The Prevention of Corruption Act, 1988

Initially, within the Indian Justice System, the Indian Penal Code dealt with the offenses of bribery
and corruption in cases of Public Servant. But during the 1945s it came into notice that the then-
existing law was not adequate to meet the exigencies and a need was felt to introduce special
legislation to eradicate bribery and corruption, it was thus that the Prevention of Corruption Act,
1947 was enacted for the first time.

The 1947 Act was later amended at two instances by the Criminal Law Amendment Act, 1952 and by
the Anti-Corruption Laws (Amendment) Act, 1964 based on the recommendations of the Santhanam
Committee. The 1947 Act became a pilot to the Prevention of Corruption Act, 1988 which came in
force on 9th September 1988. It was aimed at making anti-corruption laws more effective by
widening their coverage and by strengthening the provisions to make the overall statute more effect

In State of M.P. v. Ram Singh, (2000) 5 SCC 88, the Supreme Court held that the object of the
Prevention of Corruption Act, 1988 was to make effective provisions for prevention of bribe and
corruption amongst public servants. It has been further held that it is a social legislation to curb
illegal activities of public servants and should be liberally construed so as to advance its object and
not liberally in favour of the accused.

THE STATEMENT OF OBJECT AND REASONS FOR THE ENACTMENT OF THE PREVENTION OF
CORRUPTION ACT, 1988

1. The bill is intended to make the existing anti-corruption laws more effective by widening their
coverage and by strengthening the provisions.

2. The Prevention of Corruption Act, 1947, was amended in 1964 based on the recommendations of
the Santhanam Committee. There are provisions in Chapter IX of the Indian Penal Code to deal with
public servants and those who abet them by way of criminal misconduct. There are also provisions in
the Criminal Law Amendment Ordinance, 1944, to enable attachment of ill- gotten wealth obtained
through corrupt means, including from transferees of such wealth. The bill seeks to incorporate all
these provisions with modifications so as to make the provisions more effective in combating
corruption among public servants.

3. The bill, inter alia, envisages widening the scope of the definition of the expression ‗public
servant‘, incorporation of offences under sections 161 to 165A of the Indian Penal Code,
enhancement of penalties provided for these offences and incorporation of a provision that the
order of the trial court upholding the grant of sanction for prosecution would be final if it has not
already been challenged and the trial has commenced. In order to expedite the proceedings,
provisions for day-to-day trial of cases and prohibitory provisions with regard to grant of stay and
exercise of powers of revision on interlocutory orders have also been included.

4. Since the provisions of section 161A are incorporated in the proposed legislation with an
enhanced punishment, it is not necessary to retain those sections in the Indian Penal Code.
Consequently, it is proposed to delete those sections with the necessary saving provision.

1
THE SALIENT FEATURES OF THE ACT

Some of the salient features of the Act are:

1. It incorporates the Prevention of Corruption Act, 1947, the Criminal Law Amendment Act, 1952,
and Sec. 161 to 165-A of the Indian Penal Code with certain tweaks in the original provisions.

2. It has enlarged the scope of the definition such as Public Duty and Public Servant under the
definition clause, Section 2, of the act. 3. It has shifted the burden of proof from the prosecution as
mentioned in the CrPC to the accused who is charged with the offense.

4. The provisions of the Act clearly state that the investigation is to be made by an officer, not below
the rank of Deputy Superintendent of Police.

5. The 1988 Act enlarged the scope of the term ‘public servant’ which now includes employees of
the central government, union territories, nationalized banks, employees of the University Grants
Commission (UGC), vice-chancellors, professors, and the like.

6. The Act covers ‘corrupt’ acts as bribe, misappropriation, obtaining a pecuniary advantage,
possessing assets disproportionate to income and the like.

THE CONSTITUTIONAL PROVISIONS RELATED TO PREVENTION OF CORRUPTION ACT

Statutory and Legal Provisions regarding corruption are also specified under the codified Laws. The
Supreme law i.e. The Constitution of India, is also consist the provision of Writ Jurisdiction. To
control the offences related to money as well as economy, Office of Comptroller and Auditor
General (CAG) is constituted, besides these there are certain authorities at Central level and State
level such as CVC (Central Vigilance Commission), CPA (Committee on Parliament Account), CBI
(Central Bureau of Investigation), ACBS (Anti-Corruption Bureau of State).

The Supreme Court is the guardian of the Constitution. The Constitution has empowered the Apex
Court to safeguard the fundamental rights enshrined in Part III of the Constitution. Fundamental
Rights are the rights against the mighty powers of the State. The State is defined in Art. 12 of the
Constitution.

Under Art. 32 and 226 of Indian Constitution following ―Writs‖ are provided as well as facility of
Public Interest Litigation (PIL) available.

i. Writ of Habeas Corpus

ii. Writ of Mandamus

iii. Writ of Prohibition

iv. Writ of Certiorari

v. Writ of Quo-Warranto

All these writs are having their own impact and power in different fields, and actually these are
nothing but ―Powers in Hands of Judiciary to control the Administrative discretion.

2
Preamble of the Constitution of India gives guaranty of ‘Justice’ to the citizens of India. Constitution
adopted federal government which consist Union Government at Central level and State
Government at State level. Crime is in a list of state subject whereas, law and order is in a concurrent
list. There are number of provisions made under Constitution for eradication of corruption in the
society. Art. 311 of the Constitution of India and judicial Reform process aims to eradicate corruption
from the society.

THE INVESTIGATING AGENCIES CONSTITUTED FOR IMPLEMENTING ANTI-CORRUPTION POLICIES IN

INDIA

To eradicate the evil of corruption and for implementing anticorruption policies and raising
awareness on corruption issues, the Central Government has enacted Anti-Corruption Laws to deal
with the prevention of corruption and constituted commissions namely Central Vigilance
Commission, Central Bureau of Investigation, Enforcement Directorate and Anti-Corruption Bureau
to enforce the Law of Prevention of Corruption Act. No doubt these anti-corruption agencies are
doing best to combat corruption through implementing and enforcing anti-corruption policies
adopted by government.

At the federal level various bodies are constituted. Out of which key institutions are the Supreme
Court (S.C), the Central Vigilance Commission (CVC) the Central Bureau of Investigation (CBI) the
office of the Comptroller and Auditor General (CAG) and the Chief Information Commission (CIC),
Enforcement Directorate (ED) and at the State level there are the Anti-corruption Bureau (ACB) for
each State.

Above investigating agencies are specialized bodies to form anti-corruption strategies. Its main
function is to enforce the anti-corruption legislature and detect the corruption. These agencies have
a power to investigate and prosecute corrupt persons who have committed an offence under the
provision of anti-corruption laws. In addition to these, anti- corruption agencies are also responsible
for awareness campaign, mobilizing and educating citizens about corruption.

As per recommendation of Santhanam Committee, Government of India vide resolution dt.11/2/84

establish Central Vigilance Commission (CVC), the Central Bureau of Investigation (CBI), the office of
the Comptroller and Auditor General (CAG) and Anti-corruption Bureau (ACB) which are the main
nodal investigating agencies for each State.

A) Supreme Court and High Courts: Any citizen can file a petition, known as Public Interest Litigation,
before the Hon‘ble High Courts and Hon‘ble the Supreme Court, alleging corruption in the public
sector. If the Hon‘ble High Courts and the Supreme Court find the allegations credible, they can refer
such cases to the Central Bureau of Investigation for further enquiry or investigation. Many big cases
of corruption have been successfully investigated by the agency in the past on such references from
these courts.

B) Central Vigilance Commission (CVC): Central Vigilance Commission is an apex Indian governmental
watchdog body created in 1964 to address governmental corruption constituted under the provision
of Central Vigilance Commission Act, 2002. It has the status of an autonomous body i.e. free from
executive control. The Central Vigilance Commission set up by the Government of India to advise

3
and guide central government agencies, as well as it also have special power to analysis of
complaints of corruption, professional misconduct, misuse of power by administrative bodies.

The Central Vigilance Commission Act provides for constitution of a Central Vigilance Commission, to
inquire or cause inquiries to be conducted into offences alleged to have been committed under the
Prevention of Corruption Act, 1988 by certain categories of public servants of the Central
government, corporation established by or under any Central Act, government companies, societies
and Local authorities owned or controlled by the Central Government and for matters connected
therewith or incidental thereto.

C) Central Bureau of Investigation (CBI): The Central Bureau of Investigation is an investigating

agency set up by the Government of India to investigate crime, especially corruption cases in Union
Territories, which are directly administered by the Government of India. Over a period of time, it has
become the premier corruption investigation agency in the country. It enjoys high credibility
amongst the people of India. As a result even the States also refer sensitive and large-scale
corruption cases to the Central Bureau of Investigation for investigation. The High Courts of various
States and the Supreme Court of the country have powers under the Indian Constitution to entrust
investigation of any crime to the Central Bureau of Investigation for investigation.

D) Comptroller and Auditor General of India (CAG): Comptroller and Auditor General is supreme
constitutional audit authority of India. Comptroller and Auditor General is the ‗watchdog‘ on each
and every financial transaction of Central or State department such as railway, telecom, public
sector, organizations etc. Every department/ organization is subject to internal audit as well as of
statutory audit. Comptroller and Auditor General is one of the institutions to prevent the corruption
in government department. Art.148 of the Constitution deals with Comptroller and Auditor General.
In democratic form every department is accountable to the people. Role of Comptroller and Auditor
General in democracy is as prejudiciary. Main function of the Comptroller and Auditor General is to
see that, money sanction by parliament must be spent only for that purpose for which it is sanction.

E) Anti-Corruption Bureau (ACB): These police agencies of the States are meant mainly for
investigating corruption cases within the States under the Corruption Act. They are responsible for
the prevention, detection and investigation of corruption crime only and are not engaged in
conducting other police duties such as handling conventional crimes and law and order. After
investigating a crime, they file the investigation reports in a court of law to launch prosecution.

THE VARIOUS STATUTES THAT HAVE BEEN ENACTED WITH THE AIM TO CURB CORRUPTION AND
WHAT ARE THE KEY FEATURES OF SUCH STATUTE

Public servants in India can be penalized for corruption under the Indian Penal Code, 1860 and the
Prevention of Corruption Act, 1988. The Benami Transactions (Prohibition) Act, 1988 prohibits
benami transactions. The Prevention of Money Laundering Act, 2002 penalises public servants for
the offence of money laundering. India is also a signatory (not ratified) to the UN Convention against
Corruption since 2005. The Convention covers a wide range of acts of corruption and also proposes
certain preventive policies.

Key Features of the Acts related to Corruption:

I. Indian Penal Code, 1860:

4
The IPC defines ―public servant as a government employee, officers in the military, navy or air
force; police, judges, officers of Court of Justice, and any local authority established by a central or
state Act.

Section 169 pertains to a public servant unlawfully buying or bidding for property. The public
servant shall be punished with imprisonment of upto two years or with fine or both. If the property
is purchased, it shall be confiscated.

Section 409 pertains to criminal breach of trust by a public servant. The public servant shall be
punished with life imprisonment or with imprisonment of upto 10 years and a fine.

II. The Benami Transactions (Prohibition) Act, 1988:

The Act prohibits any benami transaction (purchase of property in false name of another person who
does not pay for the property) except when a person purchases property in his wife‘s or unmarried
daughter‘s name.

Any person who enters into a benami transaction shall be punishable with imprisonment of upto
three years and/or a fine.

All properties that are held to be benami can be acquired by a prescribed authority and no money
shall be paid for such acquisition.

III. The Prevention of Money Laundering Act, 2002

The Act states that an offence of money laundering has been committed if a person is a party to any
process connected with the proceeds of crime and projects such proceeds as untainted property.
‘Proceeds of crime’ means any property obtained by a person as a result of criminal activity related
to certain offences listed in the schedule to the Act. A person can be charged with the offence of
money laundering only if he has been charged with committing a scheduled offence.

The penalty for committing the offence of money laundering is rigorous imprisonment for three to
seven years and a fine of upto Rs 5 lakh. If a person is convicted of an offence under the Narcotics
Drugs and Psychotropic Substances Act, 1985 the term of imprisonment can extend upto 10 years.

The Adjudicating Authority, appointed by the central government, shall decide whether any of the
property attached or seized is involved in money laundering. An Appellate Tribunal shall hear
appeals against the orders of the Adjudicating Authority and any other authority under the Act.

Every banking company, financial institution and intermediary shall maintain a record of all
transactions of a specified nature and value, and verify and maintain records of all its customers, and
furnish such information to the specified authorities.

IV. The Prevention of Corruption Act, 1988:

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

5
If a public servant takes gratification other than his legal remuneration in respect of an official act or
to influence public servants is liable to minimum punishment of six month and maximum
punishment of ten year and fine. The Act also penalizes a public servant for taking gratification to
influence the public by illegal means and for exercising his personal influence with a public servant.

It is necessary to obtain prior sanction from the central or state government in order to prosecute a
public servant.

“PUBLIC SERVANT” AS PER THE PREVENTION OF CORRUPTION ACT AND WHAT CONSTITUTES
“PUBLIC DUTY”

Section 2(b): Public Duty

It means a duty in the discharge of which the State, the public or the community at large has an
interest.

In State of Gujarat v. Mansukhbhai Kanjibhai Shah, 2020 (2) RCR (Criminal) 544, the Supreme Court
observed that evidently, the language of Section 2(b) of the PC Act indicates that any duty
discharged wherein State, the public or community at large has any interest is called a public duty.

Section 2(c): Public Servant

It states-

(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 company as defined in Section 617 of the Companies Act, 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 officer by virtue of which he is authorised 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

6
aid from the Central Government or 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;

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 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 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 1. — Persons falling under any of the above sub-clauses are public servants, whether
appointed by the government or not.

Explanation 2. — Wherever the words “public servant”occur, 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.

In State of Maharashtra & Anr. v. Prabhakar Rao & Anr., (2002) 7 SCC 636, the Supreme Court held
that the definition of Public Servant‘ U/s 21 of IPC is of no relevance under the Prevention of
Corruption Act, 1988.

In Manish Trivedi v. State of Rajasthan, (2014) 14 SCC 420, the Supreme Court held that a member of
the Municipal Board or a Municipal Councillor per se may not come within the definition of public
servant as defined U/s 21 of IPC but this does not mean that they cannot be brought in the category
of public servant by any other enactment. In the present case, the Municipal Councillor or the
Member of the Board does not come within the definition of ―public servant‖ U/s 21 of IPC, but in
view of the legal fiction created by section 87 of the Rajasthan Municipalities Act, 1959 they come
within its definition.

In C.B.I. v. Ramesh Gelli, (2016) 3 SCC 788, the managing director and chair of a private banking
company were held to be ―public servants for the purposes of prosecution under the Prevention of
Corruption Act 1988.

In P.V. Narsimha Rao v. State, 1998 CriLJ 2930, the Supreme Court held that MLA is public servants
U/s 2(c)(viii) of Prevention of Corruption Act, 1988, as it states any person who holds an office by
virtue of which he is authorized or required to perform any public duty‘.

In M. Karunanidhi v. Union of India, AIR 1979 SC 898, the Supreme Court held that a Chief Minister
or a Minister are in the pay of the Government and are, therefore, public servants.

7
In Ashok Kumar Badola v. State of Rajasthan, (2011) 4 RLW 3606, the Rajasthan High Court held that
the definition of public servant has been expanded including holders of public office, who discharge
public duties. The Chairman of Municipal Council holds a public office and discharges public duties,
therefore, he would fall under the definition of term ―public servant‖ as defined U/s 2(c) of the Act.

In Shankardas Swami v. State of Rajasthan, (2018) 3 RLW 1881, the Rajasthan High Court held that
the protection U/s 197 CrPC is avaliable to the public servants even after their retirement. The
offence complained of is attributable to discharge of public duty or has a direct nexus therewith,
therefore, obtaining sanction is pre requisite

State of Gujarat vs. Mansukhbhai Kanjibhai Shah, (criminal appeal no.989 of 2018, decided on 27-04-
2020), Interpreting Section 2(c)(xi) of the Prevention of Corruption Act, 1988, Justice Ramana, who
authored the judgment, said: “Simply speaking, any person, who is a vice-chancellor, any member of
any governing body, professor, reader, lecturer, any other teacher or employee, by whatever
designation called, of any university, is said to be a public servant….. “Further, the definition covers
any person whose services have been availed of by a university, or any other public authority in
connection with holding or conducting examinations. On a perusal of Section 2(c) of the PC Act, we
may observe that the emphasis is not on the position held by an individual, rather, it is on the public
duty performed by him/her….. “It cannot be stated that a ‘deemed university’ and the officials
therein, perform any less or any different a public duty, than those performed by a university
simpliciter, and the officials therein.” Justice Ramana underlined the importance of “trust”. “There is
no gainsaying that nations are built upon trust. It is inevitable that in a democracy one needs to rely
on those with power and influence and to trust them of being transparent and fair,”

SOME OF THE OFFENCES COVERED UNDER THE PREVENTION OF CORRUPTION ACT, 1988 RELATED
TO BRIBING OF A PUBLIC SERVANT AND WHAT IS THE PENALTY PRESCRIBED

Section 7: Offence relating to public servant being bribed.

In P. Satyanarayana Murthy v. State of A.P., (2015) 10 SCC 152, it has been settled by the Supreme
Court that to convict the accused it is necessary to have adequate proof of demand and acceptance
of illegal gratification by the public servants U/s 7 of the Prevention of Corruption Act, 1988. It also
laid down hat without the proof of demand by the accused, mere possession and recovery of
currency notes would not establish the offence U/s 7. The Supreme Court has made the below-
mentioned observations: ―The proof of demand for illegal gratification, thus, is the gravamen, of
the offence U/s 7 of the Act and in the absence thereof, unmistakably, the charge, therefore, would
fail. Mere acceptance of any amount, allegedly by way of illegal gratification or recovery thereof,
dehors the proof of demand, ipso facto, would thus not be sufficient to bring home the charge under
the two sections of the Act”.

Section 8: Offence relating to bribing of a public servant.

In Parkash Singh Badal v. State of Punjab, (2007) 1 SCC 1, the Supreme Court held that ‘Gratification’
is not restricted to pecuniary gratification. It has been further held that the opening word of Sections
8 and 9 is ―whoever. The expression is very wide and would also cover public servants accepting
gratification as a motive or reward for inducing any other public servant by corrupt or illegal means.

8
Restricting the operation of the expression by curtailing the ambit of Sections 8 and 9 and confining
to private persons would not reflect the actual legislative intention.

THE INVESTIGATION PROCEDURE PRESCRIBED UNDER THE PREVENTION OF CORRUPTION ACT, 1988

Section 17: Persons authorised to investigate.

In Vinod Kumar Garg v. State (Government of National Capital Territory of Delhi), (2020) 2 SCC 88,
Apex Court has held that if an investigation was not conducted by a police officer of the requisite
rank and status required Under Section 17 of the Act, such lapse would be an irregularity, however
unless such irregularity results in causing prejudice, conviction will not be vitiated or be bad in law.
Therefore, the lack of sanction was found not to be a ground for quashing of the proceedings.

Section 17A: Enquiry or Inquiry or investigation of offences relatable to recommendations made or

decision taken by public servant in discharge of official functions or duties.

In Yashwant Sinha and Ors. v. Central Bureau of Investigation and Ors., (2020) 2 SCC 338, the
Supreme Court observed that: “In terms of Section 17A, no Police Officer is permitted to conduct
any enquiry or inquiry or conduct investigation into any offence done by a public servant where the
offence alleged is relatable to any recommendation made or decision taken by the public servant in
discharge of his public functions without previous approval, inter alia, of the authority competent to
remove the public servant from his Office at the time when the offence was alleged to have been
committed. In respect of the public servant, who is involved in this case, it is Clause (c), which is
applicable. Unless, therefore, there is previous approval, there could be neither inquiry or enquiry or
investigation”.

THE LEGAL PROVISION AND POSITION CONCERNING SANCTION REQUIREMENT UNDER THE
PREVENTION OF CORRUPTION ACT FOR PROSECUTION

Section 19: Previous Sanction necessary for Prosecution

In State through Anti-Corruption Bureau, Government of Maharashtra, Bombay v. Krishanchand

Khushalchand Jagtiani, AIR 1996 SC 1910, the Supreme Court held that the requirement of obtaining
sanction is to ensure that no public servant is unnecessarily harassed. Such protection is however
not absolute or unqualified – while a public servant should not be subjected to harassment, genuine
charges and allegations should be allowed to be examined by court.

In Romesh Lal Jain v. Naginder Singh Rana & Ors., (2006) 1 SCC 294, the Supreme Court held that an
order granting or refusing sanction must be preceded by application of mind on the part of
appropriate authority on material placed before it.

The Supreme Court in the matter of State of Punjab & Anr. v. Mohammed Iqbal Bhatti, 2010 AIR
SCW 1186 has considered the question whether State has any power of review in the matter of
grant of sanction in terms of Section 197 of the Code of Criminal Procedure, 1973 and held as under:

“Although the State in the matter of grant or refusal to grant sanction exercises statutory
jurisdiction, the same, however, would not mean that power once exercised cannot be exercised
once again. For exercising its jurisdiction at a subsequent stage, express power of review in the State
may not be necessary as even such a power is administrative in character. It is, however, beyond any

9
cavil that while passing an order for grant of sanction, serious application of mind on the part of the
concerned authority is imperative. The legality and/or validity of the order granting sanction would
be subject to review by the criminal courts. An order refusing to grant sanction may attract judicial
review by the Superior Courts. Validity of an order of sanction would depend upon application of
mind on the part of the authority concerned and the material placed before it. All such material facts
and material evidences must be considered by it. The sanctioning authority must apply its mind on
such material facts and evidences collected during the investigation. Even such application of mind
does not appear from the order of sanction, extrinsic evidences may be placed before the court in
that behalf. While granting sanction, the authority cannot take into consideration an irrelevant fact
nor can it pass an order on extraneous consideration not germane for passing a statutory order. It is
also well settled that the Superior Courts cannot direct the sanctioning authority either to grant
sanction or not to do so. The source of power of an authority passing an order of sanction must also
be considered. [See: Mansukhlal Vithaldas Chauhan v. State of Gujarat, (1997) 3 SCC 622”.

In Asian Resurfacing of Road Agency Pvt. Ltd. & Ors. v. Central Bureau of Investigation, AIR 2018 SC
2039, the Supreme Court observed that:

i. Section 19(3)(b) subsumes all grounds which are relatable to sanction granted. This is clear from
the word ―any‖ making it clear that whatever be the error, omission or irregularity in sanction
granted, all grounds relatable thereto are covered.

ii. This is further made clear by Explanation (a), which defines an “error” as including competency of
the authority to grant sanction.

iii. The words ―in the sanction granted by the authority‖ contained in Sub-clause (b) are
conspicuous by their absence in sub-clause(c), showing thereby that it is the proceedings under the
Act that are referred to.

iv. The expression ―on any other ground‖, therefore, refers to and relates to all grounds that are
available in proceedings under the Act other than grounds which relate to sanction granted by the
authority.

v. On the assumption that there is an ambiguity, and that there are two views possible, the view
which most accords with the object of the Act, and which makes the Act workable, must necessarily
be the controlling view. It is settled law that even penal statutes are governed not only by their
literal language, but also by the object sought to be achieved by Parliament. (See: Ms. Eera through
Dr. Manjula Krippendorf v. State (Govt. of NCT of Delhi) & Anr., MANU/SC/0876/2017 at paragraphs
134-140).

vi. In Madhu Limaye v. State of Maharashtra, (1977) 4 SCC 551 at 558, this Court held, ―It has been
pointed out repeatedly, vide for example, The River Wear Commissioners v. William Adamson,
(1876-77) 2 AC 743 and R.M.D. Chamarbaugwalla v. The Union of India, AIR 1957 SC 628, that
although the words occurring in a particular statute are plain and unambiguous, they have to be
interpreted in a manner which would fit in the context of the other provisions of the statute and
bring about the real intention of the Legislature. As the Statement of Objects and Reasons extracted
hereinabove makes it clear, Section 19(3)(c) is to be read with Section 4(4) and Section 22, all of

10
which make it clear that cases under the Act have to be decided with utmost despatch and without
any glitches on the way in the form of interlocutory stay orders.

vii. It has been argued on behalf of the Appellants that Sub-section (4) of Section 19 would make it
clear that the subject matter of Section 19, including Sub-section (3), is sanction and sanction alone.
This argument is fallacious for the simple reason that the subject matter of Sub-section (4) is only in
the nature of a proviso to Section 19(3)(a) and (b), making it clear that the ground for stay qua
sanction having occasioned or resulted in a failure of justice should be taken at the earliest, and if
not so taken, would be rejected on this ground alone.

viii. Section 19(3)(c) became necessary to make it clear that proceedings under the Act can be stayed
only in the eventuality of an error, omission or irregularity in sanction granted, resulting in failure of
justice, and for no other reason. It was for this reason that it was also necessary to reiterate in the
language of Section 397(2) of the Code of Criminal Procedure, that in all cases, other than those
covered by Section 19(3)(b), no court shall exercise the power of revision in relation to interlocutory
orders that may be passed. It is also significant to note that the reach of this part of Section 19(3)(c)
is at every stage of the proceeding, that is inquiry, trial, appeal or otherwise, making it clear that, in
consonance with the object sought to be achieved, prevention of corruption trials are not only to be
heard by courts other than ordinary courts, but disposed of as expeditiously as possible, as
otherwise corrupt public servants would continue to remain in office and be cancerous to society at
large, eating away at the fabric of the nation.

In M.P. Special Police Establishment v. State of M.P. & Ors., (2004) 8 SCC 788 (Constitutional Bench),
the Supreme Court held that no sanction u/s 19 of the P.C. Act, 1988 for prosecution of a Minister,
after his resignation, for offences committed by him during his tenure as Minister is required.

In Dr. Subramaniam Swamy v. Dr. Manmohan Singh, AIR 2012 SC 1185, the Apex Court issued
guidelines in following terms with an observation that Parliament should consider the Constitutional
imperative of Article 14 enshrining the rule of law wherein ‗due process of law‘ has been read into
by introducing a time limit in Section 19 of the P.C. Act 1988 for its working in a reasonable manner.

“(a) All proposals for sanction placed before any Sanctioning Authority, empowered to grant
sanction for the prosecution of a public servant under Section 19 of the PC Act must be decided
within a period of three months of the receipt of the proposal by the concerned authority.

(b) Where consultation is required with the Attorney General or the Solicitor General or the
Advocate General of the State, as the case may be, and the same is not possible within the three
months mentioned in clause (a) above, an extension of one month period may be allowed. But the
request for consultation is to be sent in writing within the three months mentioned in (a) above. A
copy of the said request will be sent to the prosecuting agency or the private complainant to
intimate them about the extension of the time limit.

(c) At the end of the extended period of time limit, if no decision is taken, sanction will be deemed to
have been granted to the proposal for prosecution, and the prosecuting agency or the private
complainant will proceed to file the chargesheet/ complaint in the court to commence prosecution
within 15 days of the expiry of the aforementioned time limit.”

11
In CBI v. Ashok Kumar Aggarwal, 2014 (84) ACC 252, the Hon‘ble Supreme Court has summarized the
role of the prosecution and the sanctioning authority before according sanction U/s 19 of the P. C.
Act, 1988 as under :

(a) The prosecution must send the entire relevant record to the sanctioning authority including the
FIR, disclosure statements, statements of witnesses, recovery memos, draft charge-sheet and all
other relevant material. The record so sent should also contain the material/document, if any, which
may tilt the balance in favour of the accused and on the basis of which, the competent authority
may refuse sanction.

(b) The authority itself has to do complete and conscious scrutiny of the whole record so produced
by the prosecution independently applying its mind and taking into consideration all the relevant
facts before grant of sanction while discharging its duty to give or withhold the sanction.

(c) The power to grant sanction is to be exercised strictly keeping in mind the public interest and the
protection available to the accused against whom the sanction is sought.

(d) The order of sanction should make it evident that the authority had been aware of all relevant
facts/materials and had applied its mind to all the relevant material.

(e) In every individual case, the prosecution has to establish and satisfy the Court by leading
evidence that the entire relevant facts had been placed before the sanctioning authority and the
authority had applied its mind on the same and that the sanction had been granted in accordance
with law.

In Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao Phalke & Ors., (2015) 3 SCC 123, the Supreme
Court held that sanction U/s 19(1) of prosecution cannot be granted if the prosecution is simply
vexatious nor the court can issue a positive direction to the sanctioning authority to give sanction for
prosecution.

In Manish Trivedi v. State of Rajasthan, AIR 2014 SC 648, The Supreme Court held that power U/s 19
of the P.C. Act, 1988 of sanction to prosecute cannot be delegated by the competent authority.
Sanction cannot be granted on the basis of report given by some other officer or authority.

In State of Maharashtra v. Mahesh G. Jain, (2013) 8 SCC 199, the Supreme Court held that grant of
sanction U/s 19 (1) of the P.C. Act, 1988 for prosecution is administrative function. Only prima facie
satisfaction of the sanctioning authority is needed.

In Anil Kumar v. M.K. Aiyappa, (2013) 10 SCC 705, the Supreme Court relying upon its earlier
decisions reported in (i) State of UP v. Paras Nath Singh, (2009) 6 SCC 372 (Three-Judge Bench) and
(ii) Army Headquarters v. CBI, (2012) 6 SCC 228 and (iii) Subramanian Swamy v. Manmohan Singh,
(2012) 3 SCC 64, it has been held by the Hon‘ble Supreme Court that Special Judge cannot order
registration of FIR U/s 156(3) CrPC for offences under P.C. Act, 1988 without prior sanction order of
competent authority U/s 19 (1) of the P.C. Act, 1988.

In Romesh Lal Jain v. Naginder Singh Rana & Ors., (2006) 1 SCC 294, the Supreme Court observed
that:

12
“Test to determine for sanction order to amount to a composite order, there must be an immediate
or proximate connection between the P.C. Act and the IPC offences for which accused is charged.
The test to be applied in such a case would be whether the offences under IPC are also required to
be prove in relation to the offences under the P.C. Act, 1988”.

In R.S. Nayak v. A.R. Antulay, AIR 1984 SC 684 (Constitutional Bench), the Supreme Court held that if
the public servant has ceased to be a public servant on the date of cognizance of the offence by the
court, sanction for his prosecution is not required.

THE PRESUMPTION UNDER THE PREVENTION OF CORRUPTION ACT REGARDING PUBLIC SERVANT
ACCEPTING ANY UNDUE ADVANTAGE

Section 20: Presumption where public servant accepts any Undue Advantage.

In C.M. Girish Babu v. CBI, (2009) 3 SCC 779, the Apex Court has held as follows:

“It is well settled that the presumption to be drawn under Section 20 is not an inviolable one. The
accused charged with the offence could rebut it either through the cross-examination of the
witnesses cited against him or by adducing reliable evidence.

It is equally well settled that the burden of proof placed upon the accused person against whom the
presumption is made under Section 20 of the Act is not akin to that of burden placed on the
prosecution to prove the case beyond a reasonable doubt”.

In N. Sunkanna v. State of Andhra Pradesh, (2016) 1 SCC 713, the Apex Court held as follows:

“It is settled law that mere possession and recovery of the currency notes from the accused without
proof of demand will not bring home the offence under Section 7, since demand of illegal
gratification is sine qua non to constitute the said offence. The above also will be conclusive insofar
as the offence under Section 13(1) (d) is concerned as in the absence of any proof of demand for
illegal gratification the use of corrupt or illegal means or abuse of position as a public servant to
obtain any valuable thing or pecuniary advantage cannot be held to be established. It is only on
proof of acceptance of illegal gratification that presumption can be drawn under Section 20 of the
Act that such gratification was received for doing or forbearing to do any official act. Unless there is
proof of demand of illegal gratification proof of acceptance will not follow”.

In Selvaraj v. State of Karnataka, (2015) 10 SCC 230, the Supreme Court with respect to
corroboration and burden of proof observed as follows:

“The allegation of bribe taking should be considered along with other material circumstances.
Demand has to be proved by adducing clinching evidence. Recovery of tainted money is not
sufficient to convict the accused. There has to be corroboration of the testimony of the complainant
regarding the demand of bribe.”

The Apex Court further observed as follows: “The prosecution has to prove the charge beyond
reasonable doubt like any other criminal offence and the accused should be considered innocent till
it is proved to the contrary by proper proof of demand and acceptance of illegal gratification, which
is the vital ingredient to secure the conviction in a bribery case”.

13
THE KEY CHANGES BROUGHT ABOUT BY THE PREVENTION OF CORRUPTION (AMENDMENT) ACT,
2018

Key changes to the definitions-

The Amendment Act includes the following definitions:

a. The term “Prescribed” has been introduced to mean rules that may be drafted by the Central
Government under the Act. Given that, we anticipate the following rules:

o Rules for organizations and companies to form internal guidelines and procedures to prevent its
employees from affording undue advantage to public servants; and o Rules for prosecution of a
public servant under the Act.

b. The term “Undue Advantage” has been defined to mean any gratification other than legal
remuneration. The term “Gratification” has been clarified to include all forms of gratifications
estimable in money besides pecuniary gratification.

c. The term “Legal remuneration” has been clarified to include all remuneration a public servant is
permitted to receive by the concerned authority.

Key amendments-

1. Time Extensions: Under Section 4 (4), the courts no longer have complete trails for offences under
the Act within 2 years, failing which the judges will need to record the requirement for extension in
time. A trial can now be extended by 6 months at a time for up to a maximum of 4 years.

2. Exemptions for Compulsion: Section 8 prescribes punishment for persons abetting a bribe or
attempting to indulge in corruption with a public servant. The Amendment Act exempts those acts
committed out of compulsion, provided a person so compelled files a compliant with the police or
investigating agency within 7 days of giving a bribe under compulsion.

3. Commercial Organizations: Section 9 now specifically deals with commercial organizations and
persons associated with commercial organizations. The term commercial organization is clarified to
include all forms of business structures and the phrase persons associated with commercial
organization‘ is wide enough to include employees and vendors.

4. Punishment: Section 10 now imposes specific terms for imprisonment and a fine where the
commercial organization's directors, officers in default or a person with control over the
organization has consented to the corrupt act violating the provisions of the Act. It may be useful to
note that when amendments to Section 10 and Section 9 are read together – the amended Act
seems to penalize both the commercial organisations for violation of the Act by levying of a fine and
the officers in charge of such commercial organization under Section 10 for criminal liability.

5. Corruption by Public Servants: The Amendment Act seems to have diluted the instances where a
public servant can be accused of alleged criminal misconduct. The amended Section 13 of the Act
only refers to the misuse of property and unjust enrichment as grounds for misconduct (which is
assessed by disproportionate assets). Earlier, Section 13 accounted for general tendencies to seek
bribes or indulge in corrupt practices as grounds of criminal misconduct.

14
6. Permission to prosecute by an investigative authority: The Amendment Act appears to make it
more difficult to prosecute government employees. The amendment under Section 19 states that for
prosecution of a public servant under Sections 7, 11, 13 and 15 of the Act, firstly, a sanction must be
obtained from an authority that has the right to dismiss them. Secondly, an investigative authority
(such as a police officer) must seek an application for permission, or else there are multiple layers of
compliances that need to be cleared before the court can take cognizance of the offence.

SOME OF THE PROBLEMS AND CHALLENGES FACED WHILE TACKLING THE MENACE OF CORRUPTION

Despite adequate laws to fight corruption in the public sector, it is still one of the biggest menaces
Indian society must deal with. The Indian criminal justice system has been facing many problems and
challenges in its fight against corruption, some of which are highlighted below.

A) No Law to tackle Corruption in the Private Sector: The Prevention of Corruption Act 1988 is the
existing law in India dealing with offences relating to corruption. This law, however, was essentially
enacted to take care of corruption cases in the public sector and by public servants, whereas in fact,
there is widespread corruption in the private sector also which seriously hampers the overall growth
and development of the country.

After the liberalization of the Indian economy in the early 1990s, the private sector has expanded
greatly. The problem of corruption in the private sector is increasing with the expansion of the
private sector. Today it has assumed alarming proportions. It has become the single biggest menace
to Indian society. Efforts are underway to enact laws to deal with corruption in the private sector as
envisaged in the UNCAC.

B) Inherent Delays in the Criminal Justice System: The system is painfully slow and punishments are
not swift. As explained earlier, sec. 19 of the Corruption Act requires prior permission of the
authority competent to remove a public servant from his or her post before launching prosecution
against him or her in court. This often delays the launch of a prosecution. Upon receiving reports
from the investigating agencies seeking approval for a prosecution, the concerned authorities often
take considerable time to grant such permission. Also, permission is sometimes denied on political
and other grounds.

The Corruption Act provides for trial of corruption cases under the act exclusively by the Special
Judges. The number of Special Judges is highly insufficient compared to the number of corruption
cases filed in their courts. As a result, these courts are overburdened and there is a large discrepancy
in the number of cases disposed by the investigating agencies and the number of cases disposed by
the courts, adding to the backlog each year. During trial of offences, adjournments are often taken
or granted on various grounds. Further, the proceedings in the trial court are challenged at various
stages by parties filing petitions in the same court as well as in higher courts. Appeals and revisions
filed in higher courts against the order of the trial court often take years to be concluded.

C) Hostile Witnesses: In order to convict a corrupt public servant, the prosecution has to prove its
case beyond doubt. This is a strict legal requirement as per the Indian Evidence Act, the general law
on evidence in India. There is no exception to this requirement even for corruption cases.
Prosecution has to depend heavily on the testimony of witnesses to prove its case beyond doubt.
However, witnesses often do not support the prosecution case because of influence, allurement and

15
intimidation from the other side. There is no witness protection scheme, nor are there provisions for
quick and effective action against witnesses who become hostile. As a result, witnesses frequently
become unco-operative and spoil the prosecution case. Punishments are, therefore, not swift and
effective under the Corruption Act and don‘t deter corrupt public servants.

D) Ineffective Asset Recovery: Though there are legal provisions for confiscation and recovery of
property acquired as proceeds of crime, such recovery is not easy. Corrupt public servants often
acquire properties with the proceeds of crime in the names of their friends, relatives, family
members and other acquaintances. Therefore, it is not easy to prove in court that such properties
are the proceeds of crime. Such properties are quite often held offshore under strict privacy laws
and it is not easy to trace and recover them, especially in the absence of desired international co-
operation.

16