Corruption is like honesty. Both words have no legal value. There is no punishment for being dishonest nor is there any punishment for corruption. Morality is kept out of law books to keep the matters simple and enforceable without the whims of enforcer.
However, there are certain acts and omissions or combinations thereof which are prohibited in law which can be termed as corruption for the purpose of this work. Some of these aspects which overlap with politics shall be discussed in Chapter 11.
As stated earlier, according to Chankya the public servants are in the public money like fish in water. Nobody can really know how much water a fish drank before it threw it back into the pond of water. In other words, or in legal parlance, Chankya placed the burden of proof on the conduct of public officer to show that s/he is not corrupt. This definition, though most friendly to the citizens, in a democracy run by bureaucracy, has few takers. Yet the courts have always looked at the corruption with complete disdain.
Immoral acquisition of wealth destroys the energy of the people believing in honesty, and history records with agony how they have suffered. The only redeeming fact is that collective sensibility respects such suffering as it is in consonance with the constitutional morality. Therefore, the relief for quashing of a trial under the PC Act 1988 has to be considered in the above backdrop.
Niranjan Hemchandra Sashittal vs State Of Maharashtra decided by SC on 15 March, 2013 published (2013) 4 SCC 642; followed in Geeta Ram Nautiyal vs State Of Uttarakh and decided by HC on 17 October, 2019.
Corruption is the worst enemy of every free civilized society. More so in an egalitarian welfare democratic set up like ours. Not only does corruption in official and semiofficial spheres hit the economically and socially low state of society harder than the comparatively better placed citizen, but it also tends to breed dislike for honest people/officials.
The longer corruption is tolerated in a political set up the winder and deeper its tentacles spread. With the result that even the agency created to root out corruption may have to be closely watched in its activities. The Court has to scrutinise each case with great care. Their attempt is to see that neither an accused person made a victim of police chicanery nor the anti-corruption agency unduly obstructed in lawfully discharging its duty to bring to book the guilty persons.
Kesho Parshad vs. State, AIR 1967 Delhi 51: 69 Pun LR (D) 25: 1967 Cri L J 1138.
It is sad but a bitter reality that corruption is corroding, like cancerous lymph nodes, the vital veins of the body politics, social fabric of efficiency in the public service and demoralising the honest officers. The efficiency in public service would improve only when the public servant devotes his sincere attention and does the duty diligently, truthfully, honestly and devotes himself assiduously to the performance of the duties of his post. The reputation of corrupt would gather thick and un-chaseable clouds around the conduct of the officer and gain notoriety much faster than the smoke.
Swatantar Singh vs. State of Haryana, AIR 1997 SC 2105: 1997 (4) SCC 14: 1997 (4) JT 156: 1997 (3) Scale 201: 1997 (3) Supreme 361.
It is an established fact that a crime though committed against an individual, in all cases it does not retain an individual character. It, on occasions and in certain offences, accentuates and causes harm to the society. The victim may be an individual, but in the ultimate eventuate, it is the society which is the victim. A crime, as is understood, creates a dent in the law and order situation. In a civilised society, a crime disturbs orderliness. It affects the peaceful life of the society. An individual can enjoy his liberty which is definitely of paramount value but he cannot be a law unto himself. He cannot cause harm to others. He cannot be a nuisance to the collective.
Neeru Yadav vs State Of U.P. decided by SC on 29 September, 2015.
The preamble of Prevention of Corruption Act, 1947 indicates that the Act was passed as it was expedient to make more effective provisions for the prevention of bribery and corruption. The long title as well as the Preamble indicate that the Act was passed to put down the said social evil i.e. bribery and corruption by public servant. Bribery is a form of corruption. The fact that in addition to the word 'bribery' the word 'corruption' is used shows that the legislation was intended to combat also other evil in addition to bribery.
M. Narayanan Nambiar v. State of Kerala, AIR 1963 SC 1116 : (1963) 2 Cri LJ 186 : 1963 Supp (2) SCR 724.
Adverse affect on reputation
The adverse impact of lack of probity in public life leading to a high degree of corruption is manifold. It also has adverse effect on foreign investment and funding from the International Monetary Fund and the World Bank who have warned that future aid to under-developed countries may be subject to the requisite steps being taken to eradicate corruption, which prevents international aid from reaching those for whom it is meant.
Rv Secretary of State for Foreign and Commonwealth Affairs, (1995) 1 WLR 386.
Sting Operation
Being essentially a deceptive operation, though designed to nab a criminal, a sting operation raises certain moral and ethical questions. The victim, who is otherwise innocent, is lured into committing a crime on the assurance of absolute secrecy and confidentiality of the circumstances raising the potential question as to how such a victim can be held responsible for the crime which he would not have committed but for the enticement. Another issue that arises from such an operation is the fact that the means deployed to establish the commission of the crime itself involves a culpable act.... A crime does not stand obliterated or extinguished merely because its commission is claimed to be in public interest. Any such principle would be abhorrent to our criminal jurisprudence. At the same time the criminal intent behind the commission of the act which is alleged to have occasioned the crime will have to be established before the liability of the person charged with the commission of crime can be adjudged. The doctrine of mens rea, though a salient feature of the Indian criminal justice system, finds expression in different statutory provisions requiring proof of either intention or knowledge on the part of the accused. Such proof is to be gathered from the surrounding facts established by the evidence and materials before the court and not by a process of probe of the mental state of the accused which the law does not contemplate.
Rajat Prasad vs C.B.I., (2014) 6 SCC 495.
Political Nexus
Bribery and graft by public officers are the important crimes which are characterised as white collar crimes. The rise of such crimes in many countries has coincided with progress made in those countries in the economic and industrial fields. It is hardly surprising that the two processes should go together considering that most of the white collar crimes are, directly or indirectly, connected with the production and distribution of wealth. In a welfare State, the Government tends to control a vast number of means of production and distribution of goods and material services. The Constitution of India provides that the State shall in particular direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to sub-serve the common good that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. During the last several decades the country has seen the execution of various five year plans involving huge expenditure by the Government for various nation building activities. The corrupt officers, businessman and contractors never had it so good. No doubt the country did make some progress, but a big chunk of money earmarked for developmental projects has been pocketed by the white collar criminals.
State vs. Bharat Chandra Roul, 1995 Cri L J 2417 Ori.
There has been a rapid spread and growth of criminal gangs, armed senas, drug Mafias, smuggling gangs, drug peddlers and economic lobbies in the country which have, over the years, developed an extensive network of contacts with the bureaucrats/Government functionaries at the local levels, politicians, media persons and strategically located individuals in the non-State sector.
Vohra Committee Report, 1993.
In certain States, like Bihar, Haryana and UP, these gangs enjoy the patronage of local level politicians, cutting across party lines and the protection of governmental functionaries. Some political leaders become the leaders of these gangs/armed senas and, over the years, get themselves elected to local bodies, State Assemblies and the national Parliament. Resultantly, such elements have acquired considerable political clout seriously jeopardizing the smooth functioning of the administration and the safety of life and property of the common man, causing a sense of despair and alienation among the people.
Vohra Committee Report, 1993.
Public acceptance of corruption
There is a tendency of people to believe that the things can not be done without bribe. There is a need to remove this impression.
As long as an impression exists that corruption is prevalent and that unless one pays to somebody things are not done, there would be always persons who would feel the urge to offer bribe. Bribe would be offered not only to get an undue favour but also to avoid unnecessary harassment and to see that no obstruction or delay is caused in getting the most legitimate work done. To prevent the repetition of crimes, it is necessary to inculcate a general feeling that things are done in due course uninfluenced by extraneous considerations.
Mohandas Lalwani vs. State of Madhya Pradesh, 1973 CrLJ 1812: AIR 1973 SC 2679: 1974(3) SCC 361: 1974(1) SCR 636: 1973 CrLR (SC) 653.
Corruption in Education
If any undeserving candidates are allowed to top exams by corrupt means, not only will the society be deprived of deserving candidates, but it will be unfair for those students who have honestly worked hard for one whole year and are ultimately dis-entitled to a good rank by fraudulent practices prevalent in those examinations. It is well settled that socio-economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. Usually socio-economic offence has deep rooted conspiracies affecting the moral fibre of the society and causing irreparable harm, needs to be considered seriously.
State of Bihar vs Amit Kumar @ Bachcha Rai decided by SC on 20 April, 2017.
In the aforesaid case it was alleged that the respondent-accused was involved in tampering with the answer sheets by illegal means and interfering with the examination system of Bihar Intermediate Examination 2016 and thereby securing top ranks, for his daughter and other students of Vishnu Rai College, in the said examination. During the investigation when a search team raided his place various documents relating to property and land to the tune of Rs. 2.57 Cr. were recovered besides Rs.20 lakhs in cash. In addition to this, allegedly a large number of written answer sheets of various students, letter heads and rubber stamps of several authorities, admit cards, illegal fire arm etc. were found which establishes a prima facie case against the respondent. The allegations against the respondent are very serious in nature, which are reflected from the excerpts of the case dairy. Therefore the offences alleged, if proved, may jeopardize the credibility of the education system of State of Bihar. Accordingly the bail granted by the High Court was cancelled.
State of Bihar vs Amit Kumar @ Bachcha Rai (ibid)
Corruption in judiciary
Duties of Higher Courts — Need for self-imposed or corrective measures or disciplinary action.
Corruption, appears to have spread everywhere. No facet of public function has been left unaffected by the putrefied stink of corruption. Corruption, the name is depraved and degraded conduct. Dishonesty is thine true colour; thine corroding effect is deep and pervasive; spreads like lymph-nodes, cancerous cells in human body spreading as wild fire eating away the vital veins in the efficacy of public functions. It is a sad fact that corruption has its roots and ramification in the society as a whole. In the widest connotation, corruption includes improper or selfish exercise of power and influence attached to a public office. The root of corruption is nepotism and apathy in control on narrow considerations which often extends passive protection to the corrupt officers. The source and succour for acceptability of the judgment to be correct, is the upright conduct, character, absolute integrity and dispassionate adjudication as hallmarks. The conduct displayed on and off the Bench becomes centre stage of the judicial officer. Fallen standard of rectitude is the bane for lost faith of the people, tending to defeat the constitutional scheme of conferment of the powers of judicial review or decision according to law unless checks and corrective measures are applied and enforced. The conferment of exclusive power of judicial review on the judiciary may become means to personal gain or advantage. The lymph-nodes (cancerous cells) of corruption constantly keep creeping into the vital veins of judiciary and the need to stem it out by judicial surgery lies on judiciary itself by its self-imposed or corrective measures or disciplinary action under the doctrine of control enshrined in Articles 235, 124(6) of the Constitution. It would, therefore, be necessary that there should be constant vigil by the High Court concerned on its subordinate judiciary and self-introspection. What is most necessary is to stem out the proclivity of the corrupt conduct rather than to catch when the corrupt demands made and acceptance of illegal gratification. Corruption in judiciary cannot be committed without some members of the Bar become privy to the corrupt. The vigilant watch by the High Court, and many a time by the members of the Bar, is the sustaining stream to catch the corrupt and to deal with the situation appropriately. At the same time the High Court is the protector of the subordinate judiciary. Often some members of the bar, in particular, in Muffasil Courts, attempt to take undue advantage of their long standing at the bar and attempt to abuse their standing by bringing or attempting to bring about diverse forms of pressures and pin-pricks on junior judicial officers or stubborn and stern and unbendable officers. If they remain unsuccessful, to achieve their nefarious purpose, some members of the Bar indulge in mudslinging without any base, by sending repeated anonymous letters against the judicial officer questioning their performance/capacity/integrity. The High Court should, therefore, take care of the judicial officers and protect them from such unseeming attempts or pressures so as to maintain their morale and independence of the judicial officer and support the honest and upright officers.
High Court of Judicature at Bombay through its Registrar vs. Shirish Kumar Rangrao Patil, AIR 1997 SC 2631: 1997(3) SCR 1131: 1997(6) SCC 339: 1997(5) JT 337: 1997(4) Scale 181: 1997(2) UJ 152: 1997(76) FLR 659: 1997(2) LLN 470: 1997(4) SLR 321.
However when a sitting judge of Patna High Court pointed to the corruption in judiciary, judicial work was withdrawn from him and a full court stayed his judgement.
See https://www.indiatoday.in/india/story/bihar-judge-in-trouble-for-questioning-corruption-in-judiciary-1593085-2019-08-29
Fraud on Constitution
Corruption is a vice of insatiable avarice for self- aggrandizement by the unscrupulous, taking unfair advantage of their power and authority and those in public office also, in breach of the institutional norms, mostly backed by minatory loyalists. Both the corrupt and the corrupter are indictable and answerable to the society and the country as a whole. This is more particularly in re the peoples' representatives in public life committed by the oath of the office to dedicate oneself to the unqualified welfare of the laity, by faithfully and conscientiously discharging their duties attached thereto in accordance with the Constitution, free from fear or favour or affection or ill-will. A self-serving conduct in defiance of such solemn undertaking in infringement of the community's confidence reposed in them is therefore a betrayal of the promise of allegiance to the Constitution and a condemnable sacrilege.
Per Amitava Roy J. in State of Karnataka vs Selvi J. Jayalalitha decided by SC on 14 February, 2017.
Special features of corruption
Deep penetration of corruption into the society in India is a special feature. Corruption is one of the most talked about subjects to day in the country since it is believed to have penetrated into every sphere of activity. What distinguishes India from other societies in variety and degree of corruption afflicting its society has been scintillatingly described by James Cameron, an eminent Journalist in the following words :
"In India, corruption, public or private, venality is sanctified by the oldest traditions, it is denied by nobody indeed, the totality and persuasiveness of Indian corruption is almost a matter of national pride".
It is described as wholly widespread and spectacular.
State vs. Bharat Chandra Roul, 1995 Cri L J 2417 Ori
The reason for acceptability has been explained in previous chapter about the evolution and history of corruption in India wherein the bribe and corruption was part of public life of those who were supposed to be protectors of the society.
Object of PC Act:
The Prevention of Corruption Act was intended to make effective provision for the prevention of bribe and corruption rampant amongst the public servants. It is a social legislation defined to curb illegal activities of the public servants and is designed to be liberally construed so as to advance its object.
State of Madhya Pradesh v. Ram Singh, AIR 2000 SC 870: 2000(5) SCC 88: 2000(1) Scale 396: 2000(1) JT 518: 2000(1) Crimes 245(SC): 2000 CrLJ 1401.
Do not call 'corrupt'
A man may be a thief. In relation to his employment if an investigating agency supplies information of the said fact to the prospective employer, it would be a privileged occasion and no action would lie. But say, the investigating agency reaches the wedding venue when the man is getting married. It would be of no concern nor an occasion for the investigating agency to proclaim to the gathering that the man is a thief. In such a situation, if an action is brought, it would be no defence for the investigating agency to establish that the man is a thief. A lady may be a prostitute but it would not give a license to all and sundry to call her a prostitute as and when they feel like. Of course, where the character of a person is a relevant issue, statements made honestly, bona fide and on some objective facts would qualify as made on privileged occasion.
In this case it was alleged that a person was receiving money from a terrorist organisation and the money was routed through the account of his son in New York. This is what the court decided:
"…..The entire thrust of cross-examination of the plaintiff by the defendant is an entry in the account of the plaintiff's son maintained by Citibank, New York. The plaintiff had admitted the said entry but had disclosed that the source of remittance was not known. This is no circumstance for any reasonable person to form an honest belief that the remittance came from LTTE……………………..LTTE is a banned organisation. It's cadre has been indicted at a criminal trial of conspiring and succeeding in assassinating Sri Rajiv Gandhi, the Ex-Prime Minister of India. It is a banned organisation in India. A statement against a person that he has been receiving money from LTTE is ex facie defamatory. Such a person would be lowered in the esteem of the public. Plaintiff would accordingly be entitled to some recompense. The defendant has refused to apologize and withdraw his offending statement…..."
Ram Jethamalani vs. Subramanyam Swamy, AIR 2006 Delhi 300, 126 (2006) DLT 535.
What are corrupt actions?
Section 7 of Prevention of Corruption Act, 1988 as amended by Act of 2018, any public servant who,—
(a) obtains or accepts or attempts to obtain from any person, an undue advantage, with the intention to perform or cause performance of public duty improperly or dishonestly or to forbear or cause forbearance to perform such duty either by himself or by another public servant; or
(b) obtains or accepts or attempts to obtain, an undue advantage from any person as a reward for the improper or dishonest performance of a public duty or for forbearing to perform such duty either by himself or another public servant; or
(c) performs or induces another public servant to perform improperly or dishonestly a public duty or to forbear performance of such duty in anticipation of or in consequence of accepting an undue advantage from any person,
shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine.
Explanation 1.—For the purpose of this section, the obtaining, accepting, or the attempting to obtain an undue advantage shall itself constitute an offence even if the performance of a public duty by public servant, is not or has not been improper.
In other words, merely because there is no legal flaw in the official act would not be a defence against accepting bribe for doing that act.
Illustration.—A public servant, 'S' asks a person, 'P' to give him an amount of five thousand rupees to process his routine ration card application on time. 'S' is guilty of an offence under this section.
Explanation 2.—For the purpose of this section,—
(i) the expressions "obtains" or "accepts" or "attempts to obtain" shall cover cases where a person being a public servant, obtains or "accepts" or attempts to obtain, any undue advantage for himself or for another person, by abusing his position as a public servant or by using his personal influence over another public servant; or by any other corrupt or illegal means;
(ii) it shall be immaterial whether such person being a public servant obtains or accepts, or attempts to obtain the undue advantage directly or through a third party.
Part one of the Explanation 2 makes attempt to obtain bribe also punishable even if such attempt is not successful. Part two of this explanation clarify that even if bribe or benefit is routed through some other person, official shall be guilty.
Demand of bribe
The prosecution in order to prove the charge under the above provisions has to establish by proper proof, the demand and acceptance of the illegal gratification and till that is accomplished, the accused should be considered to be innocent.
A. Subair vs. State of Kerala, (2009) 6 SCC 587.
Mere recovery of the amount said to have been paid by way of illegal gratification would not prove the charge against the accused and in absence of any evidence to prove payment of bribe or to show that the accused had voluntarily accepted the money knowing it to be bribe, conviction cannot be sustained.
State of Kerala vs. C.P. Rao, (2011) 6 SCC 450; reiterated in Mukhtiar Singh Since vs State of Punjab decided by SC on 14 July, 2017.
As regards the persons other than public servant, section 7A of the PCA, 1988 prohibits everybody from taking undue advantage to influence public servant by corrupt or illegal means or by exercise of personal influence. It provides:
"Whoever accepts or obtains or attempts to obtain from another person for himself or for any other person any undue advantage as a motive or reward to induce a public servant, by corrupt or illegal means or by exercise of his personal influence to perform or to cause performance of a public duty improperly or dishonestly or to forbear or to cause to forbear such public duty by such public servant or by another public servant, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine."
Section 8 of the PCA 1988 defines offence relating to bribing of a public servant and holds bribe giver to be equally guilty. It provides that:
"(1) Any person who gives or promises to give an undue advantage to another person or persons, with intention—
(i) to induce a public servant to perform improperly a public duty; or
(ii) to reward such public servant for the improper performance of public duty;
shall be punishable with imprisonment for a term which may extend to seven years or with fine or with both:
Provided that the provisions of this section shall not apply where a person is compelled to give such undue advantage:
Provided further that the person so compelled shall report the matter to the law enforcement authority or investigating agency within a period of seven days from the date of giving such undue advantage.
Provided also that when the offence under this section has been committed by commercial organisation, such commercial organisation shall be punishable with fine.
Illustration.—A person, 'P' gives a public servant, 'S' an amount often thousand rupees to ensure that he is granted a license, over all the other bidders. 'P' is guilty of an offence under this sub-section.
Explanation.—It shall be immaterial whether the person to whom an undue advantage is given or promised to be given is the same person as the person who is to perform, or has performed, the public duty concerned, and, it shall also be immaterial whether such undue advantage is given or promised to be given by the person directly or through a third party.
Confidential informant or complainant shall not be prosecuted:
"Nothing above shall apply to a person, if that person, after informing a law enforcement authority or investigating agency, gives or promises to give any undue advantage to another person in order to assist such law enforcement authority or investigating agency in its investigation of the offence alleged against the later."
Section 9 of PCA 1988 provides for offence relating to bribing a public servant by a commercial organisation. It stipulates:
"(1) Where an offence under this Act has been committed by a commercial organisation, such organisation shall be punishable with fine, if any person associated with such commercial organisation gives or promises to give any undue advantage to a public servant intending—
(a) to obtain or retain business for such commercial organisation; or
(b) to obtain or retain an advantage in the conduct of business for such commercial organisation:
Provided that it shall be a defence for the commercial organisation to prove that it had in place adequate procedures in compliance of such guidelines as may be prescribed to prevent persons associated with it from undertaking such conduct.
(2) For the purposes of this section, a person is said to give or promise to give any undue advantage to a public servant, if he is alleged to have committed the offence under section 8, whether or not such person has been prosecuted for such offence.
(3) For the purposes of section 8 and this section,—
(a) "commercial organisation" means—
(i) a body which is incorporated in India and which carries on a business, whether in India or outside India;
(ii) any other body which is incorporated outside India and which carries on a business, or part of a business, in any part of India;
(iii) a partnership firm or any association of persons formed in India and which carries on a business whether in India or outside India; or
(iv) any other partnership or association of persons which is formed outside India and which carries on a business, or part of a business, in any part of India;
(b) "business" includes a trade or profession or providing service;
(c) a person is said to be associated with the commercial organisation, if such person performs services for or on behalf of the commercial organisation irrespective of any promise to give or giving of any undue advantage which constitutes an offence under sub-section (1).
Explanation 1.—The capacity in which the person performs services for or on behalf of the commercial organisation shall not matter irrespective of whether such person is employee or agent or subsidiary of such commercial organisation.
Explanation 2.—Whether or not the person is a person who performs services for or on behalf of the commercial organisation is to be determined by reference to all the relevant circumstances and not merely by reference to the nature of the relationship between such person and the commercial organisation.
Explanation 3.—If the person is an employee of the commercial organisation, it shall be presumed unless the contrary is proved that such person is a person who has performed services for or on behalf of the commercial organisation.
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the offence under sections 7A, 8 and this section shall be cognizable.
Thus the police need not apply to magistrate and start investigation immediately.
(5) The Central Government shall, in consultation with the concerned stakeholders including departments and with a view to preventing persons associated with commercial organisations from bribing any person, being a public servant, prescribe such guidelines as may be considered necessary which can be put in place for compliance by such organisations."
Section 10 of PCA 1988 makes the person in charge of commercial organisation to be guilty of offence if such organisation gives bribe etc. It provides:
"Where an offence under section 9 is committed by a commercial organisation, and such offence is proved in the court to have been committed with the consent or connivance of any director, manager, secretary or other officer shall be of the commercial organisation, such director, manager, secretary or other officer shall be guilty of the offence and shall be liable to be proceeded against and shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine.
Explanation.—For the purposes of this section, "director", in relation to a firm means a partner in the firm."
Abetment of offence
Section 12 of PCA 1988 provides for punishment for abetment of offences. It provides that:
"Whoever abets any offence punishable under this Act, whether or not that offence is committed in consequence of that abetment, shall be punishable with imprisonment for a term which shall be not less than three years, but which may extend to seven years and shall also be liable to fine."
Private individuals too can be prosecuted by the Court on the ground that they have abetted the act of criminal misconduct falling under Section 13(1)(e) of the 1988 Act committed by the public servant.
State of Karnataka vs Selvi J. Jayalalitha decided by SC on 14 February, 2017.
Thus the term 'abetment' includes corroborating, helping or aiding an accused in commission of offence under PC Act.
Assets disproportionate to income
CCS(CCA) Rules
The service conditions of employees of Central Government are governed by Central Civil Services (Conduct) Rules 1965. Rule 18 provides as under:
"18. Movable, immovable and valuable property:
(1) (i) Every Government servant shall on his first appointment to any service or post submit a return of his assets and liabilities, in such form as may be prescribed by the Government, giving the full particulars regarding -
(a) the immovable property inherited by him, or owned or acquired by him or held by him on lease or mortgage, either in his own name or in the name of any member of his family or in the name of any other person;
(b) shares, debentures and cash including bank deposits inherited by him or similarly owned, acquired, or held by him;
(c) other movable property inherited by him or similarly owned, acquired or held by him; and
(d) debts and other liabilities incurred by him directly or indirectly.
NOTE 1.- Sub-rule (1) shall not ordinarily apply to Group 'D' servants but the Government may direct that it shall apply to any such Government servant or class of such Government servants.
NOTE 2.- In all returns, the values of items of movable property worth less than Rs.10000 may be added and shown as a lump sum. The value of articles of daily use such as clothes, utensils, crockery, books, etc. need not be included in such return.
NOTE 3.- Where a Government servant already belonging to a service or holding a post is appointed to any other civil service or post, he shall not be required to submit a fresh return under this clause.
(ii) Every Government servant belonging to any service or holding any post included in Group 'A' and Group 'B' shall submit an annual return in such form as may be prescribed by the Government in this regard giving full particulars regarding the immovable property inherited by him or owned or acquired by him or held by him on lease or mortgage either in his own name or in the name of any member of his family or in the name of any other person.
(2) No Government servant shall, except with the previous knowledge of the prescribed authority, acquire or dispose of any immovable property by lease, mortgage, purchase, sale, gift or otherwise either in his own name or in the name of any member of his family:
Provided that the previous sanction of the prescribed authority shall be obtained by the Government servant if any such transaction is with a person having official dealings with him.
(3) Where a Government servant enters into a transaction in respect of movable property either in his own name or in the name of the member of his family, he shall, within one month from the date of such transaction, report the same to the prescribed authority, if the value of such property exceeds twenty thousand rupees in the case of a Government servant holding any Group 'A' or Group 'B' post or fifteen thousand rupees in the case of a Government servant holding any Group 'C' or Group 'D' post:
Provided that the previous sanction of the prescribed authority shall be obtained by the Government servant if any such transaction is with a person having official dealings with him.
(4) The Government or the prescribed authority may, at any time, by general or special order, require a Government servant to furnish, within a period specified in the order, a full and complete statement of such movable or immovable property held or acquired by him or on his behalf or by any member of his family as may be specified in the order. Such statement shall, if so required by the Government or by the prescribed authority, include the details of the means by which, or the source from which, such property was acquired.
(5) The Government may exempt any category of Government servants belonging to Group 'C' or Group 'D' from any of the provisions of this rule except sub-rule (4). No such exemption shall, however, be made without the concurrence of the Cabinet Secretariat (Department of Personnel).
Explanation I. - For the purposes of this rule -
(1) the expression "movable property" includes-
(a) jewellery, insurance policies, the annual premia of which exceeds Rs.10,000/- or one-sixth of the total annual emoluments received from Government, whichever is less, shares, securities and debentures;
(b) all loans, whether secured or not, advanced or taken by the Government servant;
(c) motor cars, motor cycles, horses or any other means of conveyance; and
(d) refrigerators, radios radiograms and television sets."
See https://dopt.gov.in/forewordnotification#10
Thus, every Government servant shall on his first appointment to any service or post and thereafter at such intervals as may be specified by the Government, submit a return of his assets and liabilities in such form as may be prescribed by the Government giving the full particulars as indicated in that rule.
Similar provisions govern the employees of State Governments as well. In practice there is no mechanism in place to ensure honest and complete compliance of this provision. In this computer age no common database is known to have been maintained. This results in huge accumulation of assets by a Government Servant and his family members by re-routing the funds as legitimate business earnings of the family members. Sometimes assets are acquired as gifts to family members from the people who were given favours.
A presumption of corruption fairly and reasonably arises against an officer who cannot account for large accretion of wealth which he could not possibly have saved from his known sources of income. This principle has received statutory recognition in section 5 (3) of the Prevention of Corruption Act, 1947, (now section 13 of PC Act 1988) and its application in a departmental inquiry against an officer charged with corruption could not, therefore, be unjust or inequitable. In fact, this principle has recently been upheld by the Supreme Court in the case of G.R. Manker Vs. Union of India (Civil Appeal No. 160 of 1963)
[Ministry of Home Affairs OM No. 39/19/63-Ests.(A), dated 16.12.1964]
Where the lessee or the lessor is a person having official dealings with the Government servant the general meaning of the term 'lease' as given in Section 105 of the Transfer of Property Act, 1882 would apply; it would include any agreement giving rise to the relationship of tenant or any conveyance, grant or devise of reality for designated period of conveyance of interest in real property for limited term with conditions attached, irrespective of the duration of such agreement, etc., or the mode of payment of rent or other consideration. This general meaning of the term 'lease' would also apply to the new Rule 18A which has been introduced by Rule 3 of the CCS (Conduct) (Amendment) Rules, 1973 relating to a transaction entered into by a Government servant in respect of immovable property situated outside India as also to any transaction with a foreigner, foreign Government, foreign organisation or concern in respect of any immovable property.
[Cabinet Secretariat, DP & AR OM No. 25/57/64-Ests.(A), dated 5th February, 1973]
Section 13 of PCA 1988 makes unlawful enrichment illegal and a punishable offence. It's sub section (1) provides:
"(1) A public servant is said to commit the offence of criminal misconduct,—
(a) if he 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
(b) if he intentionally enriches himself illicitly during the period of his office.
Explanation 1.—A person shall be presumed to have intentionally enriched himself illicitly if he or any person on his behalf, is in possession of or has, at any time during the period of his office, been in possession of pecuniary resources or property disproportionate to his known sources of income which the public servant cannot satisfactorily account for.
Explanation 2.—The expression "known sources of income" means income received from any lawful sources."
Section 13(1)(a) of PC Act 1988 is similar to section 5(1)(c) of PC Act, 1947 which was similar to section 405 of Penal Code which makes misappropriation of property an offence. In regard to these provisions it was observed:
"The offence created under section 5 (1) (c) of the Corruption Act is distinct and separate from the one under section 405 of the Indian Penal Code and, therefore, there can be no question of section 5 (1) (c) repealing section 405 of the Indian Penal Code. If that is so, then, Article 14 of the Constitution can be no bar."
Amarendra Nath Roy v. The State, AIR 1955 Cal 236: 1955 CriLJ 784 approved in Om Prakash Gupta v. State of U.P., (1957) SCR 423.
It may be noted that the Prevention of Corruption Act, 1988 was amended by 'The Lokpal and Lokayukta Act, 2013', Act I of 2014 (w.e.f 16.01.2014). This amendment has increased the minimum prescribed punishment under Section 8, 9, 13(2) of the Prevention of Corruption Act.
Offence of money-laundering
Money-laundering is an offence under Prevention of Money Laundering Act. Details about money laundering is dealt with in Chapter 10.
Habitual Offender
There is a special punishment for habitual offender under section 14 of PCA 1988:
"...Whoever convicted of an offence under this Act subsequently commits an offence punishable under this Act, shall be punishable with imprisonment for a term which shall be not less than five years but which may extend to ten years and shall also be liable to fine.".
Violation of Rules
Mere disregard of relevant provisions of the Financial Code as well as ordinary norms of procedural behaviour of government officials and contractors, without conclusively establishing, beyond a reasonable doubt, the guilt of the officials and contractors concerned, may give rise to a strong suspicion but that cannot be held to establish the guilt of the accused.
Abdulla Mohd. Pagarkar v. State (Union Territory of Goa, Daman and Diu), (1980) 3 SCC 110 followed in A. Sivaprakash vs State Of Kerala decided by SC on 10 May, 2016.
Retrospective application
The provisions of the penal law only apply to offences committed after a new legislation is enacted.
Conviction of accused under the Act for an offence committed prior to enforcement of the penal law is violative of article 20(1) of the Constitution and therefore conviction is vitiated.
The punishment prescribed for an offence under Section 161 of IPC is imprisonment of either description which may extend to 3 years of with fine, or with both. In the case of an offence under Section 7 of the Act of 1988, the offender is liable to be punished with imprisonment which shall not be less than six months and which may extend to five years and also liable to fine. Section 7 is placed on a higher pedestal than that of Section 161 I.P.C. Section 7 of the Act of 1988 while enhancing the period of punishment to 5 years, stipulates that the offender shall be compulsorily imprisoned for a period of not less than six months. In the instant case, this aspect was taken note of by the learned Sessions Judge while sentencing the accused for imprisonment for a period of two years. The offence for which a person is sought to be convicted must have been in force at the time when the Act with which he is charged was alleged to have been committed. Section 7 of the Act of 1988 was not in force at the time the appellant-accused is alleged to have demanded and accepted illegal gratification. Contravention of a provision relating to fundamental right cannot be condoned. The trial held against the appellant, therefore, is opposed to Article 20 (1) of the Constitution and because of this fundamental defect, the whole trial is vitiated. In such a situation, the only way out is to order retrial invoking Section 386 of the Cr. P.C.
R.S. Kalakapur vs. State of Karnataka, 1994 (3) Crimes 420 Kar.
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