Blowing The Whistle On Fraud: A Study On Vigil Mechanism Under Corporate Law
- IJLLR Journal
- Apr 17
- 2 min read
Aditi Yashasvi, Amity Law School, Noida, Uttar Pradesh
ABSTRACT
In an era of increasing corporate fraud and complex financial misconduct, whistleblowing has emerged as a critical tool in upholding transparency and accountability. White-collar crimes, often committed by individuals in positions of trust using technical or legal expertise for personal or institutional gain, pose serious threats to economic stability and public trust. In this context, whistleblowers- insiders who report such misconduct- are essential to exposing fraud that would otherwise remain hidden due to the confidential and intricate nature of corporate operations. However, the effectiveness of whistleblowing as a vigil mechanism depends significantly on the legal and institutional safeguards available to protect and support whistleblowers.
This paper firstly undertakes a conceptual analysis of white-collar crime and its evolving definitions, moving beyond Sutherland’s classical view to modern interpretations that emphasize access, skill, and motive rather than social status. It also explores how economic fraud has expanded in both scale and sophistication, particularly in the Indian corporate context.
Secondly, the study evaluates whistleblowing mechanisms as a corrective tool within corporate governance, examining how legal theories- such as Agency Theory and Public Choice Theory- explain its role and limitations. It further highlights how whistleblowers contribute to early fraud detection, using global and Indian case studies like WorldCom and Satyam to illustrate their impact.
Thirdly, the research analyzes the legal frameworks governing whistleblower protection in India, including the Companies Act 2013, SEBI regulations, and the Whistle Blowers Protection Act 2014. A comparative study is conducted with global models such as the U.S. Sarbanes-Oxley Act, the Dodd-Frank Act, the UK’s PIDA, and the EU Directive (2019/1937), drawing attention to international best practices.
Finally, the paper identifies gaps in India’s current framework, such as the absence of a comprehensive reward system, limited protection from retaliation, and lack of anonymous reporting channels. The study concludes proposing phased reforms- legal, institutional, and cultural- to empower whistleblowers and strengthen corporate vigilance in India.
