CHAPTER – IV

AN ANALYSIS OF THE PREVENTION

OF CORRUPTION ACT, 1988
4.1. INTRODUCTION

The Prevention of Corruption of Act, 1988 is an important legislation to fight

with evil of corruption. It is an effective instrument to curb this evil. The success of
movement against the evil of corruption depends upon the performance of this
legislation. Hence it becomes important for us to know about the efficacy of this
legislation. We have to find out the lacuna in the legislation if they exist in this
legislation. We have to do away with the draconian provisions existing within the Act.
Similarly the introduction of new provisions into the Act will also be fruitful.

As we have observed in Chapter – II, the evil of corruption has been in

existence from the ancient times. It has affected the society all over the world.
Because of a number of factors it has affected our nation badly. We have already
observed in Chapter – I that all the fields of life are affected by the evil of corruption.
Even the Education Sector is not immune from this evil which is expected to
incorporate ideal ethical behavior among the students. For instance, two senior
officers of the Directorate of Higher Education were arrested by the Anti-Corruption
Bureau for demanding and accepting a bribe of Rs. 20,000 from a Professor 299. There
have been various reasons behind the expansion of corruption. The evil of corruption
has affected the prospects of economy in an enormous way because of multifarious
nature of the evil. The cases of corruption have increased manifold. We have enacted
many anti-corruption laws to tackle with this evil. Yet there is no end to the instances
of corruption. Even the members of elite class are promoting the evil of corruption
irrespective of the money and resources they are having. Similarly, top bureaucrats
299
―Two Directorate of Higher Education officials held for graft‖, Available at: http://www.business-
standard.com/article/pti-stories/two-directorate-of-higher-education-officials-held-for-graft-
114122400650_1.html (visited on December 25, 2014).

200
and politicians are also a part of this deadly nexus. Not only the persons who are
enjoying top government positions are exploiting their position for wrong reasons, but
their proxies are also a part of this deadly nexus which is evident from a number of
instances300.

Fighting corruption has appeared as a vital development issue in India in recent

years. More and more policymakers, businesses, and civil society organizations, have
begun to confront the issue openly. At the same time the general level of
understanding about corruption has risen significantly. Until recently, it was not
uncommon to hear someone discuss anti-corruption strictly in law enforcement terms.
By contrast, most people working in the field today acknowledge that public
education and prevention are equally important. The field has also come to appreciate
how critical the role of civil society is for effective and sustained reform301.

The people enjoying top positions and status are exploiting the machinery of
the administration in a negative and destructive way. Irrespective of the public opinion
against the evil and repeated attempts of enacting new laws to curb the evil of
corruption, a huge amount of black money is still lying into tax heavens. It is also
evident from a recent analysis by a trio of senior economists from the Bank of Italy 302.
The estimate of Indians‘ share in this is about $152-181 billion as per this report.
These estimates are only for the wealth invested in shares and debt securities or held
in bank deposits. The report does not give any idea about the wealth invested in
physical assets like real estate, gold or art. So it is an alarming situation as there has
been no permanent solution to curb this evil.

Not only this, but recent other estimates have also shown the same trend where
Gabriel Zucman, of London School of Economics, estimating it at $7.6 trillion,

300
―Child security officer, brother held taking bribe‖, Available at:
http://www.hindustantimes.com/ludhiana/ludhiana-child-security-officer-brother-held-taking-
bribe/article1-1283687.aspx (visited on April 20, 2015).
301
Alberto Ades and Rafael di Tella, ―The Causes and Consequences of Corruption: A Review of Recent
Empirical Contributions‖ 27 (2) IDS Bulletin 6-11 (1996).
302
Subodh Varma, ―$181 billion Indian black money in tax havens?‖ Available at:
http://timesofindia.indiatimes.com/india/181-billion-Indian-black-money-in-tax-
havens/articleshow/51487042.cms (visited on March 21, 2016).

201
Boston Consulting Group at $8.9 trillion and Tax Justice Network at $21 trillion 303.
Daily we are coming across to a number of revelations where people from politics,
entertainment to the sports world are found to be owning big numbers of unaccounted
or black money. Recently, millions of confidential documents (―Panama Papers‖)
have leaked from one of the world‘s most secretive law firms; Mossack Fonseca based
in Panama304. It has exposed a number of rich and powerful people who have hidden
their money in tax heavens. The documents of the firm have revealed a massive leak
of 11.5 million taxes which has exposed the secret offshore dealings of aides to
Russian president Vladimir Putin, world leaders and celebrities including Barcelona
forward Lionel Messi. In addition, Dictators and other heads of state have also been
accused of laundering money, avoiding sanctions and evading tax, according to these
leaked documents which show the inner workings of the law firm. There are many
persons from India as well from different parts of society including business
communities, top politicians and film-stars whose name has appeared into the
―Panama Papers Leaks‖.

A number of factors explain growing emphasis and concern on fighting

corruption. Expansion and consolidation of democracy at the grassroots level has
enabled citizens to use the vote and new-found civil liberties to confront corruption,
prompting leaders and opposition figures to show a stronger anti-corruption
commitment. Internationally, since the end of the Cold War, donor governments have
focused less on ideological grounds for foreign assistance and concentrated more on
trade and development, both of which are undermined by corruption. Countries with
high levels of corruption, like India, have found themselves less able to attract
investment and aid in a competitive global market. At the same time, business within
the country has faced ever stiffer competition with the globalization of trade and
capital markets, and has become less willing to tolerate the expense and risk
associated with corruption.

303
Ibid.
304
Rachael Revesz, ―Panama Papers: Millions of leaked documents reveal how world‘s rich and powerful
hide their money‖, Available at: http://timesofindia.indiatimes.com/world/us/Panama-Papers-Millions-of-
leaked-documents-reveal-how-worlds-rich-and-powerful-hide-their-money/articleshow/51677505.cms
(visited on April 4, 2016).

202
 There is little doubt that corruption in present-day India pervades all levels and
all services, not even sparing the Indian Administrative Service and Judicial Service.
The bureaucracy of the British India was considered to be largely untainted with
corruption. Compulsions of electoral politics in independent India changed this image
and the administrative as well as the police and judicial services came to be charged
with colluding with the political leadership to indulge in systemic corruption, making
a mockery of democratic governance and frustrating the prime object of welfare State.

Professor Edwin H. Sutherland has done a remarkable job to find out the traces
of crime out of disguised activities of people. He is the pioneer of the study of ―white
collar crimes‖ through which he which breached the ancient legal view that a king
could do no wrong. His analysis of white collar crimes is a significant tool to find out
the genesis and mechanism of corruption. White collar crimes are the illegal acts done
by the persons who are rich and belong to upper strata of the society in terms of
money, power and position. They misuse the machinery of the State at the cost of poor
and needy people. They indulge into activities involving economic crimes. This richer
socio-economic group exploits the resources of the economy to the detriment of the
public at large. In fact, these activities affect the total crime phenomenon and results
into a vicious circle of crimes related to each other in a subtle way. Another important
part of his study reveals that the relation between status and criminal behavior is not
one-dimensional and even the people of higher strata are also a part to certain crimes.
These crimes are categorized as ‗white collar crimes‘. Hence there are no class-
specific explanations to interpret such behavior of people involved into crime.

In this way Professor Sutherland has broken the traditional belief that people
who live below the poverty line are more prone to indulge into crimes and show
criminal behavior. Traditional hypotheses of criminal conduct put much accentuation
on poverty as the reason for the wrongdoing or on the other social conditions and
individual characteristics which are thought to be connected with deprivation or
poverty. The assumption behind these speculations is that criminal conduct can be
explained through these unreasonable elements social or individual. The social
pathologies which have been underlined are poverty and related elements like poor

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lodging, absence of training and interruption in family life. The individual pathologies
which have been recommended as clarification of criminal conduct were, at in the first
place, physical anomalies. He argued that the traditional theories of criminal behavior
taking their data from poverty and other related conditions are scanty and
unacceptable. He contended that there are two reasons behind it. Firstly, the traditional
theories do not correspond to the data collected for the purpose of establishing
criminal behavior. Secondly, these theories are founded upon prejudiced and biased
sample of all criminal acts.

Sutherland kept up that standard components are not poverty and other related
factors, but rather the social and individual relations which are related now and then
with poverty and at times with wealth and sometimes with both. The hypotheses of
criminal conduct which are held by most researchers working in this field have been
founded on investigations of the culprits who are captured, tried in the criminal courts,
and, if indicted, fined, put on post-trial supervision, or perpetrated to corrective and
reformatory organizations305. Such offenders have their cause in a substantial extent of
cases in the lower socio-economic status. Thus, these biased samples cannot be taken
as an authentic basis for the research.

Professor Sutherland maintained that the persons of upper socio-economic

class are also engaged in crimes and have such criminal behavior, though the instances
and types of crime may be different. According to Prof. Sutherland, the people who
belong to upper strata are indulged into economic crimes and since they enjoy good
positions in life are called ―white-collar criminals‖. This criminal conduct is not quite
the same as the criminal conduct of the lower financial class, mainly, in the
administrative procedures which are utilized as a part of managing the wrongdoers.
According to Sutherland, ―a white-collar crime is defined as a violation of the criminal
law by a person of the upper socio-economic class in the course of his occupational
activities‖306. Hence there are three main elements of white collar crimes:

i. there is violation of criminal law,

305
Edwin H. Sutherland, ―Crime and Business‖ 217 AAAP&SS 115 (1941).
306
Id. at 112.

204
 ii. by a person of the upper socio-economic class,
iii. in the course of his occupational activities.

Prof. Sutherland maintains that his definition of ―white collar crimes‖ is not
definite one and is just approximate. But, this definition is generally accepted by the
concerned persons. The upper financial class is characterized by its wealth as well as
by its respectability and esteem in the general society. It alienates the idea of poverty
as causation of criminal behavior from the common belief which used to express
otherwise. However, Heremann Mannheim is of the opinion that Prof. Sutherland has
underestimated the influence of poverty on other forms of crime 307. But this opinion of
Mannheim does not take away any credit away from Prof. Sutherland who has done a
remarkable job into the field of criminology and to find out the reasons behind
criminality of the wrongdoers.

There is little doubt that corruption in present-day India pervades all levels and
all services, not even sparing the Indian Administrative Service and Judicial Service.
The bureaucracy of the British India was considered to be largely untainted with
corruption. Compulsions of electoral politics in independent India changed this image
and the administrative as well as the police and judicial services came to be charged
with colluding with the political leadership to indulge in systemic corruption, making
a mockery of democratic governance.

Amid the time of IInd World War, a huge amount of money was raised and
spent on war arrangements. New offices were opened; a substantial number of
contractual workers were employed for execution of government work associated with
war endeavors. Since the assignments were to be finished within the fixed or
stipulated time, the adherence to money related guidelines and regulations was
avoided many a times, in this way, a circumstance was made which was quickly
misused by deceitful, covetous and greedy persons (both authorities and non-
authorities) for their personal benefits at the expense of society and government. The

307
―Understanding White-Collar Crime‖, Available at: http://www.sagepub.com/sites/default/files/upm-
binaries/43839_2.pdf (visited on April 2, 2016).

205
then existing Government of India understood the wickedness of the issue and made
special staff was vested by Deputy Inspector General of Police and the
superintendence of special staff was vested with War and Supply Department.

Since this new Department was made by an executive order of Central

Government which was not in harmony with the provisions of the Government of
India Act, 1935 the power and jurisdiction of the Investigating Officers were tested in
Court of Law which required declaration of an Ordinance on July 12, 1943 (No. XXII
of 1943). The Ordinance provided for the establishment of Special Police for the
examination of specific classes of offenses with jurisdiction in British India. Another
ordinance was declared on September, 25, 1946 preceding the failure of the past
ordinance issued in 1943.

In this way, the seeds of corruption find their roots from the pre-Independence
period which affected the future generations and the evil of corruption continued as a
tradition. The mid-1960s is considered to be the great divide in the history of public
administration in India. It marked the fading away of the Gandhian and Nehruvian era
of principled politics and the emergence of new politics the keynote of which was
amorality. The scams and scandals of the nineties revealed that among the persons
accused of corruption were former Prime Ministers, former Chief Ministers, and even
former Governors. India‘s experience with corruption has shown that laws, rules,
regulations, procedures and methods of transaction of government business, however
sound and excellent cannot by themselves ensure effective and transparent
administration if the political and administrative leadership entrusted with their
enforcement fails to do so and abuses its powers for personal gain. The moral up-
gradation of people in all the walks of life along with effective implementation of anti-
corruption laws can be of big help in this context.

There has been disintegration of moral values among the people for the sake of
attaining an extravagant life-style. Hence, they are prompted to indulge into mala fide
dealings to attain a lavish standard of life. All this has resulted into a chaos into the
society. The segment which is suffering badly because of this evil is the common man.
The common man is unable to get what is his basic right being a citizen of the biggest
206
democracy of the world. A democracy can never be successful in real terms if there is
an atmosphere of corruption. In this chapter we are going to study about the
provisions of the Prevention of Corruption Act, 1988 and their efficacy. We are also
going to observe whether there is any need of amendment or incorporation of some
new provisions in the present statute.

4.2. DEFINITION OF PUBLIC SERVANT

As the Act covers the wrongful acts committed by the public servants, it becomes
necessary to know about the persons who are public servants. Simply, we can say the
persons who are in the employment of the Government are public servants. But the
term ‗public servant‘ has to be seen in a broader perspective. The State of modern
world is a welfare State and it has to perform a number of activities to serve the
people in a better way. For this purpose the State has to act in numerous ways by
involving a number of agencies or instrumentalities. The purpose of prevention of
corruption is to regulate the administration so that the benefits of the schemes should
reach the poor and downtrodden people effectively. So it becomes the duty of the
Government to regulate the behavior not only of the persons who are in the
employment of the Government, but also of the persons who are part of these agencies
and instrumentalities. So a broader definition is needed and the Act provides the same.
The definition covers a number of people who are the part of the system in one or
other way.

‗public servant‘ means308:

i. any person in the service or pay of the Government or remunerated by

the Government by fees or commission for the performance of any
public duty;
ii. any person in the service or pay of a local authority;
iii. any person in the service or pay of a corporation established by or
under a Central, provincial or State Act, or an authority or a body
owned or controlled or aided by the Government or a Government

308
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 2 (c).

207
 company as defined in Section 617 of the Companies Act, 1956 (1 of
1956);
iv. any judge, including any person empowered by law to discharge,
whether by himself or as a member of any body of persons, any
adjudicatory functions;
v. any person authorised by a Court of justice to perform any duty, in
connection with the administration of justice, including a liquidator,
receiver or commissioner appointed by such Court;
vi. any arbitrator or other person to whom any cause or matter has been
referred for decision or report by a Court of justice or by a competent
public authority;
vii. any person who holds an office by virtue of which he is empowered to
prepare, publish, maintain or revise an electoral roll or to conduct an
election or part of an election;
viii. any person who holds an office by virtue of which he is authorized or
required to perform any public duty;
ix. any person who is the president, secretary or other office-bearer of a
registered co-operative society engaged in agriculture, industry, trade
or banking, receiving or having received any financial aid from the
Central Government or a State Government or from any corporation
established by or under a Central, Provincial or State Act, or any
authority or body owned or controlled or aided by the Government or a
Government company as defined in Section 617 of the Companies Act,
1956 (1 of 1956);
x. any person who is a chairman, member or employee of any Service
Commission or Board, by whatever name called, or a member of any
selection committee appointed by such Commission or Board for the
conduct of any examination or making any selection on behalf of such
Commission or Board;
xi. any person who is a Vice-Chancellor or member of any governing body,
professor, reader, lecturer or any other teacher or employee, by

208
 whatever designation called, of any University and any person whose
services have been availed of by a University or any other public
authority in connection with holding or conducting examinations;
xii. any person who is an office-bearer or an employee of an educational,
scientific, social, cultural or any other institution, in whatever manner
established, receiving or having received any financial assistance from
the Central Government or any State Government, or local or other
public authority.
Explanation I: Persons falling under any of the above sub-clauses are public
servants, whether appointed by the Government or not.

Explanation II: Wherever the word ―public servant‖ occurs, they shall be
understood of every person who is in actual possession of the situation of a
public servant, whatever legal defect there may be in his right to hold that
situation.

The term ―public servant‖ is one of the most important terms given under the
Prevention of Corruption Act, 1988. It is of utmost importance because of being
deciding factor of one‘s liability being a public servant. Previous anti-corruption
legislation i.e., the Prevention of Corruption Act, 1947 did not define the term ―public
servant‖. It used to adopt 309 the definition as is given under Section 21 of the Penal
Code, 1860. Thus, the Prevention of Corruption Act, 1988 provides a broader
definition of the term within the Act itself under Section 2 (c).

4.2.1. ORIGIN AND DEVELOPMENT OF THE TERM “PUBLIC SERVANT”

The Prevention of Corruption Act, 1947 punished the wrongdoers (public

servants) for the acts committed by them in violation of the provisions of the Act. But,
it did not define the term ―public servant‖ explicitly. It was dependent 310 upon the
definition of the term as is given in the Indian Penal Code 311. The term ―public
servant‖ was defined for the first time within an anti-corruption legislation under the

309
The Prevention of Corruption Act, 1947 (Act 2 of 1947), s. 3.
310
Ibid.
311
The Indian Penal Code, 1860 (Act 45 of 1860), s. 21.

209
Prevention of Corruption Act, 1988 312. The Prevention of Corruption Act, 1988 gives
a broader definition of the term as compared to previous enactments concerned.

First of all, we have to analyze the Indian Penal Code to know about the origin
and development of the term. The first Law Commission was constituted in 1834 by
the Charter Act of 1833 under the Chairmanship of Lord Macaulay which
recommended codification of the Penal Code, the Criminal Procedure Code and a few
other matters313. The term was used for the first time in any legislation in India.

The Indian Penal Code was initially drafted by the 1st Law Commission
constituted in 1834 on the resourcefulness of Lord Macaulay who moved the House of
Commons in 1833 for codifying the Criminal Law. The draft code was submitted to
the Governor-General of India in Council, in the year 1837 by the Commission under
the president-ship of Lord Macaulay, Macleod Anderson and Milett were other
Commissioners as members. The assignment before the commission was massive; as
it needed to accommodate the current law without upsetting diverse classes, groups
and ethnic congregations. Lord Macaulay examined while completing the job, ―I trust
that no nation ever stood in such a great need of getting a code of law as India and I
accept likewise that there never was a nation in which the need may be so effortlessly
supplied. Our Principle is basically this consistency when you can have it, differing
qualities when you should have it, yet in all cases conviction‖. Macaulay Code
couldn't be completed as it was transferred to the Law Advisers of the Crown, then to
another Commission which presented its 2nd and last report in 1847. Again it was
modified by Bethune and Peacock, who were the Law Members from the Council of
Governor-General.

At the occasion of dialog and debate on the draft of the code the objections
were raised that, Section 21 of the Code is excessively far reaching yet it was

312
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 2 (c).
313
Available at the official website of Law Commission of India at:
http://www.lawcommissionofindia.nic.in/main.htm#a1 (visited on April 7, 2016). It was Commission
constituted during pre-Independence time. Afterwards, Ist Law Commission was constituted under the
chairmanship of Mr. M. C. Setalvad, Former Attorney General of India for the period 1955-1958 in post-
Independence period. Recently, Twenty-First Law Commission was constituted by the Central
Government under the chairmanship of Dr. Justice Balbir Singh Chauhan.

210
overruled by Lord Macaulay who supported it. Later on, we find that the same
provision of the Act could not adapt to the needs of the dynamic culture and was
required to be altered over and over. The Indian Penal Code was finalized on 6th
October, 1860 (however, after correction draft code was submitted in the year 1847) a
century prior to India earned independence, which clarifies why the provisions made
with respect to public servant were discovered and required amendments on numerous
occasions.

People who are listed as public servant under Section 21 of Indian Penal Code
are mentioned in the Code with regards to offenses done by them (Chapter VI,
Sections 128 and 129; Chapter VII-Offenses relating to Army, Navy and Air Force,
Chapter IX, Sections 161-169) furthermore the offenses as for them (Chapter VI,
Sections 124; Chapter IX, Section 170-171; Chapter X, Section 172-190; Chapter
XVI, Sections 332-333; Chapter XXI, Sections 500-502). The anti-corruption laws are
related with public servants with regards to offenses carried out by them, in this way,
the Prevention of Corruption Act, 1988 has repealed Sections 161-165A (both
inclusive) of the Indian Penal Code (Act 45 of 1860) and provisions have been
consolidated in the new Act besides repealing the Prevention of Corruption Act, 1947
(2 of 1947) and Criminal Law Amendment Act, 1952 (46 of 1952).

The provisions of Section 2 (c) of the Prevention of Corruption Act, 1988

which defines the term ―public servant‖, have been procured from Section 21 of the
Indian Penal Code and new provisions have also been incorporated to make it more
comprehensive and broad. Section 21of the Indian Penal Code was clause 14 in the
draft of the bill introduced by Lord Macaulay. There were just 10 Clauses and 1
Explanation in the original Act of 1860. The eleventh clause with Explanation 3 was
introduced in 1920 by the Indian Election Offenses and Enquiries Act, 1920 314. The
twelfth clause and Explanation 4 were included the year 1958 Criminal Law
Amendment Act, 1950, which included ‗officers in the service or pay of the local
authority or corporation‘ and so forth in the class of public servants. On the
recommendation of Santhanam Committee Report the Anti-Corruption Laws

314
The Indian Election Offenses and Enquiries Act, 1920 (Act 31 of 1920), s. 2.

211
(Amendment) Bill, 1964 was presented in the Parliament and framed as Criminal Law
(Amendment) Act, 1964 rolling out amendments in Clauses 3, 4, 8, 9 and 12. While
Clause 12 has been altered and divided into clauses, has been changed and partitioned
into Clause 12 (a) and Clause 12 (b).

The Prevention of Corruption Act of 1988 further broadens the meaning of

public servant. At present, there are twelve Clauses and two Explanations given under
Section 2 (c) of the Act which are sufficient enough to cover a number of desired
persons within the term ―public servants‖. By reading the concerned provisions from
both the enactments (Indian Penal Code, 1860 and the Prevention of Corruption Act,
1988), we can find that the provisions (i), (ii), (iii), of Section 2 (c) of the Prevention
of Corruption Act corresponds to Clause (12) of Section 21 of the Indian Penal Code
and Clauses (iv), (v), (vi), (vii) of Section 2 of the Prevention of Corruption Act, 1988
relate to Clause (3), (4), (6), (11) of Section 21 of the Indian Penal Code. The Clauses
(vii), (ix), (xi), (xii) of Section 2 of the Prevention of Corruption Act, 1988 are new
provisions.

The Prevention of Corruption Act, 1988 has also put up at rest the controversy
made by clashing judgments of different High Courts which had resulted into
uncertainty and confusion into the brains of the police, investigation agencies and the
Courts regarding the cases of bribery and corruption. The Clause (b) has been added
in Section 2 which characterizes ‗public duty‘ as ―duty in the discharge of which the
State, the public or the community at large has an interest‖. In this way the term
‗public duty‘ is in consonance with the term ―public servant‖ and the parameter for
establishing nature of the employment has shifted from pay and remuneration to
public duty, which is a welcome move. The Explanation to the clause (b) of Section 2
of the Prevention of Corruption Act clarifies the word ‗State‘ which includes ―a
Corporation established under a Central, Provincial or State Act or Authority or a
Body owned or controlled or aided by the Government or a Government Company as
defined in Section 617 of Company Act, 1956 (1 of 1956)‖. Section 2 (c) Clauses i-ii
of the Prevention of Corruption Act, 1988 along with Explanation to Section 2 (b)

212
characterizes ‗public servants‘ on the basis of pay or remuneration given by or drawn
from the State or Government fund.

Indeed, even before the existence of the Prevention of Corruption Act, 1988 it
was held in G.A. Monterio v. State of Ajmer 315 that genuine test to find out if a person
is a public servant is whether he is in pay or remuneration of Government and whether
he is endowed with the execution of a public duty and in case if both these
preconditions are fulfilled then the nature of office does not make a difference.

The Clauses iv-vi of Section 2 (c) of the Prevention of Corruption Act

mentions officers of the Court. Just minor variations have been made in Section 21 of
the Indian Penal Code. Correspondingly, the Clause (vii) of Section 2 (c) of the Act
does not require any explanation in this context. Section 2 (c), Clause (viii) of the Act
is another provision which added a fresh classification to the term ―public servant‖
and gives another idea to the definition by importing the term ―public duty‖ in Section
2 (b). A Sarpanch of Gram Panchayat is a public servant as per the meaning of this
provision. It was held in Bhanwar Lal Mali v. State of Raj316 that a Sarpanch is a
public servant therefore previous sanction is necessary before initiating prosecution.

The question whether an M.L.A. or M.P. can be held a public servant as per the
domain of Section 2 (c) (viii) was challenged in Courts before establishment of the
Prevention of Corruption Act, 1988 and it was held in dominant instances that he is
not a public servant inside of the domain of Section 21 of I.P.C. Presently, after the
making the Prevention of Corruption Act, 1988 circumstances have changed definitely
and interpretation has become obsolete as the new definition covers M.L.A. and
M.P.‘s as well. In another case, Habibulla Khan v. State of Orissa317 it was held that,
however a M.L.A would come within the meaning of term ―public servant‖' yet he is
not the sort of ―public servant‖ for whose prosecution previous sanction is required.
This anomaly was further settled by a 5-judge Bench of the Hon‘ble apex court in P.V.
318
Narasimha Rao v. State (C.B.I.) which held that a Member of Parliament holds an

315
AIR 1957 SC 13
316
1994 (3) Crimes 791 (Raj)
317
1993 (Cr. L.J. 3604)
318
1998 Cr. L.J. 2930

213
office and by virtue of such office he is required or accredited to perform duties and
such duties are in the nature of public duties. As a result, an MP would therefore fall
within the ambit of sub-clause (viii) of clause (c) of section 2 of the Prevention of
Corruption Act, 1988 even though there is no authority who can grant sanction for his
prosecution under section 19(1) of the Act. It was also held that sanction is not
necessary for the court to take cognizance of the offences and the prosecuting agency
shall take permission ofbthe Chairman of the Rajya Sabha or Speaker of the Lok
Sabha as the case may be before filing the charge sheet.

The Sub Clauses (x) to (xii) to the Clause (c) of Section are explicit and these
classes of public functionaries have been categorized as public servants with all their
privileges and liabilities. The Explanations 1 and 2 have been added to remove
confusion and to deal with any controversial situation. Any person, who undertakes
upon himself duties and responsibilities attached to a public servant, should be
considered as a public servant and the fact that he is not receiving any salary or
remuneration should not be permitted to change the position. An ex-public servant
may also be prosecuted under the Prevention of Corruption Act, 1988 as decisive date
for the purpose of applying the provisions of the Act is the date of commission of the
offence and not the date of superannuation, resignation, removal and

The Monumental Acts, specifically, the Indian Penal Code, the Code of
Criminal Procedure and the Indian Evidence Act were made over a century back
completely in a different socio-political atmosphere yet they were able to tackle all the
problems for which they were made even after the because of the foresightedness of
the vision of the individuals who drafted these legislations. The Indian Penal Code
was the first to be drafted but came into law books as a law after 26 years of its
proposal and final review by Bethune and Peacock, who were the law members of the
Governor-General‘s Council. It is implied that the Commission and different
Committees constituted for the draft drew intensely on English Laws and then-
prevailing Indian law. In addition, necessary help was taken from Livingstone's
Louisiana Code and the Code of Napoleon. In spite of the way that men of
prominence were connected with the drafting of statutes and they took assistance from

214
all relevant sources of that time; furthermore that the Act was viewed as most state-of-
the-art for just about 100 years, it required changes particularly in context of anti-
corruption law and were appropriately affected.

The changes made to these enactments predominantly went for making the law
more successful and with this in perspective endeavors have been made to bring
presumptions in favour of prosecution. The progressions were likewise introduced to
remove practical hindrances hampering the fair investigation of cases. The
jurisdiction, controls and powers of the investigating agencies were additionally
improved. The idea of Welfare State changed the aggregate situation and the State
entered in the field of industry and business which started the allocation of
government‘s scheme and budget to the fields and persons unreached until now. A
class of new functionaries rose to the picture that took care of huge government cash
which originated the seeds of corruption among the public servants who were in
charge of those schemes and budget. As a result of it there came into existence an
atmosphere of chaos and dissatisfaction among the general public which originated
the demand of responsibility, accountability and susceptibility of the highest public
servants which further resulted into the introduction of changes into the definition of
public servants.

The growing public opinion in favour of establishing the offices of Lokayuktas

in States and Lokpal at Centre is also a result of decreasing ethical and professional
responsibility on the part of public servants. There is a strong public opinion in favour
of bringing Ministers, Chief Ministers and Prime Minister under the Lokayuktas and
Lokpal which is evident from the protests and dharnas initiated by a vast section of
the people including civil society in recent years. The Prevention of Corruption Act,
1988 is point of interest in this context as it has brought together the provisions of
other enactments by consolidating them besides extending the scope of Section 21 of
I.P.C to make it harmonious and consistent with present socio-economic changes and
environment.

In this way the complete scenario has been changed and we have to evolve new
methods, schemes, procedure and techniques to control the evil of corruption. The
215
Court has adjudged a number of persons as public servant by giving the term ‗public
servant‘ a broad interpretation. Following persons have been held as public servant:

4.2.2. MINISTER, CHIEF MINISTER AND PRIME MINISTER – WHETHER

PUBLIC SERVANT OR NOT?

A Minister, Prime Minister and Chief Minister is a public servant in terms of

Clause (12) of Section 21 of the Indian Penal Code itself which corresponds to sub-
clause (i) of clause (c) of Section 2 of the Prevention of Corruption Act, 1988. The
honorable Supreme Court in M. Karunanidhi v. Union of India319, held that a Minister
is appointed and dismissed by the Governor and is therefore subordinate to him, that
he gets salary for the public work done or the public duty performed by him and that
the said salary is paid to him out of the government funds.

A Member of Legislative Assembly (MLA), however, was held not to be a

public servant under Section 21 of the Indian Penal Code but he comes within the
purview of the sub-Clause (viii) of Clause (c) of section 2 of the Prevention of
Corruption Act, 1988. As held by the High Court of Orissa, an M.L.A. ―holds an
office‖ and ―performs public duty‖ in Habibulla Khan v. State of Orissa 320. In the
appeal, the Supreme Court proceeded ―assuming‖ that M.L.A. is a public servant. In a
later decision in the case of P.V. Narasimha Rao v. State (C.B.I).321, (decided on 17-4-
1998), a 5-judge Bench of the Apex Court laid down that a Member of Parliament
holds an office and by virtue of such office he is required or authorised to perform
duties and such duties are in the nature of public duties. An MP would therefore fall
within the ambit of sub-clause (viii) of clause (c) of section 2 of the Prevention of
Corruption Act, 1988 even though there is no authority who can grant sanction for his
prosecution under section 19 (1) of the Act. Sanction is not necessary for the court to
take cognizance of the offences and the prosecuting agency shall, before filing a
charge sheet for offences punishable under sections 7, 10, 11, 13 and 15 of the Act

319
1979 Cr. L. J. 773, AIR 1979 SC 598
320
1993 Cr. L.J. 3604
321
1998 Cr. L.J. 2930

216
against an M.P. in a criminal court, obtain the permission of the Chairman of the
Rajya Sabha or Speaker of the Lok Sabha as the case may be.

4.3. DEFINITION OF THE TERM „PUBLIC DUTY‟

The Prevention of Corruption Act, 1988 is an effective tool to fight with the
evil of corruption. It is important to discuss general terms given into the Act. It is a
reformed enactment as compared to its earlier versions because it has removed various
doubts by defining various terms which were not defined earlier. These terms are
important because these are used within the Act a number of times. One of such terms
is ‗public duty‘. Like the term ‗public servants‘; ‗public duty‘ is also defined under the
Prevention of Corruption Act, 1988. The term ‗public duty‘ is relevant to decide the
liability of the public servants under various circumstances. The breach of duty results
into criminal omission. The Act provides a broad definition of the term to cover all
present and future instances without leaving any scope of confusion regarding the
functions of the public servants when it comes to their duties and discretionary
powers. It defines the term as 322:

‗public duty‘ means a duty in the discharge of which the State, the
public or the community at large has an interest;

Explanation - In this clause ‗State‘ includes a corporation established

by or under a Central, Provincial or State Act, or an authority or a body owned
or controlled or aided by the Government or a Government company as
defined in section 617 of the Companies Act, 1956.

Recently, on 23rd February 2016, the Hon‘ble Supreme Court of India has
widened the definition of ‗public servants‘ by taking help of the term ‗public duty‘. In
Central Bureau of Investigation, Bank Securities & Fraud Cell v. Ramesh Gelli &
Others323 and Ramesh Gelli v. Central Bureau of Investigation through

322
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 2 (b).
323
[Criminal Appeal Nos. 1077-1081 of 2013], Available at:
http://supremecourtofindia.nic.in/FileServer/2016-02-23_1456211032.pdf (visited on May 30, 2016).

217
Superintendent of Police, BS & FC & Anr.324 the Court held that every chairman who
is appointed on a whole-time basis, managing director, director, auditor, liquidator,
manager and any other employee of a banking company shall be deemed to be a
public servant for the purposes of the Indian Penal Code. In an another case, Dadaji v.
State of Maharashtra325, the Hon‘ble Supreme Court has held that public duty means a
duty in the discharge of which the State, public or community at large has an interest.
This definition should be extended to semi-Government authorities, bodies and their
Departments where the employees are entrusted with public duty.

4.4. PRIVATE PERSONS ARE ALSO COVERED TO SOME EXTENT

As we have discussed, the Prevention of Corruption Act, 1988 is applicable

upon public servants. To some extent, it is also applicable upon a category of private
persons; which we are going to discuss in this part. Though the Prevention of
Corruption Act, 1988 punishes for the offences committed by the public servants, yet
there are some instances where it is applicable upon some private persons as well.
These are the situations where a person takes illegal gratification to influence a public
servant. It is provided under the Act that326:

―Whoever accepts or obtains, or agrees to accept, or attempts to obtain,

from any person, for himself or for any other person, any gratification
whatever as a motive or reward for inducing, by corrupt or illegal means, any
public servant, whether named or otherwise, to do or to forbear to do any
official act, or in the exercise of the official functions of such public servant to
show favour or disfavour to any person, or to render or attempt to render any
service or disservice to any person with the Central Government or any State
Government or Parliament or the Legislature of any State or with any local
authority, corporation or Government company referred to in clause (c) of
section 2, or with any public servant, whether named or otherwise, shall be

324
[Writ Petition (Crl.) No. 167 of 2015], Available at: http://supremecourtofindia.nic.in/FileServer/2016-
02-23_1456211032.pdf (visited on May 30, 2016).
325
2016 (3) RCR (Criminal) 741
326
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 8.

218
 punishable with imprisonment for a term which shall be not less than six
months but which may extend to five years and shall also be liable to fine.‖

Thus, whenever an illegal remuneration is received by a person other than a

public servant upon the conditions given under Section 8 of the Act (which are same
as are given under Section 7), such other person shall also be liable for the offence.
The punishment provided under the Act is from six months of imprisonment to five
years along with the fine. Similarly, the acts committed by the persons who use their
personal influence with the public servants to get illegal gratification are also
committed under the Act. The relevant provision states that327:

―Whoever accepts or obtains or agrees to accept or attempts to obtain,

from any person, for himself or for any other person, any gratification
whatever, as a motive or reward for inducing, by the exercise of personal
influence, any public servant whether named or otherwise to do or to forbear to
do any official act, or in the exercise of the official functions of such public
servant to show favour or disfavour to any person, or to render or attempt to
render any service or disservice to any person with the Central Government or
any State Government or Parliament or the Legislature of any State or with
any local authority, corporation or Government company referred to in clause
(c) of section 2, or with any public servant, whether named or otherwise, shall
be punishable with imprisonment for a term which shall be not less than six
months but which may extend to five years and shall also be liable to fine.‖

Thus, the persons who are somewhere related with the public servants involved
into corrupt practices are covered under this Section. It is an important provision
considering V.I.P. culture in our country. There are a number of persons who happens
to be relatives, acquaintance or friends of public servants who boasts of their relation
with such public servants and try to get illegal benefits at many places. In addition,
this provision also discourages the public servants‘ intention of getting illegal benefits
by hiding their identity behind the identity of some other persons.

327
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 9.

219
4.5. INTERPRETATION OF „KNOWN SOURCES OF INCOME‟ IN
PREVENTION OF CORRUPTION ACT, 1988

The term ‗known source of income‘ is quite relevant in implementing anti-

corruption law. A public servant is under the duty of performing various functions of
State. For this he is paid salary which comes from the money paid by the taxpayers.
Hence it becomes the duty of the public servants to account for their dealings with
respect to government and general public. He is responsible to work in a transparent
manner towards the general public. He has to declare all the sources of income for the
sake of transparency. Under Clause (e) of sub-section (1) of Section 13, the
Prevention of Corruption Act, 1988 we come across to an offence which is generally
called ‗possession of disproportionate assets‘. It is described in the following words -
A public servant commits the offence of criminal misconduct if he or any person on
his behalf, is in possession or has, at any time during the period of his office, been in
possession for which the public servant cannot satisfactorily account, of pecuniary
resources of income. Thus it becomes a part of the offence of criminal misconduct if
such public servant is in possession of assets for which he cannot satisfactorily
account for.

It might be correlated here to specify that the offence of having

disproportionate assets was for the first time incorporated into the law by introduction
of Section 13 (5) (e) of the earlier Prevention of Corruption Act, 1947. It did not
existed there originally but was introduced later by the Criminal Law Amendment
Act, 1964 (40 of 1964) on the premise of the suggestions of the Santhanam
Committee formed by the Central Government. It might be further specified that
before its turning into a substantive offence without precedent for 1964, the act of
possessing disproportionate resources by a public servant was just a rule of evidence
characterized under Section 5 (3) of the Prevention of Corruption Act, 1947 with just
an option for proving the offence of criminal misconduct alternatively.

The above mentioned definition makes it profusely clear that the commission
of the said offence gets completed just when the ownership of financial assets of
property is unbalanced to the known sources of income. The expression ―known
220
sources of income‖ was not characterized in the erstwhile Prevention of Corruption
Act, 1947 or in the Criminal Law Amendment Act, 1964 which incorporated this
offense for the first time. However, the term was devised by the courts of law later on.

In Tarsem Singh & Others v. State, Chandigarh Administration 328, Sections

420, 471, 468 of the Indian Penal Code and Section 389 of the Criminal Procedure
Code were in question. The conviction of accused who was a public servant was
suspended. Considering Section 13 (1) (d) and Section 13 (2) of the Prevention of
Corruption Act, 1988, it was held by the Court that the discretion should not be
applied routinely without considering all the aspects including implication of
suspending such sentence.

In Parkash Singh Badal and another v. State of Punjab and others329, under
Section 197 of the Code of Criminal Procedure, it was held that where prosecution of
a public servant with respect to an offence perpetrated amid discharge of official duty,
the court cannot take cognizance of the offence without previous consent of competent
sanctioning authority which is compulsory. The implication of words ―no‖ and ―shall‖
in Section 197 of the Code of Criminal Procedure makes it inexhaustibly clear that the
bar on taking cognizance of the offence by the court is complete and unqualified.
Hence, very cognizance by the courts is prohibited. Section 19 of the Prevention of
Corruption Act, 1988 describes that where a criminal act is done under the guise of
power but in reality, it is done for such public servant‘s own pleasure or advantage
then such acts shall not be made immune as per the Doctrine of State Immunity.
Where the act is performed under the shade of office for the advantage or pleasure of
such officer Section 19 (1) will be applicable. In this way, Section 19 (1) is related
with the time and type of the offence concerned.

The case of C.S.D. Swamy v. State330 is also relevant in this context. In this case
it was held by the court that the burden of proving the source of disproportionate
assets lies upon the accused. The Legislature by using the expression ―satisfactorily

328
2006 (1) RCR (Criminal) 831 (P&H)
329
2007 (1) RCR (Criminal) 1
330
AIR 1960 SC 7

221
account‖ in Section 5 (3) of the Act, cast the burden on the accused not only to offer a
plausible explanation as to how he came by the large wealth disproportionate to his
known sources of income, but also to satisfy the court that his explanation was
worthy of credence. Consequently, cases under the general law where it had been held
that the accused could be exonerated if he offered a plausible explanation could have
no application331.

The court also explained the application of the term ―known source of income‖.
The expression ―known sources of income‖ used in that section referred to such
sources of income as became known to the prosecution as a result of the investigation
and could not mean those that were within the special knowledge of the accused, and
it was no part of the duty of the prosecution to lead evidence in that regard. The
prosecution cannot, in the very nature of things, be expected to know the affairs of an
accused person. Those will be matters especially within the knowledge of the accused
within the meaning of Section 106 of the Evidence Act. Where the prosecution
fulfilled the conditions laid down by the earlier part of Section 5 (3) of the Act, the
statutory presumption had to be raised and it would be for the accused to rebut the
same by cogent evidence.

The above mentioned elucidation of the term ―known source of income‖ was
repeated by the Hon‘ble Supreme Court in Sajjan Singh v. State of Punjab 332 and
Hemant Kumar Mohanti v. State of Orissa 333. What is important to know here is that
the term ―known source of income‖ has been defined under the Prevention of
Corruption Act, 1988 which is described as334:

―Explanation :- ‗Known Sources of Income‖ means income received from

any lawful source and such receipt has been intimated in accordance with the
provision of the law, rules or orders for the time being applicable to a public
servant‖.

331
Available at: https://indiankanoon.org/doc/620182/ (visited on May 15, 2016).
332
AIR 1964 SC 464, 1964 SCR (4) 630
333
1973 (1) SLR 1121
334
Explanation to the Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 13 (1) (e).

222
 Thus, there is no need to take inference from other sources about the meaning of
the term ―known source of income‖ as the term is specifically defined under the Act.
Now, we can conclude here that for a source of income to be qualified as a ―known
source of income‖ under Section 13 (1) (e) of the Prevention of Corruption Act, 1988,
following conditions have to be fulfilled:

i. Income has to be drawn out from a lawful source of income, and

ii. There should be an intimation of the receipt of such income from a lawful
source, in accordance with the provision of the law, rules or orders applicable
upon such public servant, for the time being in force.
As a natural consequence, it can be deduced that:

i. any income received from a source which is not lawful cannot be considered
for inclusion in the expression known sources of income for the purpose of
Section 13 (1) (e) of the said Act, even if such an income was actually received
by the concerned public servant. Any income or other amount of money
obtained from a source which is not legal cannot find a place into the term
―known source of income‖ given under Section 13 (1) (e) of the Prevention of
Corruption Act.
ii. Any income received even from a legal source, cannot in the same manner be
considered to be included within the term ―known sources of income‖ for the
above mentioned purpose, if the acknowledgment of such income other amount
of money has not been intimated to the concerned authority in accordance with
the provision of any law, rules or orders for the time being in force applicable
upon such concerned public servant.
In this manner, it is abundantly clear from the above discussed analysis that even if
the presence of a specific source of income is demonstrated by a public servant, it will
not be considered as a ―known source of income‖ if both of the requirements, which
we have discussed recently, are not fulfilled. When it comes to ascertain that whether
an offence of possessing disproportionate assets under Section 13 (1) (e) of the
Prevention of Corruption Act, 1988 has been made out or not, if these two

223
requirements are not fulfilled, the prosecution will not be able to start legal proceeding
against such person alleged to be having disproportionate source of income or assets.

There have been a few hesitations in some corners such that the above said
meaning of ―known sources of income‖ results into some problem or impediment or
unfairness to the charged public servant and spots an overwhelming burden of proof
upon him to guarantee that his sources of income be legal, as well as that receipt of
any of such sources be informed to the concerned authorities as per the provisions of
any law, rules or orders for the time being in force applicable upon such public
servant. Any resistance with both of these two fundamental requirements in
appreciation of a specific source of income received by a public servant will keep such
source of income out of the definition of ―known sources of income‖ for the purpose
of determining as to whether an offence under Clause (e) of sub-section (1) of Section
13 of the Prevention of Corruption Act, 1988 is committed or not.

In this way, this provision has resulted into a kind of imbalance between
prosecution and defence, by favouring prosecution and causing hardship or
inconvenience for the defence. In perspective of this, the contentions of bringing
hardship, disadvantage, unfairness or injustice to a public servant accused of having
disproportionate assets because of the above discussed meaning of ―known sources of
income‖ are now and again discussed in some corners and it is questioned whether the
said definition will serve the purpose of awarding justice in a court of law. But these
contentions do not deserve much support because of dreaded consequences of the acts
of bribery and corruption. Giving some relaxations in this regard will also defeat the
purpose of erecting zero-tolerance policy against the evil of corruption which is the
need of the hour to combat this ever growing evil defeating the noble cause of social
justice.

4.6. INVESTIGATION OR ENFORCEMENT AGENCIES

The present day range of economic offences is far too many in its range as well
as level of sophistication of its commission.335 Considering the significance to cope

335
Upendra Thakur, Corruption in Ancient India 89 (Abinav Publications, New Delhi, 1979).

224
with such sort of offenses which undermine the economy of the nation, the
Government of India has set up various investigation or enforcement agencies having
the essential ability and expertise to scrutinize such kind of violations with fruitful
results. These investigation agencies are exceptionally authorised under pertinent
provisions of the different Acts as recorded in the forthcoming paragraphs with the
essential goal of dealing with economic offenses falling under their particular ambits.
Mutual participation and coordination among various law implementation authorities
is must to accomplish their objective. Directorate exists to guarantee that serious
offences, frauds, cheatings and tricks are adequately examined for successful results
of trial.

The underlying endeavors in this course of setting up Special Agencies to

explore wrongdoings of such nature falling under the scope of economic offenses
furthermore to cope with bribery and corruption with respect to public servants, was
accomplished by an extraordinary enactment to be specific ―The Delhi Special Police
Establishment Act, 1946‖. The Special Police Establishment constituted in 1946 now
known as Central Bureau of Investigation since 1962, is in presence with the end goal
of examination of specific offences of certain classes of offenses as given under
Section 3 of the Delhi Special Police Establishment Act, including the Economic
Offenses, in harmony with endeavors of the State Governments, wherever essential.

This specific agency has nationwide operation comparable to monetary

offenses as well as offenses identifying with corrupt dealings by public servants and
of typical violations of importance by shared assent of Central and also of State
Governments336. In addition there are several other specific agencies dealing with
different economic crimes involving corrupt and illegal dealings which are given
under the following table. According to this table, we can easily recognize as to what
type of economic offence should be dealt with which specific agency. Furthermore, a
great level of participation, cooperation and coordination is required to get the desired
results into the field of anti-corruption. Following is the Table showing various

336
Girish Mishra, White Collar Crimes 95 (Gyan Publishing House, Delhi, 1998)

225
economic crimes, their respective legislations and enforcement authorities dealing
with such crimes:

Sr. Economic Crimes Enforcement Act or Legislation

No. Authorities
1 Evasion of Tax Central Board of Income Tax Act, 1961
Direct Taxes (CBDT)
2 Illegal imports or Collectors of Customs Act, 1962
Trafficking of Goods Customs
3 Illegal Transferring of Central Board of Conservation of Foreign
Smuggled Goods Direct Taxes (CBDT) Exchange and Prevention of
Smuggling Activities Act
(COFEPOSA), 1947
4 Evasion of Excise Collectors of Central Excise Act, 1944
Duty Central Excise
5 Theft of Cultural Police/CBI Antiquity and Art
Objects Treasures Act, 1972
6 Money Laundering Directorate of The Prevention of Money
Enforcement Laundering Act, 2002

7 Undisclosed Foreign Police/CBI The Foreign Exchange

Contributions Management Act, 1999
(FEMA)
8 Unlawful Drug Narcotics Control The Narcotic Drugs and
Trafficking Bureau/Police/CBI Psychotropic Substances Act,
1985
9 Deceitful Central Bureau of Banking Regulation
Bankruptcy Investigation Act, 1949

10 Corruption and Central Bureau of Prevention of

Bribery by Public Investigation Corruption Act, 1988
Servants

226
11 Fraud Relating to State Vigilance Indian Penal Code
Banks Bureau/CBI

12 Insurance Frauds Police/CBI Indian Penal Code

13 Unlawful Foreign Directorate The Foreign Trade

Trade General of Foreign (Development And
Trade/CBI Regulation) Act, 1992

14 Fraud relating to Police/CBI The Information Technology

Credit/ATM Cards Act, 2000 & Indian Penal
Code
15 Terrorist Activities Police/CBI The Prevention of Terrorism
Act, 2002 (POTA)
16 Illegal Trafficking in Police/CBI The Prevention of Terrorism
Arms Act, 2002 (POTA)

17 Illegal Trafficking in Police/CBI Prevention & Control of

Explosive substances Explosive Substances Act,
1908
18 Company Frauds Police/CBI The Companies Act, 2013

Table: 4.1

Thus it is manifest from the Table: 4.1 that numerous special laws have been
legislated in the country which regulate the following areas: Customs, Excise, Taxes,
Foreign Exchange, Bribery and Corruption, Narcotics Drugs, Banking, Insurance,
Smuggling, Money Laundering, Trade and Commerce relating to export and import
etc. The corresponding enactments directly help in implementation of the laws by
their corresponding Departmental Enforcement Agencies created. These investigating
or enforcement agencies execute legal powers of Enquiry, Investigation, Adjudication,
Imposing of Fine and Penalties as are entrusted to them by various enactments or
directions. These officers of these Investigating or Enforcement Agencies are also

227
equipped with powers similar to those of Police in context of summoning witnesses,
search and seizure of goods, documents and confiscation of proceeds of crime.

The Economic offenses which aim to further the main motive of attaining illicit
benefits require exceptional treatment to counter the problem of bribery and
corruption. The all-around developing lawful plan of action to battle Economic
Crimes which is prevalently getting described as Money Laundering is by enacting
such Legislations which provide for the provisions of attachment and confiscation of
the proceeds of crime so as to defeat the basic motive of the wrongdoers by denying
them monetary advantage.

There are various statutes or enactments in our country which provide for the
confiscation of the proceeds of crime and forfeiture of assets. These enactments
include:

i. The Criminal Law (Amendment) Ordinance, 1944;

ii. The Customs Act, 1962 (Sections 118 to 122);

iii. The Code of Criminal Procedure, 1973 (Sec. 452);

iv. Smugglers And Foreign Exchange Manipulators (Forfeiture of Property)

Act, 1976;

v. Narcotic Drugs and Psychotropic Substances Act, 1985;

vi. The Foreign Exchange Management Act, 1999 (FEMA).

The provisions given in these enactments have proved to be having great

deterrence effect. Hence, keeping in mind this deterrence effect of these provisions
new enactments may also be executed in the same way having similar provisions to
wipe out the existing dodges and to bring into force an inclusive framework of
enactments to make confiscation of properties and forfeiture of assets more effective,
in the light of new legislations adopted in different countries.337

337
47th Report, ―The Trial and Punishment of Social and economic offences‖ (Law Commission of India,
Ministry of Law and Justice, New Delhi, 1972)

228
 The Table: 4.1 as is shown in this chapter mention various acts which fall under
the category of ‗Economic Offences‘. Various special laws have also been enacted to
deal with such acts of ‗economic offences‘. The Table also indicates the Enforcement
or Investigation Agencies authorized to enquire and investigate on getting information
of commission of such offences. These agencies or authorities are assembled beneath
in the following list for appreciation:

i. Central Bureau of Investigation (CBI);

ii. Enforcement Directorate (ED);

iii. Central Board of Direct Taxes (CBDT);

iv. Reserve Bank of India (RBI) (not directly but by giving guidelines
regarding various policies);

v. Directorate of Revenue Intelligence (DRI);

vi. Directorate of Preventive Operations (DPO);

vii. Narcotics Control Bureau (NCB);

viii. Financial Intelligence Unit (FIU);

ix. Directorate General of Foreign Trade (DGFT);

x. Directorate of Income Tax (DIT);

xi. Directorate of Vigilance (State Vigilance Bureaus in States);

xii. Directorate of Enforcement (In States).

In this way, we have discussed about various agencies which are entrusted with
the responsibility of carrying out investigation for the prevention of corrupt activities.
We may not get the desired results if these agencies work in an isolated way. An
effective participation, coordination and co-operation among these agencies can give
tremendous results in context of prevention of corruption. The government has
recently announced that a multi-agencies group will be constituted comprising various

229
government agencies – the CBDT, FIU, FT&TR (Foreign Tax and Tax Research) and
the RBI338. The function of this multi-agency group will be to monitor the accounts
disclosed by ―Panama Papers‖ and to book the concerned persons under the relevant
law. ―Panama Papers‖ have disclosed that there are five hundred Indians having such
account. This kind of arrangement may be adopted in other instances as well to get
desired results.

4.7. POLICE OFFICERS AUTHORISED TO INVESTIGATE UNDER THE

PREVENTION OF CORRUPTION ACT, 1988

An investigation into the offence is of great essence in criminal justice system.

The investigation part is done by the police generally. It is their prime responsibility to
collect evidences and try to find out the real persons behind the crime. For this
purpose huge powers are given to the police. But, sometimes these wide powers are
misused by the police. As in here the matter is related with administration and
governance by the public servants, these powers should be scrutinized effectively. For
this purpose not all the policemen are allowed to investigate. Only the police officers
above a specified rank are allowed to investigate into the case. The police officer
competent to investigate the offences would be one not below the rank of339:

(a) an inspector of Police of Delhi special police establishment (CBI);

(b) an Assistant Commissioner of Police in the metropolitan areas of Bombay,

Calcutta, Madras and Ahmedabad and in any other metropolitan area notified
as such under sub-section (1) of Section 8 of the Code of Criminal Procedure,
1973;

(c) a Deputy Superintendent of Police or a police officer of equivalent rank,

elsewhere; or

(d) an Inspector of Police authorized by state government by general or special

order in this behalf.

338
―Multi-agencies to probe Panama Papers‖, The Tribune, April 5, 2016
339
As given under the Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 17.

230
 Further, it is also provided under the same provision that such concerned
officer may investigate without getting an order from Metropolitan Magistrate or a
Magistrate of first class, as the case may be. In addition, he may go ahead to arrest the
accused without any warrant from such Metropolitan Magistrate or a Magistrate of
first class, as the case may be; as we have discussed. In this way, we can analyze that
not all the policemen are allowed to investigate into the cases of corruption under the
Prevention of Corruption Act, 1988. Only the specified police officers can carry out
investigation into the offences. Thus, an effective arrangement has been made in
context and a fine balance has been made between the two parties i.e., the accused and
prosecution so that no public servant is harassed by the police inappropriately. It is an
effective arrangement to control the evil of corruption and to establish the rule of law
carrying out the noble purpose of natural justice.

4.8.1. PRESUMPTION OF CORRUPTION IN CERTAIN CASES

Presumption is a rule of law which permits a court to assume a fact is true until
such time as there is a preponderance (greater weight) of evidence which disproves or
outweighs (rebuts) the presumption340. Generally, in instances of corruption covered
by anti-corruption laws; a presumption is made against the accused that he has
received illegal benefits from some other person. It is an effective arrangement to
control the evil of corruption by putting the burden of proof upon the accused. There
are numerous provisions inside the English law to clarify the origins of presumption in
various areas. Parmod Chander alias Parbodh Chander v. State of Punjab 341 is a good
example of this provision where the accused was working as Naib Tehsildar in
Punjab. He demanded Rs. 1000/- for attesting the Will of the complainant. A trap was
arranged for this purpose and the bribe money was recovered by Police, which the
accused had kept on his desk under a paperweight. The shadow witness turned hostile.
Conviction was upheld. The accused was not able to explain why the amount of Rs.
1000/- was lying on his table and he also had not given any explanation as to why he

340
Available at: http://legal-dictionary.thefreedictionary.com/presumption (visited on May 2, 2016).
341
2006 (2) RCR (Criminal) 239

231
was falsely implicated into the case by the police and hence his conviction was
upheld.

Moreover, it is also not proper to presume that a ―trap witness‖ is an ―interested

witness‖. The burden of proving this fact lies upon the defence. In D. Velayutham v.
State Rep. by Inspector of Police, Salem Town, Chennai 342, the Hon‘ble Supreme
Court held that:

―It would be a derogation and perversion of the purpose and object of

anti-corruption law to invariably presuppose that a trap/ decoy witness is an
―interested witness‖, with an ulterior or other than ordinary motive for
ensuring the inculpation and punishment of the accused. The burden
unquestionably is on the defence to rattle the credibility and trustworthiness of
the trap witness‘ testimony, thereby bringing him under the doubtful glare of
the Court as an interested witness. The defence cannot be ballasted with the
premise that Courts will, from the outset, be guarded against and suspicious of
the testimony of trap witnesses.‖

Moreover, it was also settled by the Court in Vinod Kumar v. State of Punjab343
that even when the complainant becomes hostile will not result into collapse of whole
case of prosecution and other evidences on record shall also be evaluated for
corroboration.

In this part we are going to talk about the presence of presumption in these
areas and its genesis. In England, if it is proved during a proceeding under English law
i.e., under the Prevention of Corruption Act, 1960; or the Public Bodies Corrupt
Practices Act, 1889, that a person has been paid any money gift or received any
benefit from any other person or his agent while such first person is in employment of
his Majesty or any other government department for holding or seeking to attain a
contract from his Majesty or any other government department or public body, then he
shall be deemed to have received such money, gift or any other consideration
corruptly, unless the contrary is proved beyond any reasonable doubt. Similarly, such
342
AIR 2015 SC 2506
343
AIR 2015 SC 1206

232
provisions regarding presumption have also been incorporated within Indian law to
shift burden of proof upon the accused for preventing the incidents of bribery and
corruption among the public servants.

4.8.2. PRESUMPTION JURIS ET DE JURE344

The presumption regarding instances of corruption in some provisions is juris

et de jure. These are interpretations drawn by the law in a mandatory way. These are
derivations of facts so overwhelming that law won‘t allow proof to be called to
repudiate them. These are similar to the words ―conclusive proof‖ used in Indian
Evidence Act.

4.8.3. PRESUMPTION „SHALL PRESUME‟

These are derivations of facts which just hold until proof has been given which
repudiates them. They provide only a prime facie verification which might be ousted
by evidences which negatives it or by involvement with some other proofs and still
more confirmed presumption which proposes an opposite derivation. They are similar
to the words ‗shall presume‘ utilized as a part of the Indian Evidence Act and are
described effectively under the Act345. The rule of presumption is an important part of
law of evidence.

4.8.4. PRESUMPTION MAY PRESUME

These do not generally should be classed amongst legitimate presumptions like

two classes of presumption discussed earlier because they are inductions of facts and
the law does not as in earlier cases order force to draw them yet just advices their
doing as such. They are similar to the words ―may presume‖ utilized as a part of
Indian Evidence Act e.g. in any trial of an offence culpable under Section 11; under
clause (b) of sub-sec (1) of Section 13 it is to be proved that an accused person has
accepted or obtained or has agreed to accept or attempted to obtain for himself or has
agreed to accept or attempted to obtain for himself or for any other person any
344
This phrase is a rule of law of Evidence used to denote conclusive presumptions of law, which cannot be
rebutted by evidence. Available at: http://legal-dictionary.thefreedictionary.com/Juris+et+de+jure visited
on May 3, 2016.
345
The Indian Evidence Act, 1872 (Act 1 of 1872), s. 4.

233
gratification or any valuable thing from any person it shall be presumed unless the
contrary is proved that he accepted or obtained or agreed to accept or attempted to
obtain that gratification or that valuable thing as the case may be as a motive or
reward such as is mentioned in Section 7 or as the case may be without consideration
or for a consideration which he knows to be inadequate. The provision for legal
presumption is given under Section 20 of the Prevention of the Corruption Act, 1988
which corresponds to earlier provision i.e. Section 4 of the Prevention of Corruption
Act, 1947. Now we have to analyse the term under the present Act of 1988.

4.8.5. DIFFERENCE BETWEEN PRESUMPTION UNDER SECTION 4 OF

THE PREVENTION OF CORRUPTION ACT, 1947
(CORRESPONDING SECTION 20 OF THE NEW ACT) AND SECTION
114 OF EVIDENCE ACT

Under Section 114 of the Evidence Act it is upon the Court to attract or not to
attract a presumption with regards to the presence of specific facts while it is
mandatory upon the court to attract such presumption under Section 4 (1) of the
Prevention of Corruption Act, 1947 (or Section 20 of the Prevention of Corruption
Act, 1988). Nevertheless if it is proved that any gratification (other than legal
remuneration) or any valuable thing was evidenced to have been received by an
accused person then it was mandatory upon the court to draw a presumption that the
person received that thing as motive or reward. Therefore, the court has no option in
the matter once it was recognized that the accused person had received a sum of
money which had not been due to him as legal remuneration or reward. The Privy
Council in Dhanwantrai Balwantrai Desai v. State of Maharashtra 346, observed that a
non-compulsory presumption of fact which ascend from recent possession of stolen
property under Section 114 of the Evidence Act in the absence of any judicious
clarification only but the exact statutory and mandatory presumption of law under
Section 4 of the Prevention of Corruption Act, 1947 could not be so warded off
without the definite proof of facts clarifying the receipt of a gratification or reward.

346
AIR1964 SC 575

234
4.8.6. NATURE OF PRESUMPTION

Now we are going to find out the nature of the presumption given into the
Prevention of Corruption Act. The presumption given under Section 4 emerged not
just when the accused had received or had acquired for himself or for some other
individual any gratification but additionally when he had received or had gotten for
himself or for some other individual any profitable thing from any individual. Cash
notes cannot be denied as profitable or valuable things. The presumption under this
Section is a presumption of law and hence it is compulsory on the Court to bring this
presumption up for each instance brought under this Section because in light of the
fact it is a presumption of law and not of facts. In this way the presumption of law
constitutes a rule of jurisprudence. This being a presumption of law, when the proofs
necessary for raising the presumption are either verified or proved or confessed the
court has to carry on the basis that the satisfaction or valuable thing attained by the
accused was received by him as a motive or reward until the contrary is proved.

The lawmaking body probably understood that it is hard to convict the accused
on the charge of bribery. In these types of cases it could have been very difficult to
prove the charge in the absence of presumption because of the peculiarities of the
instances. The evidences given in these types of cases are often trained evidences so it
was not very easy to establish the charge of bribery beyond the reasonable doubt. The
legislature was conscious about the fact that the evil of bribery or corruption amongst
public servants represented a major issue and must be adequately dealt with. Hence
they introduced the necessity of presumption under various sections of the Prevention
of Corruption Act for the sake of transparent and well-organized administrative
framework. The presumption given under various sections of the Prevention of
Corruption Act is accessible to the Court which is going to try the offences culpable
under these provisions. It has provided a relief to the prosecution of the burden of
proving the motive in accepting the said gratification. The presumption can be
rebutted by the prosecution by providing evidence to the contrary. In Indra Vijay Alok
v. State of Madhya Pradesh347 an amount of Rs. 1000/- was given by the respondent to

347
AIR 2015 SC 3681

235
the appellant which was later on recovered from his person (appellant). The Hon‘ble
Court held that the presumption of receiving illegal gratification is made against the
accused, unless it is rebutted. In present case, the presumption was not rebutted by the
accused and he was sentenced accordingly.

4.8.7. ACCEPTANCE OF GRATIFICATION IS TO BE PROVED FIRST

The presumption under Section 4 (or under Section 20 of new Act) emerges
just after verifying that the accused has obtained/accepted or has acquired or had
endeavored to get for himself or for any other person any delight/gratification (other
than lawful remuneration) or any profitable thing from any individual and that any
delight/gratification (other than the lawful remuneration) or any valuable thing had
been given by a accused person. This provision required that the prosecution ought to
prove that the accused obtained/accepted or consented to obtain/accept the sum as
delight/gratification. The expression ―accept‖ signifies ―to obtain or take or get with a
consenting mind‖. In this way it was necessary upon the prosecution to demonstrate
not just the passing of cash to the accused but additionally that he obtained it with a
consenting mind. This would require confirmation of either an agreement to
accept/acknowledge before the actual acceptance/acknowledgment or of his consent to
accept/acknowledge the same as delight/gratification at the time the money was
presented.

Where there was no evidence that the accused acknowledged/accepted the cash
as unlawful delight/gratification and the plea of the accused was that the cash was put
into his pocket under a false ploy was more plausible than the instance of the
presumption. The presumption under Section 4 could not be figured it out. Regardless
of the possibility that such presumption emerges it was adequately rebutted if there
were condition demonstrating that the prosecution version was not right. It is
obligatory for the prosecution to raise presumption under Section 4 to ascertain that
not merely the payment of money or thing had been made over to the accused but
additionally it had to be proved by the prosecution that such payment or kind
amounted to delight/gratification other than legal payment. It was further established
that the payment/thing received without motive would not amount to gratification
236
other than legal remuneration and there was no scope for raising the presumption
under Section 4 of the Prevention of Corruption Act (earlier Act).

In the event that one acknowledges delight/gratification or a profitable thing for

some other person, he comes under the scope of the Section and shall be charged
accordingly. But it is not the case with the person receiving such delight/gratification
inadvertently, unconsciously and unknowingly and the bearer or transmitter would not
come under the scope of the Section. It was held that such presumption may be
rebutted by the accused not just by oral confirmation of witnesses giving evidence for
the sake of accused additionally by the statement of the accused given under Section
342 of the Code of Criminal Procedure and by any document produced in favour of
accused or by the encompassing circumstances for the case. In Amrit Lal v. State of
Punjab348, Section 7 of the Prevention of Corruption Act, 1988 was discussed dealing
with bribery. The evidence of complainant regarding the demand of the bribe money
not confirmed because of lack of corroboration. The statement of complaint was
contradicted regarding the amount of money demanded as bribe. In addition, two
witnesses before whom the tainted money was recovered were not examined and
given up unnecessarily. The Court held that the appellant was entitled to benefit of
doubt and hence was acquitted of the charge.

The presumption raised under Section 4 of the Prevention of Corruption Act,

1947 was not limited to the cases where the accused was in fact charged under Section
161 of the Indian Penal Code but it was also accessible in cases where the accused
was charged under some other provision where the graveness of the offence was of
same nature as is provided under Section 161 of Indian Penal Code. Additionally, it
was also observed that Section 5 of the 1947 Act provided for the same arrangement
because the graveness of the offence is same as provided under Section 161 of Indian
Penal Code.

Therefore, where the accused was charged under Section 5 of the Prevention of
Corruption Act, 1947 the Trial Court was completely right in applying the
presumption raised under Section 4 of the Act. While discussing the scope of extent of
348
2006 (3) R.C.R. (Criminal) 796

237
burden of proof located upon the accused to refute the presumption it was held by the
Court that it was adequate if the accused person succeeded in raising a preponderance
of probability in his favour and consequently will get the benefit of doubt. In Sanjay v.
State of Maharashtra349, Court held that if an accused is tricked into taking the
amount, it hardly be treated as an acceptance so as to attract presumption laid down in
Section 20 of the Prevention of Corruption Act.

4.9. OFFENCES UNDER THE ACT

In this part we are going to discuss about various acts which are made
punishable under the Act. There is a classification of offences under the Act based
upon the degree of their consequences. Similarly, acts of abetment, conspiracy,
agreement and attempt to do these offences have also been made punishable because it
is more important to cut the nip from the bud to discourage such acts of bribery and
corruption. Various acts have been categorized under various Sections and are made
punishable accordingly. One of the most important offences is the offence of criminal
misconduct; which we have already discussed in detail. The habitual offenders
committing repeated acts of corruption are punished under this offence. They are
awarded higher punishments as they have refused to get reformed and are more
dangerous to the society because of their frequent involvement into the crimes. Now,
we are going to discuss about various acts made punishable under the Prevention of
Corruption Act, 1988:

4.9.1. PUBLIC SERVANTS TAKING ILLEGAL GRATIFICATION

It is a generalized offence mentioned into the Act committed by a public

servant taking gratification other than his legal remuneration from any person. Section
7 of the Prevention of Corruption Act, 1988 punishes this offence. The main body of
the provision350 tells about various aspects of the offence of taking illegal gratification
which is given as under:

349
2016 (3) R.C.R. (Criminal) 732
350
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 7.

238
 ―Whoever, being, or expecting to be a public servant, accepts or obtains
or agrees to accept or attempts to obtain from any person, for himself or for
any other person, any gratification whatever, other than legal remuneration, as
a motive or reward for doing or forbearing to do any official act or for
showing or forbearing to show, in the exercise of his official functions, favour
or disfavour to any person or for rendering or attempting to render any service
or disservice to any person, with the Central Government or any State
Government or Parliament or the Legislature of any State or with any local
authority, corporation or Government company referred to in clause (c) of
section 2, or with any public servant, whether named or otherwise, shall be
punishable with imprisonment which shall be not less than six months but
which may extend to five years and shall also be liable to fine.‖

It is a beautifully crafted provision covering almost all the aspects of offence of

receiving a gratification other than legal remuneration. It covers all public servants as
well as persons who expect themselves to be public servant though they may not be
public servants in actual terms e.g. some defect or lacuna in their employment. Where
a public servant induces a person erroneously to believe that his influence with the
Government has obtained a title for that person and thus induces that person to give
the public servant, money or any other gratification as a reward for this service, the
public servant has committed an offence under this section 351. In addition, it punishes
the act of receiving illegal gratification at all the stages of crime i.e. attempt to
commit, agreement to commit and the commission of the act itself. Thus, the
provision has great deterrent effect to control this offence. The act is punishable when
a public servant accepts or obtains an illegal gratification for himself or any other
person. The word ―gratification‖ has also been used broadly and it covers a number of
instances and transactions within itself. The word "gratification" is not restricted to
pecuniary gratifications or to gratifications estimable in money 352.

351
The Prevention of Corruption Act, 1988 (Act 49 of 1988), Explanation (e) to s. 7.
352
The Prevention of Corruption Act, 1988 (Act 49 of 1988), Explanation (b) to s. 7.

239
 The concerned act is committed by the public servant for the consideration of a
motive or reward for doing or forbearing to do any official act or for showing or
forbearing to show, in the exercise of his official functions, favour or disfavour to any
person or for rendering or attempting to render any service or disservice to any person.
In this way, the acts of showing or forbearing to show favour or disfavor to any person
for the sake of an illegal gratification are made punishable under the Act. The
concerned public servant may be associated with Central Government or any State
Government or Parliament or the Legislature of any State or with any local authority,
corporation or Government company referred to in clause (c) of section 2. The act of
taking gratification by a public servant, other than his legal remuneration, is
punishable with an imprisonment which shall be not less than six months but which
may extend to five years in addition with fine. The Hon‘ble Supreme Court in
Mukhtiar Singh v. State of Punjab353 held that the demand and voluntary acceptance of
illegal gratification are sine qua non for proving the offence under Section 7 of the
Prevention of Corruption Act.

4.9.2. RECEIVING VALUABLE THING WITHOUT CONSIDERATION OR

FOR AN INADEQUATE CONSIDERATION

We have observed that many of the public servants are indulged into corrupt
practices. As there is an ever growing demand of establishing a sound vigil-
mechanism to find out their bad practices, their plans of action have also changed
tremendously. They have evolved new methods to receive such illegal payments
through presents and gifts. Hence, the legislature has enacted provisions to cover all
such practices of receiving valuable things without any consideration or for a
consideration not adequate from persons concerned in proceeding or business
transacted by such public servant. The relevant provision given under the Act
describes that354:

―Whoever, being a public servant, accepts or obtains or agrees to

accept or attempts to obtain for himself, or for any other person, any valuable

353
2016 (3) RCR (Criminal) 558
354
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 11.

240
 thing without consideration, or for a consideration which he knows to be
inadequate, from any person whom he knows to have been, or to be, or to be
likely to be concerned in any proceeding or business transacted or about to be
transacted by such public servant, or having any connection with the official
functions of himself or of any public servant to whom he is subordinate, or
from any person whom he knows to be interested in or related to the person so
concerned, shall be punishable with imprisonment for a term which shall be
not less than six months but which may extend to five years and shall also be
liable to fine.‖

Thus the act of receiving a valuable thing by a public servant, without

consideration or for a consideration which such public servant knew to be inadequate,
from a person whom such public servant knew to be or likely to be concerned in any
proceeding or business transacted or about to be transacted by such public servant, is
punishable. Not only the acts, but attempts or agreement to accept or obtain are also
punishable. It is an important thing to control the evil of bribery and corruption
effectively. All such acts, attempts or agreements are punishable under the Act, even
though such acts, attempts or agreements were initiated by the person agent of such
interested persons. The punishment provided under the Section is the imprisonment
for a term which shall be not less than six months but which may extend to five years
and shall also be liable to fine.

4.9.3. OFFENCE OF CRIMINAL MISCONDUCT

Criminal Misconduct is one of the main offences provided under the

Prevention of Corruption Act, 1988. Criminal misconduct in discharge of official duty
is made punishable under the Act. It is provided under Section 13 of the Act. In this
part we are going to discuss about the offence and punishment provided under Section
13. Criminal misconduct has to be evaluated in context of misdeeds done by the
public servants while discharging their official duties. The related provision 355 tells us
that:

355
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 13.

241
1. A public servant is said to commit the offence of criminal misconduct:

(a) if he habitually accepts or obtains or agrees to accept or attempts to

obtain from any person for himself or for any other person any
gratification (other than legal remuneration) as motive or reward such
as is mentioned in Section 7; or

(b) if he habitually accepts or obtains or agrees to accept or attempts to

obtain for himself or for any other person, any valuable thing without
consideration or for a consideration which he knows to be inadequate
from any person whom he knows to have been or to be likely to be
concerned in any person whom he now to have been or to be likely to be
concerned in any proceeding or business transacted by him, or having
any connection with the official functions of himself or of any public
servant to whom he is subordinate, or from whom any person whom he
knows to be interested in or related to the person so concerned; or

(c) If he dishonestly or fraudulently misappropriates or otherwise converts

for his own use any property entrusted to him or under his control as a
public servant or allows any other person so to do; or

(d) If he, -

(i) by corrupt or illegal means, obtains for himself or for any other
person any valuable thing or pecuniary advantage; or

(ii) by abusing his position as a public servant, obtains for himself or

for any other person any valuable thing or pecuniary advantage; or

(iii) while holding office as a public servant, obtains for any person
any valuable thing or pecuniary advantage without any public interest; or

(e) if he or any person on his behalf, is in possession or has, at any time

during the period of his office, been in possession for which the public

242
 servant cannot satisfactorily account, of pecuniary resources or
property disproportionate to his known sources of income.

It is also provided under the provision 356 that the guilty public servant may be
punished by way of imprisonment which should not be less than one year and which
may be extended up to 7 years. In addition, he shall also be liable to pay such amount
as fine as directed by the Court. The Explanation to the Section 13 (1) provides that
the term ―known source of income‖ means the income received from any lawful
source and it should not be from any illegal source. It is also mandatory that the
receipt of such income should be intimated to the concerned authorities in accordance
with the provisions of any law, rules orders issued by such concerned authority or
State or Central government having authority over such concerned public servant.
Thus, a duty has been imposed upon public servant to avoid difficulties in future.

4.9.4. OFFENCE COMMITTED BY HABITUAL OFFENDERS

There are various offences categorized under the Prevention of Corruption Act,
1988. Some of these are of higher degree, whereas others are of lesser degree.
Offences of higher degree attract more severe punishment than the offences of lower
degree. The purpose of the punishment is to create a deterrent effect upon the possible
future offenders along with the reformation of accused. But, it is the nature of some
offenders to commit the offences repeatedly. The severity of punishment put no
pressure upon them to restrict them to commit such crimes. They have to be put
behind the bars for a longer period for committing such acts more than once. There are
provisions into the Prevention of Corruption Act as well to deal with such offenders.
A higher degree of punishment is provided for them for a longer duration. In this part,
we are going to discuss about such instances. It is provided under the Act that 357:

―Whoever habitually commits-

(a) an offence punishable under section 8 or section 9; or

(b) an offence punishable under section 12,

356
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 13 (2).
357
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 14.

243
 shall be punishable with imprisonment for a term which shall be not less than
two years but which may extend to seven years and shall also be liable to fine.‖

Not only this, there are other provisions as well where the acts committed by
habitual offenders are dealt with. The word ―habitually‖ used under Section 13 (1) (a)
and (b) also provide punishment for offences committed by such persons.

It is also interesting to note here that there is no limit as to number of instances

to establish the ‗habit‘ of the accused. And this point will be considered by the
Hon‘ble Court as per the facts and circumstances of a particular case. It is necessary to
establish a number of instances of bribery spread over a reasonable period of time. It
was held in Biswabhusan Naik v. State358 that the legislature has not imposed any limit
as to the number of instances or the period to be covered as being sufficient or
necessary for proof, which it might well have done. The test of Reasonableness shall
be adopted in this context.

4.9.5. OFFENCES COMMITTED BY THE PERSONS OTHER THAN

PUBLIC SERVANTS

In this part, we are going to discuss about the acts committed by the persons
other than public servants. Though the Prevention of Corruption Act, 1988 applies
upon public servants, yet there are some instances where it is applicable upon some
other persons as well. These are the situations where a person takes illegal
gratification to influence a public servant. It is provided under the Act that 359:

―Whoever accepts or obtains, or agrees to accept, or attempts to obtain,

from any person, for himself or for any other person, any gratification
whatever as a motive or reward for inducing, by corrupt or illegal means, any
public servant, whether named or otherwise, to do or to forbear to do any
official act, or in the exercise of the official functions of such public servant to
show favour or disfavour to any person, or to render or attempt to render any
service or disservice to any person with the Central Government or any State

358
AIR 1952 Ori. 289.
359
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 8.

244
 Government or Parliament or the Legislature of any State or with any local
authority, corporation or Government company referred to in clause (c) of
section 2, or with any public servant, whether named or otherwise, shall be
punishable with imprisonment for a term which shall be not less than six
months but which may extend to five years and shall also be liable to fine.‖

Thus, whenever an illegal remuneration is received by a person other than a

public servant upon the conditions given under Section 8 of the Act (which are same
as are given under Section 7), such other person shall also be liable for the offence.
The punishment provided under the Act is from six months of imprisonment to five
years along with the fine. Similarly, the acts committed by the persons who use their
personal influence with the public servants to get illegal gratification are also
committed under the Act. The relevant provision states that360:

―Whoever accepts or obtains or agrees to accept or attempts to obtain,

from any person, for himself or for any other person, any gratification
whatever, as a motive or reward for inducing, by the exercise of personal
influence, any public servant whether named or otherwise to do or to forbear to
do any official act, or in the exercise of the official functions of such public
servant to show favour or disfavour to any person, or to render or attempt to
render any service or disservice to any person with the Central Government or
any State Government or Parliament or the Legislature of any State or with
any local authority, corporation or Government company referred to in clause
(c) of section 2, or with any public servant, whether named or otherwise, shall
be punishable with imprisonment for a term which shall be not less than six
months but which may extend to five years and shall also be liable to fine.‖

Thus, the persons who are somewhere related with the public servants involved
into corrupt practices are covered under this Section. It is an important provision
considering V.I.P. culture in our country where a number of persons try to use their
connections for evil motives. There are a number of persons who happens to be
relatives, acquaintance or friends of public servants who boasts of their relation with
360
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 9.

245
such public servants and try to get illegal benefits at many places. In addition, this
provision also discourages the public servants‘ intention of getting illegal benefits by
hiding their identity behind the identity of some other persons.

4.9.6. ABETMENT OF CERTAIN OFFENCES IS ALSO AN OFFENCE

If a public servant, with respect to whom an offence has been committed as

mentioned under Sections 8 and 9, abets the acts of such other persons given into the
same sections, the very act of abetment shall also be punishable under the Act 361.
Here, it is immaterial that whether that offence is committed in consequence of that
abetment or not. The abettor shall be punishable with imprisonment for a term which
shall be not less than six months but which may extend to five years and shall also be
liable to fine. Thus, the same type of punishment will be there for the abettor as well.
It is a welcome provision when it comes to discouraging the persons to abet others to
do offence under the Act providing the same quantum of punishment for the abettor
even when the offence abetted is committed or not.

Similarly, Section 12 also makes it punishable to abet an offence mentioned in

Sections 7 and 11. Under Section 7, the offence of taking gratification other than legal
remuneration in respect of an official act, by a public servant is punishable. On the
other hand, under Section 11, the acts of public servant obtaining valuable thing,
without consideration from person concerned in proceeding or business transacted by
such public servant, is made punishable. It is provided under the provision 362 that:

―Whoever abets any offence punishable under section 7 or section 11

whether or not that offence is committed in consequence of that abetment, shall
be punishable with imprisonment for a term which shall be not less than six
months but which may extend to five years and shall also be liable to fine‖.

It is interesting to note here that the act of abetment is punishable irrespective

of the fact that the act, for which the abetment was made, was committed or not in
consequence of the abetment. It is also notable to mention here that the same

361
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 10.
362
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 12.

246
punishment is provided under the Section as is provided for the offence committed
under Section 7 or 11, even though the act, for which the abetment was made, was
committed in consequence or not.

4.10.1. ANALYSIS OF THE TERM „CRIMINAL MISCONDUCT‟ (SECTION

13 OF THE PREVENTION OF CORRUPTION ACT, 1988)

Criminal misconduct in discharge of official duty is made punishable under the

Prevention of Corruption Act, 1988. It is provided under Section 13 of the Act. In this
part we are going to discuss about the features and implications of this term. Criminal
misconduct has to be evaluated in context of misdeeds done by the public servants
while discharging their official duties. The related provision 363 tells us that:

1. A public servant is said to commit the offence of criminal misconduct:

(a) if he habitually accepts or obtains or agrees to accept or attempts to
obtain from any person for himself or for any other person any
gratification (other than legal remuneration) as motive or reward such
as is mentioned in Section 7; or
(b) if he habitually accepts or obtains or agrees to accept or attempts to
obtain for himself or for any other person, any valuable thing without
consideration or for a consideration which he knows to be inadequate
from any person whom he knows to have been or to be likely to be
concerned in any person whom he now to have been or to be likely to be
concerned in any proceeding or business transacted by him, or having
any connection with the official functions of himself or of any public
servant to whom he is subordinate, or from whom any person whom he
knows to be interested in or related to the person so concerned; or
(c) If he dishonestly or fraudulently misappropriates or otherwise converts
for his own use any property entrusted to him or under his control as a
public servant or allows any other person so to do; or
(d) If he, -

363
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 13.

247
 (i) by corrupt or illegal means, obtains for himself or for any other
person any valuable thing or pecuniary advantage; or
(ii) by abusing his position as a public servant, obtains for himself or for
any other person any valuable thing or pecuniary advantage; or
(iii) while holding office as a public servant, obtains for any person any
valuable thing or pecuniary advantage without any public interest; or
(e) if he or any person on his behalf, is in possession or has, at any time
during the period of his office, been in possession for which the public
servant cannot satisfactorily account, of pecuniary resources or
property disproportionate to his known sources of income.
It is also provided under the provision364 that the guilty public servant may be
punished by way of imprisonment which would not be less than one year and which
may extend to 7 years. In addition he shall also be liable to pay a fine as directed by
the Court. The Explanation to the Section 13 (1) provides that the term ―known source
of income‖ means the income received from any lawful source. It is also mandatory
that the receipt of such income should be intimated to the concerned authorities in
accordance with the provisions of any law, rules orders issued by such concerned
authority or State or Central government having authority over such concerned public
servant.

In B. Noha v. State of Kerala & Another365, Section 7 and 13 (1) (d) read with
Section 13 (2) of the Prevention of Corruption Act, 1988 were in question in context
of conviction upon illegal gratification. Appreciation of evidence was the main
deciding factor which came before the consideration of the Court. Where it is proved
that there was willful and cognizant acceptance of the cash, there is no further weight
upon the prosecution to prove by direct evidence the motive or demand of the
accused. It has just to be derived from the facts and circumstances acquired in the
specific case. At the point when sum is found to have been gone to public servant the
burden is upon him i.e. public servant to prove that it was not by method for illegal

364
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 13 (2).
365
(2006) 12 SCC 277

248
gratification/reward. This was not accomplished by the accused and hence the
conviction of the accused was upheld by the honorable Court.

4.10.2. CRIMINAL MISCONDUCT ON THE BASIS OF SECTION 5 OF

PREVENTION OF CORRUPTION ACT, 1947

Earlier, before the passing of the Prevention of Corruption Act, 1988, Section 5
of the Prevention of Corruption Act, 1947 dealt with criminal misconduct. Therefore,
here it is important to discuss the prior position i.e., position under the Prevention of
Corruption Act, 1947, to know criminal misconduct in detail. The Act created new
offences under the Indian Penal Code like those under Section 161. The Legislature
extended the scope of the crimes related to bribery and corruption by providing a very
wide definition in Section 5 with a view to cover the persons holding public office and
taking unlawful advantage of their official position to obtain profitable thing or
pecuniary favour.

Before the nation got independence the existing law i.e. the Indian Penal Code,
1860 was found to be insufficient to eliminate or even control the increasing evil of
bribery and corruption. The provisions of the Prevention of Corruption Act, 1947
broadly included the existing offences committed by public servants given under
Sections 161 to165 of the Indian Penal Code. The Act established the rule of evidence
of presumption against the accused. The Act also created a new offence of criminal
misconduct by public servants though to some extent it overlapped on the pre-existing
provisions. The Prevention of Corruption Act, 1947 created a new offence categorized
it as criminal misconduct in discharge of official duty under Section 5 of the Act. It
deals with the instances of the offence of habitual corruption.

If a public servant continually acknowledges bribe as rewards or attempts to get

things of value as corruption for exercising his authority extraordinarily and
deceptively misuses property entrusted to him as a virtue of such position or he mis-
uses his position keeping in mind the end goal to get for himself any profitable thing
he shall be guilty of criminal offense in discharging his obligation related to his post.
As a result of it he shall be guilty for the commission of offense with a punishment up

249
to seven years of imprisonment. He shall also be liable to the fine as directed by the
Court.

The relevant provision of the Prevention of Corruption of Act, 1947 i.e. Section
5 was expected to cover that sort of crime in which government worker or public
servants with no apparent sources were living richly over their salary and were in a
position to put resources into property which prima facie showed to be unimaginable
that they ought to have amassed those assets with honesty. This section created a
novel offence and used the terminology criminal misconduct in the discharge of
official duty for this offence. In spite of the fact that Section 5 Clause (c) overlapped
to some degree with the meaning of Criminal Breach of Trust, it is one type of
criminal offence as characterized by the section. Now, as per present situation, Section
5 has been revoked and it has been replaced by Section 13 of the Prevention of
Corruption Act, 1988 which now deals with the offence of criminal misconduct by
public servants in discharging their official duties.

4.10.3. SCOPE OF SECTION 5 OF THE PREVENTION OF CORRUPTION

ACT, 1947

Section 5 of the Prevention of Corruption, 1947 deals with the instances where
the corruption is done by the public servants habitually. This section was applicable
not only to the habitual offenders but also to the cases in which the accused was
charged with having taken illegal gratification or where he had criminally
misappropriated the property entrusted to him on a single instance. This is evident
from the reading of clause (c) and clause (d) of sub section (1) of this section.

Earlier, under section 161 and 165 of the Indian Penal Code, 1860 a
prosecution could be laid even on account of a solitary instance by which a public
servant has accepted an illegal delight or satisfaction. However, to prosecute a public
servant under sec. 5(1) (a) and (b) there must be habitual commission of the crime.
Any stray or single occurrence was not adequate to bring inside the ambit of the
Section the offense as planned under Section 5 (1) (a) and (b). Where an offense was
culpable under the Indian Penal Code and in addition under the Prevention of

250
Corruption Act, 1947 the accused could be tried under the Indian Penal code. In that
situation he was to be punished under the IPC and the provisions of the Prevention of
Corruption Act, 1988 were not pertinent.

Where a new offence has been incorporated by an enactment the accused must
be dealt with in accordance with that enactment. However, where an Act makes an act
already punishable under some former law punishable the operation of the former is
not repealed by the latter. The operation of the former Act has to be done away with
specific words within the new Act. Section 2 of General clauses Act 366 provides the
necessary guideline in this regard. It becomes unavoidable on the prosecution agency
either to prosecute the public servant under the general law or the special law. In this
way, an accused may be proceeded against under any of the two Acts.

The following elements were essential to punish an offender under Section 5

(1) (a) of the Prevention of Corruption Act, 1947:

(a) the accused had been a public servant;

(b) he had habitually accepted or had obtained from any person

gratification for himself or for any other person as is given under Section 161
0f IPC;

(c) he had done so as a motive or reward for doing or forbearing to do an

official act.

In the same way, following were the essential elements of Section 5 (1) (b):

(a) the accused had been a public servant;

(b) he had habitually accepted or had obtained or had agreed or had

attempted to obtain for himself or for any other person, any valuable thing
without consideration or for a consideration which he knew to be inadequate;

366
Where an act or omission constitutes an offence under two or more enactments, then the offender shall be
liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be
punished twice for the same offence.

251
 (c) he had received it from any person whom, he knows to have been, or to
be, or to be likely to be concerned in any proceeding or business transacted, or
about to be transacted by him, or having any connection with the official
functions of himself or of any public servant to whom he is subordinate, or
from any person whom he knows to be interested or related to the person so
concerned.

4.10.4. ANALYSIS OF THE OVERLAPPING OF SECTION 5 (1) (a) AND

SECTION 161 OF INDIAN PENAL CODE

As we have discussed earlier also, the necessary elements of the offence under
Section 5 (1) (a) of the Prevention of Corruption Act, 1947 were the same as were of
the offence committed under Section 161 of Indian Penal Code, 1860. Hence a kind of
reappearance of the offence under Section 161 Penal Code came into the picture as
offence of criminal misconduct under Section 5 (1) (a) of the Prevention of Corruption
Act, 1947. Hence, where an accused was indicted under Section 5 (1) (a) of the
Prevention of Corruption Act, the facts specified in the charge sheet were of such type
so as to constitute a different offence culpable under Section 161 of Indian Penal code.
The joined impact of these particulars being the completion of an intensified type of
such slighter offences, the conviction of the accused under Section 161 of the Penal
Code was flawlessly legitimate if any one of numerous instances out of the few
occurrences determined in the charge had been verified against him. In this way the
conviction of the charged under Section 161 of IPC was lawful and maintainable. In
endorsing such a conviction against the accused the Court was acting inside the extent
of Section 238 (1) of the Code of Criminal Procedure.

4.10.5. JOINT TRIAL UNDER SECTION (5 OR 13 OF THE PREVENTION OF

CORRUPTION ACT, 1947 OR 1988 RESPECTIVELY) AND SECTION
409 OF INDIAN PENAL CODE

The circumstance that specific special provisions of law are relevant to the trial
of one offence however not to the trial of alternate does not at all lessen the operation
of application of Section 235 (2) of the Code of Criminal Procedure. In this manner a

252
joint trial under Section 5 of the Prevention of Corruption Act and under Section 409
of IPC was lawful regardless of the unique method of proof in Section 5 (3) of the
Prevention of Corruption Act and that proof on the oath accused under Section 7 of
the same Act couldn‘t be accessible in the trial of the charge under Section 409 Indian
Penal Code.

4.11. INVESTIGATION OF THE OFFENCES

The aim of law is to establish a system into the society which is based upon the
principles of equity and natural justice. These principles are dependent upon effective
working of criminal justice system. An effective criminal justice system seeks for
justice and provides adequate relief to the victim. Before coming to a conclusion in a
particular case, we have to conduct an effective and fair investigation to obtain all the
relevant evidences necessary to prove the guilt or innocence of the accused.
Investigation into the cases under this Act can be made by the following persons or
higher rank367:

(a) In the case of Delhi Special Police Establishment, an inspector of police;

(b) In the metropolitan areas of Bombay, Calcutta, Madras and Ahmedabad
and in any other metropolitan areas notified as such under sub sec. (1) of
sec. 8 of the Code of Criminal Procedure 1973 (2 of 1974), an Assistant
Commissioner of Police;
(c) Elsewhere a Deputy Superintendent of police or a police officer of
equivalent rank;
(d) Any police officer not below the rank of an Inspector of police; specially
authorized by the State Government in this behalf.
These persons can make investigation into the cases under this Act
notwithstanding anything given or contained in the Code of Criminal Procedure. The
power of investigation into the cases can be applied even without the order of a
Metropolitan Magistrate or a Magistrate of first class. Another significant aspect of
this power is that the investigating officer can make arrest without a warrant. The
proviso to the main Section 17 also provides that if an officer of police not below the
367
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 17.

253
rank of an Inspector of Police is specially authorized by the State government in this
behalf, he shall also be having the same powers as are given to other officers as are
mentioned in (a) to (c). It is also provided that such authorized police officer shall not
investigate the case under Section 13 (1) (e) of the Act, without the order of a police
officer not below the rank of a Superintendent of Police.

Now, we are going to discuss as to how the procedure for the investigation into the
offences of bribery and corruption is executed by the concerned police officers. If the
police officer has reason to suspect that, upon information received or otherwise, an
offence has been committed by any person and for which he is authorized to
investigate or inquire, shall go on to start investigation or inquiry as he thinks
appropriate. For this purpose, he may inspect Bankers‘ Books 368 if they are of some
relevance to the finding or discovery related to the offence alleged to have been
committed. He may go on to inspect that these account books are related with the
offence or not.

In addition, he may also inquire about the account books of other persons related
to the accused to find out the truth behind the account books, as such person may be
holding money or property on behalf of the accused. He can take or cause to be taken
certified copies of the relevant entries made into those account books and it shall be
the responsibility of such concerned bank to provide all necessary assistance to the
police officer making the investigation under the Act. All other related provisions
shall also be abided by the police officer making the investigation e.g. no power under
this section in relation to the accounts of any person shall be exercised by a police
officer below the rank of a Superintendent of Police, unless he is specially authorized
in this behalf by a police officer of or above the rank of a superintendent of Police 369.
These are some basic aspects of investigation discussed under the Act.

The Act was passed as the preamble indicates to make more effective
provisions for the prevention of bribery and corruption among the public servants.
New definition of criminal misconduct in discharging an official duty and new rules

368
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 18.
369
The Prevention of Corruption Act, 1988 (Act 49 of 1988), Proviso to s. 18.

254
of presumption against accused in the case of the said offence are incorporated in the
Act. But in the year 1952 by Act 59 of 1952 presumably on the basis of the experience
gained, Sec. 5-A was inserted in the Act to protect the public servants harassment and
victimization. If it was in the interest of the public that corruption should be eradicated
it was equally in the interest in public that honest public servants should be able to
discharge their duties free from false, frivolous and malicious accusations. To achieve
these object high ranks of police officers were authorized to conduct investigation.

The Preamble of the Act shows the intention and true objectives of the
legislature behind the enactment. The Act was enacted to make more powerful
provisions for the prevention of bribery and corruption among the public servants.
New meaning was given to the term ―criminal misconduct‖ in discharging official
functions by the public servants. In addition, new rules were framed to raise
presumption against the accused regarding various offences committed under the Act.
In the year 1952, by Act 59 of 1952 probably on the premise of the experience gained
in this area, Section 5-A was embedded in the Act to ensure the protection of public
servants.

It is in the interest of the society to punish the wrongdoers. Similarly, it is also

the duty of the State to protect honest public servants from harassment and illegal
victimization so that they may feel themselves ready to fight with this evil of the
society. Hence, they should be prevented and protected from false accusation and
malicious prosecution. The said amendment was made into the Act to further the idea
of witness protection. To accomplish this purpose a system was created where only
the police officers of higher ranks were authorized to make investigation into the
offences of bribery and corruption by the public servants.

4.12.1. PREREQUISITE OF SANCTION BEFORE TAKING COGNIGANCE

As of now, we have discussed about various provisions of the Prevention of

Corruption Act, 1988 regarding investigation of the offences relating to bribery and
corruption. We have also discussed about the categorization of various police officers
authorized to make investigation into the offences under the Act. Now we are going to

255
discuss about the requirement of sanction before taking cognizance by the Court of the
offences relating to bribery and corrupt dealings by the public servants. Previous
sanction is necessary for prosecution and no court can take cognizance of the offence
without it370. This Section of the Prevention of Corruption Act states that:

(1) No court shall take cognizance of an offence punishable under section 7,

10, 11, 13 and 15 alleged to have been committed by a public servant, except
with the previous sanction,-

(a) in the case of a person who is employed in connection with the

affairs of the Union and is not removable from his office save by or with
the sanction of the Central Government, of that Government;

(b) in the case of a person who is employed in connection with the

affairs of a State and is not removable from his office save by or with the
sanction of the State Government, of that Government;

(c) in the case of any other person, of the authority competent to remove
him from his office.

(2) Where for any reason whatsoever any doubt arises as to whether the
previous sanction as required under sub-section (1) should be given by the
Central Government or the State Government or any other authority, such
sanction shall be given by that Government or authority which would have
been competent to remove the public servant from his office at the time when
the offence was alleged to have been committed.

(3) Notwithstanding anything contained in the code of Criminal Procedure,

1973,-

(a) no finding, sentence or order passed by a special Judge shall be

reversed or altered by a Court in appeal, confirmation or revision on
the ground of the absence of, or any error, omission or irregularity in,

370
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 19.

256
 the sanction required under sub-section (1), unless in the opinion of that
court, a failure of justice has in fact been occasioned thereby;

(b) no court shall stay the proceedings under this Act on the ground of
any error, omission or irregularity in the sanction granted by the
authority, unless it is satisfied that such error, omission or irregularity
has resulted in a failure of justice;

(c) no court shall stay the proceedings under this Act on any other
ground and no court shall exercise the powers of revision in relation to
any interlocutory order passed in any inquiry, trial, appeal or other
proceedings.

(4) In determining under sub-section (3) whether the absence of, or any error,
omission or irregularity in, such sanction has occasioned or resulted in a
failure of justice the court shall have regard to the fact whether the objection
could and should have been raised at any earlier stage in the proceedings.

Explanation.-For the purposes of this section,-

(a) error includes competency of the authority to grant sanction;

(b) a sanction required for prosecution includes reference to any

requirement that the prosecution shall be at the instance of a specified
authority or with the sanction of a specified person or any requirement
of a similar nature.

The prerequisite of taking sanction before taking cognizance is mandatory to

the court. This prerequisite cannot be avoided in any case. Now we are going to
discuss an important case in this perspective. In Manohar Lal Soni v. State of
Punjab371 the sanction for prosecution was given under Section of the Act. Here the
sanction for prosecution was given by the Managing Director. The impugned order of
the Managing Director was questioned by the petitioner in the higher court on the
ground that it was passed without the approval of Administrative Committee. The
371
LAWS (P&H)-2006-5-433

257
Court held that there was no illegality in the impugned order as the question whether
the sanction was granted by the competent authority is a question of fact, and will be
established by the prosecution during the course of evidence, which are yet to be
recorded. The Court held that the trial court was right in keeping the matter to be open
to be decided after the recording the evidences. It is also evident from the provision
provided372 under the Act that a court shall not stay any such proceeding for the want
of any error, omission or irregularity in the sanction granted by the authority, unless it
is satisfied that such error, omission or irregularity has resulted in a failure of justice.

In Nanjappa v. State of Karnataka373, the Hon‘ble Supreme Court was of the

opinion that when the order of sanction is not valid or legal, the Court (Trial) should
have discharged the accused rather than recording an order of acquittal on the merit of
the case. The Trial Court is not competent to take cognizance of the offence in the
absence of legal sanction. In this way it is an important obligation on the part of
prosecution to seek previous sanction from the appropriate authority.

4.12.2. THE ROLE OF COMPETENT AUTHORITY IN GIVING SANCTION

The provision of giving sanction for the prosecution of cases of bribery and
corruption of public servants is one of the most talked about concept in recent years.
The issue has gained importance because of some lacunas on the part of executive to
accord sanction within a reasonable time. The question regarding the sanction to be
given by the competent authority for initiating prosecution against an accused public
servant sought by police or any other investigating agency, after thorough
investigation into the allegations against him, has anticipated importance in recent
times. Should he function like a judge and fastidiously look at the evidences given by
the prosecution or apply his own mind to the material which has been set before him.
It is also the point of consideration that whether that authority should initiate a parallel
inquiry to find out the truth behind the crime.

372
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 19 (3) (b).
373
AIR 2015 SC 3060

258
 The question was effectively answered by the Bombay High Court in the case
of Parasnath Pande and anr. v. State374. The Court observed that section 6 of the
Prevention of Corruption Act, 1947 which corresponds to section 19 of the Prevention
of Corruption Act, 1988, does not command the sanctioning authority to look into any
particular material. It is not the function of such authority to find out the truth or
otherwise of the facts or material placed before him. The act of awarding sanction is
not a judicial act but completely an executive act. But at the same time we have to
analyse the other aspect as well. The honorable Supreme Court has considered this
feature in various cases and has propounded that the act of giving sanction for
initiating prosecution is not a simple formality. The Court has directed that the
concerned authority has to consider the evidences produced before it before coming to
a conclusion in the circumstances that whether the sanction for the prosecution should
be given or not. It is a welcome step by the honorable Supreme Court to dishearten the
malicious and vexatious complaints against the public servants. Hence, a kind of
balance should be maintained in favour of justice. In other words, sanction shall not be
denied or delayed in genuine cases, shall also not to be awarded in malicious and
vexatious allegations for the interest of justice.

In fact, Section 19 of the Prevention of Corruption Act, 1988, and Section 197
of the Code of Criminal Procedure prevent the prosecution of public servants accused
of an offence of bribery or corruption committed under the Act from mala fide, false
and vexatious accusations. Another main aspect of the provision is that there is no
requirement for initiating prosecution against the retired public personnel. The extent
of application of Section 19 of the Prevention of Corruption Act, 1988, which makes it
mandatory to obtain prior sanction before starting prosecution against a public servant,
is more extensive than Section 197 of the Code of Criminal Procedure.

It is, however important to specify here that previous sanction is not legally
required for registration of a case against a public servant to initiate criminal
proceedings against him. The requirement is there only at the time of taking
cognizance by the trial court. The court takes cognizance of a matter when it firstly

374
AIR 1962 Bom. 205, (1962) 64 Bom LR 188

259
applies its judicial mind for issuing process against the accused and to summon him to
face the trial and answer all criminal charges imposed upon him. The provision
restricts taking of cognizance of the offence by the court but does not restrict the
police‘s power to record statements and collect evidences for this purpose.

In practical, the police or any other investigation agency conducting

investigation of an offence under the Prevention of Corruption Act, 1988, approach
the concerned competent authority only after completing whole investigation and not
prior. All the records, evidences or any other relevant material so collected during
investigation by a police officer is then evaluated by senior police officers. Such
senior police officer after scrutinizing it generally seeks the legal opinion in this
context. After receiving legal opinion in this context the whole record is sent to the
concerned competent authority to seek sanction.

Beyond any doubt an authority giving sanction needs to apply its brain before
awarding sanction, yet the procedure ought not to take a more drawn out time that
might be required in the circumstances of a case as it will undoubtedly give wrong
message. It might be called attention to that the matter with respect to initiating
prosecution of the accused regarding prosecution of a public servant is prepared at
different levels in the Government in the light of the report of the investigation
agency, in addition with the evidences adduced supporting the report in context. In
light of these facts the function of the concerned authority going to sanction the
prosecution becomes important.

The concerned sanctioning authority is lawfully right not to give assent for
inappropriate, malicious or vexatious prosecutions which are politically motivated or
propelled by any other extraneous consideration. However, he is not anticipated to
examine the proceeding or witnesses like a judicial proceeding by a judicial officer.
He is just to see whether any prima facie case is made out against the persons alleged
to have committed a crime on the basis of evidences produced before it. In cases
where genuine violations were made to amass huge wealth by way of indulging into
corrupt dealings by way of conspiracy with other persons, the function of the

260
sanctioning authority becomes typical as such crimes are execute in secrecy and there
is little possibility of getting material evidences.

In these types of cases, it would be a pointless effort to seek evidences against a

particular accused involved in conspiracy because of under-cover dealings of various
accused persons. Legitimately, criminal conspiracy amongst different persons can be
demonstrated by some indirect evidences or by inference because direct proof is once
in a while accessible. The main culprit in this type of cases act behind a veil and it is
not easy to establish his direct involvement into the corrupt dealings. He might have
executed his plan by engaging some other persons for this purpose. It does not mean
that he cannot be booked for these misdeeds as he was not actively involved into those
corrupt activities. It is not in any manner essential that every one of the conspirator
consent to do one single act of corruption to accomplish the object of connivance.
There might be majority of acts and division of execution and after that one plotter
might be an outsider to the next. In these situations the function of the sanctioning
authority might be difficult to give sanction in light of secret dealings of the accused
persons, yet it has to apply its mind in favour of justice to unearth such corrupt
dealings between persons responsible for carrying out welfare schemes for the
betterment of poor and underdeveloped sections of the society.

The Hon‘ble Supreme Court in Mohammad Usman Mohammad Hussain

Maniyar and Another v. State of Maharashtra 375 has established that for the offence of
criminal conspiracy the prosecution need not as a matter of course prove that the
culprits explicitly consented to do or cause to be done an illegal act. Such a
connivance of the accused persons may be proved by necessary implication. Hence
the concerned authority which is going to deny or award sanction at the has basically
to rely upon possible inference or circumstantial evidence and it is not its function to
examine the evidences like a judge which function is attributed only to a Court of Law
having competent jurisdiction in this context. In State of Bihar and others v.
Rajmangal Ram376, the sanction was granted by the Law Department of State and not

375
AIR 1981 SC 1062, 1981 SCR (3) 68
376
AIR 2014 SC 1674

261
by the parent department to which respondents belonged. The Hon‘ble Supreme Court
held that the order of High Court to interdict the criminal proceedings was not
appropriate, as it did not result into any failure of justice.

For a situation where affirmations of bribery and corruption are made against
Chief Minister and the investigation agency can gather essential legitimate proof
which by all appearances demonstrate his association straightforwardly or by
implication his involvement into the crime, it is reasonable as well as virtuous that he
ought to instantly demit his office so that the law has its own course without any
biasness on the part of executive. Looking at the matter from the point of constitution
as it seems to be, a Governor works through his Council of Ministers headed by the
corrupted Chief Minister would not go forward to endorse his own prosecution in any
way.

Where a Governor is confronted with such a curious and intriguing

circumstance it would be a significant more secure course for him to endorse sanction
for the prosecution of the accused Chief Minister in the event that at first sight proof
uncovers facts constituting the offence against him and look for judicial decision. On
the off chance that the accused has been erroneously involved or that there is no
legitimate proof against him, he would acquire respectable discharge or acquittal as
the case may be, which has happened on account of numerous national leaders in
some cases. All this support the basic idea that concerned sanctioning authority is not
in any manner required to assess the evidences provided by the prosecution or to
postpone this matter essentially to spare the accused person.

We have seen in a number of instances that some competent sanctioning

authorities decline to give sanction to benefit an accused even when there is
substantial evidence against him. Such an approach should be condemned as it barely
supports the cause of justice. On the other hand, it emboldens the criminal elements to
execute their misdeeds with much more energy. There is one instance to demonstrate
the functioning of sanctioning authority which is the case of G. Nagarajan v. State

262
rep. by Deputy Supdt. of Police, Vigilance & Anti-Corruption Special Cell377, decided
by Madras High Court. The Court observed that the sanctioning authority had refused
sanction on relatively insubstantial grounds.

The case is related to the illegal felling of the trees in huge numbers from the
forests owned by the government under the guise of felling from the private
properties. After the change of the felled trees into timber, the forest contractor
applied for the permit to export these felled trees. The Forest Block Officer gave a
declaration that the timber looked to be sent out is not mixed with the timber of
unlawful origin and that there has been no illegal felling in the area under his
jurisdiction. As per the investigation agency it was a fabricated declaration in
perspective of the huge scale felling in the forests owned by the government. The
concerned Chief Conservator of Forests, who was the appropriate competent
sanctioning authority in this case, was persuaded that in perspective of the evidences
provided by the prosecution, albeit circumstantial it would be practical for him to
review his earlier order of refusing sanction to prosecute. Consequently, he gave his
assent and the trial Court punished the wrongdoer as per law.

The apex court of the country has reaffirmed its view regarding award of
sanction in a number of cases and has stressed that this power should be cautiously
used by the competent authority. The Hon‘ble Supreme Court in, Mohd. Fasal Ahmed
v. State of A. P.378 has said that:

―It is incumbent on the prosecution to prove that a valid sanction has

been granted by the Sanctioning Authority after it was satisfied that a case for
sanction has been made out constituting the offence. This should be done in two
ways either (1) by producing the original sanction which itself contains the
facts constituting the offence and the grounds of satisfaction and (2) by
adducing evidence to show the facts placed before the Sanctioning Authority
and the satisfaction arrived at by such authority. Any case instituted without a
proper sanction must fail because this being a manifest defect in the

377
2010 (14) R.C.R. (Criminal) 207
378
AIR 1979 SC 677

263
 prosecution, the entire proceedings, are rendered void, ab initio. What the
Court has to see is whether or not the Sanctioning Authority at the time of
giving sanction was aware of the facts constituting the offence and applied its
mind for the same; any subsequent fact which may come into existence after the
grant of sanction is wholly irrelevant. The grant of sanction is not an ideal
formality or an acrimonious exercise but a solemn and sacrosanct act which
affords protection to Government servants against frivolous prosecution and
must therefore be strictly complied with before any prosecution can be
launched against the public servant concerned.‖

The honorable Supreme Court in, Periasamy v. Inspector Vigilance & Anti-
Corruption, Tiruchirapalli379, has held that: ―The sanction order given by authority to
prosecute an accused under the Prevention of Corruption Act is not an empty
formality but it should be after full satisfaction on the basis of the materials and
evidence made available with regard to the allegations made against the particular
accused and that the non-giving of any reasons pertaining to the grounds of
satisfaction amounts to invalidate the sanction order itself and not in accordance with
law.‖ Thus, we can conclude that the act of awarding sanction for the prosecution
against a public servant is an important stage into the process of cases of corruption
and bribery. It should be executed by the appropriate sanctioning authority with due
care and caution. The sanctioning authority should provide its assistance in attaining
the course of justice and should not be a party into the defeat of justice. In situations
where there is by all appearances substantial proof against an accused, it should act
quickly and rapidly by lifting its brake to give assent for the prosecution of the
accused and should leave the rest matter for a Court of law where there will be an
opportunity even for the accused to prove his innocence or non-involvement into the
crime of bribery and corruption.

379
1992-L.W. (Crl.) 582

264
4.12.3. QUASHING OF SECTION-6A OF DELHI SPECIAL POLICE
ESTABLISHMENT ACT, 1946

Recently, a development has been seen in context of sanction given by the

competent authority in relation with prosecution of the public servant in cases of
bribery and corruption. The honorable Supreme Court has quashed the Section-6A of
the Delhi Special Police Establishment Act, 1946, according to which the prior
sanction is mandatory for starting inquiry or investigation against the public officials
of the rank of Joint Secretary and above. The Section reads as under380:

6A. Approval of Central Government to conduct inquiry or investigation381:

(1) The Delhi Special Police Establishment shall not conduct any inquiry or
investigation into any offence alleged to have been committed under the
Prevention of Corruption Act, 1988 (49 of 1988) except with the
previous approval of the Central Government where such allegation
relates to:

(a) The employees of the Central Government of the level of Joint

Secretary and above; and

(b) Such officers as are appointed by the Government in corporations

established by or under any Central Act, Government companies,
societies and local authorities owned or controlled by that
Government.

(2) Notwithstanding anything contained in sub-section (1), no such

approval shall be necessary for the cases involving arrest of a person on
the spot on the charge of accepting or attempting to accept any
gratification other than legal remuneration referred to in clause (c) of
the Explanation to Section 7 of the Prevention of Corruption Act, 1988
(49 of 1988).

380
Delhi Special Police Establishment Act, 1946 (Act 25 of 1946), s. 6A.
381
Inserted by Section 26 of the Act 45 of 2003, w.e.f. September 1, 2003.

265
 A constitutional bench of the court had quashed Section 6A of the Delhi Special
Police Establishment Act, which mandated such prior sanctions from the government
for acting against senior officers in corruption cases.382 It is a welcome step to further
the interest of justice by providing speedy justice in cases of corruption by eliminating
impediments of procedure to initiate prosecution proceedings against the accused. But
still there is urgent need to done away with these restrictive provisions of law or there
should be a time limit to grant sanction in cases of bribery and corruption as there is a
strong public opinion in against these provisions of law. A balance should be
maintained between speedy disposal of the cases and in the same way it should be
guaranteed that honest public servants are not harassed by malicious, vexatious and
frivolous accusations.

4.13. ACCUSED PERSON TO BE A COMPETENT WITNESS

The persons who have been accused under the Prevention of Corruption Act,
1988 shall be competent witnesses in the eyes of law under some specified
circumstances. This provision 383 was added to give fair opportunity to the accused to
defend his case. Hence, the provision favours the concept of natural justice by
providing an accused all opportunities to plead his case and he may act as a witness
for himself or any other persons accused under the same case. Under Section 21 of the
Act, any person punishable under the Prevention of Corruption Act 1988 shall be a
competent witness for the defence and may give evidence on oath in disproof of the
charges made against him or any person charged together with him at the same trial
provided that:

(a) He shall not be called as a witness except on his own request.

(b) His failure to give evidence shall not be made the subject of any
comment by the prosecution or given rise to any presumption against
himself or any person charged together with him at the same trial.

382
Vikas Dhoot, ―Government mulls changes in anti-corruption laws to protect official‖, Available at:
http://articles.economictimes.indiatimes.com/2014-06-09/news/50447971_1_parakh-anti-corruption-law-
cbi (Visited on June 10, 2014).
383
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 21.

266
 (c) He shall not be asked and if asked shall not be required to answer any
question tending to show that he has committed or been convicted of any
offence with which he is charged or is of bad character unless-
(i) the proof that he has committed or been convicted of such offence is
admissible evidence to that he is guilty of the offence with which he is
charged, or
(ii) he has personally or by his pleader asked any question of any
witness for the prosecution with a view to establish his own good
character, or has given evidence of his good character, or the nature or
conduct of the defence is such as to involve imputations on the character
of the prosecutor or of any witness for the prosecution, or
(iii) he has given evidence against any other person charged with the
same offence.
In this way we can analyse that it is a welcome provision of the Act giving fair
opportunity to the accused to fight his case without any biasness on the part of law.
Equal opportunity is available to him to prove his innocence as well as of other
persons implicated under the same case. He is a competent witness for defence and
should be called upon to give his evidence only upon his request. In case of his failure
to give evidence, he should not be subject to any comment by the prosecution. In
addition, no presumption shall be made against him as a result of non-giving of
evidence.

The safeguards provided to the accused are for the sake of fair play in doing
justice and furthers the principles of natural justice. He shall also not to be asked
inappropriate questions relating to his association in any other offence he has
committed or convicted or of his bad character. But these questions may be asked in
three situations: firstly, where the proof that he has committed or been convicted of
such offence is admissible in evidence to that he is guilty of the offence with which he
is charged. Secondly, where in the trial he has already given evidences of his good
character, then evidences of his bad character may be given which is also in the line of
law of evidence. And thirdly, where he has given evidences against any other person
in the same trial.
267
4.14.1. APPOINTMENT OF SPECIAL JUDGES

The main purpose of law is to try to attain a crimeless society. A perfect

crimeless society has always been a distant dream because of various complex
reasons. Then the rule of priority comes to the picture which seeks to prevent those
offences which affect society on a larger scope on priority basis. The aim of law is to
prevent such crimes which are more dangerous to the society. The crimes of bribery
and corruption come in this category because these are posing hindrances to the
constitutional objectives of bringing equality and restricting the functions of welfare
State. Not only this, these are also the mother of many other crimes. Thus, the
prevention of offences of bribery and corruption is necessary and has to be dealt with
caution and on priority basis.

For fulfilling the above mentioned purpose, there are provisions of establishing
Special Courts for the effective and speedy disposal of the cases of bribery and
corruption. Sections 3 to 6 and Section 26 of the Prevention of Corruption Act, 1988
deal with the appointment, working and functions of the Special Judges. The power to
appoint Special Judges is given to the Central Government and State government
both384. The provision given in the Act states that the Central government or the State
government by Notification in the Official Gazette may appoint as many special
judges as may be necessary for such area or areas or for such case or group of cases as
may be specified in the notification to try the following offences namely:

a) Any offence punishable under this act; and

b) Any conspiracy to commit or any attempt to commit or any abetment of any
of the offences specified in clause (a).
It is also provided under the Act that every special Judge appointed under the
Criminal Law Amendment Act, 1952 for any area or areas and is holding office on the
commencement of this Act shall be deemed to be a special Judge appointed under
Section 3 of this Act for that area or areas and, accordingly, on and from such
commencement, every such Judge shall continue to deal with all the proceedings
pending before him on such commencement in accordance with the provisions of this
384
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 3 (1).

268
Act385. Thus Section 26 of the Prevention of Corruption Act, 1988 brings light upon
the jurisdiction of special judges.

4.14.2. QUALIFICATION REQUIRED TO BE APPOINTED AS SPECIAL

JUDGE386

A person shall not be qualified for the appointment as a special judge under the
Prevention of Corruption Act, 1988 unless he is or has been a Session Judge or an
Assistant Session Judge under the Code of Criminal Procedure 1973 or in any other
law for the time being in force. The offences specified in sub-section (1) of section 3,
which we have studied in previous paragraph, shall be tried by special judges only. A
special judge has to work under great responsibility for the prevention of evil of
corruption, that‘s why he has to be efficient and qualified enough in that regard.

4.14.3. CASES TRIABLE BY SPECIAL JUDGE

In this part we are going to discuss about the cases triable by Special Judges.
Notwithstanding anything contained in the Code of Criminal Procedure, 1973, or in
any other law for the time being in force, the offences specified in sub-section (1) of
section 3 shall be tried by special Judges only387. Every such offence shall be tried by
the special Judge for the area within which it was committed, or, as the case may be,
by the special Judge appointed for the case, or where there are more special Judges
than one for such area, by such one of them as may be specified in this behalf by the
Central Government388. The Hon‘ble Supreme Court in State through CBI, New Delhi
v. Jitender Kumar Singh389 held that a Special Judge appointed under Section 3 (1) of
the PC Act has got jurisdiction to proceed exclusively against a public servant and
exclusively against a non-public servant as well, depending upon the nature of the
offence referred to in Chapter III of the PC Act. The Hon‘ble Supreme Court in M/s
Hcl Infosystem Ltd. V. Central Bureau of Investigation 390, reiterated the same as
discussed above. In this particular case, the accused public servant died before the
385
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 26.
386
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 3 (2).
387
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 4 (1).
388
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 4 (2).
389
AIR 2014 SC 1169
390
2016 (3) RCR (Criminal) 1012 (SC)

269
framing of charge. The Court held that the Special Judge could continue the
proceedings against the private persons after the death of public servant and even
when there was no charge under Corruption Act.

4.14.4. PROCEDURE TO BE FOLLOWED AND POWERS OF SPECIAL

JUDGE

The powers given to the Special Judges appointed and the procedure to be
adopted by them to decide cases under the Act are specifically defined under various
provisions391. These powers are necessary to implement the provisions of the Act and
provide justice. These powers are essential for the prevention of cases of bribery and
corruption among public servants. Following powers are given to, or procedure to be
adopted by, the Special Judges appointed under the Prevention of Corruption Act:

a) A special Judge may take cognizance of offences without the accused being
committed to him for trial and, in trying the accused persons, shall follow the
procedure prescribed by the Code of Criminal Procedure, 1973 for the trial of
warrant cases by Magistrates392. This power of the Special Judge empowers
him to do justice without following the technicalities of procedure.
b) It is provided under the Act that it is also within the power of the Special Judge
to try any offence other than an offence specified under the Act to be triable by
Special Judge, if the accused is charged with such offence in the same trial393.
c) A special Judge may, with a view to obtaining the evidence of any person
supposed to have been directly or indirectly concerned in or privy to, an
offence, tender a pardon to such person on condition of his making a full and
true disclosure of the whole circumstances within his knowledge relating to the
offence and to every other person concerned, whether as principal or abettor, in
the commission thereof and any pardon so tendered shall, for the purposes of
sub-sections (1) to (5) of section 308 of the Code of Criminal Procedure, 1973,
be deemed to have been tendered under section 307 of that Code394. It is an

391
The Prevention of Corruption Act, 1988 (Act 49 of 1988), ss. 4-6.
392
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 5 (1).
393
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 4 (3).
394
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 5 (2).

270
 important provision when it comes to obtain evidences under the Act. Most of
the time the acts of bribery and corruption done by the accused person are
performed in a very secret manner. Co-conspirators perform various functions
in an atmosphere difficult to find out by others. Hence it is the need of the hour
to use testimony of some of them against others for the interest of justice. That
is why there are provisions of pardon to the approvers.
d) Save as provided in sub-section (1) or sub-section (2) of Section 5, the
provisions of the Code of Criminal Procedure, 1973 shall be followed by the
Special Judge during the proceedings, if they are not inconsistent with the Act.
For the purpose of the proceedings before a special Judge of the said
provisions, the Court of the special Judge shall be deemed to be a Court of
Session and shall have all the powers of a Sessions Court. In addition, the
person conducting a prosecution before a special Judge shall be deemed to be a
public prosecutor395. Thus a Special Judge is equipped with all the general
powers of a Sessions Judge to conduct proceedings of the offences committed
under the Act. It is also one of the important provisions provided under the Act
furthering the cause of justice.
e) Subject to the provision discussed above, a Special Judge appointed under the
Act shall follow the proceedings as given under sections 326 and 475 of the
Code of Criminal Procedure, 1973. While conducting such proceedings he shall
be deemed to be having all the powers of a Magistrate 396. Whenever any Judge
or Magistrate after having heard or recorded the whole or any part of the
evidences in an inquiry or a trial, ceases to have jurisdiction and is succeeded
by another Judge or Magistrate, the Judge or Magistrate so succeeding may act
on the basis of evidences recorded by his predecessor. In addition, he may also
re-summon the witness whose evidences have been already recorded for the
interest of justice397.

395
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 5 (3).
396
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 5 (4).
397
The Code of Criminal Procedure, 1973 (Act 2 of 1974), s. 326.

271
 f) A special Judge also has the power to pass upon any person convicted by him
any sentence authorized by law for the punishment of the offence of which
such person is convicted398.
g) A special Judge while trying an offence punishable under this Act shall be
having all the powers and functions of a District Judge which are given to such
Judge under the Criminal Law Amendment Ordinance, 1944. The Criminal
Law Amendment Ordinance, 1944 contains provisions for the attachment of
the property of the accused.
h) Notwithstanding anything contained in the Code of Criminal Procedure 1973, a
Special Judge shall as far as practicable hold the trial of an offence on day-to-
day basis399.
i) A Special Judge appointed under the Act shall be having the power to conduct
summary trial of the cases under specific circumstances. Where a special Judge
tries any offence specified in sub-section (1) of section 3, alleged to have been
committed by a public servant in relation to the contravention of any special
order referred to in sub-section (1) of section 12 A of the Essential
Commodities Act, 1955 or of an order referred to in clause (a) of sub-section
(2) of that section, then, notwithstanding anything contained in sub-section (1)
of section 5 of this Act or section 260 of the Code of Criminal Procedure, 1973,
the special Judge shall try the offence in a summary way, and the provisions of
sections 262 to 265 (both inclusive) of the said Code shall, as far as may be,
apply to such trial400.
It is provided under the Proviso that in the case of any conviction in a summary
trial under Section 6, it shall be lawful for the Special Judge to pass a sentence of
imprisonment for a term not exceeding one year. The Special Judge may refrain
himself to try the case summarily if he is of the opinion that a sentence exceeding one
year is necessary in the case or it is undesirable to try the case summarily. In that
situation, the special Judge shall, after hearing the parties, record an order to that
effect and thereafter recall any witnesses who may have been examined and proceed

398
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 5 (5).
399
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 4 (4).
400
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 6 (1).

272
to hear or re-hear the case in accordance with the procedure prescribed by the said
Code for the trial of warrant cases by Magistrates401. There shall be no appeal by a
convicted person in any case tried summarily under Section 6 in which the special
Judge passes a sentence of imprisonment not exceeding one month, and of fine not
exceeding two thousand rupees. But such an appeal under the relevant provisions may
lie to the appropriate higher court if the sentence or fine exceeds the above said
limit402.
It is also provided under the Act that the procedure to be adopted by the court
while deciding a case under the Act be on the lines of the Code of Criminal
Procedure, 1973, but subject to certain modifications as are given as under 403:

(a) in sub-section (1) of section 243, for the words ―The accused shall then
be called upon‖, the words ―The accused shall then be required to give in
writing at once or within such time as the Court may allow, a list of the persons
(if any) whom he proposes to examine as his witnesses and of the documents (if
any) on which he proposes to rely and ―he shall then be called upon‖ had been
substituted;

(b) in sub-section (2) of section 309, after the 'third proviso, the following
proviso had been inserted, namely:-

―Provided also that the proceeding shall not be adjourned or postponed

merely on the ground that an application under section 397 has been made by
a party to the proceeding.‖;

(c) after sub-section (2) of section 317, the following sub-section had been
inserted, namely:-

―(3) Notwithstanding anything contained in sub-section (1) or sub-

section (2), the Judge may, if he thinks fit and for reasons to be recorded by
him, proceed with inquiry or trial in the absence of the accused or his pleader

401
The Prevention of Corruption Act, 1988 (Act 49 of 1988), 2nd Proviso to s. 6(1).
402
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 6 (1).
403
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 22.

273
 and record the evidence of any witness subject to the right of the accused to
recall the witness for cross-examination.‖;

(d) in sub-section (1) of section 397, before the Explanation, the following
proviso had been inserted, namely:-

―Provided that where the powers under this section are exercised by a
Court on an application made by a party to such proceedings, the Court shall
not ordinarily call for the record of the proceedings:-

(a) without giving the other party an opportunity of showing cause why the
record should not be called for; or

(b) if it is satisfied that an examination of the record of the proceedings may

be made from the certified copies.‖

4.15. APPLICABILITY OF THE PREVENTION OF CORRUPTION ACT

UPON JUDICIAL OFFICERS

In this part we are going to discuss whether the judicial officers come under the
ambit of Prevention of Corruption Act, 1988. There has never been any uncertainty
that the Prevention of debasement Act covers Judicial Officers in the subordinate
courts. Indeed, even along these lines, Judicial Officer is once in a while prosecuted
under the Act. The same is almost the position in appreciation of administrative staff
in the subordinate courts. The cause behind why Judicial Officers are not prosecuted
under the Act is not that the number of dishonest officers is insignificant, but the true
reason is that there is no viable mechanism to prosecute them. Instances of corruption
in subordinate judiciary is significantly less when contrasted with different
departments, but even then the time has now come when one ought to consider
criminal prosecution as an impediment to control such instances.

Now let us discuss whether the judges of higher courts come under the purview
of the Prevention of Corruption Act, 1988. The Constitution of India provides under
various provisions has protected and preserved the judges position as a constitutional

274
functionary and holds an office, not a post or service 404. K. Ramaswami J. former
Hon‘ble Chief Justice of Madras High Court is of the opinion that the judge functions
as a court. He is the court, a third branch of the State itself and such a court is not and
should not by any stretch of imagination, be a servant or public servant 405. In K.
Veeraswami v. Union of India and others406, Justice J.S. Verma, by descending
majority view, said that a judge of higher judiciary is a constitutional functionary,
even though he holds a public office and in that sense, he may be included in the wide
definition of public servant. But, as there was no authority nominated into the
Prevention of Corruption Act to sanction prosecution of Supreme Court and higher
court judges they could not be classified as public servant under the Prevention of
Corruption Act, 1988407. Hence, the judges of higher judiciary are not public servants
and do not come under the ambit of the Prevention of Corruption Act, 1988. The
position is different when it comes to the judicial officers of the subordinate courts,
though they barely prosecuted under the Act.

However, in majority judgment [Ray, B.C. (J), Shetty, K.J. (J), Sharma, L.M.
(J) and Venkatachalliah, M.N. (J) consenting], it was established that a Judge of the
High Court or of the Supreme Court comes within the definition of public servant
under Section 2 of the Prevention of corruption Act, 1947 and he is liable to be
prosecuted under the provisions of the Act. A Judge will be liable for committing
criminal misconduct within the meaning of Section 5 (1) (e) of the Act, if he has in his
possession pecuniary resources or property disproportionate to his known sources of
income for which he cannot satisfactorily account. In order to launch a prosecution
against a Judge of a superior Court for criminal misconduct failing under Section 5
(1) (e) of the Act, previous sanction of the authority competent to remove a Judge,
including Chief Justice of a High Court, from his office is imperative. The President
of India has the power to appoint as well as to remove a Judge from his office on the
ground of proved misbehaviour or incapacity as provided in Article 124 of the

404
The Constitution of India, art. 124 (4), (5) and 218.
405
K. Veeraswami, Whither – Laws and Justice 23-28 (Eastern Law House Pvt. Ltd., Kolkata, 2001).
406
AIR 1991 (3) SC 196
407
Atul Lalasaheb More, An Appraisal of the Judicial System in India: A Critical Study on Judicial
Independence Vis-à-vis Judicial Accountability 180 (Laxmi Book Publication, Solapur, 2015).

275
Constitution and, therefore he, being the authority competent to appoint and to remove
a Judge, of course, in accordance with the procedure envisaged in clauses (4) and (5)
of Article 124 may be deemed to be the authority to grant sanction for prosecution of a
Judge under the provisions of Section 6 (1) (c) in respect of the offences provided in
Section 5 (1) (e) of the Act. In order to adequately protect a Judge from frivolous
prosecution and unnecessary harassment the President will consult the Chief Justice of
India who will consider all the materials placed before him and tender his advice to
the President for giving sanction to launch prosecution or for filing FIR against the
Judge concerned after being satisfied in the matter. The President shall act in
accordance with the advice given by the Chief Justice of India. If the Chief Justice of
India is of opinion that it is not a fit case for grant of sanction for prosecution of the
Judge concerned, the President shall not accord sanction to prosecute the Judge. This
will save the, rubbish concerned from unnecessary harassment as well as from
frivolous prosecution against him.

4.16. WITNESS PROTECTION MECHANISM

Protection of witnesses is the main essential of an effective criminal justice

system. Every criminal trial is dependent upon collection of evidences. Without
appropriate evidences it would be very difficult for the court to decide upon a given
matter. Collection of evidences is dependent upon testimony of witnesses along with
certain other elements. Therefore, it is of utmost importance to encourage witnesses to
come to the court to help in a given case. Many a times, criminals try to intimidate
witnesses to omit them to give evidence in a court of law. Hence, witness protection is
quite relevant in present context. Moreover, a witness may be discouraged by the
procedural technicalities, for example, when he is also indicted upon because of
giving, offering bribe to a public servant. If this happens, a witness will never come
forward to give his testimony because of fear of accusation or indictment. There is a
certain provision provided under the Act giving this protection to the offeror or bribe
giver. This provision is described as follows408:

408
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 24.

276
 ―Notwithstanding anything contained in any law for the time being in
force, a statement made by a person in any proceeding against a public servant
for an offence under sections 7 to 11 or under section 13 or section 15, that he
offered or agreed to offer any gratification (other than legal remuneration) or
any valuable thing to the public servant, shall not subject such person to a
prosecution under section 12.‖

4.17. NEXUS OF PREVENTION OF CORRUPTION ACT WITH INCOME

TAX ACT, 1961

The definition of the term ―public servant‖ is given under Clause (iv) of Sub-
section (c) of Section 2 of the Prevention of Corruption Act, 1988 and it covers a
number of government servants and other persons as well including judges. The
Hon‘ble Supreme Court of India in K. Veeraswami v. Union of India and others409 by
a majority of 4:1 has held that the Prevention of Corruption Act is applicable even
upon the Judges of the Supreme Court and the High Court. Section 7 encircles a
public servant with the Central Government or any State Government or Parliament or
the Legislature of any State or with any local authority, corporation or Government
company referred to in clause (c) of section 2, or with any public servant, whether
named or otherwise, rendering favour or disfavour to any person and the act is made
punishable with imprisonment which shall be not less than six months but which may
extend to five years and shall also be liable to fine.

In our country the instances and scope of bribery and corruption has increased
manifold because of its characteristic of being a developing economy. In a developing
economy, a substantial amount of government money is disbursed for development of
infrastructure and industrial development. For this the government has to engage a
number of employees to give effect to the strategic plans. These plans and schemes
include the imposition and continuation of controls, issuing of licenses/tenders, giving
Government properties on lease, exceptional favours in the matters of employment
and a number of other activities which has opened the doors for favouritism and
corruption. The era of liberalization has also played its role in increasing corruption as
409
AIR 1991 (3) SC 196

277
a result of above mentioned reasons. A democratic government duly elected by the
people has to be accountable and should work in a transparent manner in accordance
with the law of the land. But the government has failed badly in achieving this noble
objective of democracy. That is why; the judiciary had to come forward to control this
evil by way of adopting power of judicial activism and has put the law into motion by
taking former Prime Minister, Chief Ministers, Ministers and other high rank officials
within its reach.

The Income Tax Act, 1961 is one of the socio-welfare legislation which seeks
to serve the idea of social justice by collecting a minimum amount of money from the
taxpayers which can in turn to be utilized for the welfare of weaker sections of the
society by implementing various schemes made for that purpose. The procedure for
search and seizure given under the Act is relevant in this context 410. Section 132 (4)
provides for examination on oath of any person who is in possession of properties.
The statement such given by such person may be used in evidence in any proceeding
under the Act. In this way Section 132 (4) of the Act helps the prosecutions under the
Act significantly. An assessee 411 submitting a false statement as return is also liable
for prosecution under the Act412. Similarly, falsification of books of account or
document, etc. is also punishable413. The procedure for prosecutions and various
offences are given under the Chapter XXII. In addition, the provisions for penalty are
laid down under the chapter XXI.

Attaining of immovable properties in certain instances of transfer, to neutralize

avoidance of tax, is administered under Chapter XX-A of the Act. There is also an
important provision for the acquisition of immovable property transferred for evading
tax414. Procurement of properties for an amount of money clearly improper and which
is clearly lesser than the honest estimation of the property and which encourage both
the transferor and transferee for disguise of income and avoidance of income tax are

410
Income Tax Act, 1961 (Act 43 of 1961), s. 132.
411
Defined under Section 2 (7) of Income Tax Act, 1961 as ―a person by whom any tax or any other sum of
money is payable under this Act, and includes….‖
412
Income Tax Act, 1961 (Act 43 of 1961), s. 277.
413
Income Tax Act, 1961 (Act 43 of 1961), s. 277-A.
414
Income Tax Act, 1961 (Act 43 of 1961), s. 269 C.

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covered under Section 269-C and the competent authority duly empowered under
Income Tax Act may go on to initiate proceedings for the acquisition of such property
as per the given provisions. This won‘t just deny the wicked acquirer of his property,
but additionally a huge part of the property will go to the government. There will also
be additional liability as per the Prevention of Corruption Act, 1988. This is an
incredible stride without any procurement under the Prevention of Corruption Act, for
procurement, acquisition or seizure of property, other than detainment.

After considering all the reasons discussed above, we can easily conclude that
it is the need of the hour to establish a strong legitimate nexus of cooperation between
Income Tax Department, which is working under the Central Board of Direct Taxes in
the Ministry of Finance, with the investigation agency conducting the prosecution
under the Prevention of Corruption Act. A fiery stride towards this end will reinforce
the cases under the Prevention of Corruption Act. In light of all these facts, an
amendment into the Prevention of Corruption Act might be made, for confiscation of
the property, even in the name of benemidar. The apparent owner does not dare to
disclose for the apprehension of the Prevention of Corruption Act, if he happens to be
a public servant. The benamidar is not troubled in light of the fact that he is not the
real owner and it is not his property. Incorporation of these amendments into the anti-
corruption law will tackle the issue of corruption considerably. The same amendment
may likewise be made pertinent to the overall population. It is by this procedure, the
evil of corruption may be thwarted out of many places reasonably. The Government
must have the willpower to incorporate all these necessary changes into the law after
due consideration and parliamentary debates and discussion. In this way the true
purpose of democracy may be served by punishing the wrongdoers and developing
new measures to provide equal opportunities to the weaker and underdeveloped
sections of the society, which in turn will serve the noble purpose of social justice
enshrined into the Constitution.

4.18. PENALTIES OR PUNISHMENT UNDER THE ACT

Imposition of punishment or penalty is the basic essential of criminal justice

system. Without penalty or punishment, the purpose of law is difficult to attain.
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Penalty or punishment has a deterrent effect upon the minds of possible future
wrongdoers. It dents their urge to commit crime for their selfishness. It creates an
atmosphere into the society that the crimes will not be accepted by the civil society. It
discourages the wrongdoers and establishes the faith of general public into
administration. In this part, we are going to discuss about the nature and quantum of
the punishment imposed upon the wrongdoers for the violation of provisions
enshrined onto the Prevention of Corruption Act, 1988.

The degree, quantum and duration of the punishment play an important role
into the reformation of the accused. Apart from it, these factors also play their role in
creating a deterrent effect upon the possible future offenders. It proves to be a bad
bargain for them to get involved into crimes. Under the Prevention of Corruption Act,
1988 the general punishment provided is from three years of imprisonment to seven
years for the offences of lower degree (under Sections 7 to 12), in addition with fine.
The offences of higher degree are punishable with more punishment, for example, the
acts committed by the accused under Section 13. The offence of criminal misconduct
as given under Section 13 is punishable with imprisonment for a term which shall be
not less than four years but which may extend up to ten years and shall also be liable
to fine. The persons who have committed offences mentioned under Section 14, i.e.
habitual committing of offences under Sections 8, 9 and 12, are liable to be punished
with an imprisonment of five years which may be extended up to ten years of
imprisonment. In addition, he shall also be liable to pay fine as directed by the court in
this regard. The attempts to commit offences are also punishable under the Act 415. It is
provided that whoever attempts to commit an offence referred to in clause (c) or
clause (d) of sub-section (1) of section 13 shall be punishable with imprisonment for a
minimum term of two years which may be extended to five years of imprisonment
with fine. It is also provided under the Act that the Court should consider the value or
pecuniary interest into the thing or property subject matter of the offence
committed416.

415
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 15.
416
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 16.

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 Earlier, the Prevention of Corruption Act of 1988 provided only for a minimal
term of punishment which was insufficient in effectively controlling the evil of
corruption. The term of punishment was later extended by the Lokpal and Lokayuktas
Act, 2013 (No. 1 of 2014). It was extended because of mounted pressure from all the
quarters of life against the evil of corruption. During the recent days, the civil society
has contributed immensely in this regard by establishing a strong public opinion
against the evil of corruption. The Lokpal and Lokayuktas Act, 2013 was the result of
this consciousness in addition with the legal obligation of the government towards the
implementation of the provisions of UNCAC.

4.19. JURISDICTION OR PROCEDURE OF COURTS UNDER MILITARY,

NAVAL AND AIR FORCE OR OTHER LAW NOT TO BE AFFECTED
BY THE PREVENTION OF CORRUPTION ACT417

It is notable to mention here that the Prevention of Corruption Act, 1988 does
not affect the jurisdiction of, or procedure to be applied by, any court or other
authority, granted to it under the Army Act 1950, the Air Force Act, 1950, the Navy
Act, 1957, the Border Security Force Act, 1968, the Coast Guard Act, 1978 and the
National Security Guard Act, 1986. For removing all doubts it is also provided that
the court of a special judge shall be considered to be a court of ordinary criminal
jurisdiction i.e. like any court of criminal jurisdiction, the court of special judge shall
also be incompetent to govern the jurisdiction and procedure of a court established
under above mentioned legislations.

4.20. PROVISIONS RELATING TO APPEAL AND REVISION

The power relating to appeal and revision relating to the offences f bribery and
corruption under the Act is accorded to the High Court concerned. Subject to the
provisions of this Act, High Court may exercise, so far as they may be applicable, all
the powers of appeal and revision conferred by the Code of Criminal Procedure, 1973
on a High Court as if the court of the special Judge were a court of session trying

417
The Prevention of Corruption Act, 1988 (Act 49 of 1988), s. 25.

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cases within the local limits of the High Court418. Thus the court of a Special Judge
shall be considered a Sessions Court for the purpose of appeals and revision. In this
way, the salient features of the Prevention of Corruption Act, 1988 have been
discussed in detail. There are various significant provisions under the Act which have
proved to be helpful in curbing the evil of corruption. Yet, there is further need to
explore more into the Act to make it more effective. Next chapters of the study deal
with this context.

418
Section 27, the Prevention of Corruption Act, 1988

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