S.no	Contents
1.	INTRODUCTION
2.	UNDERSTANDING THE CONCEPT OF CORRUPTION
3.	HISTORY OF CORRUPTION IN INDIA
4.	REASONS FOR RISING CORRUPTION IN INDIA
5.	EFFECTS OR CONSEQUENCES OF CORRUPTION
6.	STEPS TAKEN BY THE GOVERNMENT TO CURB THE PRACTICES
7.	EVOLUTION OF THE ACT
8.	AMENDMENTS IN ACT FOR BETTER WORKING
9.	PENALTY AFTER 2018 AMENDMENT
10.	CONCLUSION

INTRODUCTION 

Even after 75 years of Independence India is struggling or lacking to resolve the expanding problem of corruption in the nation. Corruption is the practice that is prevailing in the roots of the nation to get work done through backdoors or an illegal or illicit way and at the same time it is acting as a backfire step in the evolution or growth of the nation. The practice of corruption is seen as a hindrance and as a major barrier to success for developing countries like India. As India is a country with a vast and growing population is a tough and challenging problem to regulate or control the activity which is against the law. India is not only the country facing the problem of corruption every growing or evolving nation in the present world faces complications regarding corruption practices prevailing in the nation. This problem was significantly neglected or ignored by the government at the starting point as they felt that these practices will not affect the nation in a threatening way but after reviewing and scrutinizing the corruption practices the government felt there should be policies, acts, regulations structured or designed in such a way so that it can curb the problem of corruption. So the government decided to frame or structure policies, acts, statutes, and norms that can considerably regulate this growing constraint. 

UNDERSTANDING THE CONCEPT OF CORRUPTION 

“Corruption” is described as “the unlawful use of governmental authority for private gain.” This abuse of power weakens a democracy by undermining trust between two or more parties. Additionally, corruption may exacerbate poverty and inequality while impeding a country’s ability to prosper economically. Understanding how corruption operates is crucial to exposing it and holding the dishonest accountable for establishing a corrupt system. The growth of the nation is badly impacted by its aftermath and acts as a hindrance toward the systematic and continuous progress of the nation.

HISTORY OF CORRUPTION IN INDIA 

We are natives of Gandhi’s country, for whom the essential tenets of life were honesty and nonviolence. I will use the 2000-year-old Vedic proverb “Satyam vadhadharmam charah” as an example. The motto of our country is Satyameva Jayate. Therefore, we all support honesty and truth, at least on a lip service level. Our government thinks that telling the truth will win, and all of our major faiths support this idea. However, India is one of the most corrupt nations in the world.

The actual degree of corruption in India is unknown. However, everyone is aware of how ubiquitous it is and how it is steadily eroding the nation’s foundation. There is little question that the future of democracy is in jeopardy if corruption, bribery, and nepotism are not stopped as soon as possible. The parallel is distressing to those of us who are aware of the high moral standards that prevailed before and shortly after India became an independent nation. We seek in vain the integrity, effectiveness, quality, and commitment to duty that once distinguished government. One starts to doubt whether we are the same people that rode to independence with the motto “truth and sacrifice.” A nation or society can improve its ability to reduce corruption to manageable levels by taking a comprehensive strategy and including all of the key players in the anti-corruption reform process. However, none of this can be dealt with without wise and tenacious political leadership. without substantial levels of public backing and knowledge, as well as without a driven and competent corporate sector. In many nations, creating a thriving wicked society that is willing and able to play a significant role in influencing its surroundings is the most challenging aspect of the equation.

REASONS FOR RISING CORRUPTION IN INDIA 

The corruption practices have been happening due to various reasons in the system of the nation. Therefore, mentioning and discussing a few of them will surely highlight the main reasons for corruption.

1. Low Pay Scale of Government Employees- At present in India, there is a sterling increase in the demand for government jobs due to the security of jobs its offers and other benefits it gives to its employees. Due to the huge population and growing population, there is expanding demand for government jobs as everyone cannot secure his place in the private sector. A person who tirelessly prepares for getting a government job in India and if he is selected, he does not see any financial gain or activity of efforts which he has undergone while preparing for his exam. He, therefore, chooses an unethical way to gain more money in less period. 
2. Lack of Accountability- A government employee is not responsible for reporting his duty or activity or any of the work carried out by him on a specific day. Therefore, he thinks that he is free to act in his way and not to abide by ethics or behaviour. It was after the passing of some acts legislations and statutes that brought the illegal practice of corruption under the surveillance of the government.
3. Lack of Stick and Fast Punishments- One of the most crucial features of the government job is that there is a lack of punishment which a government employee can get if he is involved in corruption. If he is involved in corruption investigation proceedings are undertaken against him which do not render any result and the employee is transferred from one place to another or merely there is suspended for a particular period. 
4. Greed and the Need of becoming rich overnight- One of the main reasons for growing corruption is the mindset of the people working in the government sector. The need and desire to become rich and successful is also a motivating factor in involving such type of heinous activity. 
5. Tolerance of corruption by the people- In the present world where everyone is busy carrying out his day-to-day activity in the best and most effective way no one wants that his time is wasted on any futile activity which does not render any financial gain. Therefore, when they visit any government office, they try to adopt corrupt practices to get their job done easily. 

EFFECTS OR CONSEQUENCES OF CORRUPTION 

1. Lack of quality of services- The quality of services drastically decreases if one is involved in corrupt practices as he does not put any effort from his side in rendering services and gives services in the easiest way possible which in turn decreases the quality of services that needs to be maintained by the government. 
2. Lack of proper justice- If corruption is taking place in any judicial department or any department which is authorized to provide give basic services to common people then it will affect a large portion of the society. 
3. Low rate of economic growth- The involvement of any government employee will surely affect the growth rate of the nation as it will put a halt to the flow of currency in the economy. There is a hoarding of money in the form of cash, assets, and in the form of stocks which directly plays a role of hindrance in the growth of economy of the nation.
4. Low Foreign Direct Investment- If corruption exists in the government sector foreign investor will hesitate to invest in the nation as they know that their funds or capital will not be utilized in the best and most effective manner. 

STEPS TAKEN BY THE GOVERNMENT TO CURB THE PRACTICES 

To codify all existing laws, eliminate corruption in government institutions, and prosecute and discipline public servants who commit corrupt activities, the Prevention of Corruption Act, 1988 (POCA)¹, was developed. It is a potent weapon against this evil. The success of the anti-corruption campaign depends on how well this legislation works. This Act gives the Central Government the power to appoint judges to look into and try instances involving offenses that are punished under the Act, as well as situations where an attempt or conspiracy to commit an offense is made.

EVOLUTION OF THE ACT

The Indian Penal Code of 1860² first addressed cases of bribery and corruption involving public employees in the Indian Justice System. However, it became clear throughout the 1945s that the legislation in place at the time was inadequate to address the circumstances, and it was considered that special rules about bribery and corruption were to be established. As a result, the Prevention of Corruption Act, of 1947³, was impressively enacted. The Anti-Corruption Laws (Amendment) Act of 1964⁴ and the Criminal Law Amendment Act of 1952⁵, both of which were based on the Santhanam Committee’s recommendations, respectively, altered the 1947 Act twice.

As a result, the 1988 Prevention of Corruption Act, which became effective on September 9, 1988, was based on the 1947 Act. To make the whole resolution more feasible and eradicate corruption in Indian government offices and public sector organizations, it was intended to enhance the standards and widen the inclusion of anti-corruption laws. The Prevention of Corruption Act’s goal is to eradicate corruption throughout Indian government agencies and the public sector.

The extent of corruption in government organizations must be understood, but it’s also critical to prosecute and discipline public employees who take part in corrupt activities. The Act also takes into account individuals who helped the offenders commit the bribery or corruption offense.

AMENDMENTS IN ACT FOR BETTER WORKING 

Some of the amendments were done in the year 2013 and 2018 which was related to bribery and the period given to Special Judges (Section 4)⁶ for investigating the case.

2013’s Amendments 

1. Bribery was declared a criminal offense. A person who was forced to bribe will not be prosecuted under the Prevention of Corruption Act if they disclose the incident to law authorities within seven days.
2. The modified criminal misbehaviour law addressed two different sorts of offenses. Illegal enrichment, which is defined as accumulating money that is out of proportion to one’s sources of income, and fraudulent property misappropriation are the offenses.
3. The modifications were made with the pertinent government authority’s prior consent to undertake any inquiry into any offenses allegedly committed in public instances. However, if the criminal has already been detained for accepting bribes, then this authorization is not required.
4. If a special judge is handling the case, the PCA trial limit was set at two years. Only four years should be allowed for the trial’s overall duration.

2018’s Amendments

1. Bribery is a particular and explicit offense.
2. Anyone who accepts bribes faces a fine and a jail sentence of three to seven years.
3. Bribe-givers may additionally face a fine and a sentence of up to 7 years in jail.
4. In the case that the incident is reported to law enforcement within 7 days, the 2018 amendment adds a provision to safeguard persons who have been coerced to pay a bribe.
5. It redefines criminal behaviour to just include property theft and having an excessive amount of assets.
6. By requiring that investigative agencies like the Central Bureau of Investigation obtain prior clearance from a competent authority before starting an inquiry into them, it proposes a “shield” to protect government employees, including those who have retired, from punishment.
7. However, it specifies that such authorizations are not required in situations when a person is immediately detained on suspicion of taking or attempting to accept an unfair benefit for himself or another person.
8. The concept of “undue advantage” must be proven in every case of corruption involving a public employee.
9. Within two years, the trial in instances involving the payment of bribes and corruption must be concluded. Furthermore, the trial cannot be longer than four years, even with justifiable delays.
10. It includes the potential for business organizations that provide bribes to face sanctions or legal action. However, they don’t apply to nonprofit organizations.
11. It outlines the authority and processes for seizing and forfeiting the property of a public official suspected of corruption.

PENALTY AFTER 2018 AMENDMENT 

The penalty for an infraction committed by a public employee has been increased under Sections 7⁷, 12⁸, and 14⁹ of the Amendment Act from a minimum penalty of 6 months to a minimum punishment of 3 years and from a maximum punishment of 5 years to 7 years, with or without fine. In situations of abetment, sentences also go longer.

When a crime is committed repeatedly, the penalty is increased from a minimum of 2 years to 5 years and a maximum of 7 years to 10 years in jail.

1. Corruption by Public Servant: The Prevention of Corruption Act of 2018’s¹⁰, Section 13 made reference to the misappropriation of assets and unfair justifications for doing so. It offered the justification for making a criminal misconduct accusation against the public employee.
2. Sanctions for Prosecution: According to the 2018 Prevention of Corruption Act¹¹, any prosecution of public employees must get the approval of the relevant government. Section 17A of the Amendment Act¹² expands the protection to include inquiries or investigations made before prosecution. Therefore, neither a police officer nor a former one may open an investigation into a public employee.

CONCLUSION 

One thing is abundantly clear from the above analysis: Corruption threatens not only the national or global economy but also the entire human race. Thousands of people and families in India are living in extreme poverty and are unable to access even the most basic necessities for survival. As a result, they are forced to bear the harsh consequences of corruption when they are unable to provide the required standard of service.

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Endnotes:

1. Prevention of Corruption Act, 1988 (Act No 49 of 1988)
2. Indian Penal Code, 1860 (Act No 45 of 1860)
3. Prevention of Corruption Act (Act No 2 0f 1947)
4. Anti-Corruption Laws (Amendment) Act of 1964
5. Criminal Law Amendment Act of 1952
6. Section 4 of the Prevention of Corruption Act 1988
7. Section 7 of the Prevention of Corruption Act 1988
8. Section 12 of the Prevention of Corruption Act 1988
9. Section 14 of the Prevention of Corruption Act 1988
10. Prevention of Corruption Act, 2018 (Act No 16 of 2018)
11. Prevention of Corruption Act, 2018 (Act No 16 of 2018)
12. Section 17A of the Prevention of Corruption Act 2018

This article is authored by Animesh Nagvanshi, a student at ICFAI University, Dehradun.

This case analysis is authored by Prashant Prasad, a second-year law student from University Law College.

Case No.

Appeal (crl.) 1207 of 1997

Equivalent Citation

AIR 1998 SC 2120

Date of Judgment

17/04/1998

Court

The Supreme Court of India

Bench

S.C. Agrawal, G.N. Ray, A.S. Anand, S.P. Bharucha, S. Rajendra Babu

Facts of the Case 

During the 10th Lok Sabha election which was held in the year 1991, the congress party was the leading party and subsequently, it formed the government with P.V. Narasimha Rao as a Prime Minister. However, everything was going well in the party unless during the monsoon session of Lok Sabha in July 1993 a ‘No Confidence Motion’ was moved against the existing government of P.V. Narasimha Rao. Now, the party was in minority so they gave bribes to a few members of JMM (Jharkhand Mukti Morcha) and urge them to vote against the motion. The party somehow managed to defeat the motion with 251 members voting in the favor of the motion and 265 voting against the motion. 

After the motion got defeated the party once again came into power. But on February 28, 1996, a person named Shri Ravindra Kumar of Rashtriya Mukti Morcha filed a complaint with the CBI wherein it was alleged that some members of parliament were bribed during the no-confidence motion in Lok Sabha in July 1993. The CBI based on information received registered a complaint under Section 13(2)^[1], Section 13(1) (d) (iii) of the Prevention of Corruption Act^[2] against the Suraj Mandal, Shibu Soren, Simon Marandi, and Shallendra Mahto, members of JMM. In short, a criminal prosecution was launched against the bribe-taking and bribes giving members of the Parliament under the Prevention of Corruption Act, 1988^[3] and Section 120-B of the Indian Penal Code^[4]. The cognizance was taken by the special Jude Delhi, the person who sought to be charged as aforesaid, filed a petition in Delhi High Court seeking to quash the charge the High court dismissed the petition. Therefore an appeal was filed in the Supreme Court of India and then referred to the constitutional bench. 

Issues of the case 

1. Whether under Articles 105(1) and 105(2), a member of parliament can claim immunity from prosecution before a criminal court on a charge of bribery concerning the proceeding of the parliament.
2. Is a member of parliament a public servant under the Prevention of Corruption Act, of 1988?

Rationale 

Arguments from the Appellant’s side:

• The counsel from the appellant’s side argued that the immunity under Article 105(2)^[5] must be taken into wide sense so that the members of the parliament can exercise their right to vote without any kind of fear.
• It was further contended by the appellant’s side that offers and acceptance of a bribe do not amount to a criminal offense either under the Indian Penal Code^[6] or under the Prevention of Corruption Act^[7].
• Also, neither charge of conspiracy under section 120-B of IPC^[8] nor any offense mentioned under the Prevention of Corruption Act, 1988 evokes against them. 

Arguments from the State headed by the Attorney General:

• The attorney general argued that there are no sets of rules or laws that say whether these particular things fall under the purview of Parliamentary Privileges or not which are being enjoyed by the members of the parliament. This argument relied on the judgment of the U.S. Supreme Court in Brewster^[9]. The acceptance of bribes by the members is a breach of the privileges.
• Along with this many contentions were put forward from both sides which form the basis of the case.

Judgment 

The Five Judge bench split their verdict in the ratio of 3:2; the court has taken judgment based on articles 105(1) and 105(2) in literal interpretation. The court of law increased the scope of these articles and held that the members are immune from any kind of proceedings against them in respect of any vote in the parliament. In this particular case, members who have given the bribe did not enjoy immunity from prosecution. The court further held that based on the literal interpretation of the Articles under question the JMM members who have taken the bribe and voted against the motion are not guilty of corruption. But one member who has taken the bribe but did not vote was held guilty of prosecution.

P.V. Narasimha Rao was acquitted of all charges in the JMM bribery case. The judgment was delivered by a special court in Delhi, India, which found that there was insufficient evidence to support the charges against Rao and others. The judgment was a significant one, as it marked the first time that a former Prime Minister of India was acquitted in a corruption case. The case was widely watched and had a major impact on Indian politics, with many people viewing it as a test of the Indian judiciary’s independence and its ability to deal with high-profile corruption cases. The verdict in the JMM bribery case was seen as a victory for P.V. Narasimha Rao and his supporters, who had argued that the charges against him were politically motivated and aimed at tarnishing his legacy as one of India’s most transformative Prime Ministers. Despite his acquittal, the case remains a matter of public record and continues to be discussed and debated in the Indian media and political circles.

Implications for parliamentary privileges in India regarding this case

The JMM bribery case had important implications for parliamentary privileges in India. Parliamentary privileges are certain rights and immunities that are granted to members of Parliament to enable them to carry out their duties effectively. One of the key privileges is immunity from criminal prosecution for words spoken or acts done in the course of parliamentary proceedings. In the JMM bribery case, some of the accused, who were members of Parliament at the time, claimed that the charges against them were covered by parliamentary privilege and that they could not be prosecuted for bribery and corruption. This argument was rejected by the court, which held that the charges against the accused related to acts that were not covered by parliamentary privilege.

The JMM bribery case, therefore, clarified the scope of parliamentary privilege in India and established that members of Parliament are not immune from prosecution for criminal offenses, including bribery and corruption that are committed outside of parliamentary proceedings. The case was seen as a positive development for accountability and transparency in Indian politics, as it demonstrated that public officials, including members of Parliament, can be held accountable for their actions. The verdict in the JMM bribery case reinforced the principle that no one is above the law and that all citizens, regardless of their status or position, must be subject to the same legal standards and procedures.

Conclusion 

The conclusion of the case marked the end of a long and contentious legal battle that had far-reaching consequences for Indian politics. The case was widely watched and was seen as a test of the independence of the Indian judiciary and its ability to deal with high-profile corruption cases. While the verdict was seen as a victory for P.V. Narasimha Rao and his supporters, the case continues to be a matter of public record and remains a source of discussion and debate in India. The JMM bribery case serves as a reminder of the importance of ensuring the transparency and accountability of public officials, and the role that the judiciary can play in upholding the rule of law and protecting the rights of citizens.

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References:

1. Prevention of Corruption Act, 1988, Section 13(2), Act No. 49 of 1988
2. Prevention of Corruption Act, 1988, Act No. 49 of 1988
3. Ibid
4. Indian Penal Code, 1860, Act No. 45 of 1860
5. INDIA CONST, art. 105(2)
6. Supra note iv
7. Supra note ii
8. Indian Penal Code, 1860, section 120-B, Act No. 45 of 1860
9. United State v. Brewster, 33 L Ed 507

Case Number

Criminal Appeal No. 34 of 2015 (Arising out of Special Leave Petition (Crl.) No. 2961 of 2013), Criminal Appeal No. 35 of 2015 (Arising out of Special Leave Petition (Crl.) No. 3161 of 2013) and Criminal Appeal Nos. 36-37 of 2015 (Arising out of Special Leave Petition (Crl.) No. 3326-3327 of 2013)

Citation

AIR 2015 SC 923 or (2015) 4 SCC 609 

Forum

Supreme Court of India

Bench

H L Dattu CJI., Madan B Lokur, A K Sikri JJ.

Decided on

January 9, 2015

Introduction

The criminal liability of directors is a core concept in corporate criminal law; it helps regulatory authorities and courts control, prosecute and punish crimes of a corporate nature. Given the artificial nature of companies and corporates, it is the employees and executives of the company that act as its agents. Executives are the ones who take the major decisions on behalf of the company. They can easily control the acts and omissions of the company on a short and long-term basis. Given the enormous controlling power that executives possess, it is vital to have laws, regulations and principles governing the actions of these executives. This ensures that they do not violate the law without fear of repercussions and do not use certain concepts of law to evade punishment. 

In the case discussed below, there is a clear explanation of the requirements for holding executives responsible for the acts of their companies, especially in the context of the executives’ names being unlisted in the charge sheet. 

Rule of Law decided upon by the Bench

The rule of law in this case is: 
Section 120-B of the Indian Penal Code, 1860, read with Sections 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988. 

Facts & Procedural History of the case

The central allegation, in this case, was regarding the 2G spectrum case. An additional spectrum that was beyond the usual spectrum that the Telecom Ministry approves. This approval of an additional spectrum was done with a 1% additional revenue share. Multiple cases had been registered, coupled with investigations by authorities. This transaction caused losses to Government Revenue. It was alleged in multiple investigations that this plan resulted from a conspiracy between Mr Ghosh, the then Telecom Minister and certain Cellular Operators.

The case in question is an appeal against an impugned order by a Special Judge, which had issued a summons to the accused in a charge sheet. This order, passed in March 2013, mentioned that the Special Judge was satisfied with the incriminating material recorded so that a summons could be issued against the accused. The Special Judge also stated that the summons was being issued to three executives – Mr Sunil Mittal of Bharti Cellular Ltd., Mr Asim Ghosh of Hutchison Max Telecom Ltd., and Mr Ravi Ruia of Sterling Cellular Ltd. 

The Special Judge went on to specify the doctrine of ‘alter ego’ and applied the same to this case. He held that these executives (the appellants in the case) are the alter ego of their companies. So through vicarious liability, they shall be prosecuted for the crimes of their companies. It is pertinent to note that the Special Judge mentioned that their state of mind is the companies’ state of mind, and any acts of the companies shall be attributed to them. Notably, he had not mentioned the reasons for issuing an order of summons to the three executives. 

The order was sought to be challenged by two of the three executives, to the extent of the order implicating them as the accused. 

Issues raised in the Court of law

A singular issue was raised. However, the Court opined on a variety of topics concerning the issue below: 

Is the impugned order of the Special Judge, which stated that the Appellants were not named in the charge sheet, valid in law?

The decision of the Court on the issues drafted

The Court decided that the order must be set aside, given the ambiguity in the impugned order and the wrongful application of a principle to the issue at hand. They had also mentioned clearly that they were not stating that the executives were free of guilt; they merely quashed the impugned order. It is up to the Special Judge to review the incriminating material again and issue fresh summons to the Appellants. Based on the evidence uncovered, the Special Judge may apply Section 319 of the Indian Penal Code, 1860, to include the Appellants in the proceedings to prosecute them further. 

Analysis of the judgement

The judgement, which Justice A K Sikri wrote, was systematic in its breakdown of the facts and circumstances of the case, along with an analysis of the principle of alter ego and criticism of its application in the present case. 

Initially, the counsel for the Appellants contended that the impugned order was erroneous in two parts. The first three paragraphs of the order are regarding Mr Ghosh and the cellular companies involved. The Special Judge had perused all the documents submitted on record to conclude that these accused persons can be further proceeded against. In paragraph four, the Judge detailed the principle of alter ego and stated that the executives of the three cellular companies were responsible for the acts of their respective companies. The Judge had connected these paragraphs to conclude that the three executives (two of whom are appellants) must be issued a summons. Explaining all this, Senior Advocate Salve (counsel for the Appellant) stated that the Judge’s order was erroneous and did not hold good in law. 

Continuing, he detailed that the doctrine of ‘alter ego’ has been applied in reverse and that the companies were accused first rather than the directors. For the doctrine to apply, the directors must be held guilty, and so they shall be deemed guilty for the acts of the corporate body. Only when the principle is correctly applied can the agency mode of liability also be applied. For the same, he relied on Iridium India Telecom Ltd. v. Motorola Inc.¹, Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd.², and Aneeta Hada v. Godfather Travels and Tours Ltd.³, which are all landmark judgements by the Supreme Court of India. 

Sr. Adv. Salve closed his arguments by pointing out that the CBI had investigated and concluded that there was no information or submitted material to implicate the Appellant. 

Other counsels for the Appellants seconded these arguments and mentioned that some of the appellants were not mentioned in the charge sheet in the first place. 

In terms of the arguments for the respondents, Senior Counsel K K Venugopal refuted the appellants’ submissions by bringing to the forefront the reasoning behind the decision to implicate the appellants. He stated that once companies are charged with mens rea offences, they need to be punished for the same, and the only way to do that is to punish their Directors or Officers. He then pointed out the actions of these executives on behalf of their companies, which had resulted in the 2G Scam. In a nutshell, Sr. Adv. Venugopal has reinforced the human agency doctrine and stated that, despite the omission of appellants’ names in the charge sheet, the Special Judge had powers to make an order such as the one in question. 

In support of his arguments, the cases of M C Mehta v. Union of India (Taj Corridor Scam)⁴, Kishun Singh v. State of Bihar⁵ and Dharam Pal v. State of Haryana⁶ were used.  

In a rejoinder, counsel for the Appellant, Mr Fali Nariman, argued that for vicarious liability to be applied, there is a need for a statutory provision or something to be imputed. Therefore, the Special Judge has wrongfully applied the principle of alter ego. 

After listening to the extensive arguments and contentions of the parties, the Court began examining the order and applying the principle of alter ego. 

The Bench refused to discuss the comments made by the appellants concerning the 2G scam itself, making it clear that the matter is beyond the scope of their appeals. 

Firstly, the impugned order was dissected. At the outset, the Court admitted the trial courts could issue that summons to persons not mentioned as accused in the charge sheet. The only requirement is that there must be sufficient incriminating material on record to empower the Judge to issue a summons. The question, in this case, is not about the incriminating material; instead, it is about the lack of a convincing reason behind the Judge’s decision to issue a summons. The Judge has not clearly stated why he had decided to implicate the three executives as accused and issue summons. He had merely stated that the executives were or are in control of their company’s affairs – this makes them the mind and will of the companies and that this makes them the alter ego of their companies. 

Secondly, the doctrine of alter ego was dealt with. The Court reiterated a landmark Judgement from 2005 – Standard Chartered v. Directorate of Enforcement⁷, and explained that the Bench, in that case, opined that companies could be prosecuted and punished for offences with mandatory imprisonment. Then, the Iridium Infra case was discussed, wherein the same subject was discussed, with the addition of mens rea element. The judgement held that the criminal intent would be imputed to the corporate body. That is to say, the group of people controlling the company must have criminal intent, which will implicate the company to have criminal intent and therefore be punished. 

In the case at hand, the company was first held guilty of criminal intent, following which the executives were held to have criminal intent. The Special Judge had applied the principle in reverse – the company’s criminal intent had been established first, and then its executives were implicated. Thus, applying this principle in this manner makes it erroneous to apply the theory of vicarious liability to the case. 

Thirdly, the Court discussed the circumstances when the company is accused, and its executives can also be prosecuted. It is mainly concerning intent that the decision is made. There must be sufficient evidence for the same. In other cases, the statute in question must refer to the vicarious liability of the company’s executives. Cases discussed included Jethsur Surangbhai v. State of Gujarat.⁸, Sham Sunder v. State of Haryana⁹, Hira Lal Hari Lal Bhagwati v. CBI¹⁰ and Sharon Michael v. State of TN¹¹ among others. 

Based on these discussions, the Court concluded that the Special Judge had used an inaccurate principle of law. It is essential to the case that the Judge mention the reasons for his satisfaction with the incriminating material. However, the Judge failed to do the same. 

After making a brief statement on the powers of the Special Judge to issue summons when the accused is not on the charge sheet, the Court went on to conclude its analysis of the case. They held the impugned order invalid in law as the Special Judge failed to adequately explain the reasons or grounds behind his act of proceeding with the case by issuing a summons. Therefore, the impugned order was quashed and set aside, and the appeal was allowed. However, the Special Judge does have the power to revisit the case, review the documents, and prepare a fresh order that lists the reasons for the satisfaction of incriminating material clearly and in a prima facie manner.    

Conclusion

As seen from the case analysis above, Judges and legal professionals must be careful in their acts and omissions, as an error may lead to the entire proceedings being vitiated. While everything else on the part of the Special Judge’s order was abiding by the law, two points left the entire order of a significant financial scandal quashed. Therefore, it is vital that essential points are included in documents and that the law is followed to a T. 

On the other hand, it is equally essential to ensure that executives of companies do not evade punishment on procedural or theoretical grounds. In order to recover money from white-collar crimes, theories of vicarious liability should be prudently applied in relevant circumstances. 

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Citations

1. Iridium India Telecom Ltd. v. Motorola Inc., (2011) 1 SCC 74 (India)
2. Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd., (2010) 10 SCC 479 (India)
3. Aneeta Hada v. Godfather Travels and Tours Ltd., (2012) 5 SCC 661 (India)
4. M C Mehta v. Union of India, (2007) 1 SCC 110 (India)
5. Kishun Singh v. State of Bihar, (1993) 2 SCC 16 (India)
6. Dharam Pal v. State of Haryana, (2014) 3 SCC 306 (India)
7. Standard Chartered v. Directorate of Enforcement, (2005) 4 SCC 530 (India)
8. Jethsur Surangbhai v. State of Gujarat, (1984) Supp. SCC 207 (India)
9. Sham Sunder v. State of Haryana, (1989) 4 SCC 630 (India)
10. Hira Lal Hari Lal Bhagwati v. CBI, (2003) 5 SCC 257 (India)
11. Sharon Michael v. State of TN, (2009) 3 SCC 375 (India)

This case analysis is authored by Vibha Chinni Krishnan, a student of Symbiosis Law School, Hyderabad.

-Report by Gourav Jain

The Supreme Court, in the case of Menon Ekka @ Smt. Menon Ujjana Ekka vs. Union of India laid down that it can provide a criminal bail where an appeal is pending before the High Court even when the person has already gone through a part of his sentence, given the conditions are right.

Facts

The appellant was sentenced to 7 years of Rigorous Imprisonment by the Ranchi High Court. The appellant is a lady who had been convicted with her husband for an offence of the Prevention of Corruption Act, keeping in possession of inappropriate assets. Feeling aggrieved by the decision of the High Court, the lady has decided to appeal in the high court and as she had already undergone almost 3 years of her sentence, she asks for criminal bail from the Supreme Court.

Appellant’s Contentions

Shri Gaurav Agrawal, learned counsel appearing for the appellant has submitted that the lady has been sentenced to 7 years of rigorous imprisonment, for which the appellant has already undergone 2 years and 9 months sentence. It was further contended that the appeals filed by the appellant and the others are not likely to be heard in near future and thus, it is asked for the court to release the appellant on bail during the time pending disposal of the appeal before the High Court.

Respondent’s Contention

Opposing the appeal, Ms. Swati Ghildiyal, learned counsel appearing on behalf of the respondent has actively submitted that as such the High Court was ready to take up the appeals for the last disposal, however, the appellant and others were not ready for the hearing of the appeals. It is submitted that the appellant shall not make an unjustified unfairness that the appeal is not likely to be heard. It is said that looking at the charges against the appellant and the nature of the evidence, the High Court has refused correctly to suspend the sentence and release the lady on bail during the settlement of the appeal.

Judgement

Taking into consideration that the appellant is a lady and has already undergone 2 years and 9 months sentence, the appeal is allowed. She is ordered to be released on bail during the pendency of the Criminal Appeal pending before the High Court on the condition that it may be given by the learned Trial court. It is observed and made clear that the benefit of the order may not be available to the other accused persons and the present order may not be written as a precedent so far as the others are concerned. The court directed the Registry of the High Court to notify the Criminal Appeals of all the accused before the Bench taking up these appeals and the court requested the High Court to finally decide the said appeals as fast as possible but not after six months from the first listing.

All concerned appellants are ordered to cooperate in the disposal of the appeals by the High Court and within the time stated.  Any attempt on the part of the appellant and/or the other accused to delay the hearing of the appeals shall be seen seriously.

Introduction

When we talk about crimes in society people in layman language think that crimes mean a violent act that causes any injury or hurt in a physical manner to an individual, crime is of the nature to cause someone bodily injury physically or mentally. But do we realize that crimes can be differentiated on the basis of their nature & crimes need not always cause a bodily injury to a person? There are crimes present in society that is non-violent in nature & do not cause any bodily injury to a person. 

“White Collar Crimes” are crimes that are non-violent & are committed for monetary gain; these can be committed by an individual, group of people, or even an organization as well. In these crimes, there is a breach of trust, deception of money or property, or some other gain of the wrongdoer. Edwin Sutherland a famous American Sociologist, defined white-collar crimes as “the crimes committed by people who enjoy great repute, high status (social), & hold the higher respectable post in their respective occupation”.  Herbert Edelhertz, chief of the Federal Department of Justice, in 1970 defined White Collar Crimes as “an act or series of illegal acts committed by non-physical means to obtain money or property by way of guile or concealment to obtain business or personal advantage” he emphasized more on the nature of crime rather than the offenders attribute.    

Rise of White Collar Crimes in India

Bribery, Fraud & Corruption is probably the most familiar recognized white-collar crimes in India & the world. The Business Standard in 2016 distributed a report named “The changing elements of white-collar crimes in India” expressing that over the recent 10 years, the Central Bureau of Investigation (CBI) has tracked down an aggregate of 6,533 instances of corruption out of which 517 cases were filed in the last two years. 

Stats showed that 4,000 crores worth of exchange were done utilizing phony or replicate PAN cards. Maharashtra showed a speedy growth in the number of online cases with 999 cases being enlisted. The report likewise referenced that around 3.2 million individuals endured a misfortune due to the theft of their card details from the YES Bank ATMs which were managed by Hitachi Payment Services. 

Progression in business and technology has welcomed phenomenal development in one of the kinds of white-collar crimes, known as cybercrime. Cybercrimes are expanding in light of the fact that there is just a little danger of being gripped or pinched. India’s position on Transparency International’s corruption perception index (CPI) has been worked on throughout the years. 

In 2014, India was positioned 85th which later advanced to 76th position in 2015 in light of a few measures to handle white-collar crimes. In 2018, according to the report of The Economic Times, India was set at 78th position, showing an improvement of three focuses from 2017, out of 180 nations. 

India is a developing nation and white-collar crimes are turning into a significant reason for its development alongside health, poverty, etc. The pattern of white-collar crimes in India represents a danger to the financial advancement of the country. These violations require prompt mediation by the public authority by making exacting laws as well as guaranteeing its appropriate execution.

Grounds for White Collar Crimes in India

• Absence of mindfulness 

The kind of white-collar crimes is unique in relation to the conventional type of crimes. The vast majority doesn’t know about it and neglect to comprehend that they are the most exceedingly awful victim of crime.

• Absence of strict laws 

Since a large portion of these crimes is worked with by the internet and advanced strategies for the transfer of money, laws appear to be hesitant to seek after these cases as examining and following turns into a troublesome and convoluted work. Why it gets hard to follow it is on the grounds that they are normally dedicated to the protection of a home or office subsequently giving no witness to it.

• Competition

Herbert Spencer on reading, ‘On the Origin of Species by Charles Darwin, authored an adage that advancement signifies ‘Survive of the fittest’. This suggests that there will consistently be a contest between the groups and the best individual to adjust to the conditions and conditions ought to endure.

• Greed

Machiavelli, father of politics unequivocally accepted that men essentially are covetous. He said that a man can sooner and effectively fail to remember the demise of his father than the deficiency of his legacy. The equivalent is valid on account of the commission of white-collar crimes. For what reason will a man of high societal position and significance, who is monetarily secure, perpetrate such crimes if not out of greed?

Types of white collar crimes in India

• Bank Fraud: Bank fraud is a criminal act where an individual, by illicit methods, draw out cash or resources from the bank. The fraud can likewise happen when an individual erroneously addresses himself to be a bank or monetary foundation and draw out cash or resources from individuals. 

In this way we reason that bank fraud can be executed in two ways:

• By utilizing illicit intends to draw out cash or resources from the bank or any monetary establishment. 

• By erroneously addressing oneself to be a bank or any monetary organization, the individual withdraw cash or resources from individuals.

Bank fraud punishments are mentioned in India under the Indian Penal Code, 1860. Sections like 403 which manages criminal misappropriation of property, Sec. 405 which manages criminal breach of trust, 415 which manages cheating, 463 forgery, and 489A arrangements with falsifying of cash, manages the crimes of fraud in banks.

• Extortion: Extortion is a crime under section 383 of the Indian Penal Code, 1860. When one party constrains another party for remission of cash, or property or administrations, he is said to have perpetrated the crime of extortion. It is a white collar crime in light of the fact that an official may utilize his authority right and utilize his higher position in the organization to undermine someone else for giving cash, or moving property, or for offering types of assistance.

The case of People v. Fort laid certain elements to be proven for the crime of Extortion (i) There ought to be a correspondence of requests by one party to another, (ii) All together for the satisfaction of the requests, the other party or his family ought to be taken steps to cause some injury, & (iii) There ought to be a goal to coerce cash from the other party for some benefit. The other party ought to be taken steps to do or not to accomplish something.

• Forgery: As characterized under Section 464 of the Indian Penal Code, 1860, alludes to the falsifying of checks or protections determined to dupe the other individual. It is entirely expected in the account section of the organization where the agents or the staffs make false records and flee with organization’s cash consequently making misfortune that organization. 

For example in 2019, Ravi Prakash, Chief of TV9 News Channel, was taken out from his post on the charge of forgery.

• Cyber Crimes: As the utilization of computer and web is expanding, so is the crimes identified with it. The crimes which include the utilization of computer, combined with the utilization of web are called cybercrime. It is the place where the computer is utilized as the object of the wrongdoing or as an apparatus to perpetrate an offense. Cyber stalking, cyber-crime related to individual, property, child pornography etc. are example of cyber-crimes.

The solitary enactment which manages the offenses identified with cybercrime is Information Technology Act, 2000. The specific meaning of cybercrime has not been given in any of the acts or laws as it’s anything but conceivable to characterize such nature of crimes where computer and web are included.

Major Judicial Pronouncements on white collar crimes in India

In the case of SEBI, Allahabad High Court, the learned direction in the interest of SEBI guaranteed that the organization is as a rule wrongly charged as the organization was not in a situation to pay its obligations, including installments to its investors. At the point when the advertisement by the organization was put to address, the board said that the advertisement was given in 2003 while the request was passed in 2004 when the organization was not in a situation to recompense its obligations. Also, the amount of cash that the investors were asserting was no place referred to. The fundamental cause of the guide made the governing bodies raise the discipline from 1 year to 10 years and furthermore expanded the fine which may now reach out to 25 crores by correcting the laws under section 24(1) of the SEBI Act. Finally, Ravi Arora, the denounced, was held to be liable.

In the case of Abhay Singh, there were two appellants against whom a charge sheet was petitioned for an offense under Section 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988 read with Section 109 of the Indian Penal Code, 1860. It was asserted that both the accused had gathered unbalanced wealth (black money) according to their pay when they were the member of the legislative assembly. 

At the point when the Central Bureau of Investigation (CBI) started its examination, it was tracked down that the father of the appealing party had gained enormous properties and same as the case with the appellants. The High Court held that the litigant had given an entirely unexpected office of the denounced than they were really holding around then. Accordingly the authority under Section 19 of the Prevention of Corruption Act, 1988 was held to be with no legitimacy.

Conclusion

As our society is developing towards innovation and the world is encountering new mechanical progression, the pace of crimes is likewise expanding at a quicker rate. Especially the development in white-collar crimes has been colossal.

The government should make laws that are sufficiently strict to lessen the commission of such crimes. Furthermore, the framework ought to be to such an extent that not just there exist laws giving severe discipline to the denounced yet, in addition, arrange off greatest cases in a brief time. Failing to do so may result in individuals will lose total confidence in the framework, as these crimes are committed by individuals who should go about as a good example for society.

This article is written by Ajay Kataria, from Dr. B.R. Ambedkar National Law University, Sonepat, Haryana.

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