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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.
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(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.
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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.
66
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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