INTRODUCTION

Chapter 1
INTRODUCTION
India is a large country with a population of over a billion people. It is one of the fastest
growing economies in the world and is attracting huge investments from developed countries.
In spite of the healthy growth indices, a vast population still lives in poverty and does not
have access to basic sanitation, healthcare and education. The country’s progress is seriously
hampered by all pervasive corruption. It is preventing the benefits of development from
reaching the deprived sections of society. Weeding out corruption today is a major challenge
before Indian society.
The lawmakers of India have always been conscious of this problem. The British enacted the
first codified law, The Indian Penal Code, in 1860. It had a chapter dealing with offences
committed by public servants involving corruption and corrupt practices. Later, a special
piece of legislation was enacted, i.e. The Prevention of Corruption Act 1947, to deal
specifically with the problem of corruption in public life. Amendments were made from time
to time to keep pace with the changing times. Later on, in 1988, it was replaced by a more
comprehensive and broad piece of legislation - The Prevention of Corruption Act 1988.
Apart from this Act, India is a signatory to the United Nations Convention against Corruption
(UNCAC). It has signed Extradition and Mutual Legal Assistance Treaties in Criminal
Matters with a number of countries to ensure mutual co-operation in matters pertaining to
investigation of corruption and other criminal cases. Co-operation is sought from other
countries under these treaties through the instrument of Letters Rogatory (LRs).
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Corruption is a generic term, largely evolving out of the inefficiencies in the design of the
governance system. It manifests itself in different forms in different environments and the
nature and extent of its pervasiveness is affected by the institutions underlying the system.
Corruption is not only a product of the system; it feeds back into the system, and, in the long
run, has a significant impact on the macro outcomes of an economy. Corruption has had a
differential impact on economic growth across countries; a phenomenon that has been widely
researched. Besides affecting economic growth, corruption also has considerable impact on
sustainable development.
Technically, corruption covers an entire host of abuses and corruption charges that are
typically leveled at highly-placed government officials, who are able to use public funds to
improve their own fortunes due to increased access, influence, knowledge or power that
comes with an elevated position. An official engaging in bribery, nepotism, embezzlement,
extortion is guilty of abuse of public trust at minimum, and may often be charged with a
crime.
While corruption is an umbrella term and has been recognized in literature to be difficult to
define; for the purpose of this study I accept the conventional definition of corruption, which
is essentially, private gains made from the abuse of public office1. There exist different
classes of ‘public’ corruption involving four types of actors: politicians, bureaucrats and other
public servants, private elite, and the general public. Each class of corruption involves
permutations and combinations of different actors, with at least one principal protagonist
from the public sector. This study focuses only on a particular type of corruption by
politicians in India, where the incidence of corruption is significantly high2.
1
While corruption exists in the private sector as well, it is of little interest for the purpose of this study.
2
India has consistently ranked low in terms of indices measuring perceptions of corruption. India ranked 87 in
the Corruption Perception Index published by Transparency International in 2010, well below Brazil, Ghana and
China.
2
Further, the study recognizes corruption to be multilayered as well as multifaceted and
existing within the realm of illegality as well as legality, requiring analysis through lenses of
incentives, law, political institutions and ethics.
This study aims to give a brief overview of the Indian laws dealing with the problem of
corruption. The main law, i.e. The Prevention of Corruption Act 1988, is discussed in detail.
The established mechanisms for collecting information about corruption are also discussed.
The problems and challenges faced by the country in the fight against corruption are also
highlighted in brief
(I) Research Problem:
Scholarly researchers and public policy makers have struggled with the ambiguity of a
definition of corruption and its myriad forms, frequencies, and consequences3. The very
nature of corruption makes this crime inherently difficult to study and, partially due to this,
scholarly research on the topic has been largely underdeveloped.
(II) Objectives of the Study:
Research subjects have long been ambiguous, even after decades of debate, experience, and
regulation. This Study Report aims to discuss few things about anti-corruption laws like:-
 To understand corruption and its various forms.
 To know the success of Laws and Regulations.
 To pick-up the needs of amendments in Laws and Regulations.
3
(Johnson and Sharma, 2004)
3
 To conclude how these laws will become successful.
 To suggest the measures for preventing our society from graft/corruption.
(III) Research Methodology:
This study is performed by using the Doctrinal method of research. This study is totally a
desk work completed by using some Primary sources like Statutes and Case Laws as well as
Secondary sources like Books, Journals, Articles, Magazines, Newspapers and Websites.
This study is tried to be made original by using different sources.
(IV) Hypothesis:
This Study Report is an attempt to analyze the existed anti-corruptional laws fighting against
corruption in India and to come out with feasible suggestions to ensure the ethical and legal
conduct of such laws without undermining the need of fighting against corruption. However
before proceeding further, it is necessary to imagine what should be the picture if suggestions
given in this study accepted:-
1. Exhaustive Laws and Regulations will be there to deal with all the issues relating to
‘Corruption’ in India.
2. Judiciary will be actively capable to solve the different issues relating to ‘Corruption’
in India.
3. New systems/agencies will be developing to prevent the ‘Corruption’ in India.
4. Common men will be getting their basic rights and needs equally.
5. The society will be happy and peaceful.
4
(V) Research Design:
Chapter 1
In this the researcher deals with ‘Introduction’ and has given a brief overview of the
dissertation topic including its objective, hypothesis and research methodology and also
discusses in brief the research problem to be addressed by the study.
Chapter 2
In this chapter the researcher deals with meaning and definitions. Researcher presents various
definitions and forms of corruption to clear the ambiguousness about it. Researcher also
discusses the causes and consequences of corruption. Further in this chapter, the researcher
accepts the fact that there is widespread corruption in India. Researcher describes the status
of corruption in various dimensions of public and private sectors in brief.
Chapter 3
In this chapter the researcher gives a brief overview of the legal framework dealing with the
problem of corruption in India. The main law, i.e. The Prevention of Corruption Act 1988, is
discussed in detail.
5
Chapter 4
In this chapter the researcher explores the drawbacks and loopholes of Indian criminal justice
system as well as Prevention of Corruption Act, Right to Information Act and Prevention of
Benami Transactions for fighting against the corruption.
Chapter 5
In this chapter the researcher discusses some very famous and relevant case laws which show
the attitude of judiciary towards the problem of corruption.
Chapter 6
In this the researcher gives a summary of conclusions and the final outcome (arrived at
throughout the study) of the discussion. Researcher also makes some recommendations to
control the problem of corruption and further in this, the researcher propounds the emergence
for a strategy to fight against Corruption at nationwide.
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Chapter 2
MEANING, CAUSES AND IMPACT OF CORRUPTION
Corruption is a complex and multifaceted phenomenon with multiple causes and effects, as it
takes on various forms and functions in different contexts. The phenomenon of corruption
ranges from the single act of a payment contradicted by law to an endemic malfunction of a
political and economic system. The problem of corruption has been seen either as a structural
problem of politics or economics, or as a cultural and individual moral problem. The
definition of corruption consequently ranges from the broad terms of “misuse of public
power” and “moral decay” to strict legal definitions of corruption as an act of bribery
involving a public servant and a transfer of tangible resources.
Accordingly, the study of corruption has been “multi-disciplinary” and dispersed, ranging
from universal theoretical modeling to detailed descriptions of single corruption scandals. It
has been studied as a problem of political, economic, cultural or moral underdevelopment,
and mostly as something in between. The complex nature of corruption has made most
observers agree that it pervades many societies and that there are no quick-fix solutions to it.
(I) Definitions:
To choose a set of definitions of corruption is the convention, but may literally be done in an
infinite number of ways.
A strict and narrow definition of corruption, which limits corruption to particular agents,
sectors or transactions (like corruption defined as deviation from the formal rules that
7
regulate the behaviour of public officials) can be handy for fighting corruption when the
problem is limited. However, as narrow (legal) definitions may ignore vital parts of the
problem, like the lack of political will to curb corruption in certain regimes, broader and more
open-ended definitions, like corruption in terms of power abuse, will have to be applied to
address the situations of pervasive and massive corruption.
The decisive role of the state is reflected in most definitions of corruption, which will define
corruption as a particular (and, one could say, perverted) state-society relation.
Corruption is conventionally understood, and referred to, as “the private wealth seeking
behaviour of someone who represents the state and the public authority”.
“It is the misuse of public resources by public officials, for private gains”.
The encyclopaedic and working definition used by the World Bank, Transparency
International and others is that, “corruption is the abuse of public power for private benefit
(or profit)”.
Another widely used description is that, “corruption is a transaction between private and
public sector actors through which collective goods are illegitimately converted into private
regarding payoffs”4.
This point is also emphasized by Rose-Ackerman, who says “corruption exists at the interface
of the public and private sectors”5.
In Colin Nye’s classical definition, corruption is “behaviour that deviates from the formal
duties of a public role (elective or appointive) because of private-regarding (personal, close
family, private clique) wealth or status gains”6.
4
(Heidenheimer et al. 1989:6)
5
(Rose-Ackerman 1978)
8
An updated version with the same elements is the definition by Mushtaq Khan, who says
corruption is “behaviour that deviates from the formal rules of conduct governing the actions
of someone in a position of public authority because of private-regarding motives such as
wealth, power, or status”7.
Samuel Huntington noted that where political opportunities are scarce, corruption occurs as
people use wealth to buy power, and where economic opportunities are few, corruption
occurs when political power is used to pursue wealth8.
Economic and political competition, government transparency and accountability, coupled
with the democratic principles of checks and balances, are necessary instruments to restrict
corruption and power abuse. Most of these mechanisms that the literature forwards in order to
curb systemic and endemic corruption, are also largely the same mechanisms suggested to
deepening and widening democratic rule and “good governance”.
(II) Forms of corruption:
The main forms considered are bribery, embezzlement, fraud and extortion. Even when these
concepts are partly overlapping and at times interchangeable with other concepts, they may
identify some basic varieties of corruption.
(i) “Bribery” is the payment (in money or kind) that is given or taken in a corrupt
relationship. To pay or receive a bribe is corruption per se, and should be
understood as the essence of corruption. A bribe is a fixed sum, a certain
6
( Nye 1967:416)
7
(Khan 1996:12)
8
(Huntington 1968)
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percentage of a contract, or any other favour in money of kind, usually paid to a
state official who can make contracts on behalf of the state or otherwise distribute
benefits to companies or individuals, businessmen and clients.
There are many equivalent terms to bribery, like kickbacks, gratuities,
“commercial arrangements”, baksheesh, sweeteners, pay-offs, speed- and grease
money, which are all notions of corruption in terms of the money or favours paid
to employees in private enterprises, public officials, and politicians.
(ii) “Embezzlement” is theft of resources by people who are put to administer it; it is
when dis loyal employees steal from their employers. This is a serious offence
when public officials are misappropriating public resources, when state official
steals from the public institution in which he or she is employed and from
resources he is supposed to administer on behalf of the public.
Straddling , the process by which some power-holders systematically use their
political office to enter into, secure and expand their private business interests,
should be regarded as another form of embezzlement.
(iii) “Fraud” is an economic crime that involves some kind of trickery, swindle or
deceit. Fraud involves a manipulation or distortion of information, facts and
expertise, by public officials positioned between politicians and citizens, who seek
to draw a private profit. Fraud is when a public official (agent), who is responsible
for carrying out the orders or tasks assigned by his superiors (principal),
manipulates the flow of information to his private profit.
It is fraud when politicians and state agents take a share for closing their eyes on
economic crimes, and it is serious fraud when they have an active role in it.
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(iv) “Extortion” is money and other resources extracted by the use of coercion,
violence or the threats to use force. Blackmailing and extortion are corrupt
transactions where money is violently extracted by those who have the power to
do it, but where very little is returned to the “clients” (perhaps only some vague
promises of exception from further harassment).
This is for instance when the state, and in particular its security services and
paramilitary groups, extorts money from individuals, groups and businesses. With
more or less concealed threats, taxes, fees and other resources are extracted from
travellers, market vendors, transporters and other private sector businesses.
(v) “Favouritism” is a mechanism of power abuse implying “privatization” and a
highly biased distribution of state resources, no matter how these resources have
been accumulated in the first place. Favouritism is the natural human proclivity to
favour friends, family and anybody close and trusted. Favouritism is closely
related to corruption insofar as it implies a corrupted (undemocratic, “privatized”)
distribution of resources. In other words, this is the other side of the coin where
corruption is the accumulation of resources.
Favouritism is the penchant of state officials and politicians, who have access to
state resources and the power to decide upon the distribution of these, to give
preferential treatment to certain people. Favouritism or cronyism is for instance to
grant an office to a friend or a relative, regardless of merit.
(vi) “Nepotism” is a special form of favouritism, in which an office holder (ruler)
prefers his proper kinfolk and family members (wife, brothers and sisters,
children, nephews, cousins, in-laws etc.). Many unrestricted presidents have tried
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to secure their (precarious) power position by nominating family members to key
political, economic and military/security positions in the state apparatus.
Technically, corruption covers an entire host of abuses and corruption charges that are
typically leveled at highly-placed government officials, who are able to use public funds to
improve their own fortunes due to increased access, influence, knowledge or power that
comes with an elevated position. An official engaging in bribery, nepotism, embezzlement,
extortion is guilty of abuse of public trust at minimum, and may often be charged with a
crime.
(III) Causes and Consequences of Corruption:
Corruption is a global phenomenon and it is omnipresent. Corruption has progressively
increased and is now rampant in our society. Corruption in India is a consequence of the
nexus between bureaucracy, politics and criminals. India is now no longer considered a soft
state. It has now become a “consideration state” where everything can be had for a
consideration.
Causes:
Corruption in India has wings, not wheels. As the nation grows, the corrupt also grows to
invent new methods of cheating the government and public. The causes of corruption are
many and complex. The following are some of the causes of corruption.
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 Emergence of a political elite which believes in interest-oriented rather than nation-
oriented programmes and policies.
 Artificial scarcity created by people with malevolent intentions wrecks the fabric of
the economy.
 Corruption is caused as well as increased because of the change in the value system
and ethical qualities of men who administer. The old ideals of morality, service and
honesty are regarded as anachronistic.
 Tolerance of people towards corruption, complete lack of intense public outcry
against corruption and the absence of a strong public forum to oppose corruption
allow corruption to reign over people.
 Vast size of population coupled with widespread illiteracy and the poor economic
infrastructure lead to endemic corruption in public life.
 In a highly inflationary economy, low salaries of government officials compel them to
resort to corruption. Graduates from Indian Institutes of Management (IIMs) with no
experience draw a far handsome salary than what government secretaries draw.
 Complex laws and procedures deter common people from seeking help from the
government.
 Election time is a time when corruption is at its peak. Big industrialists fund
politicians to meet high cost of election and ultimately to seek personal favour.
Bribery to politicians buys influence, and bribery by politicians buys votes. In order to
get elected, politicians bribe poor, illiterate people.
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Consequences of Corruption:
Corruption is as much a moral as a development issue. It can distort entire decision- making
processes on investment projects and other commercial transactions, and the very social and
political fabric of societies. The following are some of the consequences of corruption.
Economic Development: Some fairly robust statistical evidence has now been furnished
showing that higher corruption is associated with
(i) higher (and more costly) public investment;
(ii) lower government revenues;
(iii) lower expenditures on operations and maintenance; and
(iv) ensuing lower quality of public infrastructure.
The evidence also shows that corruption increases public investment by making it more
expensive, while reducing its productivity.
The evidence from India is particularly stark. If corruption levels in India were reduced to
that in the Scandinavian countries, investments rates could increase annually by some 12 per
cent and the Gross Domestic Product (GDP) growth rate by almost 1.5 per cent each year.
Corruption also acts as an additional tax on investment by lowering the potential return to an
investor on both the initial investment and on subsequent returns. In India, current corruption
levels mean that the implicit corruption tax on investment is almost 20 percentage points.
The impact of corruption on the quality of public infrastructure is all too clearly visible in
towns and cities of India. The Public Works Department and the State Electricity Boards
which are largely responsible for the maintenance of roads and management of power
distribution respectively are among the worst corrupt government departments in India.
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Corruption also reduces the government’s resources and hence its capacity for investment,
since tax revenues are depleted by tax evasion. This has two adverse effects: first, shifts away
from investments in development areas occur, as bribe-takers are less likely to invest in
activities with significant positive social benefits like education and health. Secondly, overall
investment levels may fall, since conspicuous consumption or flight of illegal earnings is
probably higher than legal earnings. The high potential for capital flight of illegal earnings
makes corruption more likely to be associated with a negative impact on the balance of
payments.
Political System: Politically, corruption increases injustice and disregard for rule of law.
Basic human rights and freedom comes under threat, as key judicial decisions are based on
the extent of corrupt bribes given to court officials rather than on the innocence or guilt of the
parties concerned. Police investigations and arrests may be based on political victimization or
personal vendettas rather than on solid legal grounds. Commenting on the socio-political
consequences of corruption the Supreme Court of India observed that corruption in a civilised
society was a disease like cancer. If not detected in time it was sure to turn the polity
malignant leading to “disastrous consequences”. The apex court said a sociopolitical system
exposed to such a dreaded communicable disease was likely to crumble under its own weight.
(IV) State of Corruption in India:
India’s stellar performance in rankings on growth indicators and its innovative approaches to
poverty alleviation are often compromised by absence of noticeable efforts in governance
reforms for ensuring high levels of integrity, enhanced transparency and probity in public and
corporate life. It is a commonly held view that political and bureaucratic corruption, public
funds embezzlement, fraudulent procurement practices and corruption in the enforcement and
15
regulatory institutions and consumer exploitation by private companies/ contractors plague
Indian public life. Studies and public surveys have reinforced this public perception and have
consistently shown that corruption persists in India despite many steps by the government.
Examining the root causes of corruption in India and understanding its several manifestations
is necessary to place the problem in its context and is an essential prerequisite for policy
formulation.
Corruption in India has multiple channels of expression. One of the ways of advancing our
understanding of the problem is to distinguish between the many forms it takes. A widely
accepted distinction, one that can be applied to the Indian context, is that between petty and
grand corruption. Petty corruption is either the collusive or coercive action of a public official
vis-a-vis a member of the public to subvert the system over relatively small transactions. It
therefore mostly involves down the line public officials. Grand corruption is the subversion
of the system by senior government officials and formations of the political executive,
usually in collusion with private sector players. In India both forms of corruption are
prevalent as result of which corruption has become endemic to Indian society. It is also
noteworthy that even a matter as important as national security could be at risk due to various
forms of corruption.
(i) Political Corruption: From a political perspective, corruption could be referred
to as the abuse of any office of trust for private gain with deviations from set
responsibilities and use of their positions to serve private ends and secure private
gains. This type of corruption also falls in the category of what may be termed as
“Grand Corruption”.
Key factors that are the root causes of political participation in corruption are:
(a) Political will is a decisive factor in determining whether a country can enforce
the constitutional, legal and the institutional provisions available to combat
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corruption. Establishment of institutions like the Lokpal and implementation
of a nationwide anticorruption strategy would clearly demonstrate political
will and sends positive signals to one and all.
(b) Ethics and standardization of norms are a mandatory minimum measures for
establishing credibility of the political institutions. The Parliament and State
Legislatures’ role in holding the executive accountable is a powerful tool
nevertheless compulsions of electoral politics sometimes force stalemates.
(ii) Administrative Corruption: Administrative corruption occurs at the
implementation stages of government plans, schemes and even delivery of
services. The two main causes of administrative corruption are:
(a) inability of the civil servants to resist extraneous influences; and
(b) active collusion.
Absence of accountability, integrity and transparency, in the face of monopoly power coupled
with discretion to exercise such power are the contributing factors for increase of
administrative corruption. High expectation of corruption and low probability of getting
caught creates a culture of immunity. Corruption could still prevail in spite of there being
systems, procedures, laws and codes of conduct if informal cliques guide government
activity.
Corruption is widespread in India. India is ranked 85 out of 179 countries in Transparency
International’s Corruption Perceptions Index, although its score has improved consistently
from 2.7 in 2002 to 3.4 in 2008. Corruption has taken the role of a pervasive aspect of Indian
politics and bureaucracy. The economy of India was under socialist-inspired policies for an
entire generation from the 1950s until the 1980s. The economy was shackled by extensive
17
regulation, protectionism and public ownership, leading to pervasive corruption and slow
growth.
A 2005 study done by Transparency International (TI) in India found that more than 50
percent of the people had first-hand experience of paying bribe or peddling influence to get a
job done in a public office. Taxes and bribes are common between state borders;
Transparency International estimates that truckers pay annually $5 billion in bribes. Officials
often steal state property. In Bihar, more than 80 per cent of the subsidised food aid to poor is
stolen.
(V) Various Dimensions of Corruption in India:
(i) Corruption in Government Offices: In cities and villages throughout India,
“mafia raj” consisting of municipal and other government officials, elected
politicians, judicial officers, real estate developers and law enforcement officials,
acquire, develop and sell land in illegal ways. Many state-funded construction
activities in India, such as road building, are dominated by construction mafia,
which are groupings of corrupt public works officials, materials suppliers,
politicians and construction contractors. Shoddy construction and material
substitution (e.g. mixing sand in cement while submitting expenses for cement)
result in roads and highways being dangerous, and sometimes simply washed
away when India’s heavy monsoon season arrives. In government hospitals,
corruption is associated with non- availability of medicines, getting admission
through back-door, consultations with doctors and availing diagnostic services
illegally. Civil servants /public officials were rated by 13 of respondents as the
second most corrupt institution in the country. Other institutions those were polled
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included Parliament/ legislature, the private sector, media and the judiciary. The
Barometer, now in its sixth edition, surveyed 73,132 people in 69 countries
including 12 countries from Asia Pacific. In India, the survey was conducted in
five metros- Delhi, Mumbai, Kolkata, Chennai and Bangalore.
(ii) Corruption in Politics: Political parties are perceived to be the most corrupt
institutions by Indians, according to 2009 Global Corruption Barometer. The
Barometer, a global public opinion survey released by Transparency International,
found that 58 per cent Indian respondents identified politicians to be the single
most corrupt individuals. Forty-Five per cent of the people sampled felt that the
government is ineffective in addressing corruption in the country. The survey in
India, conducted at the national level between October and November last year,
also indicated that the perception of government effectiveness in relation to
addressing corruption had improved from 2007. Forty-two per cent respondents
analysed that government’s actions in the fight against corruption was effective.
(iii) Corruption in Judiciary: Corruption is rampant in India’s courts. According to
Transparency International, judicial corruption in India is attributable to factors
such as “delays in the disposal of cases, shortage of judges and complex
procedures, all of which are exacerbated by a preponderance of new laws”.
Almost 3 per cent respondents in India consider the judiciary to be corrupt. Anti-
corruption tools such as the Right to Information Act (RTI), social audit, citizens’
charters and use of technology are wonderful tools to check corruption, but
majority of the population in the country are not aware of these instruments.
Transparency International has also devised tools such as Integrity Pact and
19
Development Pact to check corruption in areas of procurement and political
institutions, respectively.
(iv) Corruption in Police: Despite state prohibition against torture and custodial
misconduct by the police, torture is widespread in police custody, which is a
major reason behind deaths in custody. The police often torture innocent people
until a “confession” is obtained to save influential and wealthy offenders. G.P.
Joshi, the programme coordinator of the Indian branch of the Commonwealth
Human Rights Initiative in New Delhi comments that the main issue at hand
concerning police violence is the lack of accountability on the part of the police.
(v) Corruption in the Private Sector: Almost 9 per cent of those surveyed considers
business and private sector to be corrupt. The private sector used bribes to
influence public policy, laws and regulations, believe over half of those polled for
the survey. The business-related findings of the Barometer sends a powerful signal
to the private sector to prove that they are clean and to communicate this clearly to
the public. Forty-five of those polled felt that the existing channels for making
corruption-related complaints were ineffective. Very few lodged formal
complaints, demonstrating serious defects in the perceived legitimacy and
effectiveness of channels for reporting and addressing bribery.
(vi) Corruption in Media: As many as 8 percent of the respondents in India consider
that corruption in the media, affects the lives of the people. The media, while not
20
being perceived as clean, scored best with just over 40 per cent of respondents
labeling the sector as corrupt, globally.
(vii) Corruption in Religious institutions: In India, corruption has also crept into
religious institutions. Some members of the Church are making money by selling
baptism certificates. A group of church leaders and activists has launched a
campaign to combat corruption within churches. Among Indian Muslims, the
recent “cash for fatwas scandal” was a major affair that exposed the Imams of the
Islamic ulama accepting bribes for issuing random, often nonsensical fatwas. The
chief economic consequences of corruption are loss to the exchequer, an
unhealthy climate for investment and an increase in the cost of government-
subsidised services. The Transparency International (TI) India study estimates the
monetary value of petty corruption in 11 basic services provided by the
government, like education, health-care, judiciary and police to be around
Rs.21,068 crores. India still ranks at the bottom quartile of developing nations in
terms of the ease of doing business, and compared to China and other lower
developed Asian nations, the average time taken to secure the clearances for a
start-up or to invoke bankruptcy is much greater. According to Transparency
International, Bihar is the most corrupt state in India. The Economist magazine
said in 2004 that “Bihar had become a byword for the worst of India, of
widespread and inescapable poverty, of corrupt politicians indistinguishable from
mafia-dons they patronise, caste-ridden social order that has retained the worst
feudal cruelties”.
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(VI) Impact of Corruption:
Globally, there is a general consensus amongst most academics and policy makers that the
debilitating effects of corruption permeate through all aspects of public life. Several studies
have shown that corruption not only stifles growth, it also perpetuates inequalities, deepens
poverty, causes human suffering, dilutes the fight against terrorism and organized crime, and
tarnishes India’s image globally. The impact of corruption is multi fold, encompassing:
political costs, economic costs, social costs, environmental costs and issues of national
security.
(i) Political Costs: The political costs of corruption are manifested in weakened public
trust in political institutions, reduced political participation, perversion of the electoral
process, restricted political choices available to citizens and loss of legitimacy of the
democratic system.
(ii) Economic Costs: Corruption reduces economic efficiency by misallocation of
resources in favour of rent seeking activities, increasing the cost of public
transactions, acting as an additional tax on business thereby reducing investment,
reducing genuine business competition.
(iii)Social Costs: The effect of corruption on the social fabric of society is perhaps the
most alarming damage of all. It undermines people's trust in the political system, in its
institutions and its leadership. Corruption distorts the value systems and wrongly
attaches elevated status to occupations that have rent seeking opportunities. This
results in a disillusioned public, a weak civil society, which attracts unscrupulous
22
leaders to political life. Eventually, there is a risk that demanding and paying bribes
could become the norm.
(iv) Environmental Costs: Environmental degradation is an indirect but serious
consequence of corrupt systems. Environmentally devastating projects are given
preference in funding, because they are easy targets for siphoning off public money
into private pockets.
(v) Issues of national security: Corruption within security agencies can lead to a threat
to national security, including through distortion of procurement, recruitment of
ineligible persons, providing an easy route for smuggling of weapons and terrorist
elements into the country and money laundering.
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Chapter 3
ANTI-CORRUPTION LAWS IN INDIA
(I) Relevant Provisions of Indian Penal Code, 1860:
The IPC defines “public servant” as a government employee, officers in the military, navy or
air force; police, judges, officers of Court of Justice, and any local authority established by a
central or state Act.
(i) Public Servant9- The word “Public Servant” denote a person falling under any of
the description hereinafter following, namely:-
First- [Rep. by the A. O. 1937]
Second- Every Commissioned Officer in the Military, Naval or Air Forces of India;
Third- Every Judge including any person empowered by law to discharge, whether
by himself or as a member of any body of persons, any adjudicatory functions;
Fourth- Every officer of a Court of Justice, [(including a liquidator, receiver or
commissioner)] whose duty it is, as such officer, to investigate or report on any
matter of law or fact, or to make, authenticate, or keep any document, or to take
charge or dispose of any property, or to execute any judicial process, or to
administer any oath, or to interpret, or to preserve order in the Court, and every
person specially authorized by a Court of Justice to perform any of such duties;
Fifth- Every juryman, assessor, or member of a panchayat assisting a Court of
Justice or public servant;
9
Section 21 of Indian Penal Code,1860
24
Sixth- Every arbitrator or other person to whom any cause or matter has been
referred for decision or report by any Court of Justice, or by any other competent
public authority;
Seventh- Every person who holds any office by virtue of which he is empowered to
place or keep any person in confinement;
Eighth- Every officer of the Government whose duty it is, as such officer, to prevent
offences, to give information of offences, to bring offenders to justice, or to protect
the public health, safety or convenience;
Ninth- Every officer whose duty it is as such officer, to take, receive, keep or
expend any property on behalf of the Government, or to make any survey,
assessment or contract on behalf of the Government, or to execute any revenue
process, or to investigate, or to report, on any matter affecting the pecuniary interests
of the Government, or to make, authenticate or keep any document relating to the
pecuniary interests of the Government, or to prevent the infraction of any law for the
protection of the pecuniary interests of the Government;
Tenth- Every officer whose duty it is, as such officer, to take, receive, keep or
expend any property, to make any survey or assessment or to levy any rate or tax for
any secular common purpose of any village, town or district, or to make,
authenticate or keep any document for the ascertaining of the rights of the people of
any village, town or district;
Eleventh- Every person who holds any office in virtue of which he is empowered to
prepare, publish, maintain or revise an electoral roll or to conduct an election or part
of an election;
Twelfth- Every person-
25
(a) in the service or pay of the Government or remunerated by fees or commission
for the performance of any public duty by the Government;
(b) in the service or pay of a local authority, a corporation established by or under a
Central, Provincial or State Act or a Government company as defined in section
617 of the Companies Act, 1956 (1 of 1956).
Illustration:
A Municipal Commissioner is a public servant.
Explanation 1- Persons falling under any of the above descriptions are public
servants, whether appointed by the Government or not.
Explanation 2- Wherever the words “public servant” occur, they shall be
understood of every person who is in actual possession of the situation of a public
servant, whatever legal defect there may be in his right to hold that situation.
Explanation 3- The word “election” denotes an election for the purpose of selecting
members of any legislative, municipal or other public authority, of whatever
character, the method of selection to which is by, or under, any law prescribed as by
election.
(ii) Public servant unlawfully engaging in trade10- Whoever, being a public servant,
and being legally bound as such public servant not to engages in trade, engages in
trade, shall be punished with simple imprisonment for a term which may extend to
one year, or with fine, or with both.
10
26
(iii) Public servant unlawfully buying or bidding for property11- Whoever, being a
public servant, and being legally bound as such public servant, not to purchase or bid
for certain property, purchases or bids for that property, either in his own name or in
the name of another, or jointly, or in shares with others, shall be punished with
simple imprisonment for a term which may extend to two years, or with fine, or with
both; and the property, if purchased, shall be confiscated.
(iv) Dishonest misappropriation of property12- Whoever dishonestly misappropriates
or converts to his own use any movable property, shall be punished with
imprisonment of either description for a term which may extend to two years, or
with fine, or with both.
(v) Criminal breach of trust13- Whoever, being in any manner entrusted with property,
or with any dominion over property, dishonestly misappropriates or converts to his
own use that property, or dishonestly uses or disposes of that property in violation of
any direction of law prescribing the mode in which such trust is to be discharged, or
of any legal contract, express or implied, which he has made touching the discharge
of such trust, or willfully suffers any other person so to do, commits “criminal
breach of trust”.
(vi) Punishment for criminal breach of trust14- Whoever commits criminal breach of
trust shall be punished with imprisonment of either description for a term which may
extend to three years, or with fine, or with both.
11
12
13
14
27
Illustrations :(e) A, a revenue-officer, is entrusted with public money and is either
directed by law, or bound by a contract, express or implied, with the Government, to
pay into a certain treasury all the public money which he holds. A dishonestly
appropriates the money. A has committed criminal breach of trust.
(vii) Criminal breach of trust by clerk or servant15- Whoever, being a clerk or servant
or employed as a clerk or servant, and being in any manner entrusted in such
capacity with property, or with any dominion over property, commits criminal
breach of trust in respect of that property, shall be punished with imprisonment of
either description for a term which may extend to seven years, and shall also be
liable to fine.
(viii) Criminal breach of trust by public servant, or by banker, merchant or agent 16-
Whoever, being in any manner entrusted with property, or with any dominion over
property in his capacity of a public servant or in the way of his business as a banker,
merchant, factor, broker, attorney or agent, commits breach of trust in respect of that
property, shall be punished with imprisonment for life , or with imprisonment of
either description for a term which may extend to ten years, and shall also be liable
to fine.
(ix) Dishonestly receiving property stolen in the commission of a dacoity17 -
Whoever dishonestly receives or retains any stolen property, the possession whereof
he knows or has reason to believe to have been transferred by the commission of
dacoity, or dishonestly receives from a person, whom he knows or has reason to

15
16
17
28
believe to belong or to have belonged to a gang of dacoity, property which he knows
or has reason to believe to have been stolen, shall be punished with imprisonment
for life, or with rigorous imprisonment for a term which may extend to ten years,
and shall also be liable to fine.
(x) Cheating18- Whoever, by deceiving any person, fraudulently or dishonestly induces
the person so deceived to deliver any property to any person, or to consent that any
person shall retain any property, or intentionally induces the person so deceived to
do or omit to do anything which he would not do omit if he were not so deceived,
and which act or omission causes or is likely to cause damage or harm to that person
in body, mind, reputation or property, is said to “cheat”.
Explanation: A dishonest concealment of facts is deception within the meaning of
this section.
Illustration: (a) A, by falsely pretending to be in the Civil Service, intentionally
deceives Z, and thus dishonestly induces Z to let him have on credit goods for which
he does not mean to pay. A cheats.
(xi) Punishment for cheating19- Whoever cheats shall be punished with imprisonment
of either description for a term which may extend to one year, or with fine, or with
both.
18
19
29
(II) The Prevention of Corruption Act, 1988:
(i) Who is Public Servant?20
In addition to the categories included in the IPC, the definition of “public servant”
includes office bearers of cooperative societies receiving financial aid from the
government, employees of universities, Public Service Commission and banks.
1. Any person in the service or pay of' the Government or remunerated by the
Government by fees or commission for the performance of any public duty;
2. Any person in the service or pay of a local authority.
3. Any person in the service or pay of a corporation established by or under a
Central, Provincial or State Act, or an authority or a body owned or controlled or
aided by the Government or a Government company as defined in section 617 of
the Companies Act, 1956.
4. Any Judge, including any person empowered by law to discharge, whether by
himself or as a member of any body of persons, any adjudicatory functions.
5. Any person authorised by a court of justice to perform any duty, in connection
with, including a liquidator, receiver or commissioner appointed by such court.
6. Any arbitrator or other person to whom any cause or matter has been referred for
decision or report by a court of justice or by a competent public authority.
7. Any person who holds an office by virtue of which he is empowered to prepare,
publish, maintain or revise an electoral roll or to conduct an election of part of an
election;
20
Section 2(C) of The Prevention of Corruption Act,1988
30
8. Any person who holds an officer by virtue of which he is authorised or required to
perform any public duty.
9. Any person who is the president, secretary or other office-bearer of a registered
co-operative society engaged in agriculture, industry, trade or banking, receiving
or having received any financial aid front the Central Government or State
Government or from any corporation established by or under a Central, Provincial
or State Act, or any authority or body owned or controlled or aided by the
Government or a Government company as defined in Section 617 of the
Companies Act, 1956;
10. Any person who is a chairman, member or employee of any Service Commission
or Board, by whatever name called, or a member of any selection committee
appointed by such Commission or Board for the conduct of any examination or
making any selection on behalf of such Commission or Board;
11. Any person who is a Vice-Chancellor or member of any governing body,
professor, reader, lecturer or any other teacher or employee, by whatever
(resignation called, of any university and any person whose services have been
availed of by a University or any other public authority in connection with holding
or conducting examinations;
12. Any person who is an office-bearer or an employee of an educational, scientific,
social, cultural or other institution, in whatever manner established, receiving or
having received any financial assistance from the Central Government or any
State Government or local or other public authority.
Explanation 1. - Persons falling under any of the above sub-clauses are public
servants, whether appointed by the government or not.
31
Explanation 2. -Whenever the words “public servant” occur, they shall be
understood of every person who is in actual possession of the situation of a public
servant, whatever legal defect there may be in his right to hold that situation.
(ii) Public servant taking gratification21-
Whoever, being, or expecting to be a public servant, accepts or obtains or agrees to
accept or attempts to obtain from any person, for himself or for any other person, any
gratification whatever, other than legal remuneration, as a motive or reward for doing
or forbearing to do any official act or for showing or forbearing to show, in the
exercise of his official functions, favour or disfavour to any person or for rendering or
attempting to render any service or disservice to any person, with the Central
Government or any State Government or Parliament or the Legislature of any State or
with any local authority, corporation or Government company referred to in Clause
(c) of Section 2, or with any public servant, whether named or otherwise shall, be
punishable with imprisonment which shall be not less than six months but which may
extend to five years and shall also be liable to fine.
Explanation-
(a) “Expecting to be a public servant”- If a person not expecting to be in office obtains
a gratification by deceiving others into a belief that he is about to be in office, and that
he will then serve them, he may be guilty of cheating, but he is not guilty of the
offence defined in this section.
(b) “Gratification”- The word “gratification” is not restricted to pecuniary
gratification or to gratifications estimable in money.
21
Section 7 of The Prevention of Corruption Act,1988
32
(c) “Legal remuneration”- The words “legal remuneration” are not restricted to
remunerations which a public servant can lawfully demand, but include all
remuneration which he is permitted by the Government or the Organisation, which he
serves, to accept.
(d) “A motive or reward for doing”- A person who receives a gratification as motive
or reward for doing what he does not intend or is not in a position to do, or has not
one, comes within this expression;
(e) Where a public servant induces a person erroneously to believe that his influence
with the Government has obtained a title for that person and thus induces that person
to give the public servant, money or any other gratification as a reward for this
service, the public servant has committed an offence under this section.
(iii)Taking gratification, in order, by corrupt or illegal means, to influence public
servant22-
Whoever accepts, or obtains, or agrees to accept, or attempts to obtain, from any
person, for himself or for any other person, any gratification whatever as a motive or
reward for inducing, by corrupt or illegal means, any public servant, whether named
or otherwise, to do or to forbear to do any official act, or in the exercise of the official
functions of such public servant to show favour or disfavour to any person, or to
render or such public servant to show favour or disfavour to any person, or to render
or attempt to render any service or disservice to any person with the Central
(c) of Section 2, or with any public servant, whether named or otherwise, shall be
22
33
punishable with imprisonment for a term which shall be not less than six months but
which may extend to five years and shall also be liable to fine.
(iv) Taking gratification for exercise of personal influence with public servant23-
Whoever accepts or obtains or agrees to accept or attempts to obtain, from any person,
for himself or for any other person, any gratification whatever, as a motive or reward
for inducing, by the exercise of personal influence, any public servant whether named
or otherwise to do or to forbear to do any official act, or in the exercise of the official
functions of such public servant to show favour or disfavour to any person, or to
render to attempt to render any service or disservice to any person with the Central
(c) of Section 2, or with any public servant, whether named or otherwise, shall be
punishable with imprisonment for a term which shall be not less than six months but
which may extend to five years and shall also be liable to fine.
(v) Punishment for abetment by public servant of offences defined in Section 8 or 924
Whoever, being a public servant, in respect of whom either of the offences defined in
Section 8 or Section 9 is committed, abets the offence, whether or not that offence is
committed in consequence of that abetment, shall be punishable with imprisonment
for a term which shall be not less than six months but which may extend to five years
and shall also be liable to fine.
23
24
Section10 of The Prevention of Corruption Act,1988
34
(vi) Public servant obtaining valuable thing, without consideration from person
concerned in proceeding or business transacted by such public servant25-
Whoever, being a public servant, accepts or obtains or agrees to accept or attempts to
obtain for himself, of or any other person, any valuable thing without consideration,
or for a consideration which he knows to be inadequate, from any person whom he
knows to have been, or to be, or to be likely to be concerned in any proceeding or
business transacted or about to be transacted by such public servant, or having any
connection with the official functions of himself or of any public servant to whom he
is subordinate, or from any person whom he knows to be interested in or related to the
person so concerned, shall be punishable with imprisonment for a term which shall be
not less than six months but which may extend to five years and shall also be liable to
fine.
(vii) Punishment for abetment of offences defined in Section 7 or 11 26-
Whoever abets any offence punishable under Section 7 or Section 11 whether or not
that offence is committed in consequence of that abetment, shall be punishable with
imprisonment for a term which shall be not less than six months but which may
extend to five years and shall also be liable to fine.
(viii) Criminal misconduct by a public servant27-
1. A public servant is said to commit the offence of criminal misconduct-
(a) If he habitually accepts or obtains or agrees to accept or attempts to
obtain from any person for himself or for any other person any
25
26
27
35
gratification other than legal remuneration as a motive or reward
such as is mentioned in Section 7; or
(b) If he habitually accepts or obtains or agrees to accept or attempts to
obtain for himself or for any other person, any valuable thing without
consideration or for a consideration which he knows to be inadequate
from any person whom he knows to have been, or to be, or to be
likely to be concerned in any proceeding or business transacted or
about to be transacted by him or having any connection with the
official functions of himself or of any public servant to whom he is
subordinate, or from any, person whom he knows to be interests in or
related to the person so concerned; or
(c) If he dishonestly or fraudulently misappropriates or otherwise
converts for his own use any property entrusted to him or under his
control as a public servant or allows any other person so to do; or
(d) If he, -
1. By corrupt or illegal means, obtains for himself or for
any other person any valuable thing or Pecuniary
advantage; or
2. By abusing his position as a public servant, obtains for
himself or for any other person any valuable thing or
pecuniary advantage; or
3. While holding office as a public servant, obtains for any
person any valuable thing or pecuniary advantage
without any public interest; or
36
(e) If he or any person on his behalf, is in possession or has, at any time
during the Period of his office, been in possession for which the
public servant cannot satisfactorily account, of pecuniary resources
or property disproportionate to his known sources of income.
Explanation- For the purposes of this section “known sources of
income” means income received from any lawful source and such
receipt has been intimated in accordance, with the provisions of any
law, rules or orders for the time being applicable to public servant.
2. Any public servant who commits criminal misconduct shall be punishable with
imprisonment for a term which shall be not less than one year but which may extend
to seven years and shall also be liable to fine.
(ix) Habitual committing of offence under Sections 8, 9 and 1228-
Whoever habitually commits-
(a) An Offence punishable under Section 8 or Section
9; or
(b) An offence punishable under Section 12, shall be
punishable with imprisonment for a term which
shall be not less than two years but which may
extend to seven years and shall also be liable to fine.
28
37
(x) Punishment for attempt29-
Whoever attempts to commit an offence referred to in Clause (c) or Clause (d) or sub-
section (1) of Section 13 shall be punishable with imprisonment for a term which may
extend to three years and with fine.
(xi) Persons authorised to investigate30-
Notwithstanding anything contained in the Code of Criminal Procedure, 1973, no
police officer below the rank, -
(a) In the case of the Delhi Special Police Establishment, of an Inspector of Police;
(b) In the metropolitan areas of Bombay, Calcutta, Madras and Ahmedabad and in
any other metropolitan area notified as such under sub-section (1) of Section 9 of the
Code of Criminal Procedure, 1973, of an Assistant Commissioner of Police;
(c) Elsewhere, of a Deputy Superintendent of Police or a police officer of equivalent
rank, shall investigate any offence punishable under this Act without the order of a
Metropolitan Magistrate or a Magistrate of the first class, as the case may be, or make
any arrest therefor without a warrant;
Provided that if a police officer not below the rank of an Inspector of Police is
authorised by the State Government in this behalf by general or special order, he may
also investigate any such offence without the order of a Metropolitan Magistrate or a
Magistrate of the first class, as the case may be or make arrest therefor without a
warrant:
Provided further that an offence referred to in Clause (e) of sub-section (1) of Section
13 shall not he investigated without the order of a police officer not below the rank of
a Superintendent of Police.
29
Section15 of The Prevention of Corruption Act,1988
30
38
(xii) Power to inspect bankers’ books31-
If from information received or otherwise, a police officer has reason to suspect
the commission of an offence which he is empowered to investigate under Section
17 and considers that for the purpose of investigation or inquiry into such offence,
it is necessary to inspect any bankers, books, then, notwithstanding anything
contained in any law for the time being in force, he may inspect any bankers,
books in so far as they relate to the accounts of the persons suspected to have
committed that offence or of other person suspected to be holding money on
behalf of such person, and take or cause or to be taken certified copies of the
relevant entries therefrom, and the bank concerned shall be bound to assist the
police officer in the exercise of his power under this section.
Provided that no power under this section in relation to the accounts of any
person, shall be exercised by a police officer below the rank of a Superintendent
of Police, unless he is specially authorised in this behalf by a police officer or
above the rank of a Superintendent of Police.
Explanation- In this section, the expressions “bank” and “bankers’ books” shall
have the meanings respectively assigned to them in the Bankers’ Books Evidence
Act, 1891.
(xiii) Previous sanction necessary for prosecution32-
(1) No court shall take cognizance of an offence punishable under Sections 7,
10, 11, 13 and 15 alleged to have been committed by a public servant, except
with the previous sanction,-
31
32
39
(a) In the case of a person who is employed in connection with the
affairs of the Union and is not removable from his office save by or
with the sanction of the Central Government, of that Government;
(b) In the case of a person who is employed in connection with the
affairs of a State and is not removable from his office save by or
with the sanction of the State Government, of that Government;
(c) In the case of any other person, of the authority competent to
remove him from his office.
(2) Where for any reason whatsoever any doubt arises as to whether the
previous sanction as required under sub-section (1) should be given by the
Central Government or the State Government or any other authority, such
sanction shall be given by that Government or authority which would have
been competent to remove the public servant from his office at the time when
the offence was alleged to have been committed.
(3) Notwithstanding anything contained in the Code of Criminal Procedure,
1973-
(a) No finding, sentence or order passed by a Special Judge shall be
reversed or altered by a Court in appeal, confirmation or revision on
the ground of the absence of, or any error, omission, irregularity in, the
sanction required under sub-section (1), unless in the opinion of that
court, a failure of justice has, in fact, been occasioned thereby;
(b) No court shall stay the proceedings under this Act on the ground of any
error, omission or irregularity in the sanction granted by the authority,
unless it is satisfied that such error, omission or irregularity has
resulted in a failure of justice;
40
(c) No court shall stay the proceedings under this Act on any other ground
and no court shall exercise the powers of revision in relation to any
interlocutory order passed in inquiry, trial, appeal or other proceedings.
(4) In determining under sub-section (3) whether the absence of, or any error,
omission or irregularity in, such sanction has occasioned or resulted in a
failure of justice the Court shall have regard to the fact whether the objection
could and should have been raised at any earlier stage in the proceedings.
Explanation- For the purposes of this section, -
(a) Error includes competency of the authority to grant sanction;
(b) A sanction required for prosecution includes reference to any
requirement that the prosecution shall be at the instance of a specified
authority or with the sanction of a specified person or any requirement
of a similar nature.
(xiv) Presumption where public servant accepts gratification other than legal
remuneration33-
(1) Where, in any trial of an offence punishable under Section 7 or Section 11
or Clause (a) or Clause (b) of sub-section (1) of Section 13 it is proved that an
accused person has accepted or obtained or has agreed to accept or attempted
to obtain from himself, or for any other person, any gratification (other than
legal remuneration) or any valuable thing from any person, it shall be
presumed, unless the contrary is proved, that he accepted or obtained or agreed
to accept or attempted to obtain that gratification or that valuable thing, as the
case may be, as a motive or reward such as is mentioned in Section 7 or, as the
33
41
case may, without consideration or for a consideration which he knows to be
inadequate.
(2) Where in any trial of an offence punishable under Section 12 or under
Clause (b) of Section 14, it is proved that any gratification (other than legal
remuneration) or any valuable thing has been given or offered to be given or
attempted to be given by an accused person, it shall be presumed, unless the
contrary is proved, that he gave or offered to give or attempted to give that
gratification or the valuable thing, as the case may be, as a motive or reward
such as is mentioned in Section 7, or, as the case may be, without
consideration or for a consideration which he knows to be inadequate.
(3) Notwithstanding anything contained in sub-sections (1) and (2), the court
may decline to draw the presumption referred to in either of the said sub-
sections, if the gratification or thing aforesaid is, in its opinion, so trivial that
no inference of corruption may fairly be drawn.
(xv) Accused person to be a competent witness34-
Any person charged with an offence punishable under this Act, shall be a
competent witness for the defence and may give evidence on oath in disproof
of the charges made against him or any person charged together with him at
the same trial:
Provided that-
(a) He shall not be called as a witness except at his own request;
34
42
(b) His failure to give evidence shall not be made the subject of any comment
by the prosecution or give rise to any presumption against himself or any
person charged together with him at the same trial;
(c) He shall not be asked, and if asked shall not be required to answer, any
question tending to show that he has committed or been convicted of any
offence other than the offence with which he is charged, or is of bad
character, unless-
1. The proof that he has committed or been convicted of such offence is
admissible evidence to show that he is guilty of the offence with which
he is charged, or
2. He has personally or by his pleader asked any question of any witness
for the prosecution with a view to establish his own good character, or
has given evidence of his good character, or the nature or conduct of
the defence is such as to involve amputations on the character of the
prosecutor or of any witness for the prosecution, or
3. He has given evidence against any other person charged with the same
offence.
(xvi) Statement by bribe-giver not to subject him to prosecution35-
Notwithstanding anything contained in any law for the time being in force, a
statement made by person in any proceeding against a public servant for an
offence under Sections 7 to 11 or under Sections 13 or Section 15, that he
agreed to offer any gratification (other than legal remuneration) or any
35
43
valuable thing to the public servant, shall not subject such person to a
prosecution under Section 12.
(xvii) Appeal and revision36-
Subject to the provisions of this Act, the High Court may exercise, so far as
they may be applicable, all the powers of appeal and revision conferred by the
Code of Criminal Procedure, 1973, on a High court as if the Court of the
special Judge were a Court of Session trying cases within the local limits of
the High Court.
(xviii) Act to be in addition-to any other law37-
The provisions of this Act shall be in addition to, and not in derogation of, any
other law for the time beings in force, and nothing contained herein shall
exempt any public servant from any proceeding, which might, apart from this
Act, be instituted against him.
(xix) Omission of certain sections of Act 45 of 186038-
Section 161 to 165-A (both inclusive) of the Indian Penal Code shall be
omitted, and Section 6 of the General Clauses Act, 1897, shall apply to such
omission as if the said section had been repealed by a Central Act.
36
37
38
44
(III) The Benami Transactions (Prohibition) Act, 1988:
The Act prohibits any benami transaction (purchase of property in false name of another
person who does not pay for the property) except when a person purchases property in his
wife’s or unmarried daughter’s name.
Any person who enters into a benami transaction shall be punishable with imprisonment of
up to three years and/or a fine.
All properties that are held to be benami can be acquired by a prescribed authority and no
money shall be paid for such acquisition.
(IV) The Prevention of Money Laundering Act, 2002 (Article 23 of UNCAC):
(i) Offence of Money-Laundering39-
“Whosoever directly or indirectly attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any process or activity
connected with the proceeds of crime and projecting it as untainted property
shall be guilty of offence of money laundering.”
(ii) Punishment for Money-Laundering40-
“Whoever commits the offence of money-laundering shall be punishable with
rigorous 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 which may
extend to five lakh rupees:
39
Section 3 of The Prevention of Money Laundering Act, 2002
40
Section 4 of The Prevention of Money Laundering Act, 2002
45
Provided that where the proceeds of crime involved in money-laundering
relates to any offence specified under paragraph 2 of Part A of the Schedule,
the provisions of this section shall have effect as if for the words “which may
extend to seven years”, the words “which may extend to ten years” had been
substituted.”
(iii) Important Provision-
(a) The Act states that an offence of money laundering has been committed if
a person is a party to any process connected with the proceeds of crime
and projects such proceeds as untainted property. “Proceeds of crime”
means any property obtained by a person as a result of criminal activity
related to certain offences listed in the schedule to the Act. A person can
be charged with the offence of money laundering only if he has been
charged with committing a scheduled offence.
(b) The penalty for committing the offence of money laundering is rigorous
imprisonment for three to seven years and a fine of up to Rs 5 lakh. If a
person is convicted of an offence under the Narcotics Drugs and
Psychotropic Substances Act, 1985 the term of imprisonment can extend
up to 10 years.
(c) The Adjudicating Authority, appointed by the central government, shall
decide whether any of the property attached or seized is involved in money
46
laundering. An Appellate Tribunal shall hear appeals against the orders of
the Adjudicating Authority and any other authority under the Act.
(d) Every banking company, financial institution and intermediary shall
maintain a record of all transactions of a specified nature and value, and
verify and maintain records of all its customers, and furnish such
information to the specified authorities.
(V) The Central Vigilance Commission Act, 2003:
This Act is created to tackle governmental corruption in February, 1964 on the
recommendations of the Committee on Prevention of Corruption, headed by Shri K.
Santhanam. It is not an investigating agency, and works through either the CBI or through the
Departmental Chief Vigilance Officers [except the investigation carried out by the CVC is
that of examining Civil Works of the Government which is done through the Chief Technical
Officer]. It is headed by a Central Vigilance Commissioner who is assisted by two Vigilance
Commissioners. Commission’s Jurisdiction under CVC Act - Members of All India Services
serving in connection with the affairs of the Union and gazetted officers of the Central
Government etc.
(VI) The Right to Information Act, 2005:
It is a well-known fact that too much secrecy in public administration breeds corruption. The
Right to Information Act aims at ensuring efficiency, transparency and accountability in
public life. This Act requires all public authorities, except the ones that handle work relating
47
to national security, to publish all information about their functioning at regular intervals
through various means of communication, including the Internet. Now any person can seek
any information from the concerned public authority just by filing an application at almost at
no cost. The public authority has to reply to the application compulsorily within 30 days. If
the information sought is denied, the applicant has a right to agitate further before the
appellate authorities under this Act. This can indeed be described as a revolutionary step
towards the eradication of corruption from public life.
(VII) India and the United Nations Convention against Corruption 2003 (UNCAC):
India has welcomed the UNCAC, which provides for international co-operation and mutual
legal assistance in investigating cases of corruption and recovery of assets. India signed the
UNCAC in December 2005. By signing the Convention India has reiterated its resolve to
strengthen international co-operation as envisaged in the Convention. It is in the process of
enactment of requisite enabling legislations by the concerned Ministries or Departments
before ratifying the Convention. Once ratified, the Convention will boost India’s effort and
commitment to fight corruption at both domestic and international level.
48
Chapter 4
LACUNAE IN ANTI-CORRUPTION LAWS
The legal structure of society forms an important pillar in the fight against corruption. If
corruption is to be cured, the need for a strong legal framework against the same is almost
axiomatic. In India, the legal framework for curbing and controlling corruption is primarily
based on statutory and common law. While existing legislations and executive orders have
gone a long way towards reducing corruption levels in India, there still remain some areas
that require change.
(I) Loopholes in the Indian Criminal Justice System:
Despite adequate laws to fight corruption in the public sector, it is still one of the biggest
menaces Indian society must deal with. The Indian criminal justice system has been facing
many problems and challenges in its fight against corruption, some of which are highlighted
below.
(i) No Law to tackle Corruption in the Private Sector: The Prevention of
Corruption Act 1988 is the existing law in India dealing with offences relating to
corruption. This law, however, was essentially enacted to take care of corruption
cases in the public sector and by public servants, whereas in fact, there is
widespread corruption in the private sector also which seriously hampers the
overall growth and development of the country.
49
After the liberalization of the Indian economy in the early 1990s, the private
sector has expanded greatly. The problem of corruption in the private sector is
increasing with the expansion of the private sector. Today it has assumed alarming
proportions. It has become the single biggest menace to Indian society. Efforts are
underway to enact laws to deal with corruption in the private sector as envisaged
in the UNCAC.
(ii) Inherent Delays in the Criminal Justice System: The system is painfully slow
and punishments are not swift. As explained earlier, sec. 19 of the Corruption Act
requires prior permission of the authority competent to remove a public servant
from his or her post before launching prosecution against him or her in court. This
often delays the launch of a prosecution. Upon receiving reports from the
investigating agencies seeking approval for a prosecution, the concerned
authorities often take considerable time to grant such permission. Also, permission
is sometimes denied on political and other grounds.
The Corruption Act provides for trial of corruption cases under the act exclusively
by the Special Judges. The number of Special Judges is highly insufficient
compared to the number of corruption cases filed in their courts. As a result, these
courts are overburdened and there is a large discrepancy in the number of cases
disposed by the investigating agencies and the number of cases disposed by the
courts, adding to the backlog each year.
During trial of offences, adjournments are often taken for granted on various
grounds. Further, the proceedings in the trial court are challenged at various stages
by parties filing petitions in the same court as well as in higher courts. Appeals
50
and revisions filed in higher courts against the order of the trial court often take
years to be concluded.
(iii) Hostile Witnesses: In order to convict a corrupt public servant, the prosecution
has to prove its case beyond doubt. This is a strict legal requirement as per the
Indian Evidence Act, the general law on evidence in India. There is no exception
to this requirement even for corruption cases. Prosecution has to depend heavily
on the testimony of witnesses to prove its case beyond doubt. However, witnesses
often do not support the prosecution case because of influence, allurement and
intimidation from the other side. There is no witness protection scheme, nor are
there provisions for quick and effective action against witnesses who become
hostile. As a result, witnesses frequently become uncooperative and spoil the
prosecution case. Punishments are, therefore, not swift and effective under the
Corruption Act and don’t deter corrupt public servants.
(iv) Ineffective Asset Recovery: Though there are legal provisions for confiscation
and recovery of property acquired as proceeds of crime, such recovery is not easy.
Corrupt public servants often acquire properties with the proceeds of crime in the
names of their friends, relatives, family members and other acquaintances.
Therefore, it is not easy to prove in court that such properties are the proceeds of
crime. Such properties are quite often held offshore under strict privacy laws and
it is not easy to trace and recover them, especially in the absence of desired
international co-operation.
51
(II) Loopholes in Prevention of Corruption Act, 1988:
The Prevention of Corruption Act, 1988 (PC Act) was enacted with the intended purpose of
consolidating and amending the law relating to the prevention of corruption. While the PC
Act has had a significant impact, there are areas that continue to act as bottlenecks in the fight
against corruption and need to be improved upon. Some of these are discussed below.
(i) Prior sanction: One such area is the requirement of obtaining prior sanction of an
appropriate authority before any court takes cognizance of an offence by a public
servant. Past experience has shown that these provisions have often resulted in
long delays due to:
(a) inordinate delays in according sanction;
(b) the provision being used to shield public servants though a wrong has been
committed (usually to protect colleagues since the sanctioning authority is
normally a senior officer of the “accused” officer); and
(c) the sanction accorded being challenged at the trial stage and cases being
discharged on the basis that the sanctioning authority had not applied its
mind while according sanction.
(ii) Protection of whistle-blowers and witnesses: Another aspect that may be
mentioned here is the lack of provisions for protection of whistle-blowers and
witnesses. The only provisions in the PC Act that, to a very limited extent, provide
for protection of whistle-blowers are Sections 5 and 24. While both of these
provisions provide some degree of protection against prosecution, they do not
52
afford any protection against action that may be taken by the wrongdoer or his
associates.
Unlike the United States of America or the United Kingdom, which have specific
legislations for whistle blower protection (Whistleblower Protection Act of 1989
in the USA and the Public Interest Disclosure Act of 1998 in the UK), India also
does not have any separate legislation for the protection of whistle-blowers or
even one for witnesses.
(iii) Corruption by private entities: The PC Act does not expressly seek to punish
corrupt acts of private parties, except to a limited extent through Section8, 9
(dealing with persons accepting gratification to use their influence on a public
servant in the conduct of an official act) and Section 12 (dealing with abetment,
pursuant to which a person offering a bribe could be punished).
(iv) Enforcement action: Past experience has shown that in many cases, there are
inordinate delays in prosecution of public servants against whom complaints have
been made. In cases of corruption, it is extremely important that prosecution take
place within a short timeframe as delays can affect the morale of the complainant
and also increase the possibility of reprisals41.
(v) Bribing Foreign Officials: The PC Act does not contain any provision to deal
with the cases where Indian citizens engage in corrupt activities with a foreign
41
This fact has also been recognized by the Law Commission of India in its 166th Report.
53
public official. Such a provision is required for bringing India’s anti-corruption
laws in line with the mandatory requirement of UNCAC.
(vi) Confiscation of property: It is well documented that the provisions of the PC Act
in this behalf are inadequate since confiscation is only permitted after prosecution
for the relevant offence42. To effectively deter public servants from engaging in
corrupt activities, it is important that the very possession of properties
disproportionate to known legal sources of income of a public servant be declared
as an offence and such properties be confiscated by the state even pending
prosecution.
(III) Loopholes in Prevention of Benami Transactions:
The Benami Transactions (Prohibition) Act, 1988 (Benami Act) prohibits benami
transactions and even provides for Government acquisition of property held benami.
However, the rules to make the confiscation of property and other provisions effective have
not been issued. This hampers the ability of the Government to take steps under this
legislation and take action in the multitude of cases where resources acquired through corrupt
practices are held benami. Steps should be for effective implementation of the Benami Act,
including by passing rules for confiscation of benami property.
42
Delhi Development Authority vs. Skipper Construction AIR 1996 SC 2005; 166th Report of the Law
Commission of India.
54
(IV) Loopholes in Right to Information Act, 2005:
The Right to Information Act, 2005 (RTI Act) has been one of the key initiatives of the
Indian government for preventing and curbing corruption. However, one of the major
criticisms of the RTI Act has been the availability of a number of grounds for exemption
from providing information. In this regard, reference may be made to Sections 8(1) (e) and
8(1) (j) of the RTI Act which provide broad exemptions from disclosure. Further, Section 11
provides an easy route for contesting any disclosure of information that has been provided by
the third party.
55
Chapter 5
CORRUPTION CASES AND JUDICIAL APPROACH
(I) A. R. Antulay’s case43:
Facts:
The appellant became the Chief Minister of Maharashtra on 9th June 1981. On 1st September
the same year, respondent no.1, a member of the BJP, applied for sanction from the Governor
of the state under Section 197 of the Code of Criminal Procedure Code, 1973 (hereinafter
“The Code”) and Section 6 of the Prevention of Corruption Act, 1947 (hereinafter “The Act”)
to prosecute the appellant. Meanwhile respondent no.1 filed a complaint before the
Additional Metropolitan Magistrate, Bombay against the appellant and others, under Sections
161 and 165 of the Indian Penal Code (hereinafter “The IPC”) as well as Sections 384 and
420 read with Sections 109 and 120B of the IPC and Section 5 of the Act.
On the refusal of the learned magistrate to take cognizance of the complaint under Sections
161 and 165 of the IPC and Section 5 of the act in absence of a sanction, a criminal revision
application was filed in the High Court of Bombay.
The Division bench held in favour of the appellant and ruled that a sanction was necessary to
prosecute the appellant. It rejected a request for transfer of the case from the Additional
Metropolitan Magistrate to itself. Meanwhile, the appellant had resigned from his post of
Chief Minister on 12th January, 1982.
43
A.R. Antulay v. R.S. Nayak (1988)
56
Respondent no. 1 was granted sanction under Section 197 of the Code by the Governor on
28th July, 1982 in respect of five items relating to three subjects only. Later on 9th August, he
filed a fresh complaint before the learned Special Judge, registered as Case no. 24 of 1982.
Respondent no.1 brought in many more allegations than those for which sanction was
granted. He contended that sanction was not necessary since the appellant had ceased to be a
public servant after resigning as CM.
The Special Judge, Shri P.S. Bhutta, issued process to the appellant ignoring the sanction and
later overruled the appellant’s objection to his jurisdiction to take cognizance of the matter
and issue process in the absence of a notification under Section 7(2) of the Criminal Law
Amendment Act, 1952 (hereinafter “The 1952 Act”). The notification would have specified
which of the three special judges of the area should try the case.
On 15th January 1983, the State Government appointed Shri R.B. Sule as the Special Judge
to try offences specified under Section 6(2) of the 1952 Act. He discharged the appellant on
25th July 1983 stating the appellant was still a public servant being an MLA and there was no
valid sanction to try the appellant.
This resulted in an appeal under Article 136 of the Constitution of India by respondent no. 1.
It was held therein that an MLA is not a public servant and the order of Special Judge Sule
was set aside. The cases were transferred by the Supreme Court to the Bombay High Court
with a request being made to the honourable Chief Justice to appoint a sitting judge of the
High Court to hold trial of the two cases (no. 24/82 and 3/83, filed by one P.B. Samant).
Thereafter the cases were assigned to S. N. Khatri, J., who rejected the objections of the
appellant in respect of his jurisdiction. A writ petition filed thereafter by the appellant in 1984
57
was dismissed by this court and it was held that it was the duty of the learned judge to follow
the directions of this court.
The cases were then transferred to Shri D.N. Mehta, J. who framed charges under 21 heads
and declined to frame charges under 22 other heads. In an appeal by special leave preferred
by respondent no.1, this court directed the high court to frame charges with regard to all
offences except those under Section 384 of the IPC. A direction to replace Shri Mehta with
another judge was also passed.
P.S. Shah, J. replaced Shri. Mehta on 24th July 1986 and proceeded to frame 79 charges
against the appellant, but not against any other co-conspirator. Thereafter two appeals by
special leave and one writ petition challenging the constitutionality of a portion of Section
197(1) of the Code were filed at this court by the appellant. Leave for the first appeal was
granted and the other appeal and petition were delinked from this case to be considered by
independent benches of this court.
Decision:
A. Whether the appeal under Article 136 of the Constitution of India is maintainable?
The doctrine of res judicata is applicable for the judgments which are valid. The appellant
come to this court to challenge the validity of the judgment passed and not to reopen the
issued decided therein.
The basic premise on which the appellant herein comes to the honourable Supreme Court is
that the judgment in question, which was passed against the appellant, is subject to nullity
hailing to the absence of jurisdiction of the court in the matters decided therein.
In Kiran Singh and Ors. v. Chaman Paswan and Ors , Venkatarama Ayyar, J. observed that
the fundamental principle is well established that a decree passed by a Court without
58
jurisdiction is a nullity, and that its validity could be set up whenever and wherever it is
sought to be enforced or relied upon-even at the stage of execution and even in collateral
proceedings. A defect of jurisdiction whether it is pecuniary or territorial, or whether it is in
respect of the subject-matter of the action, strikes at the very authority of the Court to pass
any decree, and such a defect cannot be cured even by consent of parties.
Hence, the appellant comes to contest on a critical matter of law, with respect to the
procedure of law, as exercised by the court in the questioned judgment. The appellant come
to this court under art. 136 of Constitution of India.
B. Whether a case triable only by a special judge under the Criminal Law (Amendment Act),
1952 can be transferred to the High Court for trial by itself or by this court to the High Court
for trial by it?
Section 7(1) of the 1952 Act creates a condition which is sine qua non for the trial of offences
under Section 6(1) of the said Act. The condition is that notwithstanding anything contained
in the CrPC or any other law, the said offences shall be ‘triable by Special Judges only’.
Indeed conferment of the exclusive jurisdiction of the Special Judge is recognised by the
judgment delivered by this Court in A.R. Antulay v. Ramdas Sriniwas Nayak and Anr. where
this Court had adverted to Section 7(1) of the 1952 Act and observed that Section 7 of the
1952 Act conferred exclusive jurisdiction on the Special Judge appointed under Section 6 to
try cases set out in Section 6(1)(a) and 6(1)(b) of the said Act. In spite of this while giving
directions in the other matter, that is, R.S. Nayak v. A.R. Antulay , this Court directed
transfer to the High Court of Bombay the cases pending before the Special Judge. It is true
that Section 7(1) and Section 6 of the 1952 Act were referred to while dealing with the other
matters but while dealing with the matter of directions and giving the impugned directions, it
does not appear that the Court kept in mind the exclusiveness of the jurisdiction of the
59
Special Court to try the offences enumerated in Section 6. Hence, the directions of the Court
were given per incuriam.
It is submitted before honourable court that the directions of the Court were given per
incuriam, that is to say without awareness of or advertence to the exclusive nature of the
jurisdiction of the Special Court and without reference to the possibility of the violation of
the fundamental rights in a case of this nature as observed by a seven Judges Bench decision
in The State of West Bengal v. Anwar Ali Sarkar.
Section 7(1) of the Act required the offences involved in the case to be tried by a Special
Judge only, and Section 7(2) of the Act required the offences to be tried by a Special Judge
for the area within which these were committed which condition could never be satisfied as
there was a transfer. Hence, the condition in Sub-section (1) of Section 7 of the Act that the
case must be tried by a Special Judge, is a sine qua non for the trial of offences under Section
6.
The third sub-section of Section 8 of the Act preserves the application of any provision of the
Code if it is not inconsistent with the Act save as provided by the first two sub-sections of
that Section. Section 7 of the 1952 Act provides that ‘notwithstanding anything contained in
the CrPC, or in any other law the offences specified in Sub-section (1) of Section 6 shall be
triable by Special Judges only’. By express terms therefore, it takes away the right to transfer
cases contained in the Code to any other Court which is not a Special Court. And therefore,
the power under section 406 and 407 of the code, which are in contraventions to the 1952
Act, could not be exercised in this case. Thus, the transferring the case in such manner for a
speedier trial by the High Court for an offence of which the High Court had no jurisdiction to
try under the Act of 1952 is contended to be unwarranted, unprecedented and the directions
given by this Court for the said purpose were not warranted.
60
Hence, in view of the clear provisions of Section 7(2) of the 1952 Act and Articles 14 and 21
of the Constitution, these directions are contended to be legally wrong.
The fact that the objection to the order of transfer of case was not raised before this Court
giving directions on 16th February, 1984 cannot amount to any waiver. In Meenakshi Naidoo
v. Subramaniya Sastri, it was held that if there was inherent incompetence in a High Court to
deal with all questions before it then consent could not confer on the High Court any
jurisdiction which it never possessed.
Also, in Trilok Chand v. H.B. Munshi, it was noted “...The right to move this Court for
enforcement of fundamental rights is guaranteed by Article 32. The writ under Article 32
issues as a matter of course if a breach of a fundamental right is established. But this does not
mean that in giving relief under Article 32 the Court must ignore and trample under foot all
laws of procedure, evidence, limitation, res-judicata and the like.”
On the ratio of the seven-Judge Bench decision of this Court in the State of West Bengal v.
Anwar Ali Sarkar the vires of this Act are not open to challenge. The majority of the learned
Judges in Anwar Ali Sarkar’s case expressed the view that it was open to only to the
Legislature to set up a special forum for expedient trial of particular class of cases. Section
7(1) has clearly provided that offences specified in Sub-section (1) of Section 6 shall be
triable by the Special Judge only and has taken away the power of the courts established
under the CrPC to try those offences. Section 10 of the Act required all pending cases on the
date of commencement of the Act to stand transferred to the respective Special Judge. Unless
there be challenge to the provision creating exclusive jurisdiction of the Special Judge, the
procedural law in the Amending Act is binding on courts as also the parties and no court is
entitled to make orders contrary to the law which are binding as long as Section 7 of the
61
Amending Act of 1952 hold the field it was not open to any court including the apex Court to
act contrary to Section 7(1) of the 1952 Act.
(II) Common cause’ case44:
Facts:
Common Cause, an organization that involves itself in various matters of public interest, filed
a public interest petition pursuant to Article 32 of the Constitution of India in an effort to
bring transparency to the collection of money used by candidates in the process of election.
Common Cause argued that Article 324 of Constitution of India coupled with the cumulative
effect of three statutory provisions - Section 293A of the Companies Act 1956, Section 13A
of the Income Tax Act 1961, and Section 77 of the Representation of People Act 1950 - had
the purpose of bringing transparency to the process of election-funding. Without such
transparency, those already in power were capable of collecting inordinate amounts of “black
money,” allowing them to retain power through re-election and creating a vicious cycle that
pollutes democracy. The political parties subject to the petition admitted that no tax filings or
other election-related disclosures had been made but argued that they did not have any
income liable to be taxed.
Decision:
The Court ruled that
(1) The political parties that had not been filing tax returns violated the provisions of
the Income Tax Act and
44
Common Cause v. Union of India (1996) 2 SCC 752
62
(2) The burden lies with the candidate to prove that expenditures were incurred by the
party and not the candidate him or herself.
The Court then addressed the constitutional issue of the role of the Election Commission in
bringing transparency to the process of election. With Article 324 of the Constitution
providing that the Election Commission has control over the conduct of election, the Court
was compelled to define the scope of the term “conduct of election.” Based on prior case law,
the Court concluded that the Election Commission’s constitutional authority includes issuing
directions for political parties to submit for its scrutiny the details of all expenditures incurred
or authorized by the parties in connection with the election of their respective candidates.
Thus, the Court ruled that the Secretary, Ministry of Finance, Department of Revenue, and
Government of India shall
(i) appoint a body to inquire into why requirements under the Income Tax Act
for the disclosure and filing of income tax by political parties were not
being enforced by the tax authorities, and
(ii) investigate political parties that had failed to disclose and file Income Tax
and initiate action, including any penal action against the defaulting
political parties, in accordance with the Income Tax Act.
(III) Vineet Narain’s case45:
Facts:
These writ petitions under Article 32 of the Constitution of India brought in public interest, to
begin with, did not appear to have potential of escalating to the dimensions they reached or to
45
Vineet Narain & Ors v. Union Of India & Anr 1996 SCC (2) 199
63
give rise to several issues of considerable significance to the implementation of rule of law,
which they have during their progress.
On 25.3.1991, one Ashfak Hussain Lone, alleged to be an official of the terrorist organisation
Hizbul Mujahideen, was arrested in Delhi. Consequent upon his interrogation raids were
conducted by the Central Bureau of Investigation (CBI) on the premises of Surender Kumar
Jain, his brothers, relatives and businesses. Along with Indian and foreign currency, the CBI
seized two diaries and two notebooks from the premises. They contained detailed accounts of
vast payments made to persons identified only by initials. The initials corresponded to the
initials of various high-ranking politicians, in power and out of power, and of high-ranking
bureaucrats. Nothing having been done in the matter of investigating the Jains or the contents
of their diaries, the present writ petitions were filed on 4.10.1993, in the public interest under
Article 32 of the Constitution of India.
The gist of the allegations in the writ petitions is that government agencies like the CBI and
the Revenue authorities had failed to perform their duties and legal obligations in as much as
they had failed to investigate matters arising out of the seizure of the “Jain Diaries”; that the
apprehension of terrorists had led to the discovery of financial support to them by clandestine
and illegal means using tainted funds obtained through “havala” transactions; that this had
also disclosed a nexus between politicians, bureaucrats and criminals, who were recipients of
money from unlawful sources, given for unlawful considerations that the CBI and other
government agencies had failed to investigate the matter take it to its logical conclusion and
prosecute all persons who were found to have committed an offence; that this was done with
a view to protect the persons involved, who were very influential and powerful; that the
matter disclosed a nexus between crime and corruption at high places in public life and it
posed a serious threat to the integrity, security and economy of the nation; that probity in
public life, the rule of law and the preservation of democracy required that the government
64
agencies by compelled to duly perform their legal obligations and to proceed in accordance
with law against every person involved, irrespective of where he was placed in the political
hierarchy. The writ petitions prayed, inter alia for the following reliefs:
(a) that the above said offences disclosed by the facts mentioned in the petition be
directed to be investigated in accordance with law;
(b) that this Hon’ble Court may be pleased to appoint officers of the police or others in
whose integrity, independence and competence this Hon’ble Court has confidence for
conducting and/or supervising the said investigation;
(c) that suitable directions be given by this Hon’ble Court and orders issued to ensure that
the culprits are dealt with according to law;
*****
(f) that directions be given so that such evil actions on the part of the investigating
agencies and their political superiors are not repeated in future.
It will be seen that the reliefs sought in the writ petitions fall into two broad classes. The first
class relates to investigations in the matter of the “Jain Diaries”. The second class (prayer (f))
relates to the manner in which investigations of offences of a similar nature that may occur
hereafter should be conducted.
Decision:
The judgment in the Vineet Narain case was authored by former CJI J S Verma in the wake
of massive hawala scams. It laid down guidelines to ensure independence and autonomy of
the CBI. The verdict called for transparency in the selection of the CBI Director and put the
Central Vigilance Commission in superintendence over the CBI. The apex court gave
following directions:
65
Directions for Central Bureau of Investigation and Central Vigilance Commission:
1. The Central Vigilance Commission (CVC) shall be given statutory status.
2. Selection for the post of Central Vigilance Commissioner shall be made by a Committee
comprising the Prime Minister, Home Minister and the Leader of the Opposition from a panel
of outstanding civil servants and others with impeccable integrity, to be furnished by the
Cabinet Secretary. The appointment shall be made by the President on the basis of the
recommendations made by the Committee. This shall be done immediately.
3. The CVC shall be responsible for the efficient functioning of the CBI. While Government
shall remain answerable for the CBI’s functioning, to introduce visible objectivity in the
mechanism to be established for overviewing the CBI’s working, the CVC shall be entrusted
with the responsibility of superintendence over the CBI’s functioning. The CBI shall report to
the CVC about cases taken up by it for investigation; progress of investigation; cases in
which charge-sheets are filed and their progress. The CVC shall review the progress of all
cases moved by the CBI for sanction of prosecution of public servants which are pending
with the competent authorities, especially those in which sanction has been delayed or
refused.
4. The Central Government shall take all measures necessary to ensure that the CBI functions
effectively and efficiently and is viewed as a non-partisan agency.
5. The CVC shall have a separate section in its Annual Report on the CBI’s functioning after
the supervisory function is transferred to it.
6. Recommendations for appointment of the Director, CBI shall be made by a Committee
headed by the Central Vigilance Commissioner with the Home Secretary and Secretary
(Personnel) as members. The views of the incumbent Director shall be considered by the
66
Committee for making the best choice. The Committee shall draw up a panel of IPS officers
on the basis of their seniority, integrity, experience in investigation and anti-corruption work.
The final selection shall be made by the Appointments Committee of the Cabinet (ACC) from
the panel recommended by the Selection Committee. If none among the panel is found
suitable, the reasons thereof shall be recorded and the Committee asked to draw up a fresh
panel.
7. The Director, CBI shall have a minimum tenure of two years, regardless of the date of his
superannuation. This would ensure that an officer suitable in all respects is not ignored
merely because he has less than two years to superannuate from the date of his appointment.
8. The transfer of an incumbent Director, CBI in an extraordinary situation, including the
need for him to take up a more important assignment, should have the approval of the
Selection Committee.
9. The Director, CBI shall have full freedom for allocation of work within the agency as also
for constituting teams for investigations. Any change made by the Director, CBI in the Head
of an investigative team should be for cogent reasons and for improvement in investigation,
the reasons being recorded.
10. Selection/extension of tenure of officers up to the level of Joint Director (JD) shall be
decided by a Board comprising the Central Vigilance Commissioner, Home Secretary and
Secretary (Personnel) with the Director, CBI providing the necessary inputs. The extension of
tenure or premature repatriation of officers up to the level of Joint Director shall be with final
approval of this Board. Only cases pertaining to the appointment or extension of tenure of
officers of the rank of Joint Director or above shall be referred to the Appointments
Committee of the Cabinet (ACC) for decision.
67
11. Proposals for improvement of infrastructure, methods of investigation, etc. should be
decided urgently. In order to strengthen CBI’s in-house expertise, professionals from the
Revenue, Banking and Security sectors should be inducted into the CBI.
12. The CBI Manual based on statutory provisions of the CrPC provides essential guidelines
for the CBI’s functioning. It is imperative that the CBI adheres scrupulously to the provisions
in the Manual in relation to its investigative functions, like raids, seizure and arrests. Any
deviation from the established procedure should be viewed seriously and severe disciplinary
action taken against the officials concerned.
13. The Director, CBI shall be responsible for ensuring the filing of charge-sheets in courts
within the stipulated time-limits, and the matter should be kept under constant review by the
Director, CBI.
14. A document on CBI’s functioning should be published within three months to provide the
general public with a feedback on investigations and information for redress of genuine
grievances in a manner which does not compromise with the operational requirements of the
CBI.
15. Time-limit of three months for grant of sanction for prosecution must be strictly adhered
to. However, additional time of one month may be allowed where consultation is required
with the Attorney General (AG) or any other law officer in the AG’s office.
16. The Director, CBI should conduct regular appraisal of personnel to prevent corruption
and/or inefficiency in the agency.
Directions for Enforcement Directorate:
1. A Selection Committee headed by the Central Vigilance Commissioner and including the
Home Secretary, Secretary (Personnel) and Revenue Secretary shall prepare a panel for
68
appointment of the Director, Enforcement Directorate. The appointment to the post of
Director shall be made by the Appointments Committee of the Cabinet (ACC) from the panel
recommended by the Selection Committee.
2. The Director, Enforcement Directorate like the Director, CBI shall have a minimum tenure
of two years. In his case also, premature transfer for any extraordinary reason should be
approved by the aforesaid Selection Committee headed by the Central Vigilance
Commissioner.
3. In view of the importance of the post of Director, Enforcement Directorate, it shall be
upgraded to that of an Additional Secretary/Special Secretary to the Government.
4. Officers of the Enforcement Directorate handling sensitive assignments shall be provided
adequate security to enable them to discharge their functions fearlessly.
5. Extension of tenure up to the level of Joint Director in the Enforcement Directorate should
be decided by the said Committee headed by the Central Vigilance Commissioner.
6. There shall be no premature media publicity by the CBI/Enforcement Directorate.
7. Adjudication/commencement of prosecution shall be made by the Enforcement Directorate
within a period of one year.
8. The Director, Enforcement Directorate shall monitor and ensure speedy completion of
investigations/adjudications and launching of prosecutions. Revenue Secretary must review
their progress regularly.
9. For speedy conduct of investigations abroad, the procedure to approve filing of
applications for Letters Rogatory shall be streamlined and, if necessary, Revenue Secretary
authorised to grant the approval.
69
10. A comprehensive circular shall be published by the Directorate to inform the public about
the procedures/systems of its functioning for the sake of transparency.
11. In-house legal advice mechanism shall be strengthened by appointment of competent
legal advisers in the CBI/Directorate of Enforcement.
12. The Annual Report of the Department of Revenue shall contain a detailed account on the
working of the Enforcement Directorate.
Directions for Nodal Agency:
1. A Nodal Agency headed by the Home Secretary with Member (Investigation), Central
Board of Direct Taxes, Director General, Revenue Intelligence, Director, Enforcement and
Director CBI as members, shall be constituted for coordinated action in cases having politico-
bureaucrat-criminal nexus.
2. The Nodal Agency shall meet at least once every month.
3. Working and efficacy of the Nodal Agency should be watched for about one year so as to
improve it upon the basis of the experience gained within this period.
Directions for Prosecution Agency:
1. A panel of competent lawyers of experience and impeccable reputation shall be prepared
with the advice of the Attorney General. Their services shall be utilized as prosecuting
counsel in cases of significance. Even during the course of investigation of an offence, the
advice of a lawyer chosen from the panel should be taken by the CBI/Enforcement
Directorate.
2. Every prosecution which results in the discharge or acquittal of the accused must be
reviewed by a lawyer on the panel and, on the basis of the opinion given; responsibility
70
should be fixed for dereliction of duty, if any, of the officer concerned. In such cases, strict
action should be taken against the officer found guilty of dereliction of duty.
3. The preparation of the panel of lawyers with the approval of the Attorney General shall be
completed within three months.
4. Steps shall be taken immediately for the constitution of an able and impartial agency
comprising persons of unimpeachable integrity to perform functions akin to those of the
Director of Prosecutions in U.K. On the constitution of such a body, the task of supervising
prosecutions launched by the CBI/Enforcement Directorate shall be entrusted to it.
5. Till the constitution of the aforesaid body, Special Counsel shall be appointed for the
conduct of important trials on the recommendation of the Attorney General or any other law
officer designated by him.
Justice Verma had noted that the minister’s power to review the working of the agencies and
to give broad policy directions over their functioning was not to be diluted by his verdict.
(IV) P.V.Narasimha Rao’s case 46:
Facts:
The facts involved in the Constitution Bench decision in P.V. Narasimha Rao v. State (JMM
bribery case) are that in 1991 election to the Lok Sabha, Congress (I) Party remained fourteen
members short of the majority and it formed a minority Government with P.V. Narasimha
Rao as the Prime Minister. The said Government had to face a motion of no-confidence on
28-7-1993 and it somehow managed to defeat the motion by mustering the support of 265
46
P.V.Narasimha Rao v. State (1998) 4 SCC 626
71
members as against 251. One Ravinder Kumar of the Rashtriya Mukti Morcha filed a
complaint (FIR) with the “CBI” alleging that a criminal conspiracy was hatched pursuant to
which certain members of Parliament belonging to Jharkhand Mukti Morcha and certain
others owing allegiance to Janta Dal (Ajit Singh Group) agreed to and did receive bribes from
P.V. Narasimha Rao and others to give votes with a view to defeat the no-confidence motion.
A criminal prosecution was launched against the bribe-giving and bribe-taking Members of
Parliament under the Prevention of Corruption Act, 1988 and under Section 120-B of the
Indian Penal Code. The Special Judge took cognizance of the offences of bribery and
criminal conspiracy. The persons sought to be charged filed petitions at the High Court for
quashing the criminal proceedings. The High Court at Delhi dismissed the petitions. On
presentation of appeals by way of special leave and upon reference of the case to a
Constitution Bench, the Court formulated for decision these questions:
(i) Does Article 105 of the Constitution confer any immunity on a Member of
Parliament from being prosecuted in a criminal court for an offence involving
offer or acceptance of a bribe?
(ii) Is a Member of Parliament excluded from the ambit of the 1988 Act for the reason
that:
(a) he is not a person who can be regarded as “public servant” as defined
under Section 2(c) of the1988 Act, and
(b) he is not a person comprehended in clauses (a), (b) and (c) of sub-section
(1) of Section 19 and there is no authority to grant sanction for his
prosecution under the 1988 Act?
72
Decision:
The Constitution Bench by a majority of three to two answered the first question in the
affirmative, except in the case of A-15 Ajit Singh (who, unlike the other co-accused did not
cast his vote on the no-confidence motion), holding that the bribe-taking Members of
Parliament who voted on the no-confidence motion are entitled to immunity from criminal
prosecution for the offences of bribery and criminal conspiracy conferred on them by Article
105(2) of the Constitution. The Court in answer to the second question ruled that a Member
of Parliament is a “public servant” within Section 2(c) of the 1988 Act. It also concluded that
since there is no authority to grant sanction for prosecution of the offending persons for
certain offences, they cannot be tried under the Prevention of Corruption Act, 1988 for such
offences.
The immunity under clause (2) of Article 105 becomes available to a Member when he
“makes a speech” or “gives his vote” in the parliamentary proceedings inside one of the
Chambers of Parliament or in any committee thereof. Since the acts involving conspiracy and
acceptance of bribe were wholly done by the accused outside the four walls of the legislative
Chamber, it did not attract the immunity provision so as to protect them from criminal
prosecution. Besides, these criminal acts themselves constitute completed crimes without
reference to any goings on in Parliament and are capable of proof before the Special Judge
independently of any proof or disproof of casting of vote by a Member in Parliament.
Therefore, such offences could not be deemed to be acts “in respect of” the act of “giving of
vote” inside Parliament.
Article 105(2) may give immunity from liability arising out of private criminal offences
involving defamation, libel or slander but confers no immunity from criminal prosecution for
“public offences”, that is, offences against the King or State. Obviously, no King or State can
73
be expected to confer such immunity which in all probabilities will lead to the destruction of
the kingdom or State. This position is also evident from the non-applicability of the privilege
of “freedom from arrest” of the Members of the House of Commons in England to criminal
matters, which also remains the legal position under clause (3) of Article 105, its application
being “limited to civil causes”.
The decision of the majority, it is submitted with respect, is in serious discord with the letter,
the ideals, and aspirations of the Constitution while the minority opinion is in harmony with
them. The reasoning of the minority also coincides with the present national outcry against
politicians with dubious, criminally tainted records and the wish of ordinary people to keep
such persons out of legislative chambers.
The decision in the JMM bribery case, it is submitted in all humility, requires immediate
correction by a competent Bench of the Hon’ble Supreme Court.
(V) Jayalaitha’s case47:
Facts:
The Indian Supreme Court was confronted with in B. R. Kapur v State of Tamil Nadu and
Another.
Elections to the Legislative Assembly in the State of Tamil Nadu were held in 2001. The All
India Anna Dravida Munnetra Kazhagam (AIADMK) secured a landslide majority and
consequently chose their leader J. Jayalalitha as the Chief Ministerial candidate. Jayalalitha,
however, had been denied permission to contest the elections. Earlier in 2000 she was
convicted and sentenced to imprisonment in two separate cases under the Indian Penal Code
47
B. R. Kapur v State of Tamil Nadu and Another (2001) 7 SCC 231
74
and the Prevention of Corruption Act, 1988 for offences committed during her earlier tenure
as the Chief Minister of the State between 1991 and 1996. The Election Commission rejected
her nomination papers on account of her disqualification under the provisions of the
Representation of People’s Act, 1951, (RPA) thereby denying her permission to contest
elections in 2001. Her convictions were under appeal and the High Court, on an application,
suspended the sentence of imprisonment, ordering her release on bail. Elected as the leader of
the majority party in the State Assembly and now out on bail, the Governor appointed
Jayalalitha as the Chief Minister and the question arose: was the appointment constitutionally
valid?
Jayalalitha had been convicted under section 13 of the Prevention of Corruption Act, 1988
(PCA) for “criminal misconduct by a public servant” and under section 409 of the Indian
Penal Code (IPC) for “criminal breach of trust by public servant.” Convictions under these
provisions brought Jayalalitha under the purview of the RPA which provides inter alia for the
conduct of elections to the State Legislatures, the qualifications and disqualifications for
membership of those Houses and related matters. In particular, section 8(3) of the Act
disqualifies any person “convicted of any offence and sentenced to imprisonment for not less
than two years …” from the date of such conviction to a further period of six years since his
release. Jayalalitha, on the face of these provisions, would seem to have been disqualified
from contesting elections for a total period of nine years unless the High Court acted to
reverse the convictions in appeal. In other words, at the time the newly elected members
belonging to the AIADMK chose her as the Chief Ministerial candidate, Jayalalitha was
ineligible to have been elected as a member of the Legislative Assembly. On the other hand,
Article 163(1) of the Indian Constitution requires that there be “a Council of Ministers with
the Chief Minister at the head to aid and advise the Governor” and Article 164(4) provides
for holding the office of a Minister without being a member of the Legislative Assembly: “A
75
minister who for any period of six consecutive months is not a member of the Legislature of
the State shall at the expiration of that period cease to be a Minister.” What was the
relationship between section 8(3) of the RPA and Article 164(4): could persons otherwise
disqualified under the RPA hold a Ministerial position under Article 164(4) for at least six
months? To put it differently, was Article 164(4) a “free standing provision” or did it
impliedly take in the limitations of the RPA such that those otherwise disqualified from
contesting elections could not invoke the six – month clause under Article 164(4)?
Invalidating the appointment of the respondent as the Chief Minister, the Supreme Court
concluded that the special route under Article 164(4) was applicable only to those candidates
who were otherwise eligible to contest elections. Secondly, Jayalalitha on the date of her
appointment as the Chief Minister, the Court said, was in fact disqualified from being a
member and, therefore, ineligible to invoke the benefit of Article 164(4). And finally, it
rejected the argument based on popular sovereignty: for the Court, it was legality that
restrained popular choice and not the other way round.
Decision:
The Court held that …“A person who is convicted for a criminal offence and is sentenced to
imprisonment for a period of not less than 2 years cannot be appointed as the Chief Minister
of a state under Article 164(1) read with (4) and cannot continue to function as such. Hence
the appointment of Jayalalitha as the Chief Minister of Tamil Nadu was not legal and valid
and that she cannot continue to function as the same.”
In the present case the Governor need not be made answerable to the court. All acts,
decisions, transactions and appointments otherwise legal and valid performed during the
acting of Jayalalitha or any of the Council of Ministers or by the government shall not be
adversely affected.
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The Supreme Court in this decision has declared with a view to promote the highest
democratic values in the country that a popular mandate cannot override the Constitution.
The Court has observed – “the Constitution prevails over the will of the people as expressed
through the majority party and the will prevails only if it is in accordance with the provisions
of the Constitution”.
(VI) Ram Jethmalani’s case48:
Facts:
One of the other cases exulting the Constitutionalism and refuting the inaction of the
government crime as violation of constitutional values and constitutionalism. The petition
was forwarded professional like Mr. Ram Jethmalani, Mr. Gopal Sharman, Jaybala Vaida,
Mr. KPS Gill, Prof. BB Subhash Kashyap. The petition came to the Court on the basis of
news flooded in newspapers and inaction of the Government to bring back the tainted money
deposited in the foreign Banks and Tax Petitioner contended that the money deposited in the
foreign banks can be used for unlawful purposes, also alleged that the money deposited is
owned by some of the prominent and influential people of society.
The petition was made to bring back the same is intervened at different times which is only
possible by high level petitioner giving the example of reversal of RBI decision on providing
license to UBS group for retail in 2008 further tried to convince the Court of the involvement
of influential persons from corporate arena.
Petitioner also questioned the inaction on the part of government in reveling the documents
related to Hasan Ali when it itself has claimed Rs. 70000 Crores pending from his side. The
48
Ram Jethmalani and Others v Union of India and Others, I.A.NO.1 OF 2009,( 4 July, 2011)
77
similar case is for Tapuria where no action is taken despite the fact that the Government has
Crores of Rupees not paid as tax.
From the petitoner’s side, it was requested to constitute Special Investigation Team (SIT)
headed by one or two judges of Supreme Court matter which was opposed by the
Government of India.
The Bench of Justice Sudershan Reddy J and Surender Singh Nijjar J expresses dismay over
the attitude of Government of India and virtually arguments placed by her. The Government
pleaded that these are the matters of international diplomacy and takes its due course and thus
nature. In the particular issue of the account in the German Banks and Liechtenstein, the
petitioner alleged that the countries offered to provide the account holder but the Government
chose to assume that they could have asked. Government on the matter contended that the
under proscribed to reveal the name of the persons holding the account and further that it
would be against their right of privacy under Constitution.
The Court interpreting the DTAA between India and Germany declined the argument placed
by the Government. Further the Article 26 specifically put exception to the disclosure to any
Court Proceedings. Court stated that though India is not the party to Vienna Convention
Treaties, it has adopted the general principles of the rule interpretation in practice. Referring
to the Article 31 of the Convention, the Court treaty is to be interpreted to maximum welfare
and in good faith. Court further stated that the Article 26 of the DTAA puts secrecy clause the
agreement i.e. in the matter related to the DTAA, however, the purpose for which the present
matter is concerned doesn’t even remotely implications of secrecy clause.
Court cautioned the drafting of the treaties as it is mostly done by the diplomats than lawyers.
The Court said that the treaties are to be interpreted this notion in view that these are
interpreted by the diplomats. It is important to take note that the treaties are to be given
78
general meaning to the layman alike”. However since these are drafted by the diplomats, it
first to be taken care that none of the words remain redundant in perspective.
Praising the contribution of Germany in modern Constitutionalism, especially for the concept
of Basic Structure Doctrine of the Constitution is borrowed from the German Constitution,
the court said that the Germany would be aware of the fact that such clause, if used in the
way asserting would lead to setting aside the constitutional imperatives.
Court further stated that in the cases where state has most of the information put in boxes,
the state can’t take advantage of adversarial law. In the cases of Fundamental Rights, the state
must put all the relevant information before the Court despite adversarial system doesn’t it to
do so.
The apex Court drew the relation between the Article 32(1) and Article 19(1) (a) and said that
the withholding the information from the Court the right of expression of the petitioner.
Right to Privacy:
In the matter of assertion of the Union of India that the disclosing the name of the account
holder would violate the right to privacy, assertion. Court, recognizing that the right to
privacy is an important part of the Article 21 can only be taken out by law. Since being the
account said bank is not an illegal act, the concern individuals have their right intact and can’t
be violated. Court further held that it wouldn’t make this regard as the bits may be read to
create further exception in future which is not good for democracy.
The decision is insightful and dealt with the constitutional values and principles. This
decision can be placed on the same side as to the emphasis on the Constitutional Principles
and values. However, both the decision criticized the private investment and suggested which
is beyond understanding of separation of powers.
79
The precedence set in these decisions is not concern of immediate future, but as the Supreme
Court itself noted, these kind of exceptions, fundamental concept could “bit by bit could
eviscerate” the main value.
Decision:
On 4 July 2011, the Supreme Court passed its judgment in the Ram Jethmalani and Others v
Union of India and Others case. It is popularly known as the Black Money Case. The
operative portions of the order are:
a) that the existing High Level Committee constituted by the government to oversee and
coordinate investigations into cases of money laundering and stashing black money in
tax havens be forthwith appointed as a Special Investigation Team;
b) the SIT would be headed by two former eminent judges of the Supreme Court;
c) the SIT would be responsible for ongoing and future investigations regarding
unaccounted monies in the cases of Hasan Ali, Tapuria, and other known instances,
and all other matters with respect to unaccounted monies being stashed in foreign
banks that may arise in the course of the investigation;
d) ****
e) that the SIT would be responsible to the Court.
The Supreme Court also ordered that the government shall forthwith disclose to the
petitioners all the documents and information secured from Germany regarding the
Liechtenstein names, with some reasonable conditions, and that the SIT shall expeditiously
investigate the same.
The Supreme Court order records the reluctance and disinclination of the government to take
stringent action in the Hasan Ali case. The government is reflected in an utterly pathetic light,
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with its culpability slowly but surely getting exposed, indulging in (and I quote the words of
the Court), evasion, confusion and denial, slow investigation and lack of seriousness,
inadequate and unsatisfactory replies to the Court on critical issues, such as, granting license
to UBS, whose antecedents were suspect.
Perhaps it was the persistent obstructionist attitude of the government, which appeared hell
bent on protecting Hasan Ali that prompted the learned judges to record the introductory Part
1 of the order, which goes into details about the neo-liberal paradigm of government, and its
implication on Constitutional governance. The behaviour of government during the hearings
appears to have confirmed all the negative-governance manifestations of the neo-liberal
paradigm. Anyone who has read the order will note these reaffirmations in its main body.
Several questions arise from government’s suspicious, indifferent and self-destructive
behaviour, actively inviting upon itself yet again a stinging judgment from the Supreme
Court. Did it not learn from the CVC case that the Supreme Court is not a forum where
illegalities and omissions of government can be glossed over? Was opposition to the SIT so
critical to the government that it was willing to sacrifice the entire credibility of the Finance
Ministry and the Law Ministry in the Supreme Court? And why did government oppose the
SIT so resolutely? It had certainly not opposed it in the Gujarat case, and there are several
other precedents of SITs quoted in the order.
Judging from the desperate behaviour of government, the only inference that can be drawn is
that this SIT had to be opposed at any cost, because important people controlling the
Congress Empire were involved in the larceny.
One of the most damning statements regarding the government's apathy to corruption was
made by the Swiss ambassador in March 2011. He publicly stated that the Swiss government
had not received any requests from India during his tenure for the release of data regarding
81
money illegally stashed in Swiss banks. So much for government’s determination to fight
corruption!
Professor Vaidyanathan, of the Indian Institute of Management, Bangalore has done seminal
work on this subject, but the government has shown no interest in availing his expertise, as
they definitely did not want to see any progress in the matter.
(VII) 2G spectrum scam case49:
Facts:
2G spectrum scam was a scam involving politicians and government officials in India
illegally undercharging mobile telephony companies for frequency allocation licenses, which
they would then use to create 2G spectrum subscriptions for cell phones. The shortfall
between the money collected and the money that the law mandated to be collected is
estimated to be 1766.45 billion (US$28 billion), as valued by the Controller and Auditor
General of India based on 3G and BWA spectrum auction prices in 2010. However, the exact
loss is disputed. In a chargesheet filed on 2 April 2011 by the investigating agency, Central
Bureau of Investigation (CBI), the loss was pegged at 309845.5 million (US$5.0 billion)
whereas on 19 August 2011 in a reply to CBI, Telecom Regulatory Authority of India (TRAI)
said that the government gained over 30 billion (US$480 million) by giving 2G spectrum.
Similarly Kapil Sibal, the Minister of Communications & IT, claimed in 2011, during a press
conference, that “zero loss” was caused by distributing 2G licenses on first-come-first-served
basis. It has to be pointed out, however, that “zero loss” can simply mean that frequencies
49
Centre for Public Interest Litigation & others v. Union of India & others (2010)
Dr. Subramanian swamy v. Union of India & others (2011)
82
were not sold for less than cost. The phrase indicates nothing about whether the sale was a
scam.
The original plan for awarding licences was to follow a first-come-first-served policy to
applicants. A. Raja manipulated the rules so that the first-come-first-served policy would kick
in – not on the basis of who applied first for a license but who complied with the conditions.
On 10 January 2008, companies were given just a few hours to provide their Letters of Intent
and cheques. Those allegedly tipped off by Raja were waiting with their cheques and other
documents. Some of their executives were sent to jail along with the minister.
India is divided into 22 telecom zones, with 281 zonal licenses in the market. In 2008, 122
new second generation (2G) Unified Access Service (UAS) licenses were given to telecom
companies at the 2001 price and on a first-come-first-serve basis. As per the chargesheet filed
by the Central Bureau of Investigation (CBI), several rules were violated and bribes were
paid to favour certain firms while awarding 2G spectrum licenses. The audit report of
Comptroller and Auditor General of India (CAG) says that several licenses were issued to
firms with no prior experience in the telecom sector or were ineligible or had suppressed
relevant facts. In November 2007 Prime Minister of India Dr. Manmohan Singh had written a
letter to telecom minister A. Raja directing him to ensure allotment of 2G spectrum in a fair
and transparent manner and to ensure license fee was properly revised. Raja wrote back to the
prime minister rejecting many of his recommendations. In the same month Ministry of
Finance wrote a letter to Department of Telecommunications (DOT) raising concerns over
the procedure adopted by it but DOT went ahead with its plan of giving 2G licenses. It
advanced the cut-off date to 25 September, from 1 October 2007. Later on the same day, DoT
posted an announcement on its website saying those who apply between 3:30 and 4:30 pm on
that very day would be issued licences in accordance with the said policy. Companies like
Unitech and Swan Telecom got licenses without any telecom experience.
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All the speculations of profit, loss and no-loss were put to rest on 2 February 2012 when the
Supreme Court of India delivered judgment on a public interest litigation (PIL) which was
directly related to the 2G spectrum scam. The Supreme Court declared allotment of spectrum
as “unconstitutional and arbitrary” and quashed all the 122 licenses issued in 2008 during
tenure of A. Raja (then minister for communications & IT from 2007 to 2009) the main
official accused in the 2G scam case. The court further said that A. Raja “wanted to favour
some companiesat the cost of the public exchequer” and “virtually gifted away important
national asset.” The “zero loss theory” was further demolished on 3 August 2012 when as per
the directions of the Supreme Court, Govt of India revised the base price for 5 MHz 2G
spectrum auction to 140 billion (US$2.2 billion), which roughly gives the value of spectrum
to be around 28 billion (US$450 million) per MHz that is close to the CAG’s estimate of 33.5
billion (US$540 million) per MHz.
Decision:
On 2 February 2012 Supreme Court of India delivered judgment on petitions filed by
Subramanian Swamy and Centre for Public Interest Litigation (CPIL) which had challenged
allotment of 2G licenses granted in 2008. The Supreme Court quashed all 122 spectrum
licences granted during the tenure of former communications minister A. Raja and described
the allocation of 2G spectrum as “unconstitutional and arbitrary”. The bench of Justice GS
Singhvi & Justice AK Ganguly imposed fine of 50 million (US$800,000) on Unitech
Wireless, Swan telecom and Tata Teleservices and 5 million (US$80,000) fine on Loop
Telecom, S Tel, Allianz Infratech and Sistema Shyam Tele Services Ltd. The Supreme
Court’s ruling said the current licences will remain in place for four months, in which time
the government should decide fresh norms for issuing licences.
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The Supreme Court said in its order that then telecom minister A. Raja “wanted to favour
some companies at the cost of the public exchequer” and listed seven steps he took to ensure
this happened. According to the Supreme Court of India the seven steps were :
1. After taking over as telecom minister, Raja directed that all applications received for UAS
licences should be kept pending till receipt of the Trai’s recommendations.
2. The recommendations made by Trai on 28 August 2007, were not placed before the full
Telecom Commission which would have included the finance secretary. The notice of the
meeting of the Telecom Commission was not given to any of the non-permanent members
though Trai’s recommendations for allocation of 2G spectrum had serious financial
implications and it was therefore necessary for DoT to take the finance ministry’s opinion
under the Government of India (Transaction of Business) Rules, 1961.
3. The DoT officers who attended the Telecom Commission meeting held on 10 October
2007, had no choice but to approve Trai’s recommendations, since they would otherwise
have “incurred” Raja’s “wrath”.
4. Since Cabinet had approved recommendations made by the Group of Ministers, the DoT
had to discuss the issue of spectrum pricing with the finance ministry. But, since Raja knew
that the finance secretary had objected to the allocation of 2G spectrum at rates fixed in 2001,
he did not consult the finance minister or other officials.
5. Raja brushed aside the law minister's suggestion that the matter should be placed before
the empowered group of ministers. Also, within hours of the receipt of the suggestion made
by the PM in his letter dated 2 November 2007, that keeping in view the inadequacy of
spectrum, transparency and fairness should be maintained in allocation of the spectrum, Raja
rejected it saying that it would be unfair, discriminatory, arbitrary and capricious to auction
85
spectrum to new applicants because it would not give them a level-playing field. He also
introduced a cut-off date of 25 September 2007, for considering applications though only the
previous day a DoT press release had said 1 October 2007, would be the last date. This
arbitrary action of Raja “though appears to be innocuous was actually intended to benefit
some of the real estate firms who did not have any experience in dealing with telecom
services and who had made applications only on 24 September 2007, i.e. one day before the
cut-off date fixed by the C&IT minister on his own”.
6. The cut-off date of 25 September 2007, decided by Raja on 2 November 2007, was not
made public till 10 January 2008, and the first-come-first-served principle followed since
2003 was changed by him at the last moment through a press release dated 10 January 2008.
“This enabled some of the applicants, who had access either to the minister or DoT officers,
get bank drafts prepared towards performance guarantee of about Rs 16 billion”.
7. “The manner in which the exercise for grant of LoIs to the applicants was conducted on 10
January 2008 leaves no room for doubt that everything was stage managed to favour those
who were able to know in advance change in the implementation of the first-come-first-
served policy.” As a result, some firms which had submitted applications in 2004 or 2006
were pushed down in the priority and those who had applied between August and September
2007 succeeded.
86
(VIII) CWG scam case:
Facts:
The XIX commonwealth game which is reported as the largest international multi-sport
event was held in Delhi from 3 to 14 October 2010. In 21 sports and 272 events a total of
6081 athletes from commonwealth nations and dependencies participated in the mega event.
But despite of all the success and the appreciation received worldwide by the media across
the globe one thing which equally grabbed the attention of all is the corruption and the
irregularities in the organization of the games, the commonwealth games was severely
criticized by many social activists and politicians as a large amount of money was spent in
these games despite the fact that India has one of the world’s largest concentration of poor
people. The organizing committee and the games officials were alleged for doing corruption
at various levels of organization, delays in the construction of games’ venues, infrastructural
compromise, possibility of terrorist attack and many more.
Central vigilance commission in his report released on 28 July 2010 showed irregularities in
14 cwg projects, in total 129 works in 71 organizations have been inspected. The detailed
preliminary findings included the award of work contracts at higher prices, poor quality
assurance and management, and work contracts awarded to ineligible agencies.
Prime Minister Manmohan Singh had on October 25 appointed a high-level committee to
look into alleged corruption and managerial lapses in conduct of the mega sporting event, the
main findings of the report are as follows:
 OC intentionally delayed overlays contracts by not providing estimates for the 630
crores overlay contracts.
87
 OC could have saved Rs. 138 crores in overlays if it had negotiated for the overlays
contracts.
 Chairman (Suresh Kalmadi) appointed Loyalists in Key positions, particularly a large
number from Pune including a railway guard.
 Employees and consultants and advisors were hired on criteria other than merit.
 Candidates with questionable background were accommodated, especially at senior
positions with decision making powers.
 Chairman approached Government for an additional Rs. 900 crores in August 2010
when there was no need for additional funds.
 The Organizing Committee kept misrepresenting a revenue neutral position to justify
extravagant spending.
 Chairman spent Rs. 5.06 crores on a reckless exercise of patronage to send people
unrelated with sports to the Bejing Olympics on a pleasure trip.
 Consultants, including Shashi Tharoor, were hired at terms dictated by them.
 Contract for timer board issued by Lalit Bhanot’s office without informing technology
consultant or technology head.
 Chairman kept the Executive Board in the dark about detrimental aspects of SMAM
contracts.
Taking a major step in the investigation Central bureau of Investigation (CBI) on 25 April
2011 by arresting former CWG organizing committee chairman Suresh Kalmadi in the Time
Scoring Result (TSR) case, under section 120-B and 420 of IPC. CBI filed the first charge-
sheet on 20 May 2011 alleging kalmadi as the main accuse in the TSR system contract to a
Swiss firm. In the charge sheet CBI named two companies and eight people along with the
organizing committee former chairman Lalit Bhanot and former Director General VK Verma
as accused, charged under the section 13(1) (d) of the Prevention of Corruption Act and under
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various sections of IPC. . The investigation revealed that officials of the OC had conspired
with private persons for awarding the contract at an excessive net cost of about 157.62 crores
(US$27 million) as compared to a net bid of Spain-based company for approximately 62.01
crores (US$11 million). This resulted in a loss of about 95.60 crores (US$16 million) by
wrongly eliminating all competitors of Swiss-based company.
The other case involved in this scam is the case of Queen’s Baton relay in which it was
alleged in the CBI’s FIR that in relation to the QBR held on October 29, 2009, the OC
awarded the work of transportation to the AM Car and Van Hire Ltd at exorbitantly high rates
without following the standard tender process. After completing investigations, CBI filed its
second charge-sheet (after the charge-sheet in TSR case) in a special CBI court in Delhi. The
CBI named OC officials T S Darbari, Sanjay Mohindroo, Jeychandran and London-based
businessman Ashish Patel and his two companies AM Car and Van Hire and AM Films. The
charge-sheet alleged that OC members conspired to award contracts of local transportation
and others to Patel’s companies at excessive rates during the event held in London in 2009.
On 23rd august 2012 the CBI registered a new case related to hiring of the Switzerland-based
consultant, Event Knowledge Services (EKS), for providing venue development support
services to the OC. Later, the Rs 70 crores contracts were extended to include venue
development programme management and facilitation support. Based on Shunglu
Committee’s findings, CBI registered an FIR against Suresh Kalmadi, Lalit Bhanot and AK
Mattoo. CBI sources revealed in July 2012 that the probe against alleged corruption in
construction of Barapullah Flyover and grant of Bail-out Package to EMAAR MGF is likely
to be closed in the absence of substantiating evidence. As the inquiry progressed on 3rd
February 2013 The Delhi high court framed charges against Kalmadi, who was sacked as
CWG Organising Committee(OC) chairman, and the other accused, also including OC
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Secretary General Lalit Bhanot, for the offences punishable under the IPC and Prevention of
Corruption Act for allegedly causing a loss of over Rs 90 crores to the exchequer.
(IX) Adarsh Housing Society scam case:
Facts:
The Adarsh Housing Society is a posh, 31 storey building constructed on prime real estate in
Colaba, Mumbai, for the welfare of war widows and personnel of India’s Ministry of
Defence. Over a period of several years, politicians, bureaucrats and military officers
allegedly conspired to bend several rules concerning land ownership, zoning, floor space
index and membership get themselves flats allotted in this cooperative society at below-
market rates.
The scam was unearthed in November 2010 which forced the then Chief Minister of
Maharashtra, Ashok Chavan, to resign.
In 2011, a report of the Comptroller and Auditor General of India (CAG) said, “The episode
of Adarsh Co-operative Housing Society reveals how a group of select officials, placed in
key posts, could subvert rules and regulations in order to grab prime government land - a
public property - for personal benefit.”
In January 2011, the Maharashtra government set up a two-member judicial commission to
inquire into the matter. The commission was headed by retired High Court judge Justice J A
Patil, with N N Kumbhar acting as member secretary. After deposing 182 witnesses over 2
years, the commission submitted its final report in April 2013 to the Maharashtra
government. The report highlighted 25 illegal allotments, including 22 purchases made by
proxy. The report also indicted four former chief ministers of Maharashtra: Ashok Chavan,
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Vilasrao Deshmukh, Sushilkumar Shinde and Shivajirao Nilangekar Patil, 2 former urban
development ministers: Rajesh Tope and Sunil Tatkare and 12 top bureaucrats for various
illegal acts. The allottees included Devyani Khobragade.
The Central Bureau of Investigation (CBI), the Income Tax Department and the Enforcement
Directorate (ED) are currently investigating allegations that three former chief ministers of
Maharashtra - Sushilkumar Shinde, Vilasrao Deshmukh and Ashok Chavan - were involved
in the scam.
The scam is notable for the fact that it was enacted over a period of ten years and required the
active involvement of successive officials in many crucial posts. Rules and regulations across
many departments and ministries, both at the Centre and the state of Maharashtra, were
flouted and bent to allow for the construction of the building. Some of the more blatant
transgressions included: obtaining a No Objection Certificate (NOC) from the Army towards
construction of the building in a sensitive zone, getting the Mumbai Metropolitan Region
Development Authority (MMRDA) development plan modified, and obtaining another NOC
for residential development in a Coastal Regulation Zone, often through manipulation of
records and misrepresentation of facts. Efforts by honest officers to bring this to the notice of
top officials were ignored.
Several inquiries have been ordered by the army and the Government to probe into the
irregularities.
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(X) Coalgate case:
Facts:
Coal allocation scam or Coalgate, as referred by the media, is a political scandal concerning
the Indian government’s allocation of the nation’s coal deposits to public sector entities
(PSEs) and private companies by former Prime Minister Manmohan Singh. In a draft report
issued in March 2014, the Comptroller and Auditor General of India (CAG) office accused
the Government of India of allocating coal blocks in an inefficient manner during the period
2004–2009. Over the summer of 2012, the opposition BJP lodged a complaint resulting in a
Central Bureau of Investigation probe into whether the allocation of the coal blocks was in
fact influenced by corruption.
The essence of the CAG’s argument is that the Government had the authority to allocate coal
blocks by a process of competitive bidding, but chose not to. As a result both public sector
enterprises (PSEs) and private firms paid less than they might have otherwise. In its draft
report in March the CAG estimated that the “windfall gain” to the allocatees was 10673
billion (US$180 billion). The CAG Final Report tabled in Parliament put the figure at 1856
billion (US$31 billion). On 27 August 2012 Indian Prime Minister Manmohan Singh read a
statement in Parliament rebutting the CAG’s report both in its reading of the law and the
alleged cost of the government’s policies.
While the initial CAG report suggested that coal blocks could have been allocated more
efficiently, resulting in more revenue to the government, at no point did it suggest that
corruption was involved in the allocation of coal. Over the course of 2012, however, the
question of corruption has come to dominate the discussion. In response to a complaint by the
BJP, the Central Vigilance Commission (CVC) directed the CBI to investigate the matter.
The CBI has named a dozen Indian firms in a First Information Report (FIR), the first step in
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a criminal investigation. These FIRs accuse them of overstating their net worth, failing to
disclose prior coal allocations, and hoarding rather than developing coal allocations. The CBI
officials investigating the case have speculated that bribery may be involved.
The issue has received massive media reaction and public outrage. During the monsoon
session of the Parliament, the BJP protested the Government’s handling of the issue
demanding the resignation of the prime minister and refused to have a debate in the
Parliament. The deadlock resulted in Parliament functioning only seven of the twenty days of
the session. The Parliamentary Standing Committee report on Coal and Steel states that all
coal blocks distributed between 1993 and 2008 were done in an unauthorized manner and
allotment of all mines where production is yet to start should be cancelled.
(XI) Vyapam Scam case:
Facts:
Madhya Pradesh Professional Examination Board (MPPEB) also known as Madhya Pradesh
Vyavsayik Pareeksha Mandal (Vyapam) is a self-financed and an autonomous body
incorporated by the State government. It was initially set-up in 1970 as Pre Medical Test
Board to conduct entrance tests for medical courses. In 1981, Pre Engineering Board was set
up to conduct entrance tests for engineering courses as well. But in 1982, both these boards
were amalgamated to form Professional Examination Board (PEB).
The peculiarity of the Board lies in the fact that it is entrusted with the responsibility to
conduct competitive tests for admission to various professional courses and that too on a very
large scale. The website of the Board says, “It is worth mentioning that only on the basis of
these test one can get admission to the courses recognized by national level bodies like All
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India Council for Technical Education (AICTE), Medical Council of India (MCI), NCTE
New Delhi etc. against seats available in various institutions of the state.” The power and
authority of the Board can be ascertained from the fact that recently, the responsibility to
conduct recruitment examinations for posts not covered by state Public Service Commission
was also entrusted upon it. So basically, admission to all professional courses and recruitment
to numerous jobs are conducted by the Board.
In 2013, Pre-Medical Test (PMT) scam was unearthed by Dr. Anand Rai. He is an Indore
based Ophthalmologist, presently working as a medical officer. In the past, he has also
worked to expose frauds in clinical trials. Thousands of candidates secured admission to
medical colleges in the state through unfair means like impersonation and bribery. According
to Dr. Rai, this scam dates back to 2004 and the first case was reported in Khandwa, a city
near Indore.
Shri Singh Kushwaha, SP (West), district Indore through letter number
SP/West/PA/412/2013 dated 19.07.2013 written from office of SP, District Indore (West),
Satellite Building, Moti Tabela, Indore informed Pankaj Trivedi, Controller, MP Vyapam that
case number 539/ 13 under sections 419, 420, 467, 468 had been registered in Police station
Rajendra Nagar in connection with PMT 2013 exam and was under investigation. He also
supplied the list of 317 suspect candidates, found from the home of the accused, to Pankaj
Trivedi.
Owing to the political patronage enjoyed by him, Pankaj Trivedi, Examination controller,
Vyapam was unperturbed and despite being involved neck-deep in corruption, he audaciously
wrote a letter to Principal Secretary, Medical education department, Government of MP
regarding PMT scam, virtually issuing instruction to his superior officer. In point number 4 of
letter number MP Vyapam/4674 Bhopal dated 20.07.2013 he wrote, “In view of the above
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fact and the above mentioned letter of SP (West), District Indore, the fake/suspect candidates
who have found place in the merit list should be allotted seats on a provisional basis during
counseling with the condition that if his or her involvement in the crime number 539/18 is
proved in the course of police probe/investigation, then his or her candidature will be
considered automatically cancelled”.
On July 6 and 7, Indore crime branch had arrested 20 candidates from various city hotels of
whom 17 belonged to Uttar Pradesh while three were from Madhya Pradesh. The candidates
had come to impersonate MPPMT candidates.
At a high level meeting held in Bhopal in July 2013, senior bureaucrats raised serious
questions on the police investigation in Vyapam scam and expressed surprise over the fact
that Dr. Sagar could operate so smoothly. Moreover, they were shocked to know that no tab
was kept on him as he was arrested in 2003 in similar case. In the same meeting, government
admitted major lapses in its working that helped the pre-medical test scam thrive.
In November 2013, the Special Task Force (STF) of Madhya Pradesh police made a shocking
revelation that Vyapam officials rigged five more recruitment tests for government jobs in the
state. Different FIRs against 153 people including mining baron Sudhir Sharma were filed.
Sharma, a close confidante of Chief Minister Shivraj Singh Chauhan, was earlier interrogated
by Central Bureau of Investigation (CBI) in connection with mining scam.
In December 2013, Special Task Force produced a supplementary charge-sheet against 34
accused, running into 23,000 pages in the Indore district court. Out of these 34 accused
charge-sheeted, 30 were students and their guardians.
On April 29, 2014, 27 students of Mahatma Gandhi Memorial (MGM) medical college were
expelled as it was proved that they obtained admission via fraudulent means.
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On June 19, Special Task Force of Madhya Pradesh police issued a statement that it has
arrested over 100 students for their involvement in the scam and this number could go up as
arrests are being every day. All these students cleared the medical entrance test by fraudulent
means.
Vyapam admitted in the High Court that 1020 forms were missing and 346 imposters had
appeared in the exam. Vyapam officials admitted in the court that 1120 candidates appeared
in the exam but their forms were missing because Vyapam official and accused Nitin
Mahendra had tampered with the Computers in which the record was stored. The STF has
presented charge-sheet against 28 accused, including Jagdish Sagar, in Indore Court. The fact
that the charge-sheet includes details of 3292 different offences and more than 92,176
documents is indicative of the enormity of the scam.
(XII) Jayalalitha’s disproportionate assets case:
Facts:
Following is the course of the disproportionate assets case against Tamil Nadu Chief Minister
Jayalalitha has traversed, seeing legal and political twists and turns in the last 18 years after
the DMK government decided to form Special Court on coming to power in 1996.
1996: Dr Subramanian Swamy, then a leader of Janata Party, files a case against Jayalalitha
alleging that during her tenure as Chief Minister from 1991 to 1996, she amassed properties
worth Rs 66.65 crore disproportionate to her known sources of income.
Dec 7, 1996: Jayalalitha arrested. Many allegations follow, including accumulation of
disproportionate assets.
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1997: A prosecution launched in Additional Sessions Court in Chennai against Jayalalitha
and three others for having assets “disproportionate” to their known income.
June 4, 1997: Charge-sheeted for offences under Sections 120-B IPC, 13(2) read with
13(1)(e) of the Prevention of Corruption Act, 1988.
October 1, 1997: Madras High Court dismisses three petitions by Jayalalitha including one
challenging sanction granted by then Governor M Fathima Beevi for prosecuting her in the
wealth case.
Trial progresses: By august 2000, 250 prosecution witnesses examined, only 10 more
remained.
In the 2001 May Assembly elections, AIADMK secures absolute majority and Jayalalitha
becomes Chief Minister. Her appointment is challenged due to her conviction in October,
2000 in the TANSI (Tamil Nadu Small Industries Corporation) case. SC nullifies the
appointment.
September 21, 2001, Jayalalitha ceases to be Chief Minister.
After her conviction is set aside, Jayalalitha is elected to the Assembly in a by poll from
Andipatti constituency on Feb 21, 2002, and again sworn in as Chief Minister.
Three public prosecutors resign as also senior counsel.
Several prosecution witnesses resile from their earlier depositions after AIADMK returned to
power.
2003: DMK general secretary K Anbazhagan approaches Supreme Court for transferring the
trial to Karnataka on the ground that a fair trial was not possible in Tamil Nadu with
Jayalalitha as Chief Minister.
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On November 18, 2003, the Supreme Court transfered the case to Bangalore.
February 19, 2005: Karnataka Government appoints B V Acharya, a former advocate general,
as Special Public Prosecutor (SPP) to conduct the prosecution.
In October/November 2011, Jayalalitha deposes in the Special Court and answers 1,339
questions.
August 12, 2012: Acharya expresses his inability to continue as SPP. Karnataka government
accepts his resignation in January, 2013 and discharges him from the case.
February 2, 2013: Karnataka government appoints G Bhavani Singh as SPP.
August 26, 2013: Karnataka government issues a notification withdrawing the appointment of
Bhavani Singh as SPP without assigning any reason and without consulting the Chief Justice
of Karnataka High Court.
September 30, 2013: Supreme Court quashes the notification withdrawing appointment of
Bhavani Singh as SPP.
December 12, 2013: Special Court allows a plea by DMK general secretary K Anbazhagan
and directs physical production of valuables and other assets seized from Jayalalithaa in 1997
and deposited in an RBI treasury in Chennai.
February 28, 2014: Special Court dismisses plea by SPP seeking a direction to produce
before it the seized silver articles belonging to her. Judge says the SPP had filed it only with
the purpose of delaying the proceedings.
March 14/15, 2014: Special Court imposes a cost of one-day salary on SPP Bhavani Singh
for not resuming the final arguments citing ill-health.
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March 18, 2014: Singh moves Karnataka High Court challenging the special court order
imposing cost.
March 21, 2014: HC rejects his petition saying the order of the special court imposing cost
was right.
August 28, 2014: Special Court reserves judgment for September 20 and directs all the four
accused, including Jayalalitha, to appear before it on that date.
September 16, 2014: Special Court defers by a week to September 27 pronouncement of its
verdict.
September 27, 2014: Special Court convicts Jayalalitha.50
50
Jayalalitha’s DA case chronology, The Hindu, Available at: http://www.thehindu.com/news/national/tamil-
nadu/jayalalithaas-da-case-chronology-of-events/article6452761.ece
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Chapter 6
CONCLUSION AND SUGGESTIONS
There is a much better grasp today of the extent to which corruption is a symptom of
fundamental institutional weaknesses. Instead of tackling such a symptom with narrow
intervention designed to “eliminate” it, it is increasingly understood that the approach ought
to address a broad set of fundamental institutional determinants. However, the challenge of
integrating this understanding with participatory process has barely begun. The
implementation of institutional reforms can benefit significantly from the participatory
process that is being developed for anti-corruption activities. Equally important, any
participatory process, however sophisticated, ought to lead to concrete results beyond
enhanced participation and heightened awareness. Thus, identifying key institutional reforms
in India, and mobilising support for such reforms, needs to be fully integrated into the
participatory process from very early on. Such early convergence is likely to promote a better
balance between prevention and enforcement measures in addressing corruption. Until
recently, the pendulum was firmly in the “enforcement” corner. The gradual swing towards
the middle ground has taken place due to recognition of the limitations to expose legalistic
enforcement measures, since the law institutions themselves are currently part of the
corruption problem in India.
There are adequate laws in India to fight corruption in the public sector. The Prevention of
Corruption Act 1988 is a comprehensive law which covers all possible acts pertaining to
corruption and corrupt practices by public servants. There are laws relating to tracking,
seizing, and confiscating proceeds of such crimes, both inside and outside the country. India
has signed mutual legal assistance and extradition treaties with 20 and 25 countries
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respectively to facilitate international co-operation in the fight against corruption. Ratification
of the UN Convention against Corruption by India will further strengthen its resolve to fight
against corruption by providing and obtaining international co-operation. Despite all these
measures and laws, the country is still not free from the scourge of corruption. Corruption is
still one of the biggest impediments to extending the benefits of development and progress to
the poorest of the poor. The Indian criminal justice system is facing many problems and
challenges in its fight against corruption. At present, there is no law to deal with corruption in
the private sector, which has grown in leaps and bounds in last two decades, as envisaged in
the UNCAC. Offenders take advantage of the very strict requirements of Indian courts to
prove every point beyond doubt. The system suffers from inherent delays; as a result
punishment is not swift. Corruption is considered a ‘high profit-low risk’ activity by corrupt
public servants. Recoveries of assets, which are proceeds of crime, remain a big challenge.
Such assets are often held offshore and getting them back is a Herculean task, especially in
the absence of desired international co-operation.
Therefore, corruption is an intractable problem; it is like diabetes, which can only be
controlled, but not totally eliminated. It may not be possible to root out corruption completely
at all levels but it is possible to contain it within tolerable limits. Honest and dedicated
persons in public life, control over electoral expenses, could be some of the important
prescriptions to combat corruption. Corruption has a corrosive impact on our economy and
leads to loss of overseas opportunities. Corruption is a global problem that all countries of the
world have to confront: solutions, however, can only be home-grown.
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Suggestions for fill the loopholes of anti-corruption laws: Existing legislations and executive
orders have gone a long way towards reducing corruption levels in India, there still remain
some areas that require improvement. In this regard we can consider the followings:
1. Suggestion for the improvement of PC Act:
(i) Obtaining prior sanction of an appropriate authority before any court takes cognizance
of an offence by a public servant. This provision goes beyond the protection offered
under the Criminal Procedure Code, 1973 (which only protects actions in discharge of
official duty). It may be advisable to:
(a) provide that no prior sanction would be required in cases where the officer is
caught red handed; and
(b) in other cases, prescribe a clear timeframe within which the sanctioning
authority must communicate its decision either according sanction for
prosecution or rejecting the same.
(ii) A specific legislation for protecting whistle-blowers has been recommended on many
occasions, including in the Law Commission of India’s 179th Report, pursuant to
which a bill titled “Public Interest Disclosure (Protection of Informers) Bill, 2002”
was proposed. Subsequently, a bill for this purpose has also been circulated to the
States. However, no legislation to this effect has yet been passed. While some degree
of whistle-blower protection is provided by the Central Vigilance Commission (CVC)
in terms of a notification issued by the Government of India (which itself was issued
only as an interim arrangement), on many occasions, this protection is rejected on
technical grounds.
The lack of a legislation and adequate mechanism for protection of whistle blowers
and witnesses has often resulted in complaints not being made out of fear of reprisals
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or in complains being made on an anonymous basis or using pseudonyms, which are
then either ignored or not investigated properly, resulting in inaction. Given past cases
of severe reprisals even to the extent of deaths suffered by complainants against
corruption, such as in the case of Satyendra Dubey, Satish Shetty and Manjunath
Shanmugham, it is important that appropriate legislative provisions for protection of
whistle-blowers and witnesses be introduced either through amendment to the PC Act
or through a separate legislation. The act should include whistle blowing against
private corporations and business & protection to the whistle blowers till completion
of investigations.
(iii) There is no direct provision prohibiting a private person from offering a bribe or
engaging in other corrupt practices. Such a provision is required to ensure that all
parties to a corrupt are dealt with adequately and is especially important in cases of
“collusive corruption” where the private person may be the initiator and where the
public servant may even have rejected the bribe51. This matter was to be considered
further pursuant to the recommendations made in the 4th report (ARC Report) of the
Second Administrative Reforms Commission (ARC). However, there have been no
developments in this regard. In this context, it may also be useful to create a
distinction between the penalties for commercial bribery for a benefit and a mere
facilitation payment to get the benefit of an existing right.
(iv) Concrete steps need to be taken to ensure that prosecution or other action against the
wrong-doer is completed in a timely manner, including by simplifying legal and
51
A reference may be made UK Bribery Act, 2010 which covers both bribing and accepting a bribe as offences.
Article 15 of the United Nations Convention against Corruption also makes it mandatory to adopt such
legislative and other measures as may be necessary to establish as criminal offences in respect of giving or
offering directly or indirectly of undue advantage to a public official.
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administrative procedures. Further, exemplary punishments should be meted out to
public officials convicted of corruption and the fact of such punishment should be
widely disseminated. This will not only act as a deterrent to the officials, but will also
bring to the public’s attention that steps are being taken to curb corruption.
(v) Provision to deal with the cases where Indian citizens engage in corrupt activities with
a foreign public official, is required for bringing India’s anti-corruption laws in line
with the mandatory requirement of UNCAC.
(vi) Adequate provisions for confiscation of property need to be introduced through
amendments to the PC Act or through a separate legislation that allows for civil
forfeiture.
2. Suggestion for the improvement of RTI Act:
In order for the RTI Act to become even more effective a tool against corruption, the
scope of exemptions from disclosure of information that are available under it should
be reduced. Further, the RTI Act does not provide any exemption from disclosure of
information that is privileged and need not be disclosed before a court of law in terms
of Sections 122 to 126 of the Indian Evidence Act, 1872. It would be advisable that
such privileged information not be required to be mandatorily disclosed under the RTI
Act.
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3. Suggestion for the improvement of Benami Act:
Most of the wealth in India which is accumulated through corrupt means gets invested
in benami immoveable property, gold and jewelry, high value consumer goods and
other conspicuous consumption. The unique identification project presents an
opportunity to curb this menace effectively. Quoting the unique identity number or
presenting other appropriate identity documents should be made compulsory for all
immoveable property transactions, purchase of gems and jewelry and for any other
major expenditure above a certain threshold, and clear records regarding the same
should be maintained. This would ensure that property is not sold to non-existent
persons or in fictitious names and would provide information about any expenditure
disproportionate to known sources of income.
Suggested Recommendations for the Regulators: In the Indian context, regulators carry wide
ranging powers to make, authorize, recommend and govern, policy decisions and administer
and execute government programs. Owing to the very stature and nature of powers vested in
them, there is a potential for corruption at all levels (regulators and the regulated) in the
discharge of functions. Any anti-corruption strategy in this regard can consider the
followings:
1. Review of existing structure of the regulatory regime: Existing regulatory authorities
play the dual role of formulation of rules/regulations/policies and also control and
monitoring of the activities of the operators (the regulated). Internationally, regulators
and exchanges have coped by, among others, exchanges outsourcing their regulatory
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functions to other regulators or by separating the market regulator from the market
operator.52 Government may think of having two tier structure for regulators to avoid
concentration of powers in few hands and thereby address the risks of corruption and
fraud. This may include creation of a unified regulator53, distinct from the central
bank of the country, in a phased manner to overcome supervisory difficulties and
reduce compliance costs.
2. Transparency in recruitment: There is a need for transparent process for selection of
incumbents to Head the regulators and other functionaries. Process of selection and
appointment of various functionaries (executives and non-executives) of the
regulators shall be streamlined by formation of appropriate standing committees for
search, selection and appointment. Governance structures that rely on the independent
appointment and authority of boards of directors or trustees enable putting in place
adequate internal controls and oversight on those with discretionary authority or who
handle public funds and hence there is a need for transparency in appointment of key
personnel of the Regulatory authorities.
3. Setting up guidance for appropriate ethical frameworks: To make the anti-
corruption program practical and workable it is imperative that anti-corruption and
ethical values (as provided at Annexure 1) are given due cognizance at the time of
development of framework like code of conduct or development and communication
of such a policy document. At a broad level, coverage of the said issues will send a
clear message on high standards of ethical conduct, expected behavior and action
contemplated for non-compliance by officers/employees besides defining clearly what
52
Study on Indian Capital Market reform (Nov 2007) by USAID and NISM.
53
McKinsey & Co on India Banking 2010 Towards a High-performing Sector
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actions and behaviours constitute bribery and corruption. Further, communication of
these as “best practices”, would serve to create consistency in purpose and approach
across all regulators. Extensive specific prohibitions of transactions among parties
with potential conflicts of interest are another common means to prevent the potential
for corruption.
4. Whistle blowing/grievance reporting mechanisms: Setting up appropriate whistle
blowing mechanisms is a very important step in detection of actual or attempted
policy violations. Apart from providing confidence to stakeholders that their
grievances would be dealt with in a fair, safe and confidential manner, these would
also serve to deter unethical and corrupt behavior once effectively implemented.
5. Specific administrative policies: To provide suitable direction in advocating,
implementing, monitoring and reporting on issues related to anti-corruption, it is
recommended that regulators set up and communicate to their employees, appropriate
administrative policies that regulate activities. These administrative policies may be
made available in the public domain to make the internal functioning of the regulator
transparent.
6. Coordination with other regulators and agencies as part of Anti-Corruption
strategy: Under the present system, in case of employee involvement in corrupt
activities, enquiry is conducted internally and the punitive measures are two pronged
– minor penalties and major penalties – depending upon the gravity of issue, evidence
produced and loss caused to the Government/regulator/stakeholders. In case outsiders
are involved, case is referred to the concerned agency (like Police/ACB/CBI).
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However there is no proactive mechanism to collate information including
information on employees’ assets on a continuous basis and share the same on a
periodic basis with other regulators /agencies. There is a need to establish appropriate
mechanism for coordination with other agencies.
7. Communication, education and training on Anti-Corruption: In view of their
relevance to critical sectors that contribute to an economy, apart from exercising good
governance, regulators also need to play an important role in disseminating
information and educating various stakeholders on anti-corruption. In certain aspects,
it is recommended that the regulators could consider taking on broader roles in
imparting knowledge on the subject to its stakeholders.
Suggestions for Citizens: Any anti-corruption strategy in this regard would fundamentally
focus in the following manner:
1. Ethics Education This would aim at strengthening individuals in their ethical
decision making. Value conflicts and ethical dilemmas frequently arise in the daily
lives of people, for example when family values, such as loyalty, clash with work
ethics, such as impartiality. Ethics education should provide the skill to identify such
conflicts, and instill the motivation for solving them in the best interest.
2. Character education is a holistic approach that includes civic education and connects
the moral dimension of education with students’ lives. Characteristics of socially
responsible citizens in a democracy should be emphasized both in the classroom-
based lessons and community activities.
108
3. Citizenship and democracy education should aim at strengthening democratic
processes and participation in politics, and promote values such as representation,
solidarity, participation, responsibility and pluralism. Voter education should build
citizens’ awareness of electoral processes, should also be considered anti-corruption
education. Public and private sector ethics and organizational ethics do have strong
anti-corruption components, as they build on values such as accountability, fairness,
impartiality and lawfulness.
4. Youth anti-corruption education should be integrated in school subjects such as
civics or citizenship education. The curricula must implicitly link to cover moral
issues and provide concepts such as public good and social justice that are key to
understanding the need for fighting corruption. Introducing it within the school
system strengthens the whole drive. Youth anti-corruption education should be linked
to themes that are particularly interesting to youth, for example by linking ethics with
sports: the consequences of corruption in sports- the disrespect for the value of
fairness, are obvious even to younger children. Teaching should build on real life
examples so that students can identify with ethical dilemmas. It is particularly
important to respect students’ values and rights, and to strengthen their capacities for
moral judgment without indoctrination.
5. Practice is better than theory Methods should include students’ surveys and polls,
role plays to facilitate the understanding of differing interests and to promote the
ability for conflict resolution, public debates, and attending parliamentary sessions or
visiting public institutions to understand how democracy works. School practice also
109
is itself an important vehicle for transmitting values. The context in which integrity
and ethics are taught needs to be free of repression and fear. Those who teach must
themselves represent the values they teach.
6. Higher education agenda Universities should include anti-corruption in their
governance and ethics classes. From public administration, business, law and
economics schools to technical and engineering professions, anti-corruption must be a
part of the curriculum.
7. Occupational Education Once a citizen has crossed through the stages of childhood,
school education, higher education and enters professional life it is essential that anti-
corruption education continue to be imbibed through a variety of means. This is in
fact a critical stage of anti-corruption education since it is during one’s professional
life that one’s integrity is regularly put to test. Occupation education is important
regardless of the nature of one’s profession and must be designed such that it
addresses dilemmas specific to different fields of work.
8. Organizing public awareness campaigns, exploiting the full power of the media,
NGOS, community organizations, schools etc. in raising levels of awareness against
corruption, while taking precautions to stop them from being misused (e.g. for
political ends, general denunciation, etc.)
9. Giving citizens improved access to information about rules and regulations pertaining
to corruption in order to empower them to demand greater levels of accountability
110
from public officials while ensuring that they themselves are complying with the
same.
10. Promoting ‘zero tolerance’ for corruption culture is an essential component of any
anticorruption strategy. Adequate resources must be allocated for the same.
11. Film shows and videos of people with integrity & how they grew in society through
right means.
Need for a National Anti-Corruption Strategy:
Given the dire consequences of corruption, it is quite evident that it needs to be explicitly
taken into account in India’s overall development strategy. The absence of institutions and
legislations crafted to combat corruption is not the problem in India given the wide range of
anti-corruption related steps taken in the past six decades, however significant gaps still
remain between the policy and practice. Existing anti-corruption interventions are mostly
punitive in nature. For integrity to become embedded in public life, it is important that India
shifts from this punitive approach to a more holistic preventive and participatory approach.
Moreover, a tendency has set in where the fight against corruption is seen as the job of a few
anti-corruption agencies, whereas in reality it is the responsibility of every citizen and
organisation. Therefore, a need was felt for a single comprehensive strategy that harmonizes
the efforts of withal stakeholders to fight corruption and sets an agenda for collective action.
Hence, a comprehensive approach to fill this gap – an approach that targets the root causes of
corruption, while strengthening detection and enforcement mechanisms, and introducing
systemic reform- is the need of the day. In doing so, it is important to acknowledge that
111
corruption is a reflection of both social and political values as well as weak institutions.
Given the entrenchment of corruption in Indian society, for any strategy against corruption to
be successful, sustained commitment from all actors of society, including political leaders,
various government agencies, civil society, media, the private sector and the common man,
will be imperative. It has been widely recognized that a realistic strategy to combat
corruption needs to be a participatory one that enlists input in devising, as well as,
cooperation in implementing, from these various actors. This document also focuses on the
importance of values and ethics and the role of education and awareness, so as to bring in the
citizen as a key player in the fight against corruption.
Bearing the above facts in mind the endorsement of various stakeholders, including
government bodies, persons from the legal field, politics, civil servants, members of civil
society organisations and the private sector, have been sought through a series of
consultations, surveys and group discussions to arrive at national consensus on how to deal
with the problem of corruption. The ensuing strategy is the first ever comprehensive strategy
on corruption in India and provides a framework for developing ways and means of
preventing and combating corruption in a comprehensive, co-ordinated, inclusive, and
sustainable manner.
Vision:
A nation built on good governance, transparency and integrity, and free from all forms of
corruption, and a responsible society aware of its ethical responsibilities.
112
Mission:
To channelize, integrate the resources and build synergy into the efforts of all stakeholders in
society to promote integrity in governance and progressively eliminate corruption from India
through effective prevention, detection and punishment of all corrupt activities.
Objectives:
To ensure adherence to ethical standards and integrity in the functioning of the Indian
Republic by engaging all stakeholders by:
(a) Raising public awareness to promote zero tolerance towards corruption;
(b) Undertaking effective preventive measures to minimize the scope for corruption;
(c) Strengthening legal and regulatory framework and capacity building of the institutions
of accountability as well as enforcement agencies;
(d) Creating sustainable deterrence against corruption by strict and prompt enforcement
of anti-corruption laws and regulations;
(e) Enhancing collaboration amongst all stakeholders in ensuring that corruption cases
are detected, reported, and prosecuted properly;
(f) Reducing opportunities of investment and utilization of wealth earned through corrupt
means.
Approach:
A need was expressed by various stakeholders to develop, adopt and maintain a National
Anti-Corruption Strategy (NACS) in India. The Central Vigilance Commission (CVC) with
113
the endorsement of the Vigilance Advisory Council therefore decided to assist the
government in formulating an anti-corruption policy. Formulation of the NACS was a multi-
step process which involved:
(a) assessing the status of corruption at various levels of governance;
(b) diagnosing its causes;
(c) understanding the expectations of all stakeholders; and
(d) proposing various strategies to combat corruption in an effective and efficient
manner.
The NACS was formally drafted after obtaining the endorsement of all stakeholders through
surveys, interviews, group discussions and consensus building. Based on the feedback
received on the draft, necessary amendments were made to ensure that the resultant strategy
is practical from an implementation stand-point, with a high probability of success. The
NACS then came into being once it was endorsed by all the stakeholders.
The strategy itself is hinged upon a multi-pronged approach to tackle corruption. It relies on a
combination of prevention, enforcement and awareness raising measures, embedded within
the ethical, legal, institutional, social and systemic framework of governance in India. It aims
to address both petty and grand corruption by engaging multiple stakeholders of society and
by encouraging international cooperation on issues related to corruption. It provides concrete
recommendations and action steps to be undertaken in order to progressively eliminate
corruption.
114
BIBLIOGRAPHY
Primary Sources:
 Indian Penal Code, 1860
 The Benami Transactions (Prohibition) Act, 1988
 The Central Vigilance Commission Act, 2003
 The Prevention of Corruption Act,1988
 The Prevention of Money Laundering Act, 2002
 The Right to Information Act, 2005
Secondary Sources:
 Ades, Alberto and Rafael di Tella. 1996 “The Causes and Consequences of
Corruption: A Review of Recent Empirical Contributions,” IDS Bulletin, 27, No. 2.
 Alam, M. Shahid. 1991 “Some Economic Costs of Corruption in LDCs,” Journal of
Development Studies 27.
 Bardhan, Pranab. 1997 “Corruption and Development: A Review of Issues,” Journal
of Economic Literature, 35.
 Guhan, S. and Samuel Paul, (Eds) 1997. Corruption in India: Agenda for Action New
Delhi: Vision Books.
 India. Committee on Prevention of Corruption. 1964. Report Delhi: Controller of
Publications.
 India. Committee to Enquire into the Securities Transactions of the Banks and
Financial Institutions. Interim Report (Bombay: Reserve Bank of India, 1992-93).
115
 India. Committee to Take Stock of All Information about the Activities of the Crime
Syndicates/Mafia Organisations. 1995. Report :Ministry of Home Affairs, New Delhi.
 India. Public Administration Committee. 1951. Report Delhi: Planning Commission.
 India. Shah Commission of Enquiry. 1978. Report Delhi: Controller of Publications.
 Kashyap, Subhash C., (Ed). 1997 Crime and Corruption to Good Governance: New
Delhi: Uppal.
 Noorani, A.G. Minister’s Misconduct 1973. Delhi: Vikas Publishing House.
 Pavarale, Vinod. 1996. Interpreting Corruption: Elite perspectives in India: New
Delhi: Sage.
 Ramakrishna, P.V. 1998 Anti-Corruption Laws in India: Hyderabad: S.Gogia.
 Transparency International. OSIRIS: On-line Source for Information and Research of
Integrity Systems, 1999. http://www.transparency.de.
 Visvanathan, Shiv and Harsh Sethi 1997. (Eds). Foul Play: chronicles of corruption,
1947- 97: New Delhi: Business India.
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INTRODUCTION

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Chapter 1

hampered by all pervasive corruption. It is preventing the benefits of development from

before Indian society.

Matters with a number of countries to ensure mutual co-operation in matters pertaining to

comes with an elevated position. An official engaging in bribery, nepotism, embezzlement,

politicians in India, where the incidence of corruption is significantly high2.

incentives, law, political institutions and ethics.

(I) Research Problem:

scholarly research on the topic has been largely underdeveloped.

(II) Objectives of the Study:

 To understand corruption and its various forms.

 To know the success of Laws and Regulations.

 To pick-up the needs of amendments in Laws and Regulations.

 To suggest the measures for preventing our society from graft/corruption.

(III) Research Methodology:

This study is tried to be made original by using different sources.

given in this study accepted:-

3. New systems/agencies will be developing to prevent the ‘Corruption’ in India.

5. The society will be happy and peaceful.

discusses in brief the research problem to be addressed by the study.

of corruption in various dimensions of public and private sectors in brief.

Benami Transactions for fighting against the corruption.

the attitude of judiciary towards the problem of corruption.

for a strategy to fight against Corruption at nationwide.

MEANING, CAUSES AND IMPACT OF CORRUPTION

problem of politics or economics, or as a cultural and individual moral problem. The

involving a public servant and a transfer of tangible resources.

from universal theoretical modeling to detailed descriptions of single corruption scandals. It

has been studied as a problem of political, economic, cultural or moral underdevelopment,

infinite number of ways.

address the situations of pervasive and massive corruption.

corruption as a particular (and, one could say, perverted) state-society relation.

of the public and private sectors”5.

duties of a public role (elective or appointive) because of private-regarding (personal, close

family, private clique) wealth or status gains”6.

of someone in a position of public authority because of private-regarding motives such as

wealth, power, or status”7.

occurs when political power is used to pursue wealth8.

Economic and political competition, government transparency and accountability, coupled

deepening and widening democratic rule and “good governance”.

(II) Forms of corruption:

identify some basic varieties of corruption.

relationship. To pay or receive a bribe is corruption per se, and should be

understood as the essence of corruption. A bribe is a fixed sum, a certain

benefits to companies or individuals, businessmen and clients.

There are many equivalent terms to bribery, like kickbacks, gratuities,

“commercial arrangements”, baksheesh, sweeteners, pay-offs, speed- and grease

to employees in private enterprises, public officials, and politicians.

resources he is supposed to administer on behalf of the public.

Straddling , the process by which some power-holders systematically use their

should be regarded as another form of embezzlement.

deceit. Fraud involves a manipulation or distortion of information, facts and

manipulates the flow of information to his private profit.

promises of exception from further harassment).

travellers, market vendors, transporters and other private sector businesses.

(v) “Favouritism” is a mechanism of power abuse implying “privatization” and a

related to corruption insofar as it implies a corrupted (undemocratic, “privatized”)

corruption is the accumulation of resources.

preferential treatment to certain people. Favouritism or cronyism is for instance to

grant an office to a friend or a relative, regardless of merit.

(vi) “Nepotism” is a special form of favouritism, in which an office holder (ruler)

political, economic and military/security positions in the state apparatus.

comes with an elevated position. An official engaging in bribery, nepotism, embezzlement,