New anti-corruption act: Will it be a wake-up call?

By Nusrat Hassan and Yosham Vardhan, DH Law Associates
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Corruption is impeding the growth and development of India. The need for an effective institution to tackle corruption allegations against government officials led to the passage of the historic Lokpal bill in 2013, which was notified by the government on 1 January 2014 as the Lokpal and Lokayuktas Act, 2013.

Nusrat Hassan
Nusrat Hassan

Background

In 1966, India’s first Administrative Reforms Commission came up with the idea of having an ombudsman to keep a check on corruption and redress grievances against administration. Since the introduction of the first Lokpal and Lokayuktas bill in 1968, many different versions of the bill have been introduced, with each version lapsing or being withdrawn.

Mass agitation led by Anna Hazare in 2011 acted as a catalyst and the bill has finally become law. The act provides for the establishment of a Lokpal in the centre and Lokayuktas in the states, by 1 January 2015, to inquire into allegations of corruption against certain public functionaries if the complaint is made within seven years from the date on which the alleged offence was committed.

Salient provisions

The Lokpal is to consist of a chairman and a maximum of eight members, half of whom are judicial members. A judicial member must be or have been a judge of the Supreme Court or the chief justice of a high court. Half of the members must be women or belong to the scheduled castes, scheduled tribes, other backward classes or minorities.

The chairman and members will be appointed by the president of India after being recommended by a selection committee comprising the prime minister, the speaker of the Lok Sabha, the leader of the Opposition and the chief justice of India. A secretary, director of inquiry and director of prosecution are to be appointed by the chairman.

The Lokpal is to inquire into allegations of corruption against anyone who is or has been the prime minister, a Union minister, a member of parliament, a group A, B, C or D officer as defined under Prevention of Corruption Act, 1988, or an employee of a company, society or a trust set up by an act of parliament or financed or controlled by the central government.

Yosham Vardhan
Yosham Vardhan

The Lokpal on receipt of a complaint may either order an investigation by an agency (including the Delhi Special Police Establishment) where there exists a prima facie case, or order a preliminary inquiry by its inquiry wing or any agency to ascertain if a prima facie case exists for further proceedings.

A complaint in respect of a public servant belonging to group A, B, C or D will be referred to the Central Vigilance Commission (CVC) for a preliminary inquiry. The CVC will submit its reports on public servants in groups A and B to the Lokpal. For public servants in groups C and D, the CVC will proceed in accordance with the provisions of the Central Vigilance Commission Act, 2003.

The inquiry wing of the Lokpal or the agency conducting an inquiry must submit a report to the Lokpal within 60 days from the date of receipt of the reference. A minimum three-member bench of the Lokpal will consider the report and, after giving the public servant an opportunity to be heard, will decide whether a prima facie case exists and proceed with action such as investigation, initiation of departmental proceedings or closure of proceedings against the public servant.

The Lokpal may direct any agency to carry out an investigation and submit the report within six months from the date of the order. The Lokpal then may order the investigating agency to file a charge sheet before a special court (to be constituted under the act) or to initiate the departmental proceedings against a public servant. The special courts are to complete each trial within one year from the date of filing.

The penalty for making a false, frivolous or vexatious complaint under the act is imprisonment up to one year and a fine up to ₹100,000 (US$1,600).

Conclusion

The Lokpal is a step in the right direction for companies in sectors such as infrastructure, real estate, public health, food and drugs, which need a lot of approvals and licences, necessitating greater interface with the government. With the act in place, sectors such as mining, telecoms and construction, which remain under intense scrutiny due to allegations of corruption, should get a boost. The act should also renew the confidence of global companies that have been holding back on investments and operations in India due to alleged corruption and compliance issues.

The implementation of the act should help India improve its global image and ratings in the Transparency International Corruption Perceptions Index and should create a positive environment for foreign investments in India.

Nusrat Hassan is the managing partner and Yosham Vardhan is an associate at DH Law Associates.

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