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On public servants

Implications of Supreme Court's ruling for private businesses

Recently, the Supreme Court ruled that senior employees of private sector banks would be considered "public servants" when it came to deploying the provisions of the Prevention of Corruption Act of 1988, or PC Act. The Court said that the intent of Parliament when enacting the PC Act was to widen the notion of a "public servant". It indicated that the guiding legislation for the sector, the Banking Regulation Act of 1949, said senior bankers were "public officials"; this was relevant, when drafted, to provisions of the Indian Penal Code that were subsequently superseded by the PC Act. The Court held in its main judgment that the appropriate parts of the Banking Regulation Act could not be left "meaningless", and that this was an "unintended" omission by the legislative branch which the judicial branch would have to cause to be "filled up". A concurrent opinion from the bench held that a "public servant" for the purposes of the PC Act was anyone discharging "duties in which the state, the public or the community at large has an interest".

The implications for the banking sector and beyond are considerable, and will worry many. Certainly, many have pointed out that public sector bankers have to worry about the PC Act, so why should not their counterparts in the private sector? This misses the point. In fact, it is employees of public sector corporations who should be made exempt from corruption legislation designed to control state employees. If public sector corporations are to be imagined as professional and competitive, they should be subject to the same legal regime as the private sector; their public purpose should be defined by the state-appointed representatives on their boards, and not by the legal regime they are subject to. In addition, defining "public servant" as those conducting any duties "in which the state, the public or the community at large has an interest" may lead to too broad an expansion when implemented by the executive branch. Can it now be argued that, given state and public interest, private insurers should next be investigated under the PC Act?

The Supreme Court has the final word, constitutionally, on interpreting the intent behind existing legislation. However, an amendment to the PC Act is planned to be passed by Parliament. This amendment, which contains much progressive reform of the statute, should be urgently reviewed in the light of this new development. Parliament must debate exactly which jobs constitute "public service", and whether private bankers and others - or even public sector employees - should be subject to the PC Act. If necessary, the Banking Regulation Act should also be amended in the light of this debate. The intent of the legislature should be made clear.

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Business Standard
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Business Standard

On public servants

Implications of Supreme Court's ruling for private businesses

Business Standard Editorial Comment  |  New Delhi 



Recently, the Supreme Court ruled that senior employees of private sector banks would be considered "public servants" when it came to deploying the provisions of the Prevention of Corruption Act of 1988, or PC Act. The Court said that the intent of Parliament when enacting the PC Act was to widen the notion of a "public servant". It indicated that the guiding legislation for the sector, the Banking Regulation Act of 1949, said senior bankers were "public officials"; this was relevant, when drafted, to provisions of the Indian Penal Code that were subsequently superseded by the PC Act. The Court held in its main judgment that the appropriate parts of the Banking Regulation Act could not be left "meaningless", and that this was an "unintended" omission by the legislative branch which the judicial branch would have to cause to be "filled up". A concurrent opinion from the bench held that a "public servant" for the purposes of the PC Act was anyone discharging "duties in which the state, the public or the community at large has an interest".

The implications for the banking sector and beyond are considerable, and will worry many. Certainly, many have pointed out that public sector bankers have to worry about the PC Act, so why should not their counterparts in the private sector? This misses the point. In fact, it is employees of public sector corporations who should be made exempt from corruption legislation designed to control state employees. If public sector corporations are to be imagined as professional and competitive, they should be subject to the same legal regime as the private sector; their public purpose should be defined by the state-appointed representatives on their boards, and not by the legal regime they are subject to. In addition, defining "public servant" as those conducting any duties "in which the state, the public or the community at large has an interest" may lead to too broad an expansion when implemented by the executive branch. Can it now be argued that, given state and public interest, private insurers should next be investigated under the PC Act?

The Supreme Court has the final word, constitutionally, on interpreting the intent behind existing legislation. However, an amendment to the PC Act is planned to be passed by Parliament. This amendment, which contains much progressive reform of the statute, should be urgently reviewed in the light of this new development. Parliament must debate exactly which jobs constitute "public service", and whether private bankers and others - or even public sector employees - should be subject to the PC Act. If necessary, the Banking Regulation Act should also be amended in the light of this debate. The intent of the legislature should be made clear.

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On public servants

Implications of Supreme Court's ruling for private businesses

Implications of Supreme Court's ruling for private businesses Recently, the Supreme Court ruled that senior employees of private sector banks would be considered "public servants" when it came to deploying the provisions of the Prevention of Corruption Act of 1988, or PC Act. The Court said that the intent of Parliament when enacting the PC Act was to widen the notion of a "public servant". It indicated that the guiding legislation for the sector, the Banking Regulation Act of 1949, said senior bankers were "public officials"; this was relevant, when drafted, to provisions of the Indian Penal Code that were subsequently superseded by the PC Act. The Court held in its main judgment that the appropriate parts of the Banking Regulation Act could not be left "meaningless", and that this was an "unintended" omission by the legislative branch which the judicial branch would have to cause to be "filled up". A concurrent opinion from the bench held that a "public servant" for the purposes of the PC Act was anyone discharging "duties in which the state, the public or the community at large has an interest".

The implications for the banking sector and beyond are considerable, and will worry many. Certainly, many have pointed out that public sector bankers have to worry about the PC Act, so why should not their counterparts in the private sector? This misses the point. In fact, it is employees of public sector corporations who should be made exempt from corruption legislation designed to control state employees. If public sector corporations are to be imagined as professional and competitive, they should be subject to the same legal regime as the private sector; their public purpose should be defined by the state-appointed representatives on their boards, and not by the legal regime they are subject to. In addition, defining "public servant" as those conducting any duties "in which the state, the public or the community at large has an interest" may lead to too broad an expansion when implemented by the executive branch. Can it now be argued that, given state and public interest, private insurers should next be investigated under the PC Act?

The Supreme Court has the final word, constitutionally, on interpreting the intent behind existing legislation. However, an amendment to the PC Act is planned to be passed by Parliament. This amendment, which contains much progressive reform of the statute, should be urgently reviewed in the light of this new development. Parliament must debate exactly which jobs constitute "public service", and whether private bankers and others - or even public sector employees - should be subject to the PC Act. If necessary, the Banking Regulation Act should also be amended in the light of this debate. The intent of the legislature should be made clear.
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