INDIA Law and Practice Contributed by: Priyank Ladoia, Asif Ahmed, Puneet Dhanoa and Utkarsh Routh, AZB & Partners
any undue advantage as motive or reward in order to induce a public servant, by exercising their influence over the public servant, to conduct their public duty in an improper or dishonest manner. Prior to the Amendment Act, these persons were prosecuted as abettors or by invoking the provision of criminal conspiracy under the IPC. As previously stated, bribery, including influence-peddling of for - eign public officials, is not covered under the PCA or elsewhere. 2.3 Financial Record-Keeping While the PCA does not impose any record-keeping obligations, the Companies Act, 2013 (the “Compa - nies Act”) obligates a company to maintain its books of accounts for a period of up to eight preceding financial years. If an inquiry or investigation is pend - ing against the company under the Companies Act, the company is required to maintain its books of accounts for a longer period. If the senior manage - ment of the company, including the managing director and the chief financial officer, or any person charged by the board, fails to comply with such obligations, such person will be punished with imprisonment for a term extending to one year and/or fines of between INR50,000 and INR500,000. Further, the managing director, whole-time director in charge of finance, chief financial officer or any other person charged with the duty of compliance with the requirements of maintaining the financial statement of the company shall be punishable with imprisonment for a term that may extend to one year or with fines of between INR50,000 and INR500,000 (or with both) if the corporate books: • do not show the true and fair view of the state of affairs of the company; • do not comply with the accounting standards noti - fied under the Companies Act; or • are not in the form or forms provided for a different class or classes of companies in the Companies Act. If the concerned officer mentioned above is found to have maintained false books of accounts, they may, depending on the facts and allegations, be subject to
the various offences mentioned under the IPC pertain - ing to forgery, falsification of accounts, etc. Under the PMLA, banks, financial institutions, audi - tors and intermediaries (such as brokers) are obligated to maintain records of their client’s transactions for a period of five years, where such transactions exceed a certain value. Failure to maintain these records results in liability with steep penalties. 2.4 Public Officials Misappropriation of public funds is an offence under Section 13 (1) of the PCA, and is punishable with the highest sanction under the PCA – ie, imprisonment for a minimum of four years and for up to ten years, along with a fine. Under the PCA, it is an act of criminal misconduct by a public servant for such public servant to misappro - priate – or even otherwise convert for their own gain – any property entrusted to them. The provision for criminal misconduct has been amended to its present version in the Amendment Act. Before the Amendment Act, the provision was far more comprehensive, and covered various acts of criminal misconduct; howev - er, in its present form only misappropriation of public property or owning assets that are disproportionate to the public servant’s known sources of income are considered criminal misconduct. 2.5 Intermediaries The Amendment Act, under Section 7A of the PCA, targets intermediaries in the same way as influence- peddlers (see 2.2 Influence-Peddling ). Such interme - diaries are now liable to be punished under the PCA for accepting, obtaining or even attempting to obtain any undue advantage as motive or reward to induce a public servant, by exercising their influence over the public servant, to conduct their public duty in an improper or dishonest manner. 2.6 Lobbyists There is currently no national legislation in India reg - ulating lobbying activities. Various laws in India are routinely enacted after going through a process of public consultation on draft bills/legislation. While companies and commercial organisations (including their trade bodies and industry associations) are per -
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