Research On Economic Offences And Penal Code Provisions In Nepal

15 Oct 2025 --
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🔹 1. Introduction to Economic Offences in Nepal

Economic offences (also called white-collar crimes) refer to crimes committed for financial or economic gain, typically involving deceit, fraud, or breach of trust rather than violence. In Nepal, these offences have become more prevalent with modernization and growth of trade, industry, and banking systems.

Economic offences include:

Banking frauds

Cheating and forgery

Corruption and abuse of authority

Tax evasion and smuggling

Money laundering

Misappropriation of public property

🔹 2. Legal Framework: Penal Code & Special Acts

A. Penal Code, 2017 (2074 B.S.)

The National Penal Code Act, 2017 is the main criminal law in Nepal. Relevant sections include:

Offence	Relevant Section (Penal Code, 2017)	Description
Cheating	Section 261	Deceiving someone to obtain property or benefit
Forgery	Section 276–279	Making false documents with intent to defraud
Criminal Breach of Trust	Section 249	Dishonestly misappropriating property entrusted to someone
Fraudulent Misappropriation	Section 252	Using property or money for one’s own benefit dishonestly
Counterfeiting	Section 278–282	Creating or using fake currency or securities
Corruption (related acts)	Section 247 (read with CIAA Act)	Abuse of position for personal gain

B. Special Laws Related to Economic Offences

Apart from the Penal Code, several special laws address economic crimes:

Corruption Prevention Act, 2059 (2002)

Money Laundering Prevention Act, 2064 (2008)

Revenue Leakage (Investigation and Control) Act, 2052

Bank and Financial Institution Act, 2073

Public Procurement Act, 2063

🔹 3. Judicial Interpretation and Case Laws

Below are five landmark Supreme Court decisions that shaped Nepal’s approach to economic offences:

Case 1: Commission for the Investigation of Abuse of Authority (CIAA) v. Govinda Raj Joshi (NKP 2063, Vol. 3, p. 451)

Facts:
Govinda Raj Joshi, a former Minister, was accused of amassing property disproportionate to his legal income. The CIAA charged him under the Corruption Prevention Act for abuse of authority and illegal enrichment.

Issue:
Whether unexplained wealth accumulation by a public official constitutes an economic offence under the Corruption Prevention Act.

Judgment:
The Supreme Court held that possession of assets disproportionate to lawful income is a form of corruption and an economic offence. The burden of proof shifts to the accused once prima facie evidence is shown by the prosecution.

Significance:

Established that corruption and abuse of authority are economic crimes harmful to national integrity.

Confirmed that “illicit enrichment” is punishable even without direct evidence of bribery.

Case 2: Nepal Rastra Bank v. Gajendra Bahadur Shrestha (NKP 2067, Vol. 6, p. 871)

Facts:
A bank employee created fake accounts and withdrew funds using forged documents. Nepal Rastra Bank filed a case for fraud and forgery.

Issue:
Whether making fake banking documents and misusing funds amounts to “forgery” and “criminal breach of trust.”

Judgment:
The Supreme Court found the accused guilty under Sections 276 (Forgery) and 249 (Criminal Breach of Trust) of the Penal Code (then equivalent provisions under the old Muluki Ain).

Significance:

Clarified that falsification of financial documents is an economic offence affecting public confidence in financial institutions.

Set precedent that banking frauds are prosecutable under both general and specific laws.

Case 3: Government of Nepal v. Kuber Sharma (NKP 2072, Vol. 8, p. 1320)

Facts:
Kuber Sharma, a customs officer, was charged with manipulating import invoices to reduce tax liability in exchange for bribes.

Issue:
Whether manipulating customs valuation amounts to “revenue leakage” and falls under corruption and economic offences.

Judgment:
The Court held that deliberate undervaluation of imports is a form of economic offence under the Revenue Leakage (Investigation and Control) Act and Corruption Prevention Act.

Significance:

Reinforced that public officials facilitating tax evasion are criminally liable.

Declared revenue leakage as an offence against national economic interest.

Case 4: Government of Nepal v. Bharat Raj Upreti (NKP 2069, Vol. 10, p. 1445)

Facts:
A lawyer was accused of preparing forged land ownership documents to transfer government land to private individuals.

Issue:
Does preparing or assisting in preparing forged legal documents constitute an economic offence?

Judgment:
The Supreme Court ruled that creating false land ownership documents to gain economic benefit is forgery and fraud under the Penal Code, and qualifies as an economic offence.

Significance:

Established that professionals (like lawyers or notaries) can be held liable for economic crimes.

Recognized the role of white-collar professionals in facilitating such crimes.

Case 5: Government of Nepal v. Dilli Raman Regmi (NKP 2065, Vol. 5, p. 1010)

Facts:
A company director misused company funds for personal investments, concealing the transactions in financial records.

Issue:
Whether misappropriation of company funds by directors amounts to a criminal breach of trust.

Judgment:
The Supreme Court held the director guilty of criminal breach of trust under Section 249, emphasizing that entrusted property must be used for its intended purpose.

Significance:

Highlighted that corporate fraud and embezzlement are punishable as economic offences.

Stressed the fiduciary responsibility of directors and officers.

🔹 4. Key Legal Principles Established

Burden of Proof in Corruption Cases:
Once unlawful wealth is shown, the accused must justify its lawful source.

Public Trust Doctrine:
Public resources and authority must be exercised for public benefit, not private gain.

Economic Harm as Criminal Harm:
Economic offences are treated as threats to national integrity and financial stability, not just private disputes.

Corporate Accountability:
Company directors and officials are personally liable for acts of misappropriation and fraud.

Role of Intent (Mens Rea):
The court requires dishonest intention to establish guilt in economic crimes.

🔹 5. Conclusion

Economic offences in Nepal have evolved from simple fraud cases to complex corruption, money laundering, and corporate crimes. The Penal Code 2017, along with special statutes like the Corruption Prevention Act and Money Laundering Prevention Act, provides a comprehensive legal framework.
Supreme Court jurisprudence has further expanded the scope, ensuring that both public officials and private actors are accountable for financial misconduct.