This article has been published at India: Pivotal amendments signal strict approach to anti-corruption – Global Investigations Review

In summary

This article discusses some of the pivotal judicial advancements within the anti-corruption framework, and their significance in the ongoing battle against corruption. The article takes its readers through the offences of bribery relating to elections introduced by the Bharatiya Nyaya Sanhita 2023 (BNS). Finally, the article deals with some of the critical changes in the procedures under the newly introduced criminal procedure code, the Bharatiya Nagarik Suraksha Sanhita 2023 (BNSS), which may have an impact on prosecution and trial of offences under the Prevention of Corruption Act 1988 (PCA).

Discussion points

• Members of Parliament and Legislative Assembly cannot claim immunity from prosecution under the PCA
• Offences under the PCA can now be proven by inferential evidence
• Scope and ambit of definition of public servant under the PCA
• Punishing corporate bribe givers and corporate liability under the PCA
• Punishing illegal gratification for votes under the BNS
• Impact of the new criminal procedure code, BNSS, on prosecution of offences under the PCA

Referenced in this article

• Constitution of India
• Prevention of Corruption Act 1988
• Prevention of Corruption (Amendment) Act 2018
• Indian Penal Code 1860
• Bharatiya Nagarik Suraksha Sanhita 2023
• Bharatiya Nyaya Sanhita 2023
• Companies Act 2013
• UK Bribery Act 2010
• Sita Soren v Union of India
• State of Chhattisgarh v Aman Kumar Singh
• PV Narasimha Rao v State
• State of Chhattisgarh v Aman Kumar Singh
• Neeraj Dutta vState (NCT of Delhi)
• A Sreenivasa Reddy vRakesh Sharma
• PI Babu v Central Bureau of Investigation
• State of Gujarat v Mansukhbhai Kanjibhai Shah
• Sanjay Kumar Agarwal v CBI
• Arun Mohan v CBI
• Sheikh Abdul Majeed v Union Territory of J&K
• Chitra Ramakrishna v Assistant Director, Enforcement Directorate
• Directorate of Enforcement v Padmanabhan Kishore
• Aneeta Hada v Godfather Travels & Tours (P) Ltd
• Maksud Saiyed v State of Gujarat

Corruption has long been a prevalent issue in India’s governance landscape, undermining trust in institutions and hindering socio-economic progress. Recognising the need to address this challenge, India has seen significant legislative and judicial developments over the years.

The PCA was promulgated with the view to consolidate and amend laws relating to the prevention of corruption in India and ‘make existing anti-corruption laws more effective by widening their coverage and by strengthening the provisions’.^[1] The PCA is the principal legislation dealing with anti-corruption and anti-bribery laws in India. While the PCA brought in some significant and necessary changes to the anti-corruption regime, one of the major criticisms of the PCA was that bribe-giving was not criminalised and was in fact granted immunity.^[2]

To address these concerns, the PCA was amended by way of the Prevention of Corruption (Amendment) Act 2018 (the 2018 Amendment).^[3] For the first time, giving a bribe to a public servant was made a direct offence, thereby extending the scope of the PCA to private parties as well. Additionally, the 2018 Amendment also introduced punishment for influence peddling and an offence relating to the bribery of public servants by commercial organisations. Most importantly, the 2018 Amendment introduced Chapter IVA in the PCA, which provides for powers of attachment and forfeiture of property obtained by means of an offence under the PCA. The stated objective of introducing amendments was with the aim of bringing about ‘zero tolerance towards corruption’^[4] and to align the corruption law in India with the United Nations Convention Against Corruption^[5] (the Convention) and international practices. For example, the PCA now punishes ‘influence peddling’, which has brought it in line with the Convention.^[6]

The 2018 Amendment also, inter alia, made the following changes:

• While the PCA penalised a public servant for accepting any reward other than a salary, the 2018 Amendment makes the ambit wider to include any act where a public servant accepts any ‘undue advantage’.
• The 2018 Amendment restricts the definition of ‘criminal misconduct’ under the PCA to misappropriation of assets and disproportionate possession of assets, while increasing the punishment for commission of the offence of corruption to a minimum of three years and a maximum of seven years.
• The 2018 Amendment prescribes a day-to-day trial under the PCA, as far as practicable.
• For the first time, the 2018 Amendment introduced the requirement of sanction prior to investigation.^[7]

Apart from legislative development, the Supreme Court and the high courts across the country have also in recent years passed judgments that have played a crucial role in shaping and evolving the anti-corruption laws in India by expanding the scope of application of anti-corruption laws and by addressing numerous other critical issues.

In addition to the evolution of the PCA through amendments and judicial pronouncements, a very significant development in the anti-corruption framework has been the introduction of the offence of bribery pertaining to elections under the newly enacted BNS.^[8] The introduction of these offences reinforces the significance of free and transparent democratic processes and bolsters trust in the electoral system. This is because democracy is a part of the basic structure of the Constitution of India.

Some of the key judicial and legislative developments in India’s fight against corruption are discussed below.

Key judicial developments in relation to the anti-corruption regime

Members of Parliament and state legislators can no longer claim immunity from prosecution for acts of bribery

In a recent decision by a seven-judge bench of the Supreme Court in the case of Sita Soren v Union of India,^[9] the Supreme Court, while reconsidering an earlier decision of the five-judge bench of the Supreme Court in PV Narasimha Rao v State,^[10]held that parliamentary privileges are not absolute and unqualified. It held that privilege can be claimed when (1) the act is linked to the collective functioning of the house and (2) if it has a functional relationship with discharge of the essential duties of a legislator. The Supreme Court concluded that bribery is not rendered immune, as a member engaging in bribery is committing a crime that is not essential to casting a vote or the ability to decide on how the vote should be cast.

The question arising in this case before the Supreme Court was whether, by virtue of articles 105 and 194 of the Constitution, a member of Parliament or the Legislative Assembly, as the case may be, can claim immunity from prosecution on a charge of bribery in a criminal court. Articles 105 and 194(2) of the Constitution provide that no member of Parliament and state legislatures, respectively, shall be liable to prosecution in any court in respect of anything said or any vote given by him or her in the legislature.

This question arose with the backdrop of a charge against the concerned lawmaker/appellant, who had allegedly accepted a bribe to vote in favour of a particular candidate in the Rajya Sabha (upper house of Parliament) elections, but did not vote for the alleged bribe giver.

Furthermore, in the case of PV Narasimha Rao v State,^[11] it was held that if a legislator accepts a bribe and votes in the legislative house in the agreed direction, the legislator will be protected from prosecution by virtue of articles 105 and 194 of the Constitution of India, whereas a legislator who agrees to accept a bribe but eventually decides to vote independently will be liable to prosecution. The Supreme Court has now clarified that the offence of bribery is complete on acceptance of a bribe or even on the agreement to accept a bribe being concluded. Hence, the offence of bribery is no longer contingent on the performance of the promise for which the bribe is given or is agreed to be given.

Recently, the Supreme Court has even cautioned the high courts to maintain a hands-off approach and not to quash a first information report (FIR) pertaining to corruption cases, especially at the stage of investigation.^[12]

Offences under the PCA can be proved through circumstantial evidence

Another significant recent decision of the constitution bench judgment of the Supreme Court is in the case of Neeraj Dutta v State (NCT of Delhi),^[13] where the Supreme Court was considering the question of whether in the absence of direct or primary evidence of demand of gratification the prosecution can rely on circumstantial evidence to prove the demand of a bribe under the unamended Act.^[14]

Before answering the above question, the Supreme Court held that proof of demand and acceptance of illegal gratification by a public servant is a sine qua non to prosecute an accused under the PCA (in relation to certain offences).^[15] However, significantly, the Supreme Court has held that the offence under the PCA can be proved through inferential evidence based on circumstances, even in the absence of direct oral and documentary evidence regarding demand and acceptance of illegal gratification. However, the Supreme Court clarified that such an inference can only be made by courts when foundational facts have been proved that unerringly point to the irresistible conclusion of proof of demand and acceptance.

This ruling by the Supreme Court is extremely significant from the perspective of ensuring prosecution of corruption cases under the new regime brought about under the 2018 Amendment. Under the previous regime, the bribe giver was immune from prosecution even if he or she gave a statement against the ‘public servant’ for accepting the bribe. The immunity enjoyed by the bribe giver has since been done away with under the 2018 Amendment. Thus, under the new regime, prosecution of corruption cases will have to largely depend on circumstantial evidence, as the bribe giver is likely to be reluctant to give a statement against a public servant for accepting a bribe from him or her, since he or she too now runs the risk of being prosecuted for giving a bribe.

In the absence of sanction under the PCA, trial qua offences under the Indian Penal Code 1860 to continue

In the case of A Sreenivasa Reddy v Rakesh Sharma,^[16] the charges against the public servant were both under the provisions of the Indian Penal Code 1860 (IPC) and the PCA. In this case, while discharging the accused for offences under the PCA for want of sanction, the special judge ordered that the accused still be prosecuted for offences under the IPC.

The question before the Supreme Court was whether the special court could have proceeded against the accused for the offences under IPC alone, when the accused had been discharged under the PCA for want of sanction.^[17] The Supreme Court concluded that in a case where there are allegations under the PCA and the IPC against a public servant, if a sanction to prosecute is not accorded under the PCA, the public servant would be entitled to be discharged from the allegations under the PCA. However, that would not be a fetter on the prosecution of the public servant for offences committed under the IPC.

Further, the accused contended that he could not have been prosecuted even under the IPC for want of a sanction under the Code of Criminal Procedure 1973^[18] (CrPC). In this regard, the Supreme Court held that such a sanction was only required when the offence alleged of was in ‘discharge of his official duty’ (ie, if it can be established that there was a reasonable connection between the impugned act and the performance of the official duty).

In another recent case of prosecution launched under both the provisions of the IPC and the PCA, the trial court had passed an order of acquittal under both the aforesaid offences merely on the ground of absence of sanction under the provisions of the PCA.

On appeal, the Supreme Court held that an accused cannot be acquitted merely on the ground of absence of a sanction under the PCA and remanded the matter to the trial court for fresh consideration on merits.^[19]

Expanding the scope and ambit of the term ‘public servant’ under the PCA

For initiating prosecution under the PCA, an act of corruption must be relatable to a ‘public servant’. Thus, the ambit and scope of the definition of ‘public servant’ under the PCA are crucial for application of the provisions of the PCA. The judiciary has, over the past few years, given a very expansive interpretation to the term ‘public servant’, which is also in line with the legislative intent.

While dealing with the issue of whether a trustee of a ‘deemed to be university’ would fall within the definition of ‘public servant’ under the PCA, the Supreme Court, by giving an expansive interpretation to the term ‘public servant’, held that the intent of the legislature while enacting the PCA was not restricted to preventing corruption and bribery within government enterprises alone; rather, it was to extend it to persons who may not stricto senso fall within the definition of ‘public servant’, to include those who perform a public duty.^[20] The Supreme Court concluded that a trustee of a deemed university performed the same public duty as that of a government university and, as such, would be liable to prosecution under the provisions of the PCA for the offence of bribery.

Another illustration of the courts giving an expansive interpretation to the term ‘public servant’ is the decision of the Jharkhand High Court in the case of Sanjay Kumar Agarwal v CBI.^[21]In this case, the Courtwas considering the question whether a resolution professional would, under the Insolvency and Bankruptcy Code 2016 (IBC), fall within the definition of ‘public servant’ under the PCA. The High Court, relying on the judgment of Mansukhbhai Kanjibhai Shah (supra), held that the function of a resolution professional is relatable to loans extended by the banks, and he or she is therefore responsible for dealing with public money. Hence, the Court held that the provisions of the PCA will be applicable to a resolution professional as well. However, the Delhi High Court in Arun Mohan v CBI^[22]disagreed with the decision of the Jharkhand High Court in the case Sanjay Kumar Agarwal (supra) and took a contrary view, holding that resolution professionals would not fall within the scope of the PCA. This issue is currently pending consideration before the Supreme Court.

Likewise, the High Court of Jammu and Kashmir in Sheikh Abdul Majeed v Union Territory of J&K^[23] held that a person who had leased his or her property to Food Corporation of India fell within the ambit of the PCA. The High Court held that such a person shall be liable to prosecution under the PCA, as he or she is discharging a public duty by acting on behalf of the corporation and discharging duties in relation to the public distribution system and storage, which affects the public at large.

In Chitra Ramakrishna v Assistant Director, Enforcement Directorate,^[24] the Delhi High Court held that the National Stock Exchange (NSE) is not a public authority under Article 12 of the Constitution of India; hence, the managing director of the NSE cannot be said to be a public servant under the PCA. However, a coordinate bench of the Delhi High Court, while considering the bail application of the same individual, observed that the NSE is a public authority; therefore, the managing director of the same was a public servant under the PCA. The same individual has approached the Delhi High Court in a separate petition, challenging the definitions of ‘public duty’ and ‘public servant’ under the PCA, on the ground that the definitions are too wide, considering that prosecution has been initiated against the individual even though she was a key managerial person of a private entity. This is pending adjudication before the Delhi High Court.

‘Requisite intent’ of the bribe giver

The Supreme Court in Directorate of Enforcement v Padmanabhan Kishore^[25]dealt with the case of a bribe giver who had sought quashing of proceedings against him under the Prevention of Money Laundering Act 2002 (PMLA). The ground for quashing was that the question of prosecution of a bribe giver does not arise if the amount in question is in the hands of a bribe giver, as this amount could not be said to be tainted and therefore cannot be deemed to be proceeds of crime. It was further argued that this amount will only be tainted when it is received by a public servant.

The Hon’ble Supreme Court, while interpreting the provisions of the PMLA^[26] and ‘requisite intention’ of a bribe giver, held that:

• if a person is handing over money to a public servant, without the intent to bribe, it would be mere entrustment. If the public servant takes the money and uses it for his or her own use then it would be misappropriation; and
• if the money is handed over with the requisite intent to bribe (ie, to gain an undue advantage), then this person would be assisting or will knowingly be a party to an activity connected with the proceeds of crime and, as such, would be liable for prosecution under the PMLA.

Liability of corporates for giving bribes to public servants

The 2018 Amendment punishes corporate bribe givers and introduces corporate liability to the PCA.^[27] This provision seems to be modelled on the provisions of corporate liability under the UK Bribery Act 2010.

The 2018 Amendment introduces prosecution of a commercial entity or organisation for obtaining or retaining business or gaining an advantage in the conduct of its business, by bribing a public servant. Thus, these commercial organisations are susceptible to trial and imposition of a fine if found guilty of the offence of giving or promising to give any ‘undue advantage’ to a public servant, to obtain or retain business or to obtain or retain any advantage in the conduct of its business.

The 2018 Amendment also provides for vicarious liability of directors, officers, etc, of the commercial organisation. It provides that if an alleged corrupt act has been committed by a commercial entity with the consent or connivance of any director, manager, secretary or other officer, such individual shall be guilty of an offence under the provision.^[28] However, for imposing vicarious liability on a person, it will be necessary to show that the person had a role to play in the act alleged without which the person cannot be prosecuted.^[29]

A ‘commercial organisation’ has been defined comprehensively to include not only Indian companies and partnership firms but also foreign companies and partnership firms that carry on a part of their business in India. It also includes other associations of persons formed in India or even formed outside India but who carry out their business in India.^[30]

The 2018 Amendment requires any commercial entity to have in place ‘adequate procedures’ in compliance with these guidelines as may be prescribed by the central government to prevent its employees from undertaking any conduct that may attract penal liability under the PCA. If a commercial entity is able to prove that it had the aforesaid ‘adequate procedures’, this entity can claim protection from prosecution under the PCA.

Introduction of new offence of bribery under the BNS

With a view to modernising the current legal framework and overhauling the criminal justice system, the government of India enacted three new criminal laws, namely the BNS (the new penal code), the Bharatiya Sakshya Bill 2023 (the new Evidence Act) and the BNSS (the new CrPC) on 25 December 2023. They are to come into effect in a phased manner from 1 July 2024.

The BNS introduces a new chapter^[31] in the penal code, which provides for offences punishing bribery during elections. What is interesting and crucial to note is that these offences are not limited to public servants but apply to whoever commits bribery to interfere with the electoral process.

Under the BNS, the following categories of bribery are made punishable:

• any person who gives gratification to any person to induce him or her or induce any other person to exercise any electoral right or who rewards any person for having exercised any such right; and
• a person who accepts for him or herself or any other person gratification for exercising an electoral right or inducing or attempting to induce any person to exercise this electoral right.^[32]

Therefore, the BNS punishes persons who give or receive any reward or gratification for exercising an electoral right or inducing any other person to exercise such a right. For example, if someone rewards another person for voting for a candidate by providing them with two bags of grain, this would be bribery under the BNS. This represents a significant advancement in the fight against electoral corruption in the country, where candidates and political parties frequently purchase votes using money, food and even alcohol. The BNS excludes declaration of public policy or a promise of public action from the offence of bribery.^[33]

Bribery is punishable with imprisonment extending to one year or with a fine, or both.^[34] However, the BNS clarifies that bribery by ‘treating’ (ie, gratification in the form of food, drink and entertainment is punishable only with a fine).^[35]

Interplay between the BNSS and the PCA

Key changes in procedure of prosecution under the BNSS

The PCA^[36] makes the CrPC applicable to the proceedings in relation to an offence punishable under the PCA. Once the BNSS comes into force, the PCA may need to be correspondingly amended to make the BNSS applicable for proceedings in relation to offences punishable under the PCA.

If the BNSS is made applicable, some of the key changes in procedure in the prosecution of offences under the PCA would include the following:

• The BNSS introduces the concept of a ‘Zero FIR’ (ie, an FIR), which can be registered at any police station, regardless of whether the particular police station has territorial jurisdiction or not. Once the Zero FIR is registered, the concerned police station must transfer the FIR to the police station that has jurisdiction to investigate the case.
• FIRs can be registered via electronic communication (as prescribed) and must be taken on record on being signed within three days by the person giving such information.
• Search and seizure, including preparation of a seizure memo, will have to be recorded by audiovisual means.
• The police is also under an obligation to supply the police report and other documents to the victim (if represented by an advocate) after filing a charge sheet.
• The BNSS provides for the service of summons through electronic means. A summons to witnesses and accused and notices bearing the image of the court’s seal can be served by electronic communication. Statements can also be recorded by the investigating office by way of audiovisual means. Similarly, after the filing of charge sheets or complaints, it is also permissible for the investigating authority to supply documents, such as the police report, in electronic form.
• Most importantly, trials, inquiries and proceedings may also be held in electronic mode: by use of electronic communications or use of audiovisual electronic means, including examination of complainant and witnesses, recording of evidence in inquiries and trials, and all appellate proceedings.
• An undertrial first-time offender will be automatically released on bail if he or she has spent one-third of the maximum sentence (other than cases punishable with death and imprisonment for life).

Deemed sanction under the BNSS

The BNSS^[37] provides that no court shall take cognisance of an offence committed by a public servant in discharge of his or her official duties and functions, except with the previous sanction of the competent authority. However, the BNSS has introduced a new concept of ‘deemed sanction’,^[38] whereby it is stipulated that the competent authority shall take a decision within a period of 120 days from the date of receipt of the request for sanction, and in the case of failure to make a decision within the said time period, sanction shall be deemed to have been accorded on account of this delay in decision-making.

The introduction of the concept of ‘deemed sanction’ is a positive step to reduce the delays that occur in according sanction; in fact, there are cases wherein competent authorities have taken years to grant or reject the request for sanction due to ulterior motives. Therefore, the aforesaid change is a positive step and is in line with the object of the BNSS to ensure expeditious disposal of criminal cases in India. While the PCA^[39] (which also provides for pre-cognisance sanction) does not provide for such a deemed sanction, it may be necessary to similarly amend the PCA.

Protection of witness or complainant

The PCA provides for protection of the complainant in ‘trap cases’. A trap case is a case where after receiving a specific complaint against a public servant of offences under the PCA, a trap is organised to catch him or her red-handed. Hence, if an individual coerced into paying a bribe reports the matter to the investigating agency, the agency may stage a trap involving the complainant to apprehend the corrupt public servant. The person who lodged the complaint is protected from prosecution under this provision.

The BNSS also provides for a witness protection scheme to be notified by state governments.^[40] Hence, the complainant in a case of bribery may also seek shelter under such a scheme.

In addition, the BNSS now provides that withdrawal of prosecution can only be allowed after hearing the complainant. The police officer is also under the obligation to inform the victim of the progress of the investigation within 90 days.

Adherence to timelines under the BNSS

While the PCA^[41] provides that the trial of an offence under the PCA shall as far as practicable be on a day-to-day basis and be concluded within two years, the BNSS provides for some pretrial timelines as well, which are, inter alia:

• committal proceedings shall be finished within 90 days of the date of taking cognisance, and this period may be extended by no more than 180 days;
• the accused and the victim shall be supplied with a copy of the police report and other documents within 14 days of the production or appearance of the accused; and
• charges are to be framed within 60 days of the first date of hearing on the charge (trial before a court of sessions).

Conclusion

The anti-corruption regime in the country is witnessing significant legislative amendments and judicial developments, all aimed at strengthening the framework for the fight against corruption. The PCA underwent a crucial change with the 2018 Amendment, which marked a shift towards more stringent measures to combat corruption. Judicial developments and interventions are also playing a pivotal role in shaping the anti-corruption framework in India.

The introduction of the BNS marks a key milestone in the fight against corruption in the electoral process and underscores the importance of free and fair democratic practices. The BNSS also highlights the evolving landscape of criminal procedure, particularly with emphasis on the protection of rights of victims, the protection of the witness or informant, and expeditious trial.

Notwithstanding the aforesaid positive developments, corruption in the private sector is still outside the scope of the PCA, which is restricted to acts of corruption in relation to a public servant. The aforesaid lacuna under the PCA is covered to some extent by the wide definition of ‘fraud’ under the Companies Act 2013^[42] (the Companies Act). Thus, acts of bribery and corruption in the private sector by employees or officials of a company to gain undue advantage are liable for prosecution under the Companies Act. It may be noted that under the Companies Act, the offence of ‘fraud’, being a penal provision, is punishable with imprisonment for a period of up to 10 years. Further, the Serious Fraud Investigation Office, being a specialised agency under the Companies Act,^[43] has the jurisdiction to investigate such instances of bribery and corruption within the private sector.

All in all, while there are challenges, the judicial and legislative developments demonstrate the country’s commitment to integrity and transparency in governance and public institutions.

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