Sections 9 and 10 of the Prevention of Corruption Act, 1988: Commercial Organisation Bribery
Sections 9 and 10 were substituted by the Prevention of Corruption (Amendment) Act, 2018 with effect from 26 July 2018. Current Section 9 creates an offence relating to bribing a public servant by a commercial organisation. Section 10 imposes personal criminal liability where an offence under Section 9 is proved to have been committed with the consent or connivance of specified officers of that organisation.
Section 9 - Offence Relating to Bribing a Public Servant by a Commercial Organisation
Section 9 addresses corporate and business bribery. A commercial organisation may be punished with fine where a person associated with it gives or promises an undue advantage to a public servant with the intention of obtaining or retaining business, or obtaining or retaining an advantage in the conduct of business, for that commercial organisation.
Section 9 - Current statutory provision
(1) Where an offence under this Act has been committed by a commercial organisation, such organisation shall be punishable with fine, if any person associated with such commercial organisation gives or promises to give any undue advantage to a public servant intending-
(a) to obtain or retain business for such commercial organisation; or
(b) to obtain or retain an advantage in the conduct of business for such commercial organisation:
Provided that it shall be a defence for the commercial organisation to prove that it had in place adequate procedures in compliance of such guidelines as may be prescribed to prevent persons associated with it from undertaking such conduct.
(2) For the purposes of this section, a person is said to give or promise to give any undue advantage to a public servant, if he is alleged to have committed the offence under section 8, whether or not such person has been prosecuted for such offence.
(3) For the purposes of section 8 and this section, the Act defines "commercial organisation" and explains when a person is associated with such an organisation.
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the offence under sections 7A, 8 and this section shall be cognizable.
(5) The Central Government shall, in consultation with the concerned stakeholders including departments and with a view to preventing persons associated with commercial organisations from bribing any person, being a public servant, prescribe such guidelines as may be considered necessary which can be put in place for compliance by such organisations.
Meaning of Commercial Organisation and Associated Person
For Sections 8 and 9, a commercial organisation includes a body incorporated in India carrying on business in India or outside India; a body incorporated outside India carrying on business or part of a business in India; a partnership firm or association of persons formed in India carrying on business in India or outside India; and a partnership or association formed outside India carrying on business or part of a business in India.
The expression "business" includes a trade or profession or providing service.
A person is associated with a commercial organisation if that person performs services for or on behalf of the organisation. The capacity in which services are performed is not decisive: an employee, agent, subsidiary or another person may fall within the provision depending on the relevant circumstances. The Act also creates a rebuttable presumption in relation to an employee performing services for or on behalf of the organisation.
Adequate Procedures Defence Under Section 9
The proviso to Section 9(1) gives a commercial organisation a statutory defence if it proves that adequate procedures were in place, in compliance with prescribed guidelines, to prevent associated persons from engaging in the prohibited bribery conduct. Section 9(5) empowers and requires the Central Government, after consultation with stakeholders, to prescribe prevention guidelines for commercial organisations.
Section 10 - Person in Charge of Commercial Organisation to be Guilty of Offence
Section 10 creates individual criminal liability in addition to the commercial organisation's exposure under Section 9. It applies where the Section 9 offence is proved in court to have been committed with the consent or connivance of a director, manager, secretary or other officer of the commercial organisation.
Section 10 - Current statutory provision
Where an offence under section 9 is committed by a commercial organisation, and such offence is proved in the court to have been committed with the consent or connivance of any director, manager, secretary or other officer of the commercial organisation, such director, manager, secretary or other officer shall be guilty of the offence and shall be liable to be proceeded against and shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine.
Explanation. For the purposes of this section, "director", in relation to a firm, means a partner in the firm.
Elements of liability under Section 10
Section 10 is not framed merely on the basis of an individual's job title. The Section 9 offence must be committed by the commercial organisation and it must be proved in court that the offence was committed with the consent or connivance of the director, manager, secretary or other officer concerned.
Punishment under Section 10
An officer found guilty under Section 10 is punishable with imprisonment for not less than three years and up to seven years and is also liable to fine.
Relationship Between Sections 8, 9 and 10
Section 8 principally criminalises specified giving or promising of an undue advantage to induce or reward improper performance of a public duty. Section 9 addresses the commercial organisation where an associated person gives or promises an undue advantage to a public servant with the business-related intention specified in Section 9. Section 10 addresses the personal liability of specified officers where consent or connivance in the Section 9 offence is proved.
Legal update: The obsolete pre-2018 Sections 9 and 10 have been replaced with the provisions substituted by the Prevention of Corruption (Amendment) Act, 2018.