Report No. 42
17.51. Commercial corruption.-
The provisions of Chapter 9 of the Code relating to corruption are applicable only to acts of 'public servants', and as defined in section 21, that expression does not include private employees. Commercial corruption, i.e., corruption by employees of private organisations is thus not punishable in India, unless falls within the definition of cheating or criminal breach of trust or other offences made punishable in other Chapters.
With rapid industrialisation and the formation of big joint stock companies and the wide delegation of managerial functions to professional business executives, close personal contact between the employer and employed has practically disappeared, especially where the employer is not a human being, but a corporate body. Opportunities for committing acts akin to "bribery" by such employees have increased greatly and legislation is necessary to penalise such act.
Thus an executive employee of a private undertaking, receiving a substantial personal advantage for favouring a particular firm with a contract (not necessarily the most advantageous to his employer) or conniving at the delivery of inferior materials in return for a consideration would, at present, be immune from criminal law. The only actions open to the employer-company would be a civil action and internal disciplinary measures against their servant.
17.52. Statutory offence in England and other countries.-
In England, a statute1 makes it a misdemeanour triable, summarily or on indictment, for any 'agent' to accept a bribe as an inducement for doing or forbearing to do any act in relation to his principal's business; or for showing favour or disfavour, and for any person to give a bribe to an agent as such an inducement. Although the term 'agent' is defined to include persons serving under the Crown or under any corporation etc., the term is wide enough to include persons employed in private business. This statute has frequently been invoked to deal with corruption in private industry.
Similar legislation exists in France, Germany and Sweden and in some of the United States.2
1. The Prevention of Corruption Act, 1906.
2. See note in (1962) 11 ICLQ 880 (884, 885).
17.53. Should be made an offence in India.-
We consider that in India also a provision on the subject applicable to all private employees is desirable. Corruption is perhaps as rampant amongst employees of private concerns, especially big concerns, as amongst public servants. Though our main object is to check corruption amongst employees of big undertakings, we recommend that the language of the provision should be wide enough to include all classes of firms, because it may not be feasible to frame the provision so as to exclude small firms.
17.54. New section 420B recommended.-
We recommend that the following section which is modelled on section 161 be added after section 420A proposed above.1
"420B. Employee taking bribe in respect of employer's affairs or business.- Whoever, being employed by another accepts or obtains or agrees to accept or attempts to obtain, from any person, for himself or for any other person, any gratification other than legal remuneration, as a motive or reward
(a) for doing or forbearing to do any act in relation to his employer's affairs or business, or
(b) for showing or forbearing to show, in the exercise of his functions, favour or disfavour to any person in relation to his employer's affairs or business, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.
Explanations.- (1) The word 'gratification' is not restricted to pecuniary gratifications, or to gratifications estimable in money.
(2) The words "legal remuneration" are not restricted to remuneration which an employee can lawfully demand, but include all remuneration which he is permitted by his employer to accept.
(3) "A motive or reward for doing.-A person who receives a gratification as a motive or reward for doing what he does not intend or is not in a position to do or has not done, comes within these words.
Exception.- This provision does not extend to the case in which the employee is a public servant acting as such."
1. See para. 17.50, above.
17.55. Professional corruption.-
It was suggested that there should also be a provision for punishing corruption by professional persons. For example, if a chartered accountant or an advocate takes money and gives a false certificate, he may not be guilty of any offence. We are, however, of the view that such acts would amount to professional misconduct, and may be left to be dealt with more appropriately by the disciplinary tribunal of the profession concerned. Suspension or revocation of right to practice the profession (as a chartered accountant or advocate) has a more deterrent effect than imprisonment. A provision in the Penal Code cannot be easily enforced and may prove a dead letter. We, therefore, do not suggest a provision for punishing professional corruption in general.
Fraudulent Deeds and Dispositions of Property.
17.56. Sections 421 to 424.-
Sections 421 to 424 which deal with fraudulent deeds and dispositions of property do not require any comments or modification.
The next fascicle of 16 sections deal with the offence of mischief which is clearly and neatly defined in the first section (425). While the corresponding English law as codified1 in the same year as the Indian Penal Code describes the mental element in many of its sections as "unlawfully and maliciously", our definition adopts the simpler formulation of intention or knowledge of likelihood of the consequence with which we are familiar. The classification of the offences for the purpose of prescribing punishment is also much less detailed and cumbrous than that adopted in the English Act of 1861. While that Act creates about 50 different offences of malicious damage to property, our Code is content with 15.
1. The Malicious Damage Act, 1861.
17.58. A very light punishment of imprisonment upto three months or fine or both is provided in section 426 for the ordinary offence of mischief when none of the aggravating circumstances specified in the subsequent sections exist. Aggravations are based on value of damage caused, (section 427), nature of the property damaged (sections 428 to 434), the method adopted to cause damage (sections 435 to 438), other criminal motives influencing the act (sections 439 and 440), and, of course, a combination of these aggravating circumstances.
The maximum sentences provided for the various offences are three months, one year, two years, five years, seven years, ten years and life. We propose a closing up and reduction of this spectrum of seven to fiv.-one year, three years, seven years, ten years and lif.-and also a reduction in the number of different offences.
17.59. Section 425.- Section 425 which defines mischief does not require any modification.
17.60. Sections 426, 427 and 434.-
The maximum punishment under section 426 for mischief in its simple form may be increased from three months' imprisonment to one year. When this is done, there will hardly be any need for treating mischief causing damage to the amount of a specified sum as an aggravated form of mischief punishable with imprisonment upto two years. We propose that section 427 be omitted; and also section 434 under which destroying or damaging a landmark fixed by public authority is punishable with one year's imprisonment.