Prevention of Corruption (Amendment) Act, 2018

The Act was initially introduced in 1988 to combat corruption in government agencies and public sector businesses in India. Subsequently, an amendment was brought about in the Act in order to enhance transparency and accountability of the government.

The amendments were introduced in order to tighten up the existing provisions of the Act. The amendment also brought under it’s ambit a wide range of offences. The amendments range from redefining criminal misconduct to bringing collusive bribe givers to book. The bankers and civil servants are considering the latest amendments to Prevention of Corruption Act as means to ease pressure on them amidst mounting bad loans and investigative scrutiny against their commercial decisions.

The Amendments also extend the provision of prior permission before prosecuting a civil servant to retired officials too. This means that an investigating agency like the police or the Central Bureau of Investigation will have to secure permission from a competent authority before they can arrest a retired banker or civil servant. Earlier this provision was applicable for serving banking staff and public officials as well as public servants above the joint secretary level.

Key Highlights of the Amendments

1.      Definition of Undue Advantage

Undue Advantage has been defined to mean any gratification other than legal remuneration, not being gratifications limited to monetary terms. “Gratification” is not limited to pecuniary gratifications of estimated money. The definition has been expanded to include non – monetary considerations as well.

2.      Bribery to Public Servants (The anti-corruption law accords punishment to both the bribe giver as well as the taker)

Earlier, there were no specific provisions except as abetment but under the Amendment giving a bribe is included as a crime punishable by a 7-year prison term except when one is forced to give a bribe provided it was not coerced by the bribe-taker. However, to protect persons who give bribe under coercion, the Act has provided that "the person so compelled" would have to report the matter to the law enforcement authority or investigative agency within seven days.

For the bribe takers, the punishment to a minimum of three years of imprisonment, which may extend to seven years, besides fine.

3.      Bribes by Commercial Organization

The Amended Act has now defined commercial organization. A commercial organization means not only a company or a partnership firm incorporated within India but also a body corporate or a partnership firm incorporated outside India carrying on business in India. The Amended Act provides that if any person associated with a commercial organization gives any undue advantage with an intention to

-         Obtain/retain any business or;

-         Obtain/retain an advantage in the conduct of business   

then such a commercial organization shall be guilty in terms of s. 9 of the Act. Also, the Amendment act mandates the Central Government to lay down guidelines to ensure that no commercial organization bribes any public servant.  

4.      Criminal misconduct (Honest bankers, bureaucrats can breathe easy)

The criminal misconduct provision is intended to protect public servants from being wrongly prosecuted for official decisions. Under it, bankers cannot be pulled under the corruption law unless they have accumulated assets more than what they could have obtained with their steady income, or have misappropriated assets entrusted to them.

Criminal misconduct will now include only two offences:

i.                    Misappropriating of property entrusted to the banker

ii.                  Amassing assets disproportionate to known sources of income

The Amendment comes at a time when many current and former bankers are facing intense scrutiny for their lending decisions which have resulted in NPAs. Bankers have argued for a long time that they should not be prosecuted for lending decisions they made honestly.

5.      Pre-investigation approval

Section 17A has been introduced. Tis section grants another level of protection as it requires prior approval of an appropriate authority to conduct any enquiry or inquiry or investigation into any offence alleged to have been committed by a current public servant or a former public servant.

Now, a police officer will need prior approval of relevant authority while pursuing cases against all public servants. Earlier, prior permission was needed only for joint secretaries and above. However, the same does not apply when the accused is caught red-handed.

This provisions will ensure that investigating agencies will initiate investigation (and possibly arrest as part thereof) only if they have strong proof indicating either fraud or quid pro quo by a banker.

Honest bank officials who had taken decisions in good faith and without quid pro quo will be protected from loss of liberty by arrest. It further mandates the concerned authority to convey its decision within 3 months, which period may be extended by 1 month subject to such extension being supported by reasons recorded in writing.

6.      Prior Sanction required for Prosecution of Former Public Servants

The PCA required prior sanction of the appropriate government for prosecution of serving public officials. The Amendment Act extends this protection of requirement of prior approval to any enquiry, inquiry or investigation prior to prosecution. Accordingly, no police officer shall initiate any enquiry, inquiry or investigation against a current/former public servant for an alleged offence (where the alleged offence relates to recommendations made or decisions taken in the course of his official duties), without the prior approval of employer government or in any other case, by authority competent to remove him/her from such office (concerned authority).The decision on sanction request is to be made under three months which may be extended by a month.

7.      Forfeiture of property

This section was introduced for the Special Court to attach and confiscate property, which was earlier done under a 1944 ordinance through civil courts. Forfeiture of property under section 18 A is believed to help avoid a fresh procedure to confiscate property obtained through corruption.

The idea being that persons should not be allowed to profit from corrupt acts, making it necessary for law enforcement to have powers to recover all the tainted assets one procured through PC Act offences.

The provisions of the Criminal Law Amendment Ordinance, 1944 shall, as far as may be, apply to the attachment, administration of attached property and execution of order of attachment or confiscation of money or property procured by means of an offence under this Act.

8.   Time limit for completion of trial

The initial Act no where specified the time limit within which the trial should be completed. However, the amendment now prescribes that the trial shall be completed by a special judge within a period of two years from the date of filing. Also, an extension shall be provided for six months subject to proper reasons being recorded. However, it is further to be noted that the Amendment Act does not specify the implications if the trials are not completed within the prescribed time.

               Take Away

Despite a reasonable attempt to bring about positive changes, the Amended Act still has certain inconsistencies/ loop holes. For instance, the requirement to obtain appropriate sanction / pre investigation approval before initiating prosecution for public servants tends to tighten the shield available to officers accused of corruption. Ideally the main intent of the amendment was to protect the interest and safeguard the honest officers.

We also await the guidelines which the Central Government may formulate in case of any undue advantage being given by persons associated by Commercial Organization. 

Finally, we close by the wonderful quote by the very famous Kamal Hassan –

“When you don’t take a stand against corruption you tacitly support it.”