Introduction
The Prevention of Corruption Act aims to curb corruption in both public and corporate sectors by imposing strict liability on commercial organisations and their key personnel. Sections 9 and 10 specifically address bribery involving public servants, holding both the company and responsible individuals accountable. These provisions ensure that businesses maintain ethical practices and implement effective anti-bribery measures.
Bribery by Commercial Organisations on Influencing Public Servants
Section 9 of the Prevention of Corruption Act penalizes commercial organisations if anyone associated with them offers or promises undue advantage to a public servant. This applies when the intent is to gain or retain business or an advantage in business operations. The law allows companies to defend themselves if they prove they had adequate anti-bribery procedures in place, following prescribed guidelines. A person is considered to have committed the offence under this section even if they are not prosecuted under Section 8. The law defines a “commercial organisation” broadly, covering Indian and foreign-incorporated companies, partnerships, and associations conducting business in India. “Business” includes trade, profession, or service. Any person performing services for or on behalf of such an organisation may be held liable, regardless of their formal role. Employees are presumed to perform services unless proven otherwise. Offences under Sections 7A, 8, and 9 are cognizable. The Central Government will issue mandatory guidelines, in consultation with stakeholders, to help commercial entities prevent bribery involving public servants.
Are Company Officials Liable For Undue Influence Under Prevention of Corruption Act
Section 10 of the Prevention of Corruption Act holds company officials personally liable for bribery offences. If a commercial organisation commits an offence under Section 9 with the consent or connivance of a director, manager, secretary, or officer, that person is also guilty. The court can punish such individuals with imprisonment for a minimum of three years, which may extend to seven years. They are also liable to pay a fine. This provision ensures that responsible officials face direct legal action for corrupt business practices.
Conclusion
Together, Sections 9 and 10 of the Prevention of Corruption Act create a strong legal framework to combat corporate bribery. They not only penalize organisations involved in corrupt dealings but also target directors and officers who enable or overlook such acts. By enforcing personal and corporate accountability, the Act promotes transparency and integrity in business operations.
