CHAPTER - II

NATURE AND SCOPE OF SOCIO-ECONOMIC

OFFENCES

A. EVOLUTION OF SOCIO-ECONOMIC OFFENCES :

Offences are of two types viz., (1) conventional offences

where mens rea is an essential ingredient, (2) non-conventional offences

where no mens rea is required and they are termed as public welfare

offences,1 white-collar crimes,2 and socio-economic offences.3

1. Causes of Socio-economic Crimes

As in general, in India and in other countries, industrial

revolution, transition from rural and traditional society to industralised

society, extreme business competitiveness and post World War-II

conditions had given birth to socio-economic criminality. It cannot be

denied that the technological and scientific developments led to the

dilution of people’s faith in the ultimate or absolute, with the result

that the fear of the “world beyond” was eroded as a result there was a

1. Francis Bower Sayre, “Public Welfare Offences”, 33 Col.L.R. 55 (1933). '

2. E.H. Sutherland, White Collar Crime. (1949), p.9.

3. Fortv-seventh Law Commission Report. (1972), p.4.

9

decline in ethical, moral and spiritual values. This in turn brought the

love for material happiness and the greed for money irrespective of

emphasis for moral and ethical values. Socio-economic Crimes stem

from this lure for money, particularly in the upper and middle class

people in industry, trade, business, occupation, profession and public

offices. These crimes continued to multiply partly because of their nature

and partly because of the State’s attitude of “laissez. fair” philosophy

and further more because of lack of any concerted and organised public

resentment. Though, the adverse, effects of the crimes are in evidence

all around us, and their grave consequences are obvious, a little attention

has been paid to the study of the genesis, prevention, control and

eradication of these crimes in our country.

2. Public Welfare Offences

Before the middle of 19th century a new judicial practice

developed in England, where the English courts convicted the persons

for criminal offences without the proof of mens rea in instances such as

selling adultered or impure food.4 In England, in 1846, a new

development came into existence with the decision of Regina v. Woodrow.5

4. Materials for this historical development is taken from F.B. Sayre, supra,

n.l.

5. 100 E.R. 393.

10

wherein the Court of Exchequer held the respondent liable for having in

his possession adultered tobacco eventhough the respondent proved that

he had purchased the tobacco as genuine and “had no knowledge or

cause to suspect” that it was adulterated.6

Regina v. Woodrow7 was setting a trend. Twenty years later

it was followed by the Queen’s Bench in Regina v. Stephens,8 which

marked the conscious beginning in England of the movement to do

away with the requirement of mens rea for the petty police offences.

The Court of Queen’s Bench held that although the proceeding was

6. IcL, pp. 415, 416, Pollock, C.B. said :

“It appears to me that, in this case, it being within the personal knowledge of the party that he was in the possession of the tobacco... it is not necessary that he should know that the tobacco was adultered; for reasons probably very sound, and not applicable to this case only, but many other branches of law, persons who deal in an article are made responsible for its being of a certain quality. If this were the case of provisions, or of any matter that affected the public health, it would not be at all unreasonable - to require persons dealing in them to be aware of their character and quality, and to be responsible for their goodness, whether they know if or not; they are bound to take care... In reality a prudent man who conducts this business will take care to guard against the injury he complains of... and he would not be exposed to. it. . If he examines the article, he may reject it, and not keep it in his possession; or if he is incompetent to do that, he may take a guarantee that shall render the person with whom he is dealing responsible for all the consequences of a prosecution”.

7. 100 ER. 393.

8. L.R. 1 Q.B. 702 (1866)

11

criminal in form, in substance it was of a civil nature, and that therefore

no mens rea need to be proved. The new principle embodied in this

decision, however, evoked widespread. comment. Bishop,9 commenting

Upon this decisions says :

“The doctrine of this English case may almost be deemed

new in the criminal law... And, properly limited, the

doctrine is eminently worthy to be followed hereafter”.

The decisions of the above cases10 were followed in

subsequent similar cases under statutes prohibiting the sale of impure or

adulterated food.11

Thus this doctrine inaugurated in the adulterated food and

nuisance cases soon spread to other fields, such as convictions for

violations of general police regulations without proof of any guilty intent

became more and more common.12

These types of offences which departed from the orthodox

criminal law principle by the courts are termed as “public welfare offenses”9. Bishop, New Criminal Law, (8th Edn. 1892), 1076 quoted in Francis Bowes

. Sayre, “Public Welfare Offences”, 33 Col. L.R.55 (1933).

10. Supra, nn.5-9.

11. Fitz. Patrick v. Kelly. L.R.8 Q.B. 337, Hobbes v. Winchester Corporation, 1910 2 K.B. 471.

12. Oundv v. Lecocq, L.R. 13 Q.B.D. 207 (1884)

12

by Francis Bowes Sayre,13 who classified the said offenses as follows :

(1) Illegal sales of intoxicating liquor: .

(a) Sales of prohibited beverage;

. (b) Sales to minors;

(c) Sales to habitual drunkards;

(d) Sales to Indians or other prohibited persons;

(e) Sales by Methods prohibited by law.

(2) Sales of impure or adulterated food or drugs;

(a) Sales of adulterated or impure milk;

(b) Sales of adulterated butter or oleomargarine.

(3) Sales of misbranded articles.

(4) Violations of anti-narcotic acts.

(5) Criminal nuisances;

(a) Annoyances or injuries to the public health,

safety, repose, or comfort;

(b) Obstructions of highways.

(6) Violations of traffic regulations.

13. Supra, n.l at 73.

13

(7) Violations of motor-vehicle laws.

(8). Violations of general police regulations, passed for

the safety, health or well-being of the. community.

It is submitted that the above classification of public welfare

offences of Sayre, has not included offences against taxation laws,

customs and Foreign Exchange laws, violation of corporation laws,

misuse of positions by the public servants and men in professions, in

his narrow definition of public welfare offences. The time has come

when the concept of “public welfare offences” should be given a new

dimension and extended to cover all activities that affect national health

or wealth.

3. Sutherland's White Collar Crimes

Edwin Sutherland, was the originator of the concept :

“white collar crimes”. He defined white collar crime as follows:14

“White Collar Crime means a crime committed by a

. person of respectability and high social status in the

course of his occupation”.

14. Edwin H. Sutherland, White Collar Crime. (1949), pp.9-10.

14

One thing noteworthy about white collar crime is that it

. is not associated with poverty or with social, and. personal pathologies

which accompany poverty. A general , notion is that crime is due to

poverty and its related pathologies are proved to be invalid in these

instances.

Sutherland while explaining “white collar crime” speaks of

the following essential attributes:15

(a) . The criminality of white collar crime is persistent;

a large proportion of offenders are recidivits;

(b) The illegal behaviours is much more extensive than

the prosecutions and complaints;

(c) Business man who violates the laws does not

customarily lose status among his business

associates;

(d) Business man customarily feel and express contempt

for law, for government and. for governmental

personnel.

(e) They are not only deliberate but also organized.

15. IsLp.218.

15

Upper class persons who commit white collar crimes are

frequently able to escape arrest and conviction because of their money

and social position which, make them more powerful politically.

The old notion of crime was considered to be associated

and connected with the lower socio-economic class. Crime as a behaviour

of the lower class primarily consisted of burglary, robbery, rape and other

similar traditional crimes. Of late a new concept of criminal behaviour

developed wherein upper and middle class tradesmen and persons in

professions involved, which Sutherland names as white collar crime. In

his book White Collar Crime.16 he explained the criminal activities of

70 of the biggest corporations in America and focused attention on the

following types of law-breaking by them :

(i) . Restraint of trade,

(ii) Misrepresentation in advertising,

(iii) Rebates

(iv) Infringement of patents, trademarks and copyrights,

(v) Unfair labour practices,

(vi) Financial Manipulations, .

16. Supra, n.2 at pp. 17-26

16

(vii) Violations of special war regulations, and

(viii) Miscellaneous crimes like selling of adultered

Commodities, transacting business without license and

maintaining a public nuisance.

4. Criticism on Sutherland's Contribution

The orthodox concept in criminal law is that no crime can

be committed without a guilty mind or mens rea. Many statutes dealing

with white collar crimes do not require any mens rea. Hence jurists

like Jerome Hall does not recognize white collar crimes as real crimes

but they are only regulatory offences or public welfare offences.17

Sutherland limits the concept to unlawful behaviour engaged in for the

purpose of furthering the financial or strategic interests of legitimate

callings, crimes by respectable people committed for other purposes are

not white collar crimes. For instance, murder of his spouse by a

businessman or bribery of a traffic officer by a motorist who happens to

be a physician are not encompassed by the concept.18 However, Donald

J. Newman,, has supported Sutherland for including white-collar offences

in the Category of crimes for the purpose of criminological studies. He

17. Jerome Hall, General Principles of Criminal Law. (2nd Edn. 1960), p.326.

18. Donald R. Taft & Ralph W. England. Criminology. (4th Edn. 1964), p.200.

17

expressed that there is no basic differences between the nature of ordinary

or conventional and white-collar crimes. The unique feature of white-

collar offences is the relatively high status of the offenders but the criminal

content in both is there. The farmers, repairmen and others in essentially

nonwhite-collar occupation could, through such illegalities as watering

milk for public consumption making unnecessary “repairs” on television

sets, and so forth, be classified as white-collar violators. Conversely,

however, members of high status white-collar occupations who commit

ordinary penal law violations, such as murder, robbery, rape, non-

occupationally-connected thefts, and the like, would not be white-collar

criminals.19

5. White-Collar and Corporate Crimes20

White-collar and corporate crime refer to those offences

committed by persons, acting in their legitimate corporate roles. The

offenders includes business people, members of the professions and

government,. and other varieties of workers who, in the course of their

19; Donald J. Newman, “White. Collar Crime”, 23 Law and Contemporary Problems, pp. 736-37 (1958).

20. James A.Inciardi, Criminal justice, (2nd Edn. 1987) pp.94&95.

18

everyday occupational activities, violate the basic trust placed in them

or acts in unethical ways. Crime is neither the way of life nor the

chosen career of white-collar or corporate , offenders, but rather, something

that occurs in conjunction with their more legitimate work activities.

For example :

(a) In the Business Sector : Financial manipulations,

unfair labour practices, rebates, misrepresentation of goods and consumer

deception by false labeling, fencing of stolen goods, shortchanging,

overcharging, black marketing.

(b) In the Labour Sector : Misuse of union funds, failing

to enforce laws affecting unions, entering into collusion with employers

to the disadvantages of the union members, illegal mechanisms for

controlling members. :

(c) In the Corporate Sector : Restraint of trade,

infringement of patents, monopolistic practices, environmental

contamination, misuse of trademarks, manufacture of unsafe goods, false

advertising, disposal of toxic wastes.

. (d) In the Financial Sector : Embezzlement, violation

of currency control measures, stock manipulation.

19

(e) In the Medical Sector : Illegal prescription practices,

fee-splitting, illegal abortions, fraudulent reports to insurance companies.

(f) In the Legal Sector : Misappropriation of funds in

trusts and receiverships, securing prejudiced testimony, bribery, instituting

fraudulent damage claims.

(g) In the Criminal justice Sector : Accepting bribes,

illegal arrest and detention practices, illegal correctional practices.

(h) In the Civil Sector ;. Illegal commissions, issuance

of fraudulent licenses and certificates, illegal tax evaluations, misuse of

campaign funds, illegal campaign practices.

6. The Menace of white-collar Crimes21

In contemporary society the phenomenal rise in magnitude

of white-collar crimes throughout the world involving top leaders, poses

a serious threat to the economic structure of the countries. The

Resignation of Japan Prime Minister on charges of corruption, the arrest

of Korean Minister for bribery, fall of Italian Government, and the present

21.. Sri Prabhat Chandra Tripathy, “The Menace of White collar crimes and need for a new code” 1997 cri.L.J. p. 33.

20

crime-polluted atmosphere in India are the glaring examples of white-

collar crimes which have shocked the human conscience and made the

common man lose faith in the “Rule of Law”. In this present devastating

road to ruin, the character, morality, ethics and, virtues seem to have no

value and they are publicly auctioned for money.

In India, the stream of scams continue to unfold every now

and again, and the prevailing corruption has assumed wide ranging

dimensions. While these crimes signify the plundering of the people’s

resources for the selfish enrichment of the powerful persons, the judicial

system and law enforcing agencies of the country exhibit their helplessness,

as the existing legal system does not provide proper protective measures

to eradicate these crimes from the society.

7. Scope of White-collar Crimes22

White-collar crimes are not apparent or visible on the surface

but act remains under-neath, deep rooted not being disastrous to the

individuals but to the society at large specially having much pressure on

.the exchequer. In the fifties just after independence of our . country, the

22. Hon’ble Mr. Justice Prasun Kumar Deb, “White-collar Crime” Cri. L.J.2000 p.60.

21

term “white-collar crime” was generally understood to be the crimes

related to tax evasion which were not necessarily being committed either

in connection with an occupation or by persons of high social status but

rather as a general matter committed by the relatively well-to-do. The

definition of white-collar crimes excludes the so called street crimes such

as burglary, robbery or aggravated assault, which are occassionally but

not generally committed by the persons of means but by the-end of the.

day such crimes are not now restricted to crimes of monetary concealment

or aspects towards tax evasion. The scope of white-collar criminality is

being expanded day after day.

8. Impact of white-collar Crime 23

There is little systematic data available regarding the

incidence of white-collar crime. Many white-collar crimes are of recent

origin but still it is very difficult to obtain, statistics about the various

types of white-collar crimes because it is extremely difficult to discover

the existence of such crimes... white-collar crime affects the whole moral

values of our society. Derelictions activities by corporations and their

managers or high official in Government who usually occupy leadership

23. Id* at p.62.

22

position in their arena or field establish an example which tends to

erode the moral base of the law and ethics and provides an opportunity

for other kinds , of offenders to rationalise their mis-conduct. ; The

frustration, discontent and displeasure with the system among the people

and youth in special, tend towards erosion of moral values and becomes

an important factor underlying some forms of violent crime.

9. Reasons for public indifference towards white-

collar crimes24

The public is less bothered about white-collar and economic

offenders. A murder or a decoity in a locality creates sensation in that

locality and the tit bits of the offence is discussed in public with interest

and curiosity. Whereas if a businessman commits tax evasion or FEMA

violation in the same locality nobody is interested to listen even. The

following are possibly the reasons of public indifference:

(a) In big business establishments successful law violations

are often considered as capacity of the concerned violator and he is

considered as a dynamic and dashing officer of the business establishment.

24. Girija Shankar Sharma, “The HI-FI Crime and it’s Criminal” 2000 S.C.J (3)13 at p.14.

23

He is described as a successful businessman and nothing is focussed

about his law violations.

(b) Unlike traditional crimes, which are emotional in

character and were products of lust or hate, white-collar and economic

crimes are born out of sheer greed, avarice, or caprice and are non-

emotional in character. The absence of force or violence gives public

the idea that these crimes are of lesser importance. That is why the

public opinion is not well organised against white-collar and economic

offenders.

(c) White-collar or economic crimes are generally not

committed against specific individual, in most of the cases it is against

government and society at large. Hence there is no specific victim who

would complain.

(d) Another vital reason is a psychological one. No white-

collar criminal thinks himself as an ordinary criminal, on the contrary

he thinks that he is a respectable man in the society and is regarded as

such by the society.

It is submitted that Sutherland’s definition is-,

too narrow. In order to convict a person two essential ingredients must

be satisfied viz., (1) person must have respectability and high social

24

status and (2) the crime must be committed in the course of his

occupation. The difficulty comes in convicting a person, who fulfils

only , one condition. On a plain reading it is clear, that a person cannot

be brought within the purview of white collar offence unless all the

requirements are satisfied. In one case one requirement may be satisfied

and the other may not be satisfied. This case be explained through an

illustration.

Illustration

X, a peon accepts a bribe of Rs.100, in the

course of his occupation.

In order to make him liable under the definition

of Sutherland two essential requirements are to be satisfied, viz., (1)

upper class strata and (2) in the course of his occupation.

In the above illustration though the peon has

accepted a bribe of Rs.100, in the course of his occupation, it is very

difficult to get him within the purview of Sutherland’s definition as he

did not belong to upper class strata. So as a result of intrinsic weakness

in the definition of . Sutherland it is very difficult to get the above

mentioned case within the purview of the definition.

Likewise, organisation of these professional

25

crimes has paralleled a similar trend not only in business communities

but also in labour and men in profession. It is no longer limited in its

nature and scope and has spread beyond business and trade frontiers

and has also penetrated into the civil servants and other men in high

profession. Hence it is not proper and useful to use this term to denote

this new criminal activity.

According to the definition of Sutherland one

may describe white-collar offence as a. crime committed in the course of

one’s occupation by a member of the upper class of society. For instance:

A manufacturer of drugs who deliberately supplies substandard drugs is

a white-collar criminals. But in a case where there is no connection

between the crime and the occupation, for example, a doctor evades

tax, is not a white-collar criminal, likewise a director of a company

who smuggles foreign goods is not a white-collar offender. But all of

them are guilty of social or economic offences. Social offences are

offences which affect the health or material welfare of the community as

a whole and not merely of the individual victim. In the same fashion,

economic offences are those which affect the country’s economy and not

merely the wealth of an individual victim. Hence the law Commission,25

termed such offences as socio-economic offences. These offences have

25. Supra, n.3 at p.4.

26

a tendency to erode the national health, character and economy in equal

and perhaps more measures and sometimes have transnational roots too.

They have a direct impact on the. national progress of a country

particularly like India, which is engaged in the battle of development.

10. Contribution of Law Commission of India

The term “Socio-economic offences”, is used to denote all

white-collar crimes, public welfare, offences, economic offences including

regulatory offences. So the Law Commission26 has rightly viewed that

socio-economic offences form intersecting circle with white-collar crimes

and offences of absolute liability. Characteristics of socio-economic

offences according to Law Commission are as follows:27

1. Socio-economic criminal motive is greediness or ravenousness

but not hate or lust,

2. Background of the crime is non-emotional,

3. Harm is not to an individual alone but to the whole society,

4. Act is wilful and deliberate,

26. See generally Forty-seventh Law Commision Report (1972).

27. IcL P-2.

27

5. Mode of operation of crime is through fraud, but not force,

• ’ and

6. Absence of individual and social vengeance.

Likewise, types of socio-economic offences according to Law

Commission are as follows :28

1. Offences calculated to prevent or obstruct the economic

development of the country,

2. Evasion of taxes,

3. Food and drugs adulteration,

4. Misappropriation and theft of public property and funds,

5. Offences in the nature of breaches of contracts, resulting

in the delivery of goods not according to specification,

6. Black-marketing and hoarding,

7. Misuse of positions by public servants,

8. Trafficking in licences, permits, etc

28. IsLp.3.

28

The Law Commission dealt in detail the

question of effectively dealing with certain anti-social and economic

offences. In its “Report on the Trial and Punishment of Social and

Economic Offences”, they studied causes for defective enforcement like

absence of legislative provisions, absence of the relevant statutory.

notification, faulty investigation, lack of legal expertise, procedural

drawbacks, want of evidence and administrative difficulties and defects.29

The Commission suggested30 viz., stringent action, departure from

conventional mens rea and burden of proof doctrines, increase in.

minimum and maximum punishment, establishment of special courts,

appeal should from special court to High Court, mandatory imprisonment,

need for preventive detention, stoppage of business or cancellation of

licence, probation. Amendment of Sec.6 of probation of offenders Act,

1958 called for and constitutional amendment enlarging the contents of

Item 9 in List I, Schedule VII. The above Commission .made a

remarkable contribution for the socio-economic offences. With these

juristic and authentic studies and opinions in the general background,

now it is proposed to delve into the socio-economic offence of corruption .

specifically.

29. Supra, n. 26 at pp.29-38.

30. Supra, n. 26 pp.115-162.

29

B. CORRUPTION AS A PIVOTAL OF SOCIO­

ECONOMIC OFFENCES

1. History and Evolution of Corruption

In History, usually revolutions were the result of corruption

and nepotism among the rulers and administrators. The French

Revolution was caused by widespread corruption in the Government and

the October Revolution in Russia was also because of corruption among

bureaucracy.31.

In early ages corruption was quite rampant

almost everywhere. The Code of Hammurabi, the Babylonian King

provided punishment for giving false evidence on receipt of grain or

money as a bribe. Similarly the Edict of Harmheb, the King of Egypt

provided capital punishment for the priest or official who accepted bribe

in the discharge of judicial duties; Provisions also existed for punishment

for taking bribe in the ancient laws of Jews, Greeks, Romans and

Indians.32 The giving and taking of bribes as a crime is the outcome of

refined jurisprudence. In earlier age, payment for favours shown for

31, Surendranath Dwivedy and Bhargava, Political Corruption in India. (1st Edn. 1967), p. VII.

32. See H.D. Lasswell, “Bribery”, Encyclopaedia of Social Sciences. Vol.II (Macmillan), 1959, pp. 690-691.

30

services rendered, was the rule. The payment to the Judge by the parties

for rendering justice was also a matter of course. This “paved the way

to the sale of justice to the highest bidder”. When a judge was permitted

to accept fees from the parties, he could not be expected to be objective

in the administration of justice and the scales of justice often tilted in

favour of the party which could pay the judge adequately. This practice

led to corruption and such corruption gave birth to the notion that it

was the State’s responsibility to pay. its officers, judicial or otherwise

and that every officer of the State was expected to decide in accordance

with law and his conscience and not in accordance with the magnitude

of reward.33 Thus bribery as a crime was the product of refined

jurisprudence and the concept of Rule of Law which were more or less

unknown to the earlier system.34

2. Causes of Corruption

There are many causes of corruption at both institutional.

and individual levels. Experts of different specialities have highlighted

various factors, e.g., decline in religious beliefs or in public morality,

uncertainty in the standards of appropriate behaviour, divergence between

33. Sir Hari Singh Gour, Penal Law of India. 7th Edn. 1963, Vol.I, p.760.

34. Report of the Santhanam Committee on Corruption, 1963, p.6, quoted in Twenty-nineth Law Commision of India, 1966.

31

the formal and informal rules governing behaviours in the public sector,

value conflicts in the post colonial settings where the standards and

practices embedded within traditional relationship differ, from the

institutions left behind by the departing colonial power.

Robert Klitgaard, a political scientist, has

conceptualized the opportunity for corruption within an institution in

the following formula '

Corruption = (Monopoly) -f (Discretion) - Accountability

According to him -

“The opportunity for corruption is a function of the size of

the rents under a public official’s control (M), the discretion that official

has in allocating those rents (D) and the accountability that these official

faces for his or her decisions.35

The empirical research done by Daniel

Kaufmann and Jeffrey Sachs suggests that there is a complex set of the

determinants of corruption, e.g., poor institutions (including the rule of

law and safeguards for the rights of property), civil liberties, governance

(including the level of professionalization of the administrative, service)

35. Robert Klitgaard, controlling corruption Berkely; university of California press, 1988, page 75.

32

and economic policies as also characteristics like the size of the country

which seem to play an enabling role for corruption.36 Along these lines,

the World Bank points out both institutional, and economic policy factors

which generate a nourishing environment for corruption. In its report of

1997, it states that corruption thrives:

Where distortions in the policy and regulatory

provide scope for it and where institutions of restraint are weak. The

. problem of corruption lies at the intersection of the public and the private

sectors. It is a two-way street. Private interests, domestic and external,

wield their influence through illegal means to take advantage of

opportunities for corruption and rent seeking and the public institutions

succumb to these and other sources of corruption in the absence of

credible restraint.

Thus opportunities for corrupt behaviour develop

(i) whenever public functionaries have large discretion in

exercising the powers and little accountability for their

actions taken therefor;

(ii) Whenever government policies leave some gap, then these

36. See also Asia Foundation Working Paper Series on Corruption prepared by Amanda L. Morgan, Consultant Asia Foundation, page 50.

33

gaps create opportunities for middlemen or the actors of

corruption;.

(iii) Such opportunities also develop because of prevalence of

administrative secrecy which encourages corruption and

lobbying and insularity from democratic control.

The general public also plays an important role

in spreading corruption in the administration. People take undue

advantage by bribing officials and they very much admire the corrupt

wealthy men.37 They never hate the corrupt officials, boycott the local

touts and condemn the black-marketers and hoarders. This happens

because of their illiteracy, ignorance and poverty. They are gained over

by the moneyed class of people.

. The illiterate man takes it to be a part of the

system, the law of the land and the present order of the country It is

worthwhile to know how inefficiency and corruption have affected every

branch of social system and how it has crushed our valuable social

order. This is due to economic, political, educational, social and religious

factors38:-

37. Basudev Panda, Indian Bureaucracy - An Inside Storv. (1st Edn. 1978), p. 18

38. N. Vittal, Corruption in India : The Road block to National Prosperity, (lst.- Edn. 2003), pp. 19-22.

34

(i) Economic Factors : The principle of mixed economy,

given rise to private enterpreneurship as well as public enterprises. In

practice, private enterpreneurs do not have free hand in all matters of

trade and business. State authority more or less controls almost 60 per

cent of its business deals. It has control over the matters of finance

advanced from Financial Corporations, Banks and other Governmental

institutions, issue of licences, acquisition of land, registration and

collection of sales tax and commercial taxes, issue of quota for raw

materials, issue of licences and permits for import and export, and to

some extent determination of prices of its products, sanction of transport

facilities.

(ii) Political Factors : In a democratic country political

parties thrive on trying to capture power. The leaders of the party, who

win the election, adorn various positions such as ministers, deputy

ministers and parliamentary Secretaries. Instead of serving the people,

they remain busy for some personal and party gains during their tenure

of office. They try to acquire the heavy sums of money which they

spent in the election, to satisfy their party men,, supporters and

henchmen. For all these they exploit their authority and position, depend

on the dishonest officials, encourage the dishonest businessmen, do not

take adequate action against the anti-social elements and indulge in

35

nepotism. During elections the public try to extract the maximum from

the candidates and. they follow the policy of “No Vote without. Note”.

All these have broken the old social order and have cruelly destroyed

the cultural frame of our great democracy.

(iii) Educational Factors : Everybody is of the opinion

that the present educational system is completely rootless, aimless and

totally un-suitable for our boys and girls. Added to this is the corrupt

administration, all-around political hooliganism and party factions in.

university campuses.

(iv) Social Factors : On the advent of modem civilisation

in our country, the needs of the people have increased ten-folds. Every

man dreams to enjoy the facilities extended by the civilisation. Everyone

is crazy to achieve them overnight. Everyone wants to become prosperous

and enjoy the fruits of modernity. But as the resources are limited and

financial position of those aspirants are not suitable, they resort to

immoral activities such as smuggling, theft of national property, hoarding,

black-marketing, bribing officials, whiling away their time in bars,

restaurants and brothels. As a result, there is growing youth unrest in .

the country. There is all-round economic disparity.

The other social factors of corruption are:39

39. I<Lp.23.

36

(a) Emulation of high officers in respect of modem amenities.

(b) . Dissatification. caused among low-paid employees and they

remain as neighbours of high-paid employees in the locality.

(c) Wives of high-officers play an important role in making their

husbands corrupt.

(d) Role of industrial, and commercial private concerns in

corrupting the administration.

(v) Religious Factors : Religion was earlier playing a

vital role in our social fabric. But due to complexities of the present

family life and existence of economic problems, religion has failed to

control the diffused and diverse interests of individuals. Corruption in

some form or other has also entered into the religious institutions and

has eaten away their, vital organs. There are wide-spread scandals in

the management of Lord’s citadels in our country.

3. Factors of Corruption40

According to Mr. N. Vittal, the Former Central Vigilance

Commissioner (CV.C.) corruption in any system or society depends on

40. Supra, n.38 at pp. 18-23.

37

three factors. The first is the set of individual’s sense of values, the

second , is the set of social values which are accepted by the society as

a whole and third, the system of governance or administration; There

are two broad elements which determine the extent of corruption or the

lack of probity in the public life : (I) the social roots of Corruption and

(II) the system of governance.

(I) (a) Family and Caste : From a sociological point of

view the family is the basis of our society. The joint , family and caste

are only the extended versions of the family. The joint family might

have been eroded in recent times especially in the urban areas but the

kinship in the form of caste still prevails. Casteism gets a continuous

boost because this seems to have become the basis of our entire politics...

From “casting our votes” in the first election in 1952 we have come to

a stage of “voting a caste”, these days. This organisation of our society

based on caste and kinship and the differences in the state of

development between the states provides a very strong rationale for

corruption.

(b) Family Attachment : The root cause of corruption is

the extreme attachment of people to their families. Nepotism is natural

in this situation. A person in an office feels that he should earn

enough not only for himself and his lifetime but also for his children,

38

grand children and perhaps seven generations. That is probably the

basic motive behind the enormous accumulation of wealth by the corrupt

in our country today.

(c) Power in Office : Power is never demonstrated in a

society unless it is misused. By misuse of power, and by corrupt means

wealth is accumulated.

(d) Consumerism : Consumerism and desire for an

ostentatious life style tempts many to make money by hook or crook.

Corruption is the result.

(e) Dowry : One major social cause that promotes

corruption is the dowry system. Every public servant wants, to see that

his daughter is married off well and there is continuous pressure for

‘ensuring a minimum level’ of dowry. This may be one of the reasons

why ohe comes across cases where even public servants who have had a

clean life, towards the end of their career become vulnerable to corruption.

Dowry system is definitely one of the social roots of corruption in our

country.

(f) School Admissions : Right from the kindergarten,

there is pressure of. competition. This has been further accentuated by

the government policies about affirmative action for self financing colleges

39

who charge a lot of donation money and most of it is collected in

black..

(g) Probity in Public Life : There seems to be a total

lack , of awareness about the damages of corruption or lack of probity in

public life in the well-being of the people. The voter who considers

drinking water or shelter or school or employment opportunities as higher

priorities is perhaps not aware that if there was no corruption these

issues could be tackled more effectively and the benefits would be much

more than what they are.

(h) Low Risk, High Profit : With 6 percent as the

conviction rate in our criminal courts, corruption is a low risk, high

profit business for those who can afford to be corrupt.

(II) System of Governance :

The second element responsible for corruption in our

country is our system of governance. Our democracy is based on

corruption because all political parties have to collect funds in cash,

which is black money. Corruption in our system has resulted in Rs.

58,000 crores non performing assets in the banking sector, a VDI scheme

which rewards the tax evader by levying a 30 percent tax, while

punishing the honest tax payer with a 40 percent tax and so on.

Cynical view of Living with Corruption : The easiest

option is not to do anything, accept the reality and take a cynical

view to live with corruption.

Corruption ; Causes, Consequences and Control:

Michael clarke outlines a normative formulation for

containing corruption. Clarke Postulates are :41

(a) Bureaucracies must be given adequate resources and

training and a reasonable workload and the economy must

operate in a balanced and effective way to avoid creating

pressures towards corruption.

(b) Where culture, traditions accepting of corruption exist, they

are hard to eliminate and conduce to corruption, but where

bureaucracies are well-founded and established, a service

ethos can develop that forms a cultural barrier against

corruption.

(c) The efforts of skilled and determined enterpreneurs of.

corruption are often an important factor where

circumstances are at all permissive of corruption; and all

societies will contain some quarters which invite corruption.

41. Michael. Clarke, Corruption : causes, consequences and Control. Freman printer, London, 1983 quoted in Chandanmitra, The Corrupt Society. (1st Edn. 1998) pp. 26-27.

41

(d) The political capacity of the excluded population to protest

vigorously against corruption is a vital preventive force.

(e) . The state may be more a less willing to process such

complaints effectively, but is unlikely to act with enthusiasm.

(f) Hence, the media, and the press in particular, are vitally

important as channels of protest.

The roots of corruption in public life both bureaucratic and

political, in India, can be traced to the Juxta- position characterised, by

scarcity of resources and unequal distribution of economic wealth in a

democratic form of government with capitalistic form of economic system.

Sociologically speaking corruption, is a consequence of the way of life in

our acquisitive society, where people are Judged by what they have rather

than what they are. The possession is sine qua-non of life. Apart from,

sociological basis, corruption has its economic style. The raising of

price level more than five fold of pre-second world war level without

any comparable increase in the emoluments of public servants putting

strain on the integrity of lower strata of officialdom.42

42. Dr. K. Sudhakar, “Corruption - A Socio-Economic and Legal Study”. Paper presented at the National Seminar on “Law and Corruption in India”, . sponsored by U.G.C. held on. 21st & 22nd March, 1998, organised by University College of Law, Kakatiya University, Warangal, A.R, India.

42

4. Corruption Various Meanings and Definitions

Ordinarily, corruption means guilty of dishonest practices

such as bribery.43 Bouvier, in his Law Dictionary,44 defines corruption as

“An act done with an intent to give some advantage inconsistent with

official duty and the rights of others. It includes bribery, but is more

comprehensive, because an act may be corruptly done though the

advantage to be derived from it be not offered by another. Something

against Law as, a contract by which the borrower agreed to pay the

lender usurious interest. It is said in such case that it was correctly

agreed. Bouvier defined “Bribery” as the receiving or offering any undue

reward by or to any person whomsoever, whose ordinary profession or

business relates to the administration of public justice, in order to

influence his behaviour in office, and to incline him to act contrary to

his duty and the known rules of honesty and integrity.45 According to

Cowel, bribery is a high offence, viz., when any man in Judicial place or

any great officer takes any fee, pension, reward, or gift for doing his

office, save from the kind only.46 Bribery is a penal offence generally

defined as the giving or receiving of consideration for official favour.47

43. See The Randam House Dictionary of the English Language, The Unbridged Edition (1964), p. 328.

44. 3rd ed., Vol.I, p. 688. . ■

45. LL.p. 394.

46. Cowel, quoted in Stround’s ludicial Dictionary. 3rd ed.,. Vol.I p.335.

47. Cited in Encyclopaedia Britannica. Vol.6, p. 549.

43

There are a number of judicial decisions dealing

with the definition and meaning of corruption. The concept of corruption

was discussed at length in State v. Barnett.48 in which it was. held

corruption as something against or forbidden by law, moral turpitude or

exactly opposite of honesty involving intentional disregard of law for

improper motives. It covers the act of an officer in accepting a bribe.

It covers every class of crime amounting to felony when intentionally

committed by ministerial or judicial officer. In R. v. Smith.49 it was

held “corruptly” means with the intention to corrupt.

The Supreme Court viewed in Madan Mohan

Singh v. State of U.B50 that when the accused rendered no service to

the complainant but actually had done disservice in his official capacity,

to the complainant’s knowledge will make the story of bribe improbable.

The Madya Pradesh High Court in Sheokumar v. M.A. Khan51 opined

that the expression “corrupt or illegal practice” is equivalent to corrupt

practice or illegal practice. The word practice applies even to a single

act and is not confined to habitual repetition of an action. A single

act of the nature would amount to corrupt practices.

48. Okl, Cr. App., 69, p.2d 77, 87.

49. I960 I All. li.R. 256 at 257.

50. A.I.R. 1954 S.C. 637.

51. , 1960 Mdh. Pra. 37.

44

Supreme Court in State of M.P v. Ram Singh—,

held that “The menace of corruption was found to have enormously

increased by the First and Second World War conditions. Corruption,

at the initial stages, was considered to be confined to the bureaucracy,

which had the opportunities to deal with a variety of State largesse in

the form of contracts, licences and grants. Even after the war, the

opportunities for corruption continued as large amounts , of government

surplus stores were required to be disposed of by public servants. As a

consequence of the wars, the shortage of various goods necessitated the

imposition of controls and extensive schemes of post-war reconstruction

involving the disbursement of huge sums of money which lay in the

control of the public servants, giving them a wide discretion, with the

result of luring them to the glittering shine of wealth and property.”

The Supreme Court further held that “corruption

in a civilised society is a disease like cancer, which if not detected in

time, is sure to maliganise (sic) the polity of the country leading to

disastrous consequences. It is termed as a plague which is not only

contagious but if not controlled, spreads like a fire in a jungle. Its

virus is compared with HIV leading to AIDS, being incurable. It has

52. A.I.R. 2000 S.C. 870 at 873.

45

also been termed as royal thievery. The socio-political system expose to

such a dreaded communicable disease is likely to crumble under its

own. weight. Corruption is opposed to democracy and social order, being

not only , anti people* but aimed arid targeted. against them. It affects

the economy and destroys the cultural heritage. Unless nipped in the

bud at the earliest, it is likely to cause turbulence - shaking the socio­

economic-political system in an otherwise healthy, wealthy, effective and

vibrating society.”53

In State of lammu and Kashmir v.

Vinavananda54, the Apex court said that :

“Corruption at any level, by any person of any

magnitude is condemnable which cannot be ignored by the Judicial

courts, when proved. No leniency is required to be shown in proved

cases under the prevention of corruption Act, 1988, which itself treats

the offence under it as of a special nature to be treated differently than

the general penal offences. No populous or sympathetic approach is

needed in such cases.” .

53. Id-, at p.873.

54. 2001 Cri.L.J. 957 : A.I.R. 2001 S.C. 611 at p.612.

46

A division bench of the Supreme Court in State v.

Bangarappa55, made the following observation :

. “No doubt corruption affects the normal fabric

of the society. The citizens lose, their faith in the political leaders who

shout that they are for the people. No doubt many people go unpunished

although corruption causes considerable damage to. the economy of the

nation. The roots of corruption are so deep that it is an uphill task to

eradicate them. It is only possible if and only if each citizen in our

country, follows the philosophy of contentment. To quench the thirst of

greed and lust one must be drenched in shower of honesty and the

foundation of sublime lover should sprinkle the magic drops on the eyes

for the reality of the life. Unless one tries to find a golden key to open

the gates of wisdom, the heavenly life remains as a myth and we are all

making the futile effort to attain divinity in our life. The public man

should have crystal clear and transparent personality. Caesar’s wife must

be above suspicion”.

In lavalalitha vs Union of India56. Justice -

Nanavathi. opined that corruption corrodes morals and corruption by

public servants not only leads to corrosion , of the moral fabric of .the

55. A.I.R. 2001 S.C. 222 at p.223. .

56. 1999 Cri.L.J. 2859.

47

society but also harmful to the national economy and national interest,

as the persons occupying high posts in the Government by misusing

their power to corruption can cause considerable damage to the national

economy, national interest and image of the country.

Mr. N. Vittal, the Former Central Vigilance

Commissioner (C.V.C.), Government of India opined that57 : Fighting

corruption is like fighting a War. War is too dangerous a matter to be

left to the generals. Fighting corruption is also an important matter not

to be left only to the agencies like the Central Vigilance Commissioner

or the Central Bureau of Investigation. Hence Mr. Vittal emphatically

points out that it is necessary to sensitise the entire population of the

country and bring together every citizen who wants to fight corruption.

The term corruption comes from the Latin verb

rumpere, which means “to break”. Corruption is a complex phenomenon.

Its causes. are always contextual, rooted in a country’s policies,

bureaucratic traditions, political development and social history. It covers

a broad range of human actions that encompasses four main

distinguishing features, namely, misuse of a position of power; gaining of

advantage for those who actively and passively are parties to the misuse;

57. N. Vittal, corruption in India : The Roadblock to National Prosperity. (1st Edn. 2003), p.10.

48

undersirable effects on third parties; and secrecy surrounding the

transaction. Corruption takes many forms it can be found in polities

and the bureaucracy, in police, in the election process and in the private

sector. It can be systematic or isolated. Public works construction projects

- airports, dams, highways, subways and water systems > traditionally

have provided the biggest, most publicized and most dramatic cases of

corruption world wide. Because it is pervasive and because it undermines

a free and fair system based on trust, corruption is a principal threat to

democracy.58

The simplest definition of corruption is, any act

or omission by a public servant for securing pecuniary or other material

advantage directly or indirectly for himself, his family or friends, is

corruption. As an American scholar rightly opined, polities plays an

important role in corrupt activities and “corruption is political behaviour

which deviates from the formal duties of a public role because private

regarding (personal, close family, private elique) pecuniary or status gains

or violates rules against certain types of private regarding influence.59

58. Dr. G.B. Reddy, “Corruption in High Places - Judicial Response in India, ' (2001) A.L.T. 20 (Jou).

59. J.S. Nye, “Corruption and Political Development : A Cost Benefit Analysis, American Political Science Review LXI (June, 1967), 419.

49

5. Types of Corruption

There are various types of corruption. They are60 :

(a) Petty Corruption : Involving low level officials for

routine “services”. .

(b) Grand Corruption : Large payments to win

government contracts, etc and for the consequences.

(c) Bureaucratic Corruption : Bribing officials for an

“advantage”.

(d) Political Corruption : Including bribes to politicians

or party funds bribes by politicians to win votes.

6. Political Corruption61

“Political morality, fair election and responsible opposition

and vigilant public opinion are the sine quo-non of democracy,

60. Garima. Prashad, “Bribe-Givers and Bribe-Takers are both guilty”. Lawz, September, 2001, p. 11 at p.14.

61. Prof. Rega. Jagan Mohan Rao, “Political Corruption”, paper, presented at the National Semianr on “Law and Corrupion in India”, Sponsored by U.G.C.

. held on 21st & 22nd March, 1998, organised by University College of Law, Kakatiya University, Warangal, A.E, India.

50

parliamentary democracy in particular”, so said Dr. B.R. Ambedkar.

Absence of these essential elements of democracy is mainly responsible

for high ranking political corruption ranging from former Prime Minister,

ministers to ministerial staff. Thus percolating from political executives

down to local politicians such as Municipal Counsellors and Corporators

of Municipal Corporations all over the country. Corruption, casteism,

communicalism, nepotism are rampant in all walks of political life.

The corruption is prevailing from lowest

National level to global level. It has been recently popularised as

“Scams” and “Kickbacks”, if it is involving thousands of crores of rupees

or more. This phenomena is transforming men of straw into millionaires

overnight or enriching politicians and political parties in a magical way.

The following are few scams which have seen the light of the day. They

are:62

a) Hawala Scam b) Ayurveda Scam

c) FERA Scam d) Securities Scam,

e) Colour T.V. Scam f) Fodder Scam

62. Pulluru. Satyanarayana, “Corruption in. Politics”, papaer presented at National Seminar. on “Law and Corruption in India, sponsored by U.G.C, held on 21st & 22nd March, 1998, organised by University College of Law, Kakatiya University, Warangal, A.P, India.

51

g) Indian Bank Scam h) J.M.M. pay off case

i) Lakhu bai Pathak cheating case

j) . Forest Scam k) Petrol Scam

1) Telecome Scam m) Housing Scam

n) Letter of Credit Scandalo). Bofors Scam

The present state of India as a corrupt country

is really pathetic. Transparency International, a Berlin based N.G.O.

publishes every year corruption perception Index [C.BL], ranking countries

from least corrupt to the most corrupt. India ranks 73 out of 102

countries listed for the year 2002.63

Our political system is such that the political

parties depend on contributions from big businessmen and big industrial

houses to run political business including fighting in elections. The

businessmen and industrialists who have contributed a large amount of

money to party funds will try to compensate their loss through dubious

means such as food adulteration, tax evasion, doing business with

contraband articles or drugs etc., and protection is afforded to them by

the political parties. This unholy nexus,64 between criminals and

63. Supra, n.38 at p.32.

64. Vohra Committee pointed out the nexus in full details.

52

politicians is one of the greatest reason why standard of law enforcement

dilutes in cases of white-collar and economic criminals.

7. Judicial Corruption65

Judicial corruption in India is posing a threat to democratic

way of life. Apart from many scandals involving; the Judges of High

Courts and the Supreme Court, the case of Justice Rama Swami, was

unique in the annals of Indian Judiciary. Three Judges held the enquiry

against him for charges of corruption and found him guilty; on the basis

of that impeachment motion was moved against him, in the parliament

of India; but the motion failed due to political manoeuvre of the ruling

party. The manner, in which the whole sordid and dismal affair was

conducted, shows the attitude of the ruling party. People have lost faith

in the honesty and impartiality of the Jidiciary and they feel that with

the failure of impeachment motion, the corruption has got finally

institutionalised.

There has been a central loss of character among the Judges

of higher courts. Some such shocking instances are as under:66

65. . M.S. Rahi, “Corruption and its Effects on Social Life” 2002 cri.L.J.267 atp.270. ■

66. Arun Beriwal and Roopali Chaturvedi, “Judicial Corruption and Removal of Judges’, A.I.R. 2003 Journal 349.

53

• The mysterious involvement of Mysore High Court

Judges in a sex-scandal, where even the Supreme Court refused to release

the committee’s report on the ground of confidentiality and exonerated

them.

• Three Judges of Punjab and Haryana High court who

have shown their influence - peddling in getting their eight candidates

selected by the Public Service Commission, Punjab. An example of

stark corruption practices.

• The unbecoming conduct of the sitting judge of

Rajasthan High court, who was found seeking sexual favours from a

litigant, Lady doctor. Later on indicated by the Justice B.K. Roy

Committee and resigned.

• A sitting Judge of the Delhi High court was found

involved in the illegal activities in collusion with the officials of a

Development Authority.

These are but a few instances of the lack of

public morality that has seeped into our Judicial system and are also a

pointer to the fact that even the presiding -. deities of Higher Courts are

not immune from the glamour, glitter arid galloping corruption in the

society..

54

The third conference of the Chief Justices and

the Chief Ministers at Vigyan Bhavan, New Delhi, held on

17'9'2004, the Prime Minister, Dr. Manmohan Singh said that the

confidence of the litigating public could be sustained only if, apart from

efficient and effective Justice, there was a firm belief that the Judgement

would be rendered without any extraneous circumstances.67

In Re D.C.. Saxena. case the Supreme Court

observed that :6S

“Judges have their accountability to the society and their accountability

must be Judged by the conscience and oath to their office i.e., to defend

and uphold the constitution and the laws without fear and favour. Any

criticism about Judicial system or the Judges which hampers the

administration of Justice or which erodes the faith in the objective

approach of the Judges and brings administration of Justice to redicule

must be prevented”.

67. Mohd. Abdul Khadeer, “Accountability of Law implementing .Officials” cri. L.J. 2004 Journal 327!

68. A.I.R. 1996 S.C. 2481.

55

8. Evil Effects of Corrutpion

Corruption, has assumed the character of a social

menace spreading its evils far and wide. . As a social problem corruption

has assumed alarming proportions causing misery and gloom to the

generality of the people. Corruption shakes the faith of an average

citizen in his country’s institutions, its elite, politicians and civil servants.

The sophisticated may rationalize that corruption, like inflation, is an

unavoidable appendage of development,. the result is the spread of

cynicism and lowered resistance to the giving and taking of bribes. As

a result of bribery, basic long-term national resources are utilized for

immediate gain or profit. Corruption means that bureaucratic decisions

are taken in terms of monetary gains rather than with the worthwhile

objective for the development of the nation.69 Corruption is often simply

a way of getting things done. This way of getting things done violates

on all sides the values of legalism and it contradicts the very basis of

legality. If you have the resources to effect a “Barter”, breaking the law

is more wothwhile than following it. Political influence, promised

patronage, coercion and intimidation. For instance, transfer of officials

69. Marshall B. Clinard and Daniel J. Abbott, Crimes in Developing Countries A Comparative Perspective. (1st Edn. 1973), pp. 56-57.

56

who dare to follow rules rather than dictates or rank exploitation are all

forms of corruption. Governmental lawlessness in the form of corruption,

nepotism and abuse of power are haying an adverse impact on legality.70

Corruption affects the very foundation of the

administrative machinery. It posses a serious challenge to all, for a

good administration is a condition precedent not only for our fight against

poverty, hunger, disease but also, for the very preservation of our hard

earned freedom. It affects the day-to-day life of the people. At present

in India, the very meagre rations that we get are adultered. Even the

medicines are not an exception. None of the evils like adulteration,

black-marketing or hoarding is a natural calamity. They are man-made

calamities, in fact, Government - made calamities. They are the result

of want of honesty, integrity and efficiency in administration of

Government. After all, the administration is the instrument of economic

planning. If the tools are defective the work is bound to be defective.

Even if the development plans are well-conceived, a corrupt and

inefficient administration defeats the very object.71

70. Upendra Baxi, The Crists of the Indian Legal System. (1st Edn. 1982), pp.8 and'22.

71. Supra, n.31 at p.VII.

57

The Government has been either ignoring or belittling

the evil of corruption on one excuse or another. The Government argued

that there might be petty corruption at the lower levels, whereas the

higher circle of the services were “worth their weight in gold”. There

are two standards of judgement, one for the poor individuals and the

other for those who are in power. A peon may be prosecuted and

punished for accepting a bribe of one rupee for allowing a visitor, who

did not have a visitor-pass to see a patient in a Government Hospital.

If there is a case against high officials or politicians the scale of justice

will be certainly different.72 That should not be the system. If it is so

it will have lot of impact on the society. So in order to avoid

unreasonable discrimination the scale of justice should be equal in all

corruption cases irrespective of the person’s position. When no action is

taken against people, whom commissions of Enquiry have declared prima

facie liable for corruption in high offices, and when prosecutions are

regularly withdrawn on grounds not publicly accessible or debatable,73

what is the impact of the society over this? There, is a persian proverb

which says, “when the ruler of a country takes a pinch of salt without

payment, his Officers loot the whole country. If any minister thinks

72. Supra, n.31 at pp.VIII & IX.

73. Supra, n.70 at p.7.

74. Supra, n.31 at p.VIII.

58

that what he does in secret is not known to his staff, he is living in a

fool’s paradise”.74

9. Corruption - Position in England

Though corruption as a part of . behaviour , is as old as

man, considering the giving and taking of bribes as a crime is the

outcome of refined criminal jurisprudence. Corruption in judicial ranks

has been rather, rare in the English system, the same could not always

has been said in regard to other branches of Government. The period

between the Revolution and the end of Queen ANNE’s reign witnessed

much corruption even in the highest official circles. It was during this

period that a speaker of the House of Commons was removed on the

charges of bribery and even the great Marlborough.75 could not rise above

suspicion in financial matters. The first scandal in the judicial field

occured in 1289, when a number of judges were convicted of corruption

and other offences. Subsequently Sir William Thrope (1913), Michael

de la Pole, Chancellor of England in 1387, Lord Chancellor Bacon in

1621, Lionel Granfield in 1624, and Sir Thomas Parker, First Earl of

Macclesfield in 1725,76 were convicted of corruption and other offences.

75. Lord Chief Justice of The King’s Bench in Ireland and then in .England . quoted in Encyclopaedia Britannica, Vol.14, p.922.

76. See Encyclopaedia Britannica. Vol.4, p.110.

59

The offence of bribery was a common law

misdemeanour, punishable with imprisionment or with fine or with both-77

Apart from common law, several statutes have been passed by the British

Parliament to tackle the problem of bribery and corruption from time to

time. In English law the legislation relevant to the bribery is contained

in three statutes, viz... Public Bodies-Corrupt Practices Act, 1889, The

Preventio of Corruption Act, 1906 and The Prevention of Corruption

Act, 1916, collectively known as the Prevention of Corruption Acts, 1889-

1916 and as to bribery at elections (including paid entertainments an

undue influence) in Section 99 of the Representation of People’s Act,

1949. The 1916 Act increases the maximum penalty in certain cases

and provides that corruption shall be presumed, unless the contrary be

proved, where some consideration has been given to a person in public

employment by a person holding or seeking to obtain a contract with

the employing authorities.78 The statutes defining bribery frequently

include an element of “corrupt practices”. It is a general term including

bribery, undue influence, etc., but has specific reference to electoral

systems. Beginning in the Nineteenth Century, many nations outlawed

77. . Halsburv’s Laws of England. 3rd Edn. Vol.10, p.616, see also Archbold,Pleading. Evidence arid Practice in Criminal Cases. (35th Edn. 1962), para 3483, and J.W. Cecil Turner, Russell on Crime. (12th Edn. 1964), Void, p.381.

78. Cited in Encyclopaedia Britannica, Vol.4, p.170.

60

practices that interfere with the freedom of elections such as treating,

intimidation, coercion and personation. Improvements in electoral

administration notably the secret ballot system were also: designed to

reduce corrupt election practices.79

10. Corruption - Position in India

During the early stages of the British rule in India

corruption was quite rampant and even a Governor like Robert Clive

and a Governor-General of the statute of .Warren Hastings had to face

impeachment on charges of corruption and maladministration on their

return to England. However, the charges against them were ultimately

dropped and they were acquitted.80 The East-India Company Act, 1793,

enacted that, “the demanding or receiving any sum of money, or other

valuable thing, as: a gift or present, or under colour thereof, whether it

be for the use of the party receiving the same, or for or pretended to be

for the use of the said East India Company, or of any other person

whatsoever by any British subject holding or exercising any office or

employment under His Majesty, or the said United Company in the

East Indies,. shall be deemed to be extortion and a misdemeanour at

79. Supra, n.43, at p.328.

80. P.E. Roberts, History of British India. (3rd Edn. 1964) pp.143-148 . & 216-219.

61

law and punished as such...” There was a provision for the forfeiture of

the present so received or its full value and imposition of fine under the

above said Act.81.

11. International Attempts to combat the menace of

Corruption :

1. United Nations convention against corruption82:

2. Protection of Witnesses, experts and Victims83:

(1) Each state party shall take appropriate measures in accordance

with its domestic legal system and within its means to provide

effective protection from potential retaliation or intimidation

for witnesses and experts who give testimony concerning offences

established in accordance with this convention and, as

appropriate, for their relatives and other persons close to them.

(2) The measures envisaged in paragraph (1) of this article may

include, inter alia, without prejudice to the rights of the

defendant, including the rights to due process :

81. H.R Varshni. Law of Bribery and Corruption. (1st Edn. 1953):, pp. 7-8.

82. http : //www.unodc.org/unodc/crime convention, html.

83. Article 32 : united nations convention against corruption.

62

(a) Establishing procedure for the physical protection of such

persons, such as, to the extent necessary arid feasible, relocating

them and permitting, where appropriate, non-disclosure or

limitations on the disclosure of information concerning the

identity and whereabouts of such persons;

(b) Providing evidentiary rules to permit witnesses and experts to

give testimony in a manner that ensures the safety of such

persons, such as permitting testimony to be given through the

use of communications technology such as video or other

adequate means.

(3) States Parties shall consider entering into agreements or

arrangements with other States for the relocation of persons

referred to in paragraph 1 of this article.

(4) The provisions of this article shall also apply to victims insofar

as they are witnesses.

(5) Each State Party shall, subject to its domestic law, enable the

views and concerns of victims to be presented and considered

at appropriate stages of criminal proceedings against offenders

in a manner not prejudicial to the rights of the defence.

84. Article 33 : united nations convention against corruption.

63

3. Protection of reporting persons84 :

Each State Party shall, consider incorporating irito its domestic

legal system appropriate measures to provide protection against any unjustified

treatment for any person who reports in good faith and on reasonable grounds

to the competent authorities any facts concerning offences established in

accordance with this Convention.

4. Consequences of acts of Corruption85 :

. With due regard to the rights of third parties acquired in good

faith, each State Party shall take measures, in accordance with the fundamental

principles of its domestic law, to address consequences of corruption. In this

context, States Parties may consider corruption a relevant factor in legal

proceedings to annul or rescind a contract, withdraw a concession or other

similar instrument or take any other remedial action.

5. Compensation for Damage86 :

Each State Party shall take such measures as may be necessary,

in accordance with principles of its domestic law, to ensure that entities or

persons who have suffered damage as a result of an act of corruption have

85. Article 34 : united nations convention against corruption.

86. Article 35 : united nations convention against corruption.

64

the right to initiate legal proceedings against those responsible for that damage

in order to obtain compensation.

C. Prevention of Corruption Act 1947 - Its Legislative

History:

The earlier rule, i.e., payment to the judge, by

the parties, led to abuse and sale of justice to the highest bidder. This

state of affairs continued till the force of public opinion gathered such a

momentum that it. gave birth to Anti-Corruption laws on the statute

book more than a century ago. The concept of ideal behaviour as

required of a public servant, for the first time found formal legal

expression in substantive written law87- The Indian Penal Code, 1860.

With the general degeneration of public morals,

as a result of the second world war it became necessary to enact a more

severe law so as to prevent corruption in public sevices. The offences

of bribery and corruption were already there on the statute book in IXth

chapter of the Indian Penal Code. Obviously, criminal jurisprudence of

the above Code was considered deficient and ineffective to fully meet

the challenge and cope with the new criminality. Even otherwise the

above mentioned Code was a general penal code and did not provide

87. See SS. 161 to 165 - Now repealed. .88. See The Prevention of Corruption Act, 1947.

65

any special machinery for effective control of these offences. In

consequence legislature was obliged to pass new. legislation to root, out

the evil.88 This Act was a sort of an . Emergency Law as. could be

inferred from the statement of objects and reasons given below :89

“The scope for bribery and corruption of public servants

had been enormously increased by war conditions and though the war

is now over, opportunities for corrupt practices will remain for considerable

time to come. Contracts are being terminated, large amount of

Government surplus stores are being disposed of, there will, for some

years, be shortages of various kinds requiring imposition of controls and

extensive schemes of post-war reconstruction, involving the disbursements

of very large sums of Government money, have been and are being

elaborated. All these activities offer wide scope for corrupt practices

and the seriousness of the evil and possibility of its continuance or

extension in the future are such to justify immediate and drastic action

to stamp it out”.

In India the striking legislative enactments

dealing with anti-corruption laws were three. They were as below :

89. Published in the Gazette of India, dated November 23, 1946, Part V, p.374.

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116745

(i) The Prevention of Corruption Act 1947.

(ii) Sections 161 to 165 of the Indian Penal Code 1860,

and

(iii) The Criminal Law (Amendment) Act 1952.

Those were followed by minor amendments through

the following Acts, namely :

(i) Anit-Corruption Laws (Amendment) Act 1964,

(ii) The Criminal Law (Amendment) Act 1966, and

(iii) The Anti - Corruption Laws (Amendment) Act 1967.

1. Santhanam Committee Report on Corruption :

The Government of India appointed a committee with

Santhanam as its Chairman to review the problem of corruption and to

make suggestions on various matters connected therewith. One of the

terms of reference of the committee was “To suggest changes in the law

which would ensure speedy trial of cases of bribery, corruption and

criminal misconduct and make the law other-wise more effective”,90

• 11674590. Report of the Committee on Prevention of Corruption, Ministry of Home.

Affaris, Government of India, 1964, quoted in Twenty-Nineth Law Commission Report, 1966, p.l.

67

The committee in its report opined :

“The substantive law relating to bribery,

corruption and criminal misconduct is contained in the Indian Penal

Code and. Prevention of Corruption Act 1947, the procedural law in the

Criminal Procedure Code 1898, Criminal Law (Amendment) Act 1952

and some special rules of evidence relating to such cases in the Prevention

of Corruption Act: The working of the relevant provisions of these

enactments in prosecutions in Courts and also at the stage of

investigation have disclosed that certain changes in the law are required

in order to ensure speedy trial and more effective rules”.91

2. Recommendations of the Santhanam Committee :

The committee had submitted its final report

in March 1964. It recommended amendment of certain service regulations

and enactments. In pursuance of its interim report a central vigilance

commission had been set up in 1963, with Mr. N. Sreenivasa Rao (a

retired Chief Justice of the Mysore High Court) as the first vigilance

commissioner.92 Several amending Acts with an accent on strengthening

the legal machinery to fight corruption, tax evasion, food adulteration,

91. Id-> p.53, para 72 & 73 as quoted in 29th Law Commission Report* 1966,p.l. ■“

92. Supra, n.31 at pp.31 & 34.

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foreign exchange etc., were also passed. The amending Acts increased

the powers, of the investigating officers and magistrates, by providing

summary trials and disallowing the normal right of appeal in certain

cases, by creating presumptions against accused under certain

circumstances and by making punishments to have a greater deterrent

effect. In the process The Anti-Corruption Laws (Amendment) Act

1964 (amending the Indian Penal Code 1860, The Criminal Procedure

Code 1898, The Prevention of Corruption Act 1947, and The Criminal

Law (Amendment) Act 1952) were passed by the Parliament,93 If brought

to light several omissions and loopholes in the Indian Penal Code and

suggested their removal. The Committee wanted inclusion in the

definition of the term “public servant”, the president, secretary and all

members of the managing committee of a registered co-operative society.

It also suggested amendment of a section of the Prevention of Corruption

Act 1947 which debarred police officers below the rank of Assistant

Commissioner of Police, Superintendent of Police or Deputy

Superintendent of Police from investigating offences which fall within

the purview of this Act. Persons charged with bribery have been able to

stall proceeding by the Courts under Art. 32 and 226. Hence

Departmental proceedings, involving charges of bribery and corruption,

93. Santhanam Committee Report, pp.53-54 & 8-11 quoted in Mahesh Chandra, Socio-Economic Crimes (1st Edn. 1979), pp.54-58.

69

should be specifically put in a different category and the powers of the

Supreme Court and High Courts under Art. 32 and 226 respectively

should be limited by an amendment of the Constitution. . The

Government rejected the suggestion. Vigilant public opinion to combat

these evils are called for. The Committee’s scope of study was limited.

Political corruption was beyond the purview of the Committee.94 After

nearly three years of experience, the then Central Vigilance Commissioner,

Mr. Sreenivas Rao came to the conclusion that without tackling political

corruption it was not possible to root out dishonesty and inefficiency

from the administration.95

3. Categorisation of offences by the Santhanam

Committee :

The above committee categorised offences

broadly viz., (1) offences calculated to prevent or obstruct the economic

development of the country and endanger , its economy, (2) evasion

and avoidance of taxes lawfully imposed, (3) misuse of their position

by public servants, (4) adulteration of food stuffs and drugs, (5)

profiteering, black-marketing and hoarding, (6) theft and

94. Supra, n.31 at pp.31, 40-42.

95. Santhanam Committee Report suggestions quoted in supra, n.31 at pp.31-

41.

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misappropriation of public funds, (7) Trafficking in licences, permits,

etc. The following are other economic offences mentioned by Santhanam

Committee, viz... share-pushing, malpractices in the share market and

administration of companies, monopolistic controls, under-invoicing or

over-invoicing, evasion of economic laws, bribery and corruption, election

offences and malpractices.

4. Legislative History of the Prevention of Corruption

Act, 1988 :

Eradication of corruption from public offices is one of

the most important tasks before every government. From time to time

the Government of India has been taking legal steps to combat the

virus of corruption.

Many legal devises had been created to prevent

corruption totally but in vain. But still the Government using the law

as an effective instrument to prevent it. The earlier enactment, namely

The Prevention of Corruption Act, 1947, The Penal Code Provisions

SS. 161-165A and other provisions were found insufficient to eradicate

or even to control the grave evil of bribery and corruption corroding the

public service of our country. Hence a new legislation namely “The

Prevention of Corruption Act, 1988” was passed, which is a four-in-one

71

piece of legislation because it not only contains important provisions of

the repealed prevention of Corruption Act,. 1947, the Criminal

(Amendment) Act, 1952 but also SS. 161-165A of the Indian Penal

Code and of the Criminal Law (Amendment) Ordinance, 1944-

In India the Prevention of Corruption Act, 1988 is

one such legal device introduced by the Government. It was enacted

with the object to prevent the evil practice of corruption more effectively.

Public servants alone fall within the ambit of Prevention of Corruption

Act, 1988. Thus, this Act of 1988 was enacted with the above mentioned

prime object in addition to removing anomalies and to consolidate the

laws found in earlier applicable enactments.

*2* al#vf*

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