INDIA Law and Practice Contributed by: Priyank Ladoia, Asif Ahmed, Pranav Tomar and Puneet Dhanoa, AZB & Partners
tions, such person will be punished with impris - onment for a term extending to one year and/ or fines of between INR50,000 and INR500,000. Further, the managing director, whole-time direc - tor in charge of finance, chief financial officer or any other person charged with the duty of compliance with the requirements of maintain - ing 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 notified 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 pertaining to forgery, falsification of accounts, etc. Under the PMLA, banks, financial institutions, auditors 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 punish - able 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 miscon - duct by a public servant for such public servant to misappropriate – 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; however, in its present form only misappropria - tion of public property or owning assets that are disproportionate to the public servant’s known sources of income are considered criminal mis - conduct. 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 intermediaries are now liable to be pun - ished 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 serv - ant, to conduct their public duty in an improper or dishonest manner. 2.6 Lobbyists There is currently no national legislation in India regulating 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 permitted to partici - pate in legislative consultative processes, such participation cannot, however, cross the line drawn by Section 7 of the PCA, which makes it illegal for a “public servant to take gratification
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