PREVENTION OF CORRUPTION (AMENDMENT) ACT 2018 &

1. PREVENTION OF CORRUPTION (AMENDMENT) ACT 2018& THE PRINCIPAL ACT 1988 A COMPARATIVE ANALYSIS By J.Vinod Kumar, Director, CVC

2. Genesis of PC Act PC Act 1947 • Instances of bribery and corruption among public servants had considerably increased during and after the Second World War • The existing provisions of the IPC and the CrPC were felt inadequate to tackle corruption • Prevention of Corruption Act, 1947 was passed on 11.03.1947 • 1947 Act made it obligatory for the court to make certain presumptions of guilt against the accused • It shifted the burden of proof from the prosecution to the accused PC Act 1988 • The 1988 Act came into force on 09.09.1988 • It consolidated the provisions of the Prevention of Corruption Act, 1947, Sec. 161 to 165-A of IPC with modifications, some Sections of Cr.P.C. and the Criminal Law Act, 1952 • The 1988 Act widened the scope & ambit of the definition of ‘public servant’ and included each and every person who held an office and performs a public duty • It amended the Criminal Law Amendment Ordinance, 1944 • The 1988 Act strengthened the provisions of 1947 Act and made them more effective

3. PC Act, 1988 – Amendments of 2014 • PC Act 1988 was first amended through the Lokpal & Lokayuktas Act, 2013 on 01.01.2014 • It increases the minimum sentence from 6 months to 3 years and maximum from 7 years to 10 years (sec. 11- minimum sentence of 6 months retained)

4. PC Act, 1988 – Amendments of 2018 • 2nd Administrative Reforms Commission and the Law Commission of India examined the 1988 Act and suggested certain changes to it • In 2008, a Bill to amend the 1988 Act was introduced in Parliament. The Bill sought to extend the requirement of prior sanction for prosecution to former public servants, and provide for attachment of property. However, it lapsed with the dissolution of the 14th Lok Sabha • In 2011, India ratified the United Nations Convention against Corruption (UNCAC) and agreed to bring its domestic laws in line with it • UNCAC covers giving and taking a bribe, illicit enrichment and possession of disproportionate assets by a public servant as offences, addresses bribery of foreign public officials, and bribery in the private sector

5. PC Act, 1988 – Amendments of 2018 • In August 2013, the Prevention of Corruption (Amendment) Bill, 2013 was introduced in Parliament • The Statement of Objects and Reasons of the Bill was to bring the 1988 Act in line with the UNCAC • The Standing Committee submitted its report on the Bill in February 2014 • In November 2014, the Central Government referred certain amendments to the 2013 Bill to the Law Commission of India which submitted its report in February 2015 • In November 2015, the Government circulated further amendments to the 2013 Bill, which were then referred to a Select Committee of Rajya Sabha which submitted its report on August 12, 2016 • The amendments were finally passed by both houses of Parliament in July, 2018 and notified on 26.07.2018

6. Main Features of 2018 amendments • Definition of ‘undue advantage’ inserted - Section 2(d) • Laying down timeline for speedy trials of corruption cases – Section 4(4) substituted • Restructuring all provisions of acceptance of bribe by a public servant under single Section – Section 7 substituted • Criminalization of the act of giving of bribe –Active bribery addressed- Section 8 substituted • Criminal misconduct covers only two types of offences: (i) fraudulent misappropriation of property; and (ii) illicit enrichment – Section 13(1) • Read more at: http://www.livelaw.in/prevention-of-corruption-amendment-bill-2013-as-presented-in-rajya-sabha-salient-features/ • Prior approval for inquiry or investigation by police agencies - Section 17A inserted • Intentional enriching and possession of disproportionate assets proof of such illicit enrichment. – Section 13 • Extending protection of prior sanction of the Competent Authority of appropriate Government to retired government servant and providing for timeline for granting sanction by that Competent Authority – Section 19 • Criminal liability for commercial organisations for bribing public servant.-Liability of senior management of commercial entity in case of consent or connivance – Section 10 substituted

7. ANANALYSIS

8. Prior approval The erstwhile PC Act of 1988 does not have provision for prior approval before inquiry or investigation by a police agency after Section 6A of DSPE Act was struck down by Supreme Court in 2013. The amended Act (sec. 17A) now requires investigation agencies to obtain sanction before even starting a preliminary enquiry against a public servant. Now the CBI will need prior consent of administrative authority before registering a PE or doing any verification against a public servant on a complaint alleging corruption. The amendment has now been challenged before the High Court of Rajasthan and in the Supreme Court recently.

9. Corrupt public official The 1988 Act defined a corrupt public official as any person who, “while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest.” It was expansive. The amendment narrows down this definition, by adding the test of ‘intention’, meaning prosecuting agencies need to prove a conspiracy to carry out corrupt acts, rather than simply pointing to disproportionate assets or questionable actions. The updated Section 7 defines a corrupt public official as any public servant who tries to obtain or accept from any person an “undue advantage with the intention to perform or cause performance of public duty improperly or dishonestly.” This also includes receiving an undue advantage as a “reward” for improper or dishonest work.

10. Active & passive bribery In the PC Act, 1988 (older law), the bribe givers were not considered accused. At the most, they could be prosecuted as having abetted the corruption. The amendment, however, expressly criminalises bribe giving as well as bribe taking. That said, the amendments do carve out an exception for those who are “compelled”, or forced, to give a bribe or an undue advantage. This exception only applies if they report the matter within seven days after being forced to give the bribe. The UK Bribery Act, 2010 and the US FCPA, 1977 have these provisions for active and passive bribery and it was a long felt need in India for reporting compliance to UNCAC provisions.

11. Criminal misconduct The pre-amended Act had an elaborate definition of “criminal misconduct” by public servants. The amendment (sec. 13) narrows down the definition of criminal misconduct which includes just two clauses: “if the public servant dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or any property under his control as a public servant or allows any other person so to do” or “if he intentionally enriches himself illicitly during the period of his office.” It implies that if a public servant cannot account for assets or property disproportionate to his known sources of income, then he is presumed to have intentionally enriched himself illicitly. The changed clause however, do not account for assets that have been illicitly procured for other people.

12. Liabilities of companies Under the previous Act of 1988, the companies could only be charged with abetting corruption. The amendments (sec. 9, 10), however, allow for “commercial entities” – corporations or partnership firms or even any association of people that does business in India – to be added as accused in a corruption case. If a commercial entity has been made an accused, there is provision for punishment against employees or directors of the company, and also the organisation itself is liable for fine.

13. Sanction for prosecution (sec. 19) A sanction is required for prosecuting former public servants (retired) for offences done while in office. In previous Act, there was no provision for obtaining sanction for prosecution in respect of retired officials. The decision on sanction request is to be made under three months which may be extended by a month.

14. Lokpal Act The Lokpal & Lokayuktas Act, 2013 remains untouched. Power of Lokpal to grant sanction for prosecution under Section 20(7) and simultaneous amendment brought into Section 19 of PC Act, 1988 by way of inserting the words ‘‘save as otherwise provided in the Lokpal and Lokayuktas Act, 2013”, after the words ‘‘except with the previous sanction’’, has not been interfered. Further, the amendments made in the quantum of sentences also remains unchanged i.e. minimum 3 years and maximum 10 years of imprisonment.

15. NEWPROVISIONS

16. Section 2(d) Undue advantage – scope of gratification & legal remuneration enlarged Section 4(4) Trial to conclude in two years – extendable upto 4 years in aggregate Section 7,8,9,10 All sections restructured and the acts constituting offences made broad-based, more stringent and with illustrations; new section 7A inserted

17. Section 11, 12 Sections re-structured and made sync with amended provisions Scope of abetment of offence enlarged Section 13 Scope of criminal misconduct slightly diluted Section 14, 15, 16 All sections restructured and made sync with amended provisions

18. Section 17A, 18A New Sections inserted for prior permission before beginning inquiry or investigation and attachment of property Section 19 Sanction for prosecution: retired public servants covered and procedure laid down for private persons seeking sanction Time of 3 months prescribed for grant of sanction Section 24, 29A Section 24 giving immunity to bribe giver omitted New Section 29A enables Govt. to make rules

19. Section 8 (substituted) Any person giving or promising to give an undue advantage to another person, with intention to induce or reward a public servant for improper performance of duty made liable— touts/middlemen covered • Not applicable to a person who is compelled to give undue advantage if he reports it in 7 days • Commercial entities made liable for fine

20. THANKS!