers remedies
- Anticipatory bail and regular bail before the competent court, including bail in cases under the Prevention of Money Laundering Act, 2002, where Section 45 sets twin conditions: the Public Prosecutor must be given an opportunity to oppose, and if he does, the court must be satisfied that there are reasonable grounds for believing that the accused is not guilty and is not likely to commit an offence while on bail. The Supreme Court has held that these conditions restrict bail but are not an absolute bar
- Quashing of an FIR or proceedings before the High Court, ordinarily under Section 528 BNSS or Article 226 of the Constitution, where the allegations do not disclose an offence or the dispute is essentially civil in nature
- Discharge before charges are framed, where the material on record does not support the charge
- Challenge to summoning orders, attachment of property and other coercive steps, before the trial court, the Sessions Court or the High Court, depending on the stage and the nature of the order
Civil disputes and criminal complaints
Courts have repeatedly held that a breach of contract or a commercial dispute does not by itself amount to cheating or breach of trust. The question in each case is whether dishonest intention existed at the time the promise was made, or whether property was entrusted and then dishonestly misappropriated.
Complaints by companies
Companies, including foreign companies with operations in India, are often the victims of fraud by employees, vendors or distributors, such as kickbacks, diversion of funds and false invoicing. The police and the court that can act depend on where the offence was committed, where its consequences followed or where the proceeds were received, and not merely on where the company operates. A complaint is made to the police or the Economic Offences Wing, supported by the company’s records. An FIR is registered where the information discloses a cognizable offence. For cognizable offences punishable with imprisonment of three years or more but less than seven years, the officer in charge may, considering the nature and gravity of the offence, either hold a preliminary enquiry to ascertain whether a prima facie case exists or proceed directly with the investigation under Section 173(3) BNSS. The choice is discretionary, not mandatory. An enquiry requires the prior permission of an officer not below the rank of Deputy Superintendent of Police and must be completed within fourteen days.
Where the officer in charge refuses to register the FIR, the complainant must first send the substance of the information in writing to the Superintendent of Police under Section 173(4) BNSS. If that does not lead to action, an application may be made to the Magistrate under Section 175(3), supported by an affidavit and accompanied by a copy of the application to the Superintendent of Police. The Magistrate must consider the submissions of the police officer and, after such enquiry as he thinks necessary, pass a reasoned order. The Supreme Court so held in Om Prakash Ambadkar v. State of Maharashtra (2025 INSC 139), and a mechanical direction to register the FIR is not sufficient.
Difficulties companies commonly face
- Civil dispute or crime: courts have repeatedly held that a breach of contract or a failure to pay is not cheating unless dishonest intention existed from the start. A complaint therefore has to show, from documents, what was represented and what the accused knew at the time.
- Electronic evidence: emails, chats and accounting data are the core of most employee and vendor fraud cases. They must be preserved early. To be admitted in evidence they need a certificate under Section 63(4) of the Bharatiya Sakshya Adhiniyam, 2023, in the prescribed form, which includes the hash value of the record.
- Reporting duties: where an auditor has reason to believe that fraud is being or has been committed against the company by its officers or employees, Section 143(12) of the Companies Act, 2013 and Rule 13 of the Companies (Audit and Auditors) Rules, 2014 require the auditor to report it to the Board or audit committee and, for larger amounts, to the Central Government. Listed companies have further disclosure duties to the stock exchanges.
- Parallel proceedings: there is no bar to a disciplinary inquiry and a criminal case running at the same time, although a stay of the disciplinary inquiry may be sought where the charge is grave and the facts are the same.
- Recovery of money: a criminal case does not by itself return the money. Under Section 107 BNSS the investigating officer, with the approval of the Superintendent of Police or the Commissioner of Police, may apply to the court or Magistrate to attach property believed to be proceeds of crime. If the court finds that it is proceeds of crime, it directs the District Magistrate to distribute it among the persons affected by the offence.
Companies and directors
Where an offence is alleged against a company, liability of individual directors generally depends on their role in the conduct of its business and on the provisions of the statute concerned. Vicarious liability is not presumed merely because a person holds a directorship.
Related practice areas
- Delhi High Court and Supreme Court
- Startup and Employment Disputes
- Criminal Defence
- Property and Land Disputes
- Civil and Commercial Matters
- Matrimonial and Family Law
Last reviewed: October 2026