Comment Pieces

A birds eye view at corruption law and enforcement in India

Posted on February 21, 2018

Corruption is an issue that adversely affects the country’s economy. Not only does it hold the economy back from reaching new heights, but also impede development. Study conducted by Transparency International in in 2005 recorded that more than 92% of Indians had at some point or the other paid a bribe to a public official to get a job done[1]

 

The annual Kroll Global Fraud Report notes that India has among the highest national incidences of cor­ruption (25%). The same study also notes that India reports the highest proportion reporting procure­ment fraud (77%) as well as corruption and bribery (73%)[2]. According to the Transparency International Corruption Perception Index, India is ranked 76 out of 167 nations[3].

 

The lawmakers of India have always been conscious of the problem therefore, the Indian Penal Code in 1860 included a provision, which deals with offences committed by public servant involving corrupt practices. Later on a special piece of legislation was enacted i.e. The Prevention of Corruption Act, 1947, to deal specifically with the problem of corruption in public life. Apart from these Acts, India is a signatory to the United Nation Convention against corruption (UNCAC), which imposes the obligation on the member states to build a rigorous anti corruption policies

 

The Indian Penal Code, 1860 and the Prevention of Corruption Act, 1988, broadly govern the law relating to corruption. Proposed amendments to POCA (‘Amendment Bill’), which provides for supply-side prosecution, was introduced in the upper house of Parliament in 2013.[4]

 

Indian Penal Code 1980 (section169 and 409)

 

Section 169 and 409 can be provoked in case of an act of corruption by a public servant. The IPC defines a “public servant” as a government employee, officers in the military, navy or air force; police, judges, officers of Court of Justice, and any local authority established by a central or state Act.

 

Section 169 is related to a public servant unlawfully buying or bidding for property. The public servant shall be punished with imprisonment of upto two years or with fine or both and Section 409 is related to criminal breach of trust by a public servant. The public servant shall be punished with life imprisonment or with imprisonment of upto 10 years and a fine.

 

Prevention of Corruption Act 1988

 

In addition to the categories included in the IPC, the definition of “public servant” includes office bearers of cooperative societies receiving financial aid from the government, employees of universities, Public Service Commission and banks.

 

 Under this act if a public servant takes gratification other than his legal remuneration in respect of an official act or to influence public servants he/she will be liable to minimum punishment of six months and maximum punishment of five years and fine.

 

The Act also penalizes a public servant for taking gratification to influence the public by illegal means and for exercising his personal influence with a public servant. If a public servant accepts a valuable thing without paying for it or paying inadequately from a person with whom he is involved in a business transaction in his official capacity, he shall be penalized with minimum punishment of six months and maximum punishment of five years and fine.

 

The Benami Transactions (Prohibition) Act, 1988

 

The Act prohibits purchase of property in false name of another person, who does not pay for the property, except when a person purchases property in his wife’s or unmarried daughter’s name.

 

Whoever is found guilty of the offence of benami transaction shall be punishable with rigorous imprisonment for a term which shall not be less than one year, but which may extend to seven years and shall also be liable to fine, which may extend to twenty-five per cent of the fair market value of the property[5].

 

This is necessary, as many times to evade scrutiny; property can be bought in other person’s name. This act seeks to eradicate such practice, which enables a person to easily mask his wealth behind another person’s identity.

 

The Prevention of Money Laundering Act, 2002

 

The Act states that an offence of money laundering has been committed if a person is a party to any process connected with the proceeds of crime and projects such proceeds as untainted property. “Proceeds of crime,” means any property obtained by a person as a result of criminal activity related to certain offences listed in the schedule to the Act.

 

The penalty for committing the offence of money laundering is rigorous imprisonment for three to seven years and a fine of upto Rs.5 lakh[6].

 

Investigating agencies

 

The three main authorities involved in inquiring, investigating and prosecuting corruption cases[7]

  • Central Vigilance Commission (CVC)
  • Central Bureau of Investigation (CBI)
  • Anti-Corruption Bureau (ACB)
  • The Serious Fraud Investigation Office (SFIO)
  • The Lokpal

The Central Vigilance Commission (CVC) supervises investigation of corruption (under the Prevention of Corruption Act 1988 and the Penal Code 1860) in central government departments, government companies and local government bodies, and among public servants. The CVC can refer cases to either the central vigilance officer of the relevant government department or the Central Bureau of Investigation (CBI) for investigation.

The CBI and the Anti-corruption Bureau (ACB) are also investigative authorities for corruption under the Prevention of Corruption Act 1988 and the Penal Code 1860. While the CBI’s jurisdiction covers the central government and union territories, the ACB investigates cases within the states. However, the CBI has recently sought guidance from the Supreme Court regarding the permission required from a state government to conduct an inquiry into an offence relating to the state.

The Serious Fraud Investigation Office (SFIO) is set up under the Ministry of Corporate Affairs and investigates the affairs of companies based on an order from the central government on receipt of an application from the competent regulatory authority or government department; at the request of the concerned company; or in cases of public interest on its own accord

Lokpal, which comprises a chairperson and up to eight members, is the nodal ombudsman authority, which investigates and prosecutes cases of corruption involving the prime minister; the council of ministers; members of Parliament; public servants, other than members of armed forces; employees of companies controlled by the central government; and private persons who have abetted in the commission of relevant offences. Lokpal also has the power of superintendence over the CBI,

Besides these investigating agencies and the prosecution machinery, there is also the Comptroller and Auditor General and the Central Vigilance Commission, which play an important role due to the Public Interest Litigations in India[8].

The proper implementation of these laws and diligent efforts from the investigation agencies can help curb the problem of corruption by striking fear of the consequences in the minds of the perpetrators. The act of giving bribe has become somewhat of a norm and people believe bribing is necessary to get their work done without any hassles, this belief needs to be eliminated, which can be done by spreading awareness about anti-corruption laws and bodies that are present. However, in the past decade there is a rise in general awareness amongst the people, which has lead to the implementation of the lokpal and lokayukta, to form an independent body to fight against the evils of corruption without the undue influence from the government or any other administrative body.

Together the laws and the investigation agencies clubbed with the efforts of the people in reporting incidences of bribe as well as refusing to pay bribe, can act as a chemo to the cancer that is corruption and keep it from deteriorating our country.

 

Authored by:-

Sushma Reddy

LLB (pursuing)

Intern Janaagraha

 

 

CITATIONS:-

[1] Transparency International – the global coalition against corruption, Transparency.org

[2] Global Fraud Report – Vulnerabilities on the Rise, Kroll, 2015- 2016, available at

 http://anticorruzione.eu/wp-content/uploads/2015/09/Kroll_Global_Fraud_Report_2015low-copia.pdf

[3] Transparency International’s Corruption Perception Index

 http://www.transparency.org/cpi2015#results-table

[4] Prevention of Corruption Bill, 2013,

 http://www.prsindia.org/billtrack/the-prevention-of-corruption-amendment-bill-2013-2865/

 

 

5.  http://www.prsindia.org/uploads/media/Benami/Benami%20Transactions%20Act,%202016.pdf

[6]  https://www.advocatekhoj.com/library/bareacts/preventionofmoney/4.php?Title=Prevention%20of%20Money-Laundering%20Act,%202002&STitle=Punishment%20for%20money-laundering

[7]  https://www.lexology.com/library/detail.aspx?g=17185ebc-cfd3-4f76-a504-edf12b3361a3

[8] http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/A_Comparative_View_of_Anti-Corruption_Laws_of_India.pdf