Prevention of Corruption Should Not Stymie the Creation Of Credit

Context: The problems of Prevention of Corruption Act (PoCA), 1988 was only partially addressed by the amendments of 2018. There is a need for a delicate balancing act between probity and economic activity.

Problems with the original PoCA

• Overlooked mens rea (or intention): According to Section 13 of PoCA, even a bona fide administrative decision that resulted in a loss to the exchequer may attract serious criminal charges.
  • The offence of criminal misconduct in the PoCA was treated by the courts as a strict liability offence, as seen in Runu Ghosh and Others vs Central Bureau of Investigation (CBI) case under the Delhi High Court.
  • In 2016, the SC, in the case of CBI vs Ramesh Gelli, included even private-bank employees within the purview of the Act.
    • This led to a situation where nearly any loan that went bad could come under the scanner, and this step was likely to deter bank officers from taking commercial decisions.
  • Moreover, it did not require prior sanction before the prosecution of retired employees.

PoCA amendments 2018: has been a refreshing change on multiple counts.

• Restricted the scope of ‘criminal misconduct’ to necessarily have an element of criminal intent.
• Adding a protective layer of permission from a senior official authorized to dismiss employee against whom charges are sought to be brought before any enquiry is initiated. However, the requirement of prior permission has been a double-edged sword;
  • While it has resulted in the protection of some, it has also resulted in instances of harassment of junior officers in cases where senior officials have scapegoated them to deflect blame.

Way forward

• Removing private-sector bank employees from the purview of PoCA: ‘Public servant’ as defined by the Act does not cover private-bank employees by any stretch.
• Removing certain class of public-sector employees from purview of the Act: e., employees working in industries that compete with the private sector so as to promote competition.
  • Ensuring a level playing field: Corporate commercial activities shall be governed under the Companies Act and criminal offences under provisions of the Indian Penal Code instead of PoCA.