Financial crime in India: overview

The main regulatory provisions and legislation governing corporate fraud are the:

In addition, certain other laws deal with corporate fraud depending on the facts and particulars of the case. These include the:

This article focuses on the primary laws governing the particular offences. However, certain additional ancillary laws may also govern those offences.

The term "fraud" is defined in the CA 2013 to include (in relation to the affairs of a company) any act, omission, concealment of any fact or abuse of position committed by any person with connivance, intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, irrespective of the fact that there is any wrongful gain or wrongful loss.

The CA 2013 focusses on the commission of the fraud rather than the resulting loss or damage to the affected parties. The accused's intention or motive to commit such a fraudulent act is a crucial element to the offence of fraud.

The CA 2013 also makes certain actions punishable as fraud (such as providing untrue statements in a company prospectus, accepting a deposit with the intent to defraud depositors, undertaking a business for fraudulent purposes, falsification of documents, removal of the company name to evade liabilities, making false statements in annual returns or financial statements and so on).

Under the IPC, the main offences relating to fraud (which may include corporate fraud) are as follows:

Intention is a crucial element for the commission of fraud under the IPC. Attempts to commit any of the offences above are also punishable, with the resulting sanctions generally being reduced by 50% (see Question 5).

The authorities competent to inspect, inquire, investigate and prosecute/enforce corporate fraud are the:

Depending on the nature of the fraud committed, other agencies may also play a role or attract jurisdiction. Such agencies include the:

The Central Government of India (CGI) has the power to decide or direct the SFIO to initiate the prosecution of any case of corporate fraud. Public prosecutors and company prosecutors are primarily responsible for the prosecution phase. The CBI also prosecutes cases through its division, the Directorate of Prosecution.

Police, CBI, SFIO have the power to examine orally, any person supposed to be acquainted with the facts and circumstances of the case. Furthermore, under the CrPC, the court of competent jurisdiction has the power to examine the complainant, accused or any of the witnesses.

Police, CBI, SFIO have powers to inspect any books, registers and other documents of the company. Where the investigation agencies have reasonable ground to believe that relevant books/papers are likely to be destroyed or falsified, they may enter the relevant place where such books/papers are kept, and search and seize such books and papers, if necessary. Under the CrPC, a search warrant can be issued by a court under the provisions of the CrPC, if the court has reason to believe that a person to whom the court has previously issued the summons, will not produce the document or item required for the summons.

If the police, CBI, or SFIO consider that the production of any document or other item is necessary for the purposes of any investigation, trial or other proceeding, it may require the person (in whose possession such document or item it is believed to be) to produce the same. An investigating officer can also obtain evidence from a foreign territory through a competent court. Additional provisions relating to the extradition of fugitives or the confiscation of their property can be found in the CrPC, the Extradition Act 1962 and the Fugitive Economic Offenders Act 2018.

Under the CrPC, offences are classified in two categories:

For cognizable offences, the police officer is empowered to arrest without warrant and is competent to investigate matters, without any orders from the courts. Non-cognizable offences, however, require a warrant or order from the court in order to arrest or investigate. SFIO & CBI also has powers of arrest in certain circumstances.

Under the CrPC, a competent court can direct a person to abstain from taking certain actions or can make an order regarding property that is in the possession or management of a certain person, where immediate prevention or a speedy remedy is desirable.

Based on the investigation conducted by the investigative agency (such as the SFIO, police, or the CBI) and the evidence obtained during the investigation, the investigating agency will prepare the final report of its investigation. If the investigative agency has reason to believe that a person is involved in an offence, it will submit the final report (that is, a charge-sheet containing its version of events and identifying the offences with which the accused is charged) to the court.

Thereafter, on the basis of the report submitted by the investigating agency, hearing afforded to the accused and the information and evidence available, the court may form the charges for any particular offence with the objective to inform an accused person, as precisely and concisely as possible, of the matter with which he or she is charged.

The CrPC provides for certain alternative methods of disposal (such as pardon or plea bargain). For details of the alternative methods of disposal and the applicable conditions, see Question 37.

Right to bail. No one accused of an offence of corporate fraud under CA 2013 can be released on bail unless the public prosecutor has been given an opportunity to oppose the application for such release; and where the public prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail.

Penalties. The sanctions for offences under the CA 2013 depend on the quantum or amount involved in fraud, for example:

The determining factors for the amount of fine or imprisonment under the CA 2013 largely depend on:

Right to bail. The CrPC categorises offences into bailable offences and non-bailable offences.

For bailable offences, where the accused person is arrested or detained without warrant by a police officer, or appears or is brought before a court, and is prepared to give bail, such person at any time, while in the custody of such officer or at any stage of the proceeding before such court, is entitled to be released on bail.

For non-bailable offences, where the accused is arrested or detained without warrant by a police officer or appears or is brought before a competent court, the grant or refusal to grant bail is at the discretion of the court. However, bail cannot be granted where the accused appears on reasonable grounds to be guilty of an offence punishable with death or with imprisonment of life.

Penalties. The sanctions for fraud offences punishable under the IPC are as follows:

The IPC does not currently have structured sentencing guidelines from the legislature or judiciary. Sanctions are therefore usually determined on a case-to-case basis and at the judge's discretion. Nonetheless, typically, the courts take into account a variety of factors when exercising their discretion in sentencing such as proportionality, deterrence, rehabilitation and so on (Soman v State of Kerala (2013) 11 SCC 382).

For fraud committed under the Contract Act, damages can be claimed by the aggrieved person. Typically, civil suits do not apply to fraud under the CA 2013.

Measures to safeguard the conduct of investigations include:

A person has the right to appeal before the Court of Sessions if he or she has been convicted by a magistrate, metropolitan magistrate or assistant sessions judge or magistrate of first class or second class.

Where a person is convicted by a sessions judge or an additional sessions judge or by any other court in which a sentence of imprisonment for more than seven years has been passed, such a person can appeal before the High Court. Appeals from the Special Courts are also made to the High Court.

Where a person is aggrieved with an order from the High Court, he or she can file for an appeal before the Supreme Court, in certain circumstances.

According to the CrPC, the High Court or any sessions judge has the power to call and examine the record of any proceeding before any inferior court (empowered to try criminal cases) situated within its jurisdiction, for the purpose of satisfying the correctness, legality or propriety of any finding, sentence or final order, and of the regularity of any proceedings of the inferior court.

The main regulatory provisions and legislation governing bribery and corruption is the Prevention of Corruption Act 1988 (PCA). This is the primary law relevant to bribery and corruption offences in India. The PCA is applicable to the whole of India.

Furthermore, the provisions of the IPC and CA 2013 can be interpreted to cover bribery, including bribery committed in the private sector. Therefore, while payments made fraudulently to secure contracts in the private sector are not covered by the PCA, such offences could be prosecuted under the CA 2013 and the IPC.

The IPC further provides for the conduct of public servants and penalises public servants who engage in trading or purchasing/bidding for certain property that they are not permitted to.

Other laws relevant to bribery and corruption include the:

India has ratified the following international conventions on corruption and bribery:

India is also a member of certain critical international forums such as the G20 Anti-corruption Action Group, Financial Action Task Force and is also a party to India-Brazil-South Africa Cooperation Agreement (among others).

Bribery of foreign public officials is not specifically covered under Indian laws. However, many companies in India establish internal policies restricting and penalising employees for conduct that encompasses bribery and corruption. In addition, the provisions relating to fraud (see Questions 1 to 6) and financial record-keeping under the CA 2013 (see Questions 31 to 33) may be attracted if an Indian company (whether owned by residents or foreign entities) attempts to disguise unauthorised favours or gifts provided by employee/officers/directors to any foreign public officials in their books.

Two concepts under the PCA are central to the bribery of domestic public officials. These are:

PCA provides for the following offences:

Indirect bribery is also covered under the PCA. It is therefore immaterial whether the person to whom an undue advantage is given (or promised to be given) is the same person as the person who is to perform (or has performed) the concerned public duty. It is also immaterial whether the undue advantage is given (or promised to be given) by the person directly or through a third party.

There are no specific regulations relating to private/commercial bribery. However, the provisions of the IPC and the CA 2013 can be interpreted to cover scenarios of private/commercial bribery (see Question 7). Companies typically prohibit such bribes through their internal codes of conduct and policies.

The Institute of Company Secretaries of India has formulated the Corporate Anti-bribery Code, which outlines a systematic approach that may be voluntarily adopted by a corporate entity operating in the private sector to establish an anti-bribery mechanism to prevent bribery (domestic and foreign) and facilitation payments.

The PCA provides for exemptions from liability in certain scenarios, for example:

Commercial organisations (including, Indian companies) can claim, in their defence, that they had adequate procedures in place to prevent such acts by any person associated with them, in compliance with the guidelines prescribed by the government.

The management and officials of any commercial organisation may avoid liability for offences committed by such commercial organisations if it is proven that such individuals had no knowledge of the offence or exercised all due diligence to prevent such offences.

Associated persons and agents may be held liable as abettors of an offence under the PCA.

The authorities competent to inspect, inquire, investigate, prosecute/enforce bribery and corruption and enforcement are the:

See Question 3, Prosecution powers.

See Question 3, Powers of interview.

See Question 3, Powers of search/to compel disclosure.

See Question 3, Powers to obtain evidence.

See Question 3, Power of arrest.

See Question 3, Court orders or injunctions.

Charges for bribery and corruption cases are generally brought by the CBI/Anti-Corruption Bureau or the police (see Question 4). However, the PCA provides that courts can take cognisance of certain specified offences committed by a public servant if this is previously sanctioned by a competent government authority (usually, his or her employer). For cases referred to Lokpal, the Lokpal has the power to grant sanction for prosecution.

Right to bail. Offences under PCA are non-bailable offences (State of Maharashtra v Suresh Ganpatrao Kenjale (1995) CriLJ 2487).

Penalties. The sanctions for bribery and corruption offences punishable under the PCA are as follows:

Habitual offenders are sanctioned with five to ten years' imprisonment and a fine.

Attempts at the misappropriation of property by a public servant are also punishable with two to five years' imprisonment and a fine.

With regard to fines, the PCA does not provide the exact amounts or ranges for the offences listed above. However, when fixing the amounts, the court must take into consideration:

In addition to the key safeguards set out in Question 6, safeguarding measures during the conduct of investigations under the PCA are as follows:

The High Court can exercise all powers of appeal and revision conferred by the CrPC on a High Court as if the judge of the Special Court were the judge of Court of Session trying cases within the local limits of the High Court. Appeals can be filed before the Supreme Court against an order from the High Court, in certain circumstances.

Expenses incurred for an offence prohibited by law cannot be considered as business expenses.

The securities market in India is regulated by the SEBI (see also Question 20).

The SEBI regulates insider trading and market abuse through the SEBI Act 1992 (SEBI Act) and regulations framed in accordance with the SEBI Act.

The SEBI (Prohibition of Insider Trading) Regulations 2015 (Insider Trading Regulations) issued under the SEBI Act sets out the legal regime for insider trading.

The PFUTP Regulations contains the provisions prohibiting fraudulent and unfair trade practices in the securities market in India.

The Insider Trading Regulations prohibits:

For the purposes of the Insider trading Regulations, the terms:

The PFUTP Regulations prohibits any person from, directly or indirectly:

Under the PFUTP Regulations, the term "fraud" is defined to include any act, expression, omission or concealment committed whether in a deceitful manner or not by a person or by any other person with his connivance or by his or her agent while dealing in securities in order to induce another person or his/her agent to deal in securities, whether or not there is any wrongful gain or avoidance of any loss.

Similar prohibitions are also contained in the SEBI Act. The SEBI has the power to punish attempts to contravene the SEBI Act or any abetting conducted in contravention of the SEBI Act. Furthermore, breaches of the SEBI Act are civil in nature and therefore the existence of mens rea is not essential (SEBI v Cabot International Capital Corporation (2004) 51 SCL 307 (Bom)).

Defences to insider dealing can include the following:

Furthermore, the prohibitions provided under the Insider Trading Regulations are subject to the exceptions that the UPSI may be communicated or procured for a legitimate purpose.

The Insider Trading Regulation also provides for a safe harbour for UPSI to be shared by a listed company with prospective investors as a diligence exercise, provided certain conditions are complied with (including the requirement for the information to be made publicly available prior to the transaction being in effect).

The authorities competent to investigate, prosecute and enforce offences of insider dealing and market abuse are:

SEBI is authorised to prosecute cases of insider trading and market abuse.

SEBI, or the investigation authority appointed by SEBI, has the power to require any person associated with securities market to appear personally, examine them in relation to the affairs of their business and administer them an oath accordingly. The adjudicating officer appointed by SEBI also has the power to summon and enforce the attendance of any person acquainted with the facts and circumstances of the case to give evidence.

The investigating authority can search a place or seize books, registers, other documents and records if this is necessary for the investigation. However, such powers may be exercised only after an order has been passed by a court in its behalf.

The investigating authority can inspect any book, register, or other document or record of companies connected with securities market if it has reasonable grounds to believe the company has been indulging in violation of SEBI regulations. The adjudicating officer can also require any person to produce any document which may be useful for or relevant to the subject matter of the inquiry.

SEBI has powers to arrest and detain any person who fails to pay any penalties imposed under the SEBI Act, who fails to comply with any direction from SEBI to refund/repay monies or fails to comply with any direction of disgorgement order, or who fails to pay any fees due to be paid to SEBI.

SEBI can pass the following orders (either pending investigation or inquiry or on completion of such investigation or inquiry):

If after conducting its inquiry, the SEBI is of the view that a person has violated or is likely to violate any provisions of the SEBI Act, it may pass an order requiring such person to cease and desist from committing or causing such violation and may file a complaint with the Special Court, which will take cognisance of the offence.

The decision to file a complaint is made on the basis of both facts and circumstances of each case and the evidence presented. The decision to charge must be made in accordance with the provisions of the applicable law pertaining to the subject matter of the case.

For certain offences committed under the SEBI Act, the SEBI Act also provides for the settlement of proceedings.

The sanctions for participating in insider trading and market abuse are as follows:

The SEBI Act also provides for a general provision, in terms of which, a person who contravenes (or attempts to contravene or abets the contravention of) the SEBI Act (or any rules or regulations made thereunder) is punishable with imprisonment for up to ten years, a fine of up to INR250 million, or both.

When deciding the penalty for an offence under the SEBI Act, certain factors are taken into consideration, such as the:

Any person aggrieved by an order passed by the SEBI or an adjudicating officer can make an appeal to the Security Appellant Tribunal, which will take jurisdiction over the matter.

Any person aggrieved by an order from the Special Court can make an appeal to the High Court.

The primary legislation for money laundering is the PMLA. The PMLA was enacted to prevent, control and criminalise money laundering.

In addition, regulators such as the Reserve Bank of India (RBI), the SEBI and the Insurance Regulatory and the Development Authority of India (IRDA) have issued regulations regarding money laundering.

As banking channels can be used for money laundering activities, the Indian Banks Association has taken a lead role in evolving a self-regulatory code to combat money laundering activities in the banking industry. Standards set by international financial institutions and other such bodies are generally accepted as good principles, practices and guidelines for the relevant areas.

In addition, the Black Money Act, while primarily being a statute to tax undisclosed foreign assets of Indian taxpayers, also allows the CGI to investigate, seek details and carry out discovery on undisclosed bank accounts and assets.

The Unlawful Activities (Prevention) Act, 1967 (UAPA) deals with combating terrorism in all its facets, which includes terrorist financing.

Furthermore, the National Investigation Agency Act 2008 (NIA Act) deals with investigations and prosecutions of offences under the UAPA and certain other scheduled offences.

India does not have an autonomous sanctions authority or consolidated list of financial/trade sanctions. In India, these are implemented by the government through specific notification. Financial/trade sanctions can be imposed by the:

Sanctions can be issued against specific individuals, organisations as well as countries (including specific notifications in times of war or conflict).

Under the PMLA, activities that constitute the offence of money laundering are:

The activities listed can include the concealment, possession, acquisition or use of proceeds of crime or projecting or claiming that such proceeds are not laundered/untainted.

Under the PMLA "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence (under the PMLA) or the value of any such property.

Proceeds of crime includes both the property specifically derived or obtained from the scheduled offence and any property directly or indirectly derived or obtained as a result of the criminal activity related to the scheduled offence.

Under the PMLA, the term "knowingly" implies the requirement for mens rea on the part of the person concerned (A K Mukherjee v State (1994 (Cri L J) 2469)).

Furthermore, any person/entity attempting to indulge in any process or activity connected with the proceeds of crime becomes guilty of the offence of money laundering.

The UAPA criminalises directly or indirectly raising, collecting or providing funds in India or in a foreign country or attempting to provide funds knowing that such funds are likely to be used to commit a terrorist act, irrespective of whether such funds were actually used for the commission of such act.

Furthermore, the UAPA also directly criminalises the raising of funds for "terrorist organisations" to further the activities of such organisations.

The SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) list issued by DGFT under the FTDRA, governs the export of dual-use items from India with a view to ensure that sensitive items do not fall into the hands of non-state actors.

If a person exports any item listed under the SCOMET without authorisation, they will be liable to punishment in accordance with the provisions of the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act 2005 (WMDA).

Furthermore, if a person imports or exports any goods in contravention of the FTDRA or the FTP, they will be liable to a penalty of not less than INR10,000 and not more than five times the value of goods, services or technology in respect of which the goods, services or technology in respect of which the contravention is made.

It may be a defence under the PMLA where contravention takes place without knowledge or where due diligence is exercised to prevent contravention.

It may be a defence under the UAPA where contravention takes place without knowledge or where reasonable care is exercised to prevent the commission of the offence.

The UAPA also provides protection for actions taken in good faith by the government or the armed forces as part of any operation directed towards combating terrorism.

The authorities competent to investigate, prosecute and enforce money laundering offences are the:

Depending on the facts, other agencies, such as India's Financial Intelligence Unit, Income Tax Department or RBI may also play roles/attract jurisdiction in relation to money laundering offences.

ED is responsible for prosecution of offences under the PMLA.

ED may examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under the PMLA.

The Adjudicating Authority also has powers of enforcing the attendance of any person, including any officer of a banking company or a financial institution or a company, and examining him on oath.

ED may enter and search any place where it has reason to suspect that records or proceeds of crime are kept and can force entry to doors, lockers and so on for the purpose seizing any records or property. Such measures can be taken when ED has reason to believe, on the basis of information in its possession, that any person:

ED or any other person authorised by the CGI has powers to collect evidence for the purpose of any investigation conducted under the PMLA. Furthermore, upon receipt of an application from the investigation officer, the Special Court is empowered to issue a letter of request to a court or authority in the contracting state for the purposes of obtaining evidence. The Adjudicating Authority also has powers of discovery and inspection and compelling the production of records.

ED or any other officer authorised by the CGI may arrest any person if they have reason to believe, on the basis of material in their possession, that such person has been guilty of an offence punishable under the PMLA.

ED also has powers of provisional attachment (for a period of up to 180 days under certain circumstances). These orders must be confirmed by the Adjudicating Authority.

See Question 30.

Once the ED's investigation is complete, it will file a prosecution complaint before the Special Court. On receiving the complaint, the Special Court may take cognisance of an offence, without the accused being committed to it for trial.

Right to bail. The offence of money laundering is a non-bailable offence, which means bail cannot be provided to the person arrested as a matter of right and any bail will be at the discretion of the court.

Penalties. Offences under the PMLA are punishable with imprisonment of three to seven years and a fine, except for offences relating to the Narcotic Drugs and Psychotropic Substances Act 1985, where imprisonment can be extended for up to ten years.

Right to bail. No person can be released on bail unless the public prosecutor has been given an opportunity of being heard on the application for such release. In addition, no bail will be granted if:

Penalties. The sanctions relating to terrorist financing are as follows:

Right to bail. No person can be released on bail unless the public prosecutor has been given an opportunity to oppose the application for such release.

Penalties. Under the FTDRA, if a person exports any item in the SCOMET list without authorisation, such person will be punished in accordance with the provisions of the WMDA. The penalties under the WMDA depend on the nature of the offence committed.

The FTDRA has not prescribed a limit for the penalty pertaining to the export of SCOMET items. If there are any imports/exports or any abetment or attempts to make any export/import which are in contravention of the FTDRA or the FTP, then the person in such contravention will be liable for a penalty of not less than INR10,000 and not more than five times the value of goods, services or technology in respect of which such contravention is made. There may also be a penalty under the Customs Act 1962, which includes imprisonment.

The PMLA provides for certain strict safeguards for the attachment of property.

Appeals/revision against decisions passed by the Special Court are heard by the jurisdictional High Court. Further appeals are heard by the Supreme Court, in certain cases.

An appeal from final judgment of the Special Court (formed under the NIA Act) can be heard by the High Court. Those aggrieved by the decision of High Court can seek appeal to the Supreme Court, in certain circumstances.

Any person aggrieved by order of the Directorate General of Foreign Trade (DGFT), may file an appeal with the MoC. A trading licence cannot be suspended under the FTDRA without first giving the holder an opportunity to be heard.

For the general safeguards, see Question 6.

Under the CA 2013, Indian companies must prepare and keep at their registered offices in good order:

In addition, companies must adhere to the applicable accounting and company secretarial standards when preparing/retaining books and records.

Furthermore, under the CA 2013, statutory auditors have a legal obligation to report any potential offences of fraud that they suspect during the performance of professional duties for a company either to the CGI or to the company's board of directors/audit committee, depending on the amount involved. The MCA recently issued the Companies (Auditor's Report) Order 2020 (CARO 2020), which further emphasises disclosure relating to fraud, whistleblower complaints and so on under the auditor's report.

Reporting entities under the PMLA (which includes, for example banking companies, financial institutions and intermediaries) must maintain exhaustive records of (among other things) transactions, client information, beneficial owners of specific documents involving transactions that exceed certain monetary thresholds, suspicious transactions, and the identities of clients.

In addition, various other statutes, such as the Foreign Contribution (Regulation) Act 2010, taxation laws, and applicable regulations notified by regulators such as the SEBI or RBI also contain provisions in relation to the maintenance of books and records for a definite period which are applicable to the different types of organisations governed by them, respectively, and their related disclosure requirements in certain specified events.

Company records must be maintained for eight years (see Question 31). Any contravention of this provision will be sanctioned with a fine ranging between INR50,000 and INR500,000 or both.

Furthermore, if a person makes a false statement or omits any material fact (knowing it to be material) in relation to company or financial records (such as in relation to a return, report, financial statement, prospectus and so on), he or she will be liable for corporate fraud (see Question 2).

The financial record keeping rules can be used to prosecute white-collar crimes. Violations of these rules may be used as evidence and trigger the prosecution of other crimes, such as bribery and/or tax evasion.

Furthermore, the CA 2013 empowers the Registrar of Companies to call on the company to produce books and documents for his or her inspection, if he/she is of the opinion that the information or books and papers disclosed by the company do not represent a full and fair statement, and if satisfied that there is a case, may undertake an inquiry into the affairs of the company.

In addition, if satisfied that the circumstances warrant it, the CGI may order for the inspection of books and papers by an inspector appointed by it.

Every reporting entity under the PMLA (see Question 31) must undertake client due diligence when commencing either:

In addition, current trends indicate that companies are placing increased emphasis on due diligence of external parties in relation to corruption and money laundering. Companies may hire experts in white collar crimes to undertake such due diligence on potential joint venture partners, vendors, or consultants before progressing with any contractual commitments. However, the level of due diligence required to be undertaken by each company depends largely on a number of factors (such as the industry sector in which the company/external party operates, the level of interaction with government authorities and so on).

Mens rea may be attributable to corporations on the basis of the state of mind of its directors, managers or other persons in control.

With regards to sanctions, while corporations cannot face custodial sentences, they can be fined adequately and convicted for a criminal offence. The PCA has now explicitly recognised this concept and set out provisions where a commercial organisation can be held liable under the PCA (see Question 9).

The primary legislation governing cartels is the Competition Act 2002 (Competition Act).

The Competition Commission of India (CCI) constituted under the Competition Act is the agency for inquiry, investigation and enforcement of cartel prohibitions.

Cartel behaviour is defined in the Competition Act to mean and include an association of producers, sellers, distributors, traders or service providers who, by agreement among themselves, limit, control, or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services.

The Competition Act prohibits an enterprise, person or association of such enterprise/person from entering into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. Any agreement/arrangement entered into in contravention of this provision is void.

Agreements or arrangements entered into between or among enterprises, persons, or associations of such persons/enterprises, including cartels, which are engaged in the trade of identical or similar goods or provision of services, will be presumed to have an appreciable adverse effect on competition when they:

However, joint ventures which serve to increase efficiency are excluded from the scope of this provision.

Indian courts can tender a pardon to any person at any stage of the investigation or inquiry or trial of the offence (but before judgment is passed), with a view to obtaining evidence from such person privy to an offence, when he or she agrees to make a full and true disclosure of all circumstances relating to the offence and to every other person concerned (principal or abettor).

Under the CrPC, pardons can be granted where:

Plea bargaining relates to pre-trial negotiations between the parties during which the accused agrees to plead guilty in exchange for certain concessions by the prosecutor.

However, plea bargaining as a leniency tool is only available for offences where the punishment is not death, life imprisonment or imprisonment for a term exceeding seven years. Plea bargains are not applicable in the following cases:

(State of Gujarat v Natwar Harchandji Thakor, 2005 CriLJ 2957.)

The judgment delivered by the court in cases of plea bargaining is final and no appeal can be made (except where there is a special leave petition and a writ petition).

The compounding process results in the private disposal (settlement between complainant/accused) of pending criminal complaint. It has the effect of acquittal of the accused. Statutes specify which offences which are compoundable, which can be compounded with permission of the competent court. Any other offence is a non-compoundable offence and cannot be settled privately between the parties.

See Question 3, Powers to obtain evidence.

See Question 3, Powers to obtain evidence.

India has entered into mutual legal assistance treaties/agreements on criminal matters with 39 countries with respect to service of summons/warrants/judicial processes.

For countries with which no such treaties/agreements have been entered into by India, a request can be made on the basis of an assurance of reciprocity. However, such countries do not have any obligation to consider these requests.

Furthermore, India is one of the oldest and most active members of INTERPOL. India has entered into various double taxation avoidance agreements with the countries across the world.

The IPC provides for extra-territorial jurisdiction to a court handling criminal matters in certain circumstances. Any person who is liable by any Indian law to be tried for an offence committed outside India is punishable under the IPC for any act committed beyond India in the same manner as if such act had been committed within India.

At present, India does not have any specific blocking statutes.

The Whistle Blowers Protection Act 2014 aims to protect anyone who exposes alleged wrongdoing in government bodies, projects and offices or assists in a consequent investigation. The identity of the complainant is mandatorily protected under the statute and any disclosure to the contrary is punishable with imprisonment as well as a fine. However, although this Act has been passed by Parliament, it is yet to be put into effect.

The Whistle Blowers Protection Act 2014 legislation does not cover the private sector. However, the CA 2013 and the SEBI LODR Regulations require certain private sector companies to also establish vigil (whistleblower) mechanisms for directors and employees to report genuine concerns. These vigil mechanisms must also provide for adequate safeguards against victimisation to those using the mechanism.

The Ministry of Home Affairs and the Bureau of Police Research and Development are consulting on amendment to India's criminal laws. Amendments being considered include proper classifications of blue collar, white-collar and black-collar crimes to better equip the police when dealing with the complex dynamics of internal security systems and protocols.

Furthermore, the competent authorities are considering introducing substantial amendments to the Competition Act, including a new regime relating to cartels. The Competition (Amendment) Bill 2020 (CA Bill) was published in February 2020 for inviting comments from stakeholders. Under the CA Bill, the proposed definition of cartels will be widened to explicitly cover buyer cartels. Furthermore, the CA Bill incorporates a provision which presumes that companies facilitating or otherwise furthering another cartel to be a part of an anti-competitive agreement. The CA Bill further intends to empower competent authorities to grant additional leniency to enterprises.

To manage their exposure to corruption and/or corporate crime, it is advised that companies: