Amendments to the Prevention of Corruption Act: Attachment and Forfeiture

The 2018 amendments to the Prevention of Corruption Act [PC Act] promise to bring major changes to how corruption offences will be prosecuted in India. The previous posts discussed the creation of a new offence under Section 8 for giving bribes, reforms to corporate liability under the PC through a new Section 9, and major changes to how the regime prosecutes public servants. In this post, I take up the insertion of a new chapter to the PC Act, which will make it possible for law enforcement to target the unlawful gains allegedly made from corrupt conduct. Since this is the last post in this stock-taking exercise, some general observations follow the more specific discussion.

Attachment and Forfeiture: The Text and the 1944 Ordinance

The 2018 amendments have added Chapter IV-A to the PC Act titled "Attachment and Forfeiture of Property". The idea being that persons should not be allowed to profit from corrupt acts, making it necessary for law enforcement to have powers to recover all the tainted assets one procured through PC Act offences. The new Chapter IV-A contains only one provision, Section 18-A, which says:

Section 18-A.(1) Save as otherwise provided under the Prevention of Money Laundering Act, 2002, the provisions of the Criminal Law Amendment Ordinance, 1944 shall, as far as may be, apply to the attachment, administration of attached property and execution of order of attachment or confiscation of money or property procured by means of an offence under this Act. 

(2) For purposes of this Act, the provisions of the Criminal Law Amendment Ordinance, 1944 shall have effect, subject to the modification that the references to "District Judge" shall be construed as references to "Special Judge".

As this straightforward provision suggests, all that Section 18-A does is to apply the Criminal Law Amendment Ordinance, 1944 [1944 Ordinance] to "attachment, administration of attached property and execution of order of attachment or confiscation of money or property" which is the result of PC Act offences. So the procedure under the 1944 Ordinance will be used to govern how the government goes after fruits of corrupt acts. What is this 1944 Ordinance? It was part of a wave of anticorruption measures introduced by an irked British Raj at a time when black-marketing and petty corruption were rife during the times of World War II. It mainly sought to recover money / property that persons gained by cheating Her Majesty's government or misappropriating such property. These were not the only kinds of criminal conduct imagined, and a Schedule to the 1944 Ordinance states the offences to which the procedure applies. Since existing criminal procedures did not clearly envisage this kind of action, the colonial regime fashioned a new process to allow for this recovery. Due to some judicial gymnastics by the Indian Supreme Court [discussed previously on this Blog], a colonial Ordinance (not statute) remains valid in independent India and for several years was the main legal basis for any attempts by the Indian government to seize criminal gains.

The broad outlines of that process are as follows. The process is triggered by law enforcement filing an application, which can be filed even before any criminal case is filed in court [Section 3, 1944 Ordinance]. This is filed before a "District Judge", who has powers to attach the allegedly tainted assets, or an amount equal to the criminal gains made, in the manner prescribed under the Civil Procedure Code 1908 [Section 3, 1944 Ordinance]. The attachment order can be made without hearing the accused if the District Judge is convinced there is some merit in the allegations [Section 4, 1944 Ordinance]. But for such an interim order to be made absolute, a chance to be heard must be given, not only to the accused but to other persons interested in the property too [Section 5, 1944 Ordinance]. If the District Judge is convinced that the application was bogus, she can revoke the order, but if she doesn't then the order will continue to run [Section 5, 1944 Ordinance]. For attachment - a temporary arrangement - to result in transfer of property / money, a criminal case must be filed and end in a conviction [Sections 10 and 13, 1944 Ordinance].               

The Problems with Chapter IV-A

Should persons convicted of corruption be permitted to benefit from their corruptly obtained gains? Arguably not. But, that is only the start of the matter. In this part, I argue that Chapter IV-A is hardly free of problems. The procedure applies to money or property procured by means of an offence. But procured is not defined anywhere. How would it work for public servants? Would "procure" target only the immediate gains made by the corrupt public servant in the form of bribes, or could it apply to the offence of being found in possession of assets disproportionate to your salary? And what about private persons. If the government alleges I bribed my way to get a government license, would this provision enable a seizure of my entire business built on that basis? The choice of having "procure" in Section 18-A stems from the fact that it is part of the language under the 1944 Ordinance. Which brings me to the other, broader aspects of problems with Chapter IV-A. The first of these is a problem of sheer redundancy. As mentioned above, the 1944 Ordinance has a Schedule which details the different offences to which this procedure applies. Item 4-A of that Schedule states that the Ordinance already applied to cases under the PC Act. So what was the need for Section 18-A in the 2018 amendments? Frankly, I haven't the faintest idea. There is then the issue of perpetuating the 1944 Ordinance itself: a procedure that is, in fact, the subject of pending legal challenges before the Supreme Court. I find it difficult to accept that India's Parliament still cannot come up with a new statutory process on the subject and is forced to retain a colonial era ordinance, passed during an emergency, based on arguably tenuous judicial reasoning? 

What makes the decision to retain the 1944 Ordinance for PC Act cases all the more puzzling is the proliferation of attachment and forfeiture provisions across recent statutes. Successive governments have become more enchanted with having these powers to enforce laws. Today, similar provisions are part of the Narcotics, Drugs and Psychotropic Substances Act 1985, Prevention of Money Laundering Act 2002, Benami Transactions (Prohibition) Act 1988 (since 2016), Lokpal and Lokayuktas Act 2014, and most recently the Fugitive Economic Offenders Ordinance 2018. Multiplication of such laws means each statute creates a new authority that will hear such cases before which the concerned law enforcement agency must file a claim. This only adds to the confusion, since it is common for a criminal transaction to be prosecuted under different statutes. Why not streamline the entire process and let one authority blossom from that muck, to consider all cases where the government seeks attachment and forfeiture of allegedly criminal gains? Not only does it help reduce government expenditure in creating and staffing more tribunals and bodies, but it will also help reduce potential conflicts of jurisdiction, and of conflicting legal interpretations coming about. Of course, a single authority will make life a lot easier for the accused persons as well.

Conclusions and Summing Up: New Act, Old Problems

These four posts have managed to take stock of the various key features of the 2018 amendments to the PC Act. What does one make of the changes which will soon become law? Media outlets have broadly been discussing whether or not the bribe-giving offence makes sense, and whether the PC Act now stands diluted in respect of cases against public servants. I think those questions have been answered to some degree through the posts. The bribe-giving offence makes sense, but the benevolent exceptions carry far too many loopholes to be effectively implemented without judicial support. The provisions of the PC Act have certainly been diluted - supposedly to protect honest officers - and this dilution is not as serious if we look at the offences, but more so when we look at the new provisions on getting prior sanctions. In addition to these issues, I also discussed the new regime on corporate criminal liability, which I am surprised has not been the subject of greater attention in the media yet.

But all this is what the new statutory regime is going to be on paper. None of which redresses what is a bigger set of problems with anticorruption measures in India: shoddy enforcement. I have talked about this before on this Blog and I apologise for being repetitive, but at the end of the day all these changes will end up as little more than political brownie points unless serious consideration is given on improving enforcement of the law. Can we really expect major changes to the scene if India's main anticorruption agencies - the CBI and the ED - remain subservient to vested political interests? Can we imagine the government winning cases in court if prosecutors have minimal resources, are poorly paid, grossly overworked, and rarely continue with a case from start to finish? Bringing about those changes requires more than printing new copies of statutes. It requires considerable political effort to generate consensus and then invest serious resources in reforming the legal process. But this is effort that no government is willing to bear as it does not translate into guaranteed political gains. If the new PC Act regime continues to operate without any changes on that structural level, the new legislation will continue to be plagued by some very old problems.