Catching companies that bribe

India's principal anti-corruption legislation - the Prevention of Corruption Act, 1988, or PCA - is set to undergo a major change. The Prevention of Corruption (Amendment) Bill 2013, as introduced in the Rajya Sabha, seeks to further strengthen the PCA and for the first time directly makes an offence of bribery by commercial organisations. With India Inc seeing itself at the forefront of various corruption scandals, the proposed provisions will definitely make heads turn.

The Bill, for the first time, introduces a substantive offence defined as follows: any commercial organisation which in order to obtain or retain business or a business advantage gives, or promises to give, any financial, or other, advantage to a public servant would be liable to pay a fine. The definition of a commercial organisation is fairly broad, including bodies and partnership firms incorporated or formed in India, carrying out business in India or outside India. It also includes bodies and partnership firms incorporated or formed outside India which carry on business in India. Interestingly, the term business would extend not only to conventional trades or professions, but would also cater to providing services, including charitable services.

The offence may be committed directly by any person associated with the commercial organisation - which gives the term 'associated person' a very broad ambit. Judging from the tone of the proposed legislation, third parties acting for the organisation would be included as well. The Bill goes on to provide that, when a commercial organisation is found guilty of the offence of bribery, all such persons who at the time at which the offence was committed were responsible or in charge of conducting the business of the organisation will also be guilty of the offence - and liable to a minimum imprisonment of three years, extendable to seven years, as well as a fine. Similarly, where the offence has been committed due to the consent or connivance or neglect of any director, manager, secretary or officer of the company, such person will also be held guilty of the offence.

The only defence applicable to the commercial organisation will be what is now generally accepted as the 'compliance defence'. The compliance defence would mean that the commercial organisation could still absolve itself and its officers of liability and guilt if the organisation has adequate procedures in place to prevent such misconduct. Now this is where the real bone of contention lies: what are adequate procedures?

There is no straight answer to this question. Companies which come under the ambit of the US Foreign Corrupt Practices Act and the UK's Bribery Act - which provide for a similar defence - have been struggling with this very point for the last few years and have faced million-dollar penalties even with anti-bribery compliance programmes. Finding the right procedures is going to be a challenge for India Inc; Indian authorities will also struggle to create clarity on this point. It would be pertinent to consider the guidance UK's Ministry of Justice released on this, which listed out six principles:

• Proportionate procedures
• Top-level commitment
• Risk assessment
• Due diligence
• Communication and training
• Monitoring and review.

On the flip side, the Bill is a step in the right direction. It should help ensure commercial organisations start taking anti-corruption and anti-bribery compliance a lot more seriously. Foreign companies operating in India have often complained about the unfair playing field that they face, as they are mandated to follow compliance structures to prevent bribery of foreign public officials in their home jurisdictions - while their rival Indian companies stand unaffected. The provisions of this Bill, if actually enforced, will help level the playing field to a large extent and will make the competition in the market a lot fairer. The Bill finally attacks the supply side of bribery in a comprehensive manner and not just the demand side.

At a time when India's emerging market and viability image are taking a beating due to economic and corruption factors, legislation like this would go far in attempting to boost market confidence and reaffirm the country's commitments to the United Nations Convention Against Corruption. However, knowing Parliament's far-from-expeditious manner in dealing with such legislations, we must not lose sight of the fact that the last time an amendment to the PCA was introduced, in 2008, the Bill lapsed; and the 'Prevention of Bribery of Foreign Public Officials and Officials of Public International Organisations Bill, 2011' is yet to be passed. In the case of the 2013 Bill there seems to be a more proactive approach in play - it has already been referred to the Standing Committee. One can only hope that it is passed in time.

Source: Business Standard

Bail: Law, Trends & Judgments

Bail walks the thin line between harmonizing the conflicting claims of individual freedom and the interests of justice.   While the objectives of trial and thereby of arrest are of paramount importance to society, the grave consequences of pre-detention trial have a negative impact on the accused person since he/she may be presumed to be innocent in the court of law but subjected to physical and psychological deprivations that jail life carries.

Courts face a dilemma while adjudicating bail matters, best highlighted in the words of Justice N. Talukdar and Justice A Banerjee:   “The Law of Bails, which constitutes an important branch of the procedural law, is not a static one; and in a welfare state, it cannot indeed be so.   It has to dovetail two conflicting demands, namely, on one hand, the requirements of the society for being shielded from the hazards of being exposed to the misadventures of a person alleged to have committed a crime; and, on the other, the fundamental canon of criminal jurisprudence, viz., the presumption of innocence of an accused till he is found guilty.”  

Bail has not been defined in the Code of Criminal Procedure per se and is covered under Chapter XXXIII of the Code “Provision as to bail and bonds” under sections 436-439.   Broadly speaking, bail must be granted in the following cases:  

• If the person so arrested is not accused of committing a non-bailable offence. 
• If the investigation has not been completed within the time prescribed for the same.
• If there are no reasonable grounds which exist to believe or assume that the accused person is guilty of committing a non-bailable offence.
• If the trial before the concerned magistrate is not completed before 60 days. 
• If there are no reasonable grounds to believe that the accused person is guilty after the completion of trial but before the judgment is pronounced.

In case of offences involving the commission of non-bailable offences, the operative term is ‘may be released on bail’ which brings it under the component of higher juridical discretion.   This discretion is again based on multiple factors, mainly the facts and circumstances of each case.   The decision is always expected to be guided by law and the principle that bail is the rule and refusal of it are the exceptions.   Here is a look at some landmark judgments under the law of bail and anticipatory bail before commenting on the direction that the law has taken over the last few years. 

BAIL

SANJAY CHANDRA V. CBI The case brought to the forefront the dilemma of a court hearing bail, being further compounded in cases of economic offences that result in major losses to the exchequer.   The CBI’s contention that witnesses may be influenced by the appellants was disregarded by the Supreme Court on the grounds that seriousness of the offence is not the only rule to guide the discretionary power of the court while granting bail.   The court has to take simultaneous cognizance of the punishment that maybe afforded to the accused person after trial and conviction under the relevant statute, it ruled.   The Supreme Court held that if only the first rule of ‘seriousness of offences’ is taken into account, the constitutional rights of the accused would be severely compromised.

BHARAT SINGH JADEJA V. STATE OF GUJARAT The Supreme Court established that very cogent and overwhelming circumstances are necessary for an order seeking cancellation of the bail as the trend today is towards granting bail. The reason to back this was the well-settled position that the power to grant bail is not to be exercised as punishment before trial.   The material consideration to be taken into account while evaluating the circumstances to cancel a bail is whether the accused would be readily available for his/her trial and whether he/she is likely to abuse the discretion granted in his/her favour by tampering with evidence, the court ruled. 

JOGINDER KUMAR V. STATE OF UP In this case, the Supreme Court reiterated its position of balancing individual rights and societal rights under the question of arrest and bail.   The apex court established that the concerned authorities need to justify an arrest and not merely arrest in furtherance of the power of arrest bestowed upon them.   It was ruled that no arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person.   The court further held that it would be prudent for a police officer in the interest of protection of the constitutional rights of a citizen and perhaps in his own interest that no arrest should be made without a reasonable satisfaction reached after some investigation as to the genuineness and bona fides of a complaint.   This, besides the reasonable belief both as to the person’s complicity and even so as to the need to effect arrest.

ASLAM BABALAL DESAI V. STATE OF MAHARASHTRA The Supreme Court held that once a persons’ liberty has been interfered with with his arrest without a court’s order or a warrant, the investigation must be carried out with utmost urgency and completed within the maximum period allowed under the Criminal Procedure Code.   This would be operative in law by ensuring that if the prosecuting agency fails to show a sense of urgency in the investigation of the case and omits or defaults to file a chargesheet within the time prescribed, the accused would be entitled to be released on bail. The orders so passed in such circumstances under Section 167 (2) of the Criminal Procedure Code would be deemed to be an order under Section 437 (1) or (2) or of Section 439 (1) of the Criminal Procedure Code. The rules for cancellation of such bail will continue to operate as established under the Criminal Procedure Code, it was held.

SHAHZAD HASSAN KHAN V. ISHTIAQ HASAN KHAN The Supreme Court laid down that when subsequent bail applications are made, after the first bail application has been rejected, such applications should be placed before the same judge who passed the earlier order of refusal.   The reasoning behind the same was to prevent the abuse of the process of the court.   GAMA V. STATE OF UP In the instant matter, it was laid down that bail may be applied for even after it has been rejected in the first or subsequent instances.   That there is no provision for the operation of constructive res judicata in dealing with bail applications was the view taken by the court.   This is an extremely important position of law which supports individual liberty as compared to the process of the court.

ANTICIPATORY BAIL

Siddharam Satlingappa Mhetre v. State of Maharashtra This case was a landmark judgment by the Supreme Court on the law of anticipatory bail.   The apex court highlighted the importance of life and liberty as being inalienable constitutional rights the upholding of which was of paramount importance.   It observed that the society has a vital interest in grant or refusal of bail because “every criminal offence is the offence against the state”.   The order granting or refusing bail must reflect perfect balance between the conflicting interests, namely, sanctity of individual liberty and the interest of the society, the court said.   In light of these guiding principles, the Supreme Court laid down ten parameters to be taken into consideration while dealing with anticipatory bail.

GURBAKSH SINGH SIBBIA V. STATE OF PUNJAB The Supreme Court took a very serious view on anticipatory bail applications by persons belonging to the higher echelons of society in this case.   It was held that the power of the court to grant anticipatory bail u/s 438 of the Criminal Procedure Code must be used “very sparingly and in exceptional cases only”.   The discretion under Section 438 cannot be exercised with regard to offences punishable with death or imprisonment for life unless the court at that very stage is satisfied that such a charge appears to be false or groundless, the apex court ruled. The court further reasoned that bail or anticipatory bail cannot be granted to any person on the basis of his status in society as this would be inequality.   The court’s position in this case was a significant departure from the earlier position on anticipatory bail.   

The principle of bail and the colossal sanctity of individual liberty as enshrined by the Constitution have been reaffirmed and emphasized by the apex court as well as the high courts.   To compile and recapitulate, the ratio accent of the law would be that while bail is a rule, jail is an exception.   The principles governing the discretion vested with the upholders on the august bench may vary based on the facts and circumstances of each case.   However, the basic underlying consideration remains that liberty of a citizen can be encroached only under due process of law wherein the enforcement agencies are required to assign cogent reasons for need to justify custodial interrogation and sustained detention at a pre-trial stage which is otherwise punitive and against the principles of natural justice.   Further, in view of the reformative theory applied to the principles of punishment, it has always been an approach to balance deterrent and punitive theories vis-à-vis reformation of an accused and to keep them away from hardened criminals in jail which are deemed to be universities of crime.   The broad considerations that may weigh in the minds of the judge while allowing or refusing bail are The gravity of the offences alleged.   The need for custodial interrogation for lawful pursuit of investigation or for recovery, etc. The chances of the accused fleeing from justice/trial.   The fear of tampering with prosecution evidence/threatening witnesses.   The criminal antecedents of the accused, if any.   With rising media awareness and human rights activism, there is a constant watch that maintains the equilibrium between the individual liberty on one hand and the interest of the society and victims of crime on the other.   However, one cannot ignore the pressure the media trials create on courts, a fact that does not positively contribute to the rules of equity or justice.   It is imperative that adequate safeguards are built in to avoid abuse in case of high pressure media trials.     

Comment by Mr. Majeed Memon (Noted Criminal Lawyer)   

No encroachment on personal liberty of a citizen in civil society governed by rule of law could be justified unless there are compelling reasons for doing so.   Pre-trial arrest in any case needs to be invariably avoided unless it is specifically found in a given case that interest of justice would suffer if arrest is not made.   However, after arrest by the investigating agency if the arrestee is brought before judicial officer in the matters of bail ,the question which the learned judge from the lowest court to the highest court has to ask himself is not whether I should grant bail or not, but whether I can refuse bail to the applicant.   Unless the judge is satisfied that there are compelling factors to deny bail, liberty of the arrestee has to be resorted and bail be granted.   This is in keeping with the golden principle of “bail is a rule and jail is an exception”. 

Authors: Sherbir Panag and Pervez Memon

Source: Lex Witness