Anti-Corruption 2024 Comparisons

Corruption by its very nature is a complex crime. It entails:

• giving and accepting bribes;
• ingenious ways of providing a promise or gratification to a party; and
• appropriating such bribes or proceeds, and laundering such proceeds, which may also result in tax evasion or generation of “black money”, and may also be layered in foreign jurisdictions.

Due to its complexity and cross-border implications, India signed the United Nations Convention against Corruption (the “Convention”) on 9 December 2005, and ratified it on 9 May 2011. The Convention covers:

• preventative measures;
• criminalisation;
• enforcement;
• international co-operation;
• asset recovery; and
• technical assistance/information exchange.

The Convention also covers acts of corruption in the private sector. India is a member of the Financial Action Task Force, an international intergovernmental organisation formed on the initiative of the G7, based on mutual evaluation aimed at targeting international money laundering and terrorism funding. 

In addition to the above, India is also a signatory to:

• the United Nations Convention against Transnational Organized Crime;
• the Convention on Mutual Administrative Assistance in Tax Matters; and
• multiple mutual legal assistance treaties (MLATs), etc.

While the general criminal law in India (the Indian Penal Code, 1860) already accounted for anti-bribery or anti-corruption provisions in its Chapter IX, titled “Of Offences By Or Relating To Public Servants”, this did not deal in detail with the offences of corruption. In the year 1947, India enacted a special legislation to deal with corruption more effectively. Thus, the Prevention of Corruption Act, 1947 was passed. This Act was later repealed and replaced by the Prevention of Corruption Act, 1988 (PCA), which was enacted to consolidate and amend the laws relating to the prevention of corruption in India. Therefore, the PCA is the principal legislation for anti-corruption and anti-bribery laws in India.

Enforcement of the PCA is performed by various enforcement agencies and statutory bodies. The Central Vigilance Commission (CVC) was established under the Central Vigilance Commission Act, 2003 to inquire or cause inquiries into offences alleged to have been committed under the PCA by certain categories of:

• public servants of the Central Government;
• corporations established by or under Central Acts; and
• government companies, societies and local authorities owned or controlled by the Central Government.

The CVC exercises superintendence over the functioning of the Central Bureau of Investigation (CBI) in so far as relates to the investigation of offences committed under the PCA, and has the power to direct the CBI to investigate certain cases relating to offences under the PCA.

In addition to the CVC (through the CBI), the police authorities in various states have also set up anti-corruption bureaus (ACBs) to specifically investigate allegations of corruption and create vigilance, so as to deter corruption. Pertinently, Section 17A of the PCA mandates that no police officer shall conduct any enquiry or investigation into any offence alleged to have been committed by a public servant under the PCA where the alleged offence is relatable to any recommendation made or decision taken by such public servant in discharge of their official functions or duties, without the previous approval of the relevant authority.

The complex nature of corruption and bribery offences could lead to various other offences, such as money laundering and tax evasion. Any money generated by committing offences under the PCA is considered proceeds of crime under the Prevention of Money Laundering Act, 2002 (PMLA), and such offences under the PCA are scheduled offences under the PMLA.

Various offences under the PCA have been included as a “scheduled offence” under the PMLA, meaning that both a bribe-giver and a bribe recipient will be liable for prosecution under the PCA, as well as for the offence of “money laundering” under the PMLA. The Supreme Court of India in Directorate of Enforcement v Padmanabhan Kishore, reported at 2022 SCC OnLine SC 1490, recently held that a bribe-giver is a party connected to the proceeds of crime and would therefore be liable for prosecution under the PMLA.

India also enacted the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the “Black Money Act”) to deal with undisclosed foreign income and assets. The statute provides procedures for dealing with such income and assets, and for imposition of tax on any undisclosed foreign income and asset held outside India.

Another important step in dealing with corruption was the enactment of the Benami Transactions (Prohibition) Act, 1988 to deal with transactions in which property is illegally held by one person on behalf of another person.

In 2013, India also passed the Lokpal and Lokayuktas Act, 2013 (the “Lokpal Act”), establishing the Lokpal body for the Union and Lokayukta for states, to inquire into allegations of corruption against certain public functionaries, including (among others):

• the Prime Minister;
• cabinet ministers;
• members of parliament; and
• Group A officials of the Central Government. 

A public official (ie, a government servant or employee of any corporation or any other body controlled or owned by the government) is prohibited from accepting any foreign contribution under the Foreign Contribution (Regulation) Act, 2010.

There are no specific guidelines for interpretation or enforcement of the national legislation on anti-corruption. However, Indian courts have interpreted these statutes, and have monitored their enforcement on a case-by-case basis. The Supreme Court and various High Courts have been seized of challenges to the constitutionality of certain provisions/amendments to the PCA, and have been called upon to interpret these provisions or to issue guidelines on the timelines and the procedure of trial under such anti-corruption legislation/provisions.

The Supreme Court has, time and again, re-iterated the importance of enforcement of anti-corruption laws and the menace such corruption causes in a society. All cases under the PCA are tried by special judges so as to fast-track the trial, leading to early disposal of cases. The oversight of special judges in the investigation and trial ensures that the investigating agencies are kept on their toes when it comes to such cases, and that the cases do not get lost in the barrage of cases pending in Indian courts. The Supreme Court regularly monitors the performance of such courts, and these statistics are uploaded on the National Judicial Data Grid.

More importantly, the CVC supervises corruption cases relating to public servants. In 2023, the CVC released its annual report, which stated that as many as 6,841 corruption cases probed by the CBI were pending trials in different courts, 313 of them having been pending for more than 20 years.

The CBI also has a CBI Manual, revised in 2020, which lays down the guidelines for the CBI to conduct investigations, and deals with various issues including taking sanctions under the PCA. Pertinently, said CBI Manual is not a public document and hence is not available in the public domain.

The Ministry of Personnel, Public Grievances and Pensions has notified standard operating procedures for the processing of cases under Section 17A of the PCA.

There have been no amendments to the PCA in recent years. The last key amendment to the PCA occured in 2018 by way of the Prevention of Corruption (Amendment) Act, 2018 (the “Amendment Act”).

Under the Amendment Act, the following changes were made to the PCA.

• While the PCA penalised a public servant for accepting any reward other than a salary, the Amendment Act amended this to bring within its ambit any act where a public servant accepts any “undue advantage other than legal remuneration”. 
• The Amendment Act makes giving a bribe to a public servant a direct offence, thereby extending the scope of the PCA to private parties as well. 
• The Amendment Act also prescribes that a trial under the PCA shall happen, as far as practicable, on a day-to-day basis.
• The Amendment Act also created a new offence of taking undue advantage to influence a public servant by corrupt or illegal means or by the exercise of personal influence.
• The PCA also introduced an offence relating to bribery of a public servant by a commercial organisation. This included an amendment whereby, if a commercial organisation was found guilty of bribing a public servant, with the connivance or consent of any officer of the company, including key managerial personnel, such persons would also be guilty of the offence and be liable to be proceeded against.
• The Amendment Act reduces the types of offences under criminal misconduct to cover only two offences: misappropriating property, and amassing disproportionate assets. The Amendment Act also introduced Section 17A, which mandates that no police officer shall conduct any enquiry or investigation into any offence alleged to have been committed by a public servant under the PCA where the alleged offence is relatable to any recommendation made or decision taken by such public servant in discharge of their official functions or duties, without the previous approval of the relevant authority.

Most importantly, the Amendment Act introduced Chapter IV A into the PCA, which provides powers of attachment and forfeiture of property as provided in the PMLA and the Criminal Law Amendment Ordinance, 1944.

While bribery has not been specifically defined under the PCA, a substantial definition of “undue advantage” has been provided. The definition is all-encompassing, since it includes any gratification, other than the legal remuneration received by the public servant. Further, the explanatory note to the provision further widens the word “gratification” as being not limited to pecuniary gratification or being estimable in money. Therefore, under the PCA, it is not necessary for the undue advantage to be in money, property or something estimable in money. It includes rights in property, any preferment, privilege, etc. However, it must have some value in order to qualify as an advantage.

Under Section 7 of the PCA, it is an offence for a public official to obtain, accept, or attempt to obtain any undue advantage with an intent to dishonestly perform their duty as a public servant. The provision is again comprehensive, since the explanatory note provides that improper performance is not necessary to prosecute under this provision. However, to prosecute under the provision, it is necessary for the prosecution to prove that there was a demand for undue advantage made by the public servant, and mere receipt of undue advantage is not enough to prove this offence.

The jurisprudence on the proof of demand being sine qua non is backed by multiple pronouncements of various High Courts in India, and even the Supreme Court in Krishan Chander v State of Delhi, reported at AIR 2016 SC 298, held that proof of demand is an absolute necessity. This has caused issues in numerous prosecutions, since in many cases the complainant or the person from whom the demand was made would die or turn hostile during trial, and therefore the prosecution would fail to prove its charges.

As such, a Constitution Bench of the Supreme Court in Neeraj Dutta v State (NCT of Delhi), reported at (2023) 4 SCC 731, recently held and clarified that in the absence of direct evidence (testimony recorded in court), regarding the demand of undue advantage, the prosecution can prove the demand for the undue advantage by way of circumstantial evidence, though the quality of evidence should be beyond reasonable doubt. Therefore, in order to prove the offence of taking of undue advantage by a public servant, there are two elements to prove:

• demand for undue advantage; and
• acceptance of the undue advantage by the public servant.

As stated above, the term “undue advantage” has been given a comprehensive definition. Therefore, hospitality expenditures (travel expenses, meals), gifts and promotional expenditures, and facilitation payments etc, will fall under the purview of “undue advantage”.

“Public official” has been defined widely under the PCA to include not only such person who draws their remuneration from the government (Union or state) but also any person who holds an office by virtue of which that person performs a public duty, and a person who performs their duties under authorisation of courts for the administration of justice.

The provision itself provides at least 12 broad types of persons along with two further explanations, indicating the legislature’s intent to keep the term as wide as possible; and now even the constitutional courts are pronouncing decisions which indicate that the provision is subject to the widest interpretation possible. A few instances are as follows.

• In CBI, Bank Securities & Fraud Cell v Ramesh Gelli & Others, reported at (2016) 3 SCC 788, it was held that even the chairperson of a private bank will be a public servant for the purpose of the PCA.
• In State of Gujarat v Mansukhbhai Kanjibhai Shah, reported at (2020) 20 SCC 360, the Supreme Court held that an official of a deemed university performs the same public duty as that of a government university, and therefore the trustee of the deemed university is a public servant for the purpose of the PCA.
• The Jharkhand High Court in Sanjay Kumar Agarwal v CBI, reported at 2023 SCC OnLine Jhar 394, interpreted the above pronouncements and expanded the definition of public servant to include resolution professionals appointed under the Insolvency and Bankruptcy Code, 2016 and governed by the Insolvency and Bankruptcy Board of India. The pronouncement has been challenged before the Supreme Court and is presently sub judice.

Employees of state-controlled companies stand covered under the definition of public servant, which includes any person in service of a corporation established under a Central or State enactment, and also includes persons who serve in a body owned or controlled, or even aided, by the government or a government company.

There is no provision or legislation under Indian anti-bribery laws which criminalises bribery of foreign public officials. While India did attempt to legislate on this issue by introducing a bill titled “The Prevention of Bribery of Foreign Public Officials and Officials of Public International Organisations Bill, 2011”, the bill lapsed and was never enacted.

Bribery by and between private parties is not a punishable offence under the PCA. However, India’s general law enumerating offences and prescribing punishment (the Indian Penal Code, 1860) (IPC) makes it punishable if on the facts of a particular case a company has entrusted certain property to an employee, who, in exchange for a bribe, misappropriated that property – here, an offence of criminal breach of trust will be established. Further, if an employee accepted a bribe and knowingly induced a company to enter into a loss-causing transaction, such act would fall within the purview of cheating.

For the first time, the Amendment Act has expanded the scope of the PCA to target bribe-givers, both directly and indirectly. This is provided under Section 7A of the PCA. Therefore, any person who is otherwise permitted to liaise with any government authority can be liable for punishment under the PCA if such person has been found offering or attempting to offer any undue advantage as motive or reward in order to induce a public servant, by exercising their influence over the public servant, to conduct its public duty in an improper or dishonest manner. Prior to the Amendment Act, these persons were prosecuted as abettors or by invoking the provision of criminal conspiracy under the IPC.

As previously stated, bribery, including influence-peddling of foreign public officials, is not covered under the PCA or elsewhere.

While the PCA does not impose any record-keeping obligations, the Companies Act, 2013 (the “Companies Act”) obligates a company to maintain its books of accounts for a period of up to eight preceding financial years. If an inquiry or investigation is pending against the company under the Companies Act, the company is required to maintain its books of accounts for a longer period. If the senior management of the company, including the managing director and the chief financial officer, or any person charged by the board, fails to comply with such obligations, such person will be punished with imprisonment for a term extending to one year and/or fines between INR50,000 and INR500,000.

Further, the managing director, whole-time director in charge of finance, chief financial officer or any other person charged with the duty of compliance with the requirements of maintaining the financial statement of the company shall be punishable with imprisonment for a term that may extend to one year or with fines of between INR50,000 and INR500,000 (or with both) if the corporate books:

• do not show the true and fair view of the state of affairs of the company;
• do not comply with the accounting standards notified under the Companies Act; or
• are not in the form or forms provided for a different class or classes of companies in the Companies Act.

If the concerned officer mentioned above is found to have maintained false books of accounts, they may, depending on the facts and allegations, be subject to the various offences mentioned under the IPC pertaining to forgery, falsification of accounts, etc.

Under the PMLA, banks, financial institutions, auditors, and intermediaries such as brokers are obligated to maintain records of their client’s transactions for a period of five years, where such transactions exceed certain value. Failure to maintain these records results in liability with steep penalties.

Misappropriation of public funds is an offence under Section 13(1) of the PCA, and is punishable with the highest sanction under the PCA – ie, imprisonment for a minimum of four years and for up to ten years, along with a fine.

Under the PCA, it is an act of criminal misconduct by a public servant for such public servant to misappropriate or even otherwise convert for their own gain any property entrusted to them. The provision for criminal misconduct has been amended to its present version in the Amendment Act. Before the Amendment Act, the provision was far more comprehensive, and covered various acts of criminal misconduct; however, in its present form only misappropriation of public property or owning assets which are disproportionate to the public servant’s known sources of income are considered criminal misconduct.

The Amendment Act, under Section 7A of the CPA, targets intermediaries in the same way as influence-peddlers (see 2.2 Influence-Peddling). Such intermediaries are now liable to be punished under the PCA for accepting, obtaining or even attempting to obtain any undue advantage as motive or reward to induce a public servant, by exercising their influence over the public servant, to conduct its public duty in an improper or dishonest manner.

There is no specific statute of limitations under the PCA preventing any investigation agency from initiating an investigation or launching a prosecution before the court, or depriving any court from taking cognisance of an offence within a stipulated timeframe. However, the general criminal procedural law in India (the Code of Criminal Procedure, 1973) (CrPC) prescribes periods of limitation for launching prosecution only in respect of certain categories of offences, based on the quantum of punishment prescribed. For all offences under the PCA concerning more than three years, the limitation period prescribed under the CrPC is not applicable, meaning that prosecution may be launched at any point of time.

Further, the PCA provides that, as far as practicable, trials shall be held on a day-to-day basis and concluded within two years. If the trial is not concluded within two years, it is incumbent upon the court holding trial to record reasons for not being able to complete trial, and to extend the period for six months at a time. However, the total time taken to conclude the trial shall not ordinarily exceed four years.

The geographical reach of the PCA is the entirety of India, including all its states and Union territories; therefore, it does not have extraterritorial reach.

The Amendment Act introduced corporate liability to the PCA, under which, “commercial organisation” has been defined comprehensively to not only include Indian companies but also foreign companies who carry on a part of their business in India.

These “commercial organisations” are susceptible to standing trial and suffering imposition of a fine if found guilty during trial for 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.

Further, the commercial organisation can also be held liable for the offence of bribing a public servant, to induce the public servant to improperly perform a public duty or to reward the public servant’s improper performance, just as an individual so accused would be held liable.

While the IPC does not envisage vicarious liability, the PCA provides for a certain type of vicarious liability – ie, any person in charge of a company is liable for acts of the company, upon proof that such acts were committed with their consent or connivance. Therefore, individuals and companies can both be held liable for the same offence.

The Supreme Court of India in Religare Finvest Limited v State of NCT of Delhi and Another, reported at 2023 INSC 819, recently held that a successor entity can be held liable for offences by the target entity subject to the terms of the scheme of the merger, the nature of allegations and existence of proof against the entity.

After examining the law on this subject, the Supreme Court held that criminal liability of a company:

• is recognised where it can be attributable to individual acts of employees, directors or officials of a company, or juristic persons (while relying on past pronouncements in Tesco, Meridian Global Funds, Standard Chartered BankandIridium);
• is recognised even if its conviction results in a term of imprisonment (Meridian Global Funds and Iridium);
• cannot be transferred ipso facto, except when in the nature of penalty proceedings (relying on McLeod Russel);
• ceases to exist given that the legal effect of amalgamation of two companies is the destruction of the corporate existence of the transferor company; and
• is succeeded to by the transferee company, apart from only in defined legal proceedings.

In criminal cases in India, an effective defence strategy must be based on facts which are plausible and backed by credible and admissible evidence. There cannot be a straight-jacket formula for defence, since each criminal trial turns on its own facts and evidence. Further, the defence strategy keeps evolving as and when evidence is produced and as testimonies are recorded in court.

During a trial, an accused person has a chance to establish their defence against the charges brought by the prosecution, including by cross-examining witnesses and bringing witnesses of their own.

For certain specific offences relating to a public servant under the PCA, no enquiry or investigation can be initiated without the prior sanction of the state or Central Government (as the case may be). The issue of whether this procedural requirement for obtaining a prior sanction (as introduced by the Amendment Act in 2018) will apply retrospectively is currently pending before the Supreme Court.

Further, if a person is found to have been “compelled” to give undue advantage to a public servant, they shall not punished for an offence of bribing the public servant, subject to the “compelled” person reporting the matter to law enforcement agencies within a period of seven days of giving the undue advantage.

Further, if a person is giving undue advantage in order to assist law enforcement agencies in their investigation under the PCA, such persons are not liable for the offence of bribing public officials.

The PCA recognises that a “commercial organisation” shall not be liable to such prosecution if it is able to prove that it had in place adequate procedures for preventing persons associated with the commercial organisation from undertaking such conduct. Pertinently, the PCA states that the Central Government shall prescribe such adequate procedures; however, none have been notified to date. Until such time, a commercial organisation may choose to frame its own policies and conduct regular internal training in order to present a defence that it took steps to prevent any such acts from being committed by its officials.

There are no exceptions to the previously discussed defences (see 4.1 Defences).

See 4.1 Defences for any and all exceptions available to a person or commercial organisation under the PCA.

There are no sectors or industries which can plead exemption from the applicability of the PCA.

In the course of proceedings under the PCA, the court may, at any stage of inquiry or trial, grant pardon to such person on the condition of their making a full and true disclosure of the circumstances within their knowledge with respect to the offence in question, whether as a principal or abettor of such offence, with a view to obtaining evidence of any person supposed to have been directly or indirectly concerned in or privy to an offence, and as provided under the PCA.

If an accused person pleads guilty to an offence during or before commencement of trial, the courts have discretion to take a lenient view while sentencing them. However, while exercising this discretion, the court cannot award a sentence which is lower than the minimum sentence prescribed for such offence.

For the offence of a public servant obtaining, accepting or attempting to obtain any undue advantage with an intent to dishonestly perform their duty as a public servant, as provided under Section 7 of the PCA, the punishment prescribed for the public servant is minimum imprisonment of three years and up to seven years, along with a fine.

For the offence of taking advantage to influence a public servant by use of personal influence, as provided under Section 7A of the PCA, the punishment prescribed for an individual person is minimum imprisonment of three years and up to seven years, along with a fine.

For the offence of bribing a public servant to induce such public servant to improperly perform a public duty or to reward the public servant’s improper performance, under Section 8 of the PCA, the punishment prescribed for an individual person is minimum imprisonment of three years and up to seven years, along with a fine. For a commercial organisation, there is only a fine.

For 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, as provided under Section 9 of the PCA, the punishment prescribed for a commercial organisation is a fine.

For the offence of being in charge of a commercial organisation and found guilty under Section 9 of the PCA, the relevant individual official of the commercial organisation can be punished with minimum imprisonment of three years and up to seven years, along with a fine, as provided in Section 10 of the PCA.

For abetting an offence under the PCA, as provided under Section 12, the punishment prescribed is minimum imprisonment of three years and up to seven years, along with a fine.

For criminal misconduct, whereby a public servant either misappropriates public property or owns assets far exceeding their known source of income, as provided under Section 13 of the PCA, the punishment prescribed is minimum imprisonment of four years and up to ten years, along with a fine.

Being convicted under the PCA and subsequently being convicted under the PCA again constitutes a separate offence, punishable with minimum imprisonment of five years and up to ten years, and with a fine, as provided under Section 14 of the PCA.

An attempt to commit an offence under Section 13(1)(a) of the PCA – ie, the misappropriation of public property by a public servant – is punishable with minimum imprisonment of two years and up to five years, and with a fine, as provided under Section 15 of the PCA.

Section 16 of the PCA provides for calculation of quantum of a fine for offences under Sections 7, 8, 9, 10, 11, 13(2), 14 and 15 of the PCA. The court shall consider and be mindful of the value of the property which the accused persons have obtained by committing the offence. For offences under Section 13(1) of the PCA, the court shall consider the value of the public property proved to have been misappropriated and that the accused was unable to account for. 

Further, there is no formal sentencing policy in India. Consequently, there is wide discretion for courts in matters concerning sentencing of the accused. A number of broad guidelines have been outlined by the Supreme Court with respect to the awarding of sentences to accused persons. As per these, while awarding sentences, courts must consider the principles of proportionality and deterrence.

The PCA as originally enacted did not expressly provide for any duties to prevent corruption. However, parliament amended the PCA in 2018 such that the application of the PCA has been extended to include commercial organisations. Section 9 has therefore been amended to criminalise the act of bribing as well as an attempt to bribe a public official by a commercial organisation.

However, the amendment also states that if a commercial organisation has implemented adequate procedures to ensure compliance of guidelines (as may be statutorily introduced) to prevent corruption, the same shall be treated as a valid defence available to such a commercial organisation.

It should be noted that the government has not formally issued any guidelines under Section 9 that a commercial organisation may adopt, thereby ensuring compliance of such guidelines by its employees. However, this amendment has made it incumbent upon companies to introduce internal policies, guidelines or codes of conduct to ensure their employees are routinely sensitised towards India’s anti-bribery law, and as regards their duty to act in a manner to prevent bribery.

Such internal policies, guidelines or codes of conduct are modelled on international best practices, since the government has not yet released guidelines under Section 9. In situations where a company has failed to implement any internal anti-bribery policies, guidelines or codes of conduct, the defence under Section 9 is not available to a commercial organisation – therefore rendering it liable to prosecution under the PCA.

There is currently no national legislation in India regulating lobbying activities. Various laws in India are routinely enacted after going through a process of public consultation on draft bills/legislation. While companies and commercial organisations (including their trade bodies and industry associations) are permitted to participate in legislative consultative processes, such participation cannot, however, cross the line drawn by Section 7 of the PCA, which makes it illegal for a “public servant to take gratification other than legal remuneration in respect of an official Act”.

In 2015, a private member’s bill – the Disclosure of Lobbying Activities Bill, 2015 (proposed lobbying bill) – was introduced in the Upper House of the Parliament of India, but lapsed and never became law.

There is no express provision under the PCA which casts a duty on any person to report commission of any offence under the PCA by another person to any law enforcement authority.

However, Section 8 of the PCA states that if a person has been compelled to give a bribe to any public officer, such person is legally obligated to report/disclose this to a law enforcement authority within a period of seven days. Section 8 also envisages a duty to disclose in a scenario where a person, before giving a bribe to a public officer, is obligated to inform a law enforcement authority when such bribe is being offered in order to assist any law enforcement authority or investigating agency to investigate any offence under the PCA against an identified person.

While the duty of disclosure under the PCA is limited to the aforementioned circumstances, there is nonetheless a duty cast upon listed companies under Section 177(9) of the Companies Act 2013 to internally implement a “vigil mechanism” enabling its directors and employees to report illegal conduct and behaviour. In cases where such conduct is reported, Section 177(10) requires such listed company to disclose this on its website and in its board report. Further, it is also the duty of independent directors to ensure that such a “vigil mechanism” envisaged under Section 177(9) is workable and effective, so that the sanctity of such “vigil mechanism” is not compromised.

In 2014, the Indian Parliament enacted the Whistle-Blowers Protection Act 2014; however, the Act is yet to be operationalised.

As stated in 6.3 Disclosure of Violations of Anti-bribery and Anti-corruption Provisions, Section 177(9) of the Companies Act 2013 casts a duty on listed companies to ensure that their “vigil mechanism” is framed in such a manner that it contains adequate safeguards and sufficient checks and balances for preventing victimisation of employees who report illegal conduct and behaviour.

In addition, corporate governance rules introduced by the Securities Exchange Board of India (SEBI) require listed companies to introduce a whistle-blower policy which is workable and effective, and which also provides adequate safeguards to whistle-blowers.

Indian law does not provide any incentive to whistle-blowers. However, it provides adequate mechanisms for presenting victimisation of whistle-blowers under the Companies Act 2013. As stated previously, the Whistle-Blowers Protection Act 2014 has not been operationalised.

As previously mentioned, the Whistle-Blowers Protection Act 2014 has not been operationalised. The applicable provisions can be located only in internal policies mandated either under the Companies Act 2013 or through SEBI corporate governance rules.

The CVC is the main body regarding the cross-section of enforcing anti-bribery and anti-corruption laws in public offices. The CVC has the power to itself inquire or cause an inquiry into any allegation of corruption. The CVC has superintendence over the vigilance administration of:

• the various ministries of the Central Government;
• corporations established by or under any Central Act; and
• government companies, and societies and local authorities owned or controlled by the government.

The CVC can direct initiation of disciplinary proceedings or any other appropriate action against a public servant of the Central Government by the competent authority. However, any prosecution, either by the CVC itself or by the CBI under the supervision of the CVC, has criminal enforcement by launching prosecution under the PCA.

Prosecution by the police authorities, or in cases where the offence under the PCA is a predicate offence, by the ED, by the tax authorities under the Black Money Act for wilful evasion of taxes, or by the Lokpals/Lokayukts, are criminal prosecutions under the PCA.

As discussed previously, there are multiple bodies mandated to enforce anti-corruption laws in India. These are detailed below.

CVC/CBI

The CVC is the primary statutory body that supervises the investigation and prosecution of cases by the CBI under the PCA. The CVC can itself inquire or cause the CBI to inquire into any allegations of corruption by public officials. This is, however, caveated by the fact that the CVC or the CBI, as the case may be, must seek permission of the competent authority to initiate an inquiry or an investigation, as mandated under Section 17A of the PCA. The CVC can also direct the CBI for the purpose of discharging the responsibility entrusted to it.

Additionally, the CVC can review the progress of investigations conducted by the CBI. The CVC can also review the progress of applications pending with the competent authorities for sanction of prosecution under the PCA. On issues of preventing corruption in such entities, the CVC has also been mandated to tender advice to:

• the Central Government;
• corporations established by or under any Central Act;
• government companies; and
• societies and local authorities owned or controlled by the Central Government.

See also 7.1 Enforcement of Anti-bribery and Anti-corruption Laws regarding the vigilance administration powers of the CVC.

While conducting an inquiry, the CVC can:

• summon and enforce the attendance of any person from any part of India and examine them on oath;
• require the discovery and production of any document;
• receive evidence on affidavits;
• requisition any public record or copy thereof from any court or office; and
• issue commissions for the examination of witnesses or other documents.

In relation to the investigation of offences and arrest of persons concerned in such offences, the CBI, under the Delhi Special Police Establishment Act, 1946, has all the powers, duties, privileges and liabilities which police officers have in connection with the investigation of offences. After completing the investigation, the CBI must submit a report to the CVC. The CVC must consider such report and decide whether to:

• file a charge-sheet or closure report before the Special Court against the public servant; or
• initiate departmental proceedings or any other appropriate action against the concerned public servant by the competent authority.

Police Authorities/ACB

The police authorities derive powers from the Code of Criminal Procedure, 1973 (CrPC) and can:

• issue summons to join the investigation;
• seek records and documents;
• take statements (even though such statements are not judicial statements);
• arrest the accused; and
• conduct searches and seizures.

However, the police authorities, like other investigating agencies, must seek permission of the competent authority to initiate an inquiry or investigation, as mandated under Section 17A of the PCA.

Directorate of Enforcement (ED)

In cases where the investigating agency, after a preliminary inquiry, lodges an FIR, and where the alleged offence is a scheduled offence under the PMLA, the ED can register an enforcement case information report (ECIR) and initiate investigation under the PMLA. Since the ED’s investigation is triggered only after the CBI/police authorities have received permission under Section 17A of the PCA to initiate investigation, the ED does not seek a separate permission under Section 17A. The ED has the power to (among others):

• summon the accused/witnesses;
• compel production of records;
• receive evidence on affidavits;
• issue commissions for examination of witnesses and documents; and
• arrest the accused.

In addition to these powers, the ED can attach tainted properties or properties of equivalent value, and can freeze assets/accounts. These powers have been extended to police officials and the CBI, under Chapter IV of the PCA, by the Amendment Act.

The Central Government has, by way of Section 66 of the PMLA and by various notifications, allowed information sharing among agencies, and has allowed the ED authorities to furnish or facilitate the provision of information to various government agencies, if such information is necessary for the agencies to perform their functions under the respective laws. As a corollary, since the police/CBI investigation is a precursor to the ED initiating the investigation, these agencies provide most of the information/evidence collected for the ED, to enable it to record a comprehensive ECIR.

Income Tax Authorities

Income tax authorities investigating offences under the Black Money Act draw powers from Section 131 of the Income Tax Act, and have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (CPC) – namely:

• discovery and inspection;
• enforcing the attendance of any person, including any officer of a banking company, and examining them on oath;
• compelling the production of books of account and other documents; and
• issuing commissions.

In addition to the above, the income tax authorities can:

• conduct searches and seizures;
• requisition books of accounts; and
• call for information as necessary for the purposes of the investigation.

The income tax authorities can also attach properties as provided in the second schedule of the Income Tax Act for the recovery of tax.

Lokpals and Lokayuktas

The Lokpal has the powers of superintendence over, and the power to give direction to, the CBI in respect of matters referred by the Lokpal for preliminary inquiry or investigation to the CBI under the Lokpal Act. The CVC is also mandated to send a statement, at such interval as the Lokpal may direct, to the Lokpal in respect of action taken on complaints referred to it.

The Lokpal also has the powers to direct searches and seizures by any agency, including the CBI, if the Lokpal has reason to believe that any document which, in its opinion, shall be useful for or relevant to any investigation under the Act is secreted in any place.

For the purpose of any preliminary inquiry, the Inquiry Wing of the Lokpal has all the powers of a civil court, under the CPC (as indicated previously). The Lokpal may, for the purpose of conducting any preliminary inquiry or investigation, utilise the services of any officer, organisation or investigating agency of the Central Government or of any state government, as the case may be.

If the Lokpal has reason to believe (with the reason for such belief being recorded in writing) on the basis of material in their possession that any person is in possession of any proceeds of corruption, that such person is accused of having committed an offence relating to corruption, and that such proceeds of offence are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of offence, the Lokpal or the authorised officer may (by order in writing) provisionally attach such property for a period not exceeding 90 days from the date of the order, and may seek confirmation from a special judge of attachment of such property until the completion of the proceedings against the public servant in the Special Court.

As indicated in 7.2 Enforcement Body, all enforcement agencies have powers of discovery and inspection, and can:

• compel production of documents;
• enter premises to conduct searches and seizures; and
• retain documents if these can be used as evidence against an accused person.

India does not recognise deferred prosecution agreements and non-prosecution agreements. However, India does recognise plea bargaining in limited circumstances. It is not allowed in cases where the prescribed punishment is death or life imprisonment, or imprisonment for a term exceeding seven years. Plea bargaining also does not apply where the offence affects the socio-economic condition of the country or has been committed against a woman or a child under the age of 14 years.

A person accused of an offence may file a plea-bargaining application in the jurisdictional court with a brief description of the facts of the case. A prerequisite for such an application is that the accused person has not previously been convicted of the same offence by a court. After understanding the nature and extent of punishment provided by the law for the offence, the application is voluntarily preferred.

The IPC has extraterritorial jurisdiction. Section 4 of the IPC provides that the provisions of the IPC also apply to any offence committed by any citizen of India in any place outside India. The CBI and the police authorities derive powers from the CrPC, which allows these authorities to issue letters of request and service summons under various MLATs and reciprocal arrangements with foreign states. Being members of Interpol, the Indian authorities can issue a Red Notice against an accused. A Red Notice is a request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender or similar legal action.

The PCA does not have extraterritorial jurisdiction. However, considering multiple MLATs, international conventions and international organisations that India is a part of, the courts in India can serve summons on foreign entities and foreign nationals. India also has multiple extradition treaties that allow persons/officials in foreign jurisdictions to be extradited to India for trial, especially in politically sensitive cases.

In this regard, the Black Money Act specifically deals with foreign undisclosed income and specifies that an undisclosed asset located outside India shall be charged to tax on its value in the previous year in which such asset reaches the notice of the assessing officer. The Black Money Act provides for:

• the direct assessment of the person on whose behalf or for whose benefit the undisclosed income from a source located outside India is receivable or the undisclosed asset located outside India is held; or
• the recovery from such person of the tax or any other sum of money payable in respect of such income and asset.

The Black Money Act Section 38 also provides that the Tax Recovery Officer may, in a case where an assessee has property in a country or a specified territory outside India, forward a certificate to the board for recovery of the tax arrears from the assessee, where the Central Government or any specified association in India has entered into an agreement with that country or territory under Section 90 or Section 90A of the Income Tax Act, or under Section 73 subsections (1), (2) or (4) of the Act (as the case may be), for the purposes of recovery of tax.

The PMLA provides a wider ambit to the ED in foreign matters. The PMLA defines an “offence with cross-border implications” to mean:

• any conduct by a person at a place outside India which constitutes an offence at that place, which would have constituted an offence specified in Part A, B or C of the Schedule provided in the PMLA had it been committed in India, and if such person transfers in any manner the proceeds of such conduct or part thereof to India; or
• any offence specified in Part A, B or C of the Schedule which has been committed in India and the proceeds of crime, or part thereof, have been transferred to a place outside India, or any attempt has been made to transfer the proceeds of crime, or part thereof, from India to a place outside India.

In the definition of “proceeds of crime”, the PMLA also covers any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property, or where such property is taken or held outside the country, and the property equivalent in value is held within the country or abroad.

Accordingly, the PMLA contains Chapter IX – ie, Reciprocal Arrangement for Assistance in Certain Matters and Procedures for Attachment and Confiscation of Property. This chapter deals with:

• reciprocal arrangements with foreign states;
• provisions for issuing letters of request;
• reciprocal arrangements for processes and assistance regarding transfer of accused persons; and
• attachment, seizure and confiscation, etc of property in a contracting state.

Some of the recent landmark investigations/decisions involving bribery and corruption are as follows.

Manish Sisodia v Central Bureau of Investigation, Reported at 2023 INSC 956

This concerned an ED investigation against the Deputy Chief Minister of Delhi (Mr Manish Sisodia) on the allegation regarding kickback of INR100 crores for introducing a new Delhi Excise Policy 2021–22, for licence to sell liquor and distribute it in the National Capital Territory of New Delhi, with a portion of it being used for funding his political party – ie, the Aam Aadmi Party – for its election campaign in Goa.

Mr Sisodia applied for bail, raising numerous legal and factual questions. However, considering the gravity of the allegations, the Supreme Court was not inclined to grant bail to Mr Sisodia at this stage, and noted that the State had given an assurance to conclude trial in the next six to eight months. Accordingly, the Supreme Court granted liberty to Mr Sisodia to move a fresh application for bail in case of change in circumstances, or in case the trial is protracted and proceeds at a snail’s pace over the next three months.

Ritu Chhabaria v Union of India, Reported at 2023 INSC 436

In this case, the wife of an accused, alleged to have contravened provisions of the PCA, filed a writ raising serious legal challenge to her husband’s arrest and subsequent rejection of bail under Section 167(2) of the CrPC. Section 167(2) allows an accused to be released on bail in the event the investigation is not completed within 60 days or 90 days, as applicable under said section. Investigating agencies, in order to defeat the right to such bail, often file incomplete chargesheets (investigation reports) while reserving the right to file subsequent chargesheets and continue investigation.

The Supreme Court looked down on such practice and held that the right of the accused for default bail cannot be taken away by way of filing incomplete chargesheets and conducting the investigation in a piecemeal manner. However, it is pertinent to note that a three-judge bench of the Supreme Court passed an interim order which directed that any application filed before any court seeking default bail on the basis of Ritu Chhabaria v Union of India and Others should be deferred, but this shall not preclude any trial courts or High Courts from considering applications for granting of default bail independent of and without relying on this judgment.

Soundarajan v State, Reported at 2023 INSC 377

The Supreme Court reiterated the settled principle of law in terms of the PCA that, unless demand of a bribe by a public servant and the acceptance of a bribe or undue advantage are established, the offence of obtaining pecuniary advantage by corrupt means covered by Section 13(1)(d)(i) and (ii) (of the unamended PCA) cannot be proved.

Multiple Investigations Against Former Andhra Pradesh Chief Minister N Chandrababu Naidu

The state government of Andhra Pradesh has launched multiple investigations against former Chief Minister N Chandrababu Naidu, and has arrested him for further investigation. Mr Naidu applied for bail, and approached the Supreme Court after being rejected bail from the Special Court and being rejected interim protection from the High Court in a petition to quash the investigation against him. The main thrust of his argument was that the state failed to take permission of the requisite authority under Section 17A of the PCA to initiate investigation against him, rendering the whole investigation and his arrest illegal. The Supreme Court is in seisin of the matter and has reserved judgment on it.

As stated in 5.2 Guidelines Applicable to the Assessment of Penalties, there is no formal sentencing policy in India. Consequently, courts have wide discretion in matters concerning sentencing of accused. A number of broad guidelines have been outlined by the Supreme Court with respect to the awarding of sentences to accused persons. As per these, when awarding sentences, courts must consider the principles of proportionality and deterrence.

Broadly, certain mitigating circumstances that courts consider when sentencing an accused upon completion of trial include:

• past antecedents of the accused;
• their mental and physical health at the time of the offence;
• the role played in the commission of the offence; and
• their socio-economic background.

The enforcement of the PCA was assessed by the United Nations Office on Drugs and Crime in their report titled INDIA: Incentives for corporate integrity in accordance with the United Nations Convention against Corruption, published in 2013.

Subsequently, the PCA underwent substantial amendment in 2018 to expand the scope of its application to commercial organisations, through critical amendments made in Section 9. However, the Indian government is yet to release guidelines for preventing bribery and corruption – which commercial organisations would be mandated to follow and ensure compliance with once such guidelines are notified.

Following the latest amendment in 2018, the Indian government has not proposed any further amendments to the PCA, nor is there any proposal to that effect pending in the government.