The Expanding Shadow Of The PC Act: Why Private Sector Executives Face Heightened Anti-bribery Risks In India

For decades, private sector executives operated under a simple premise that criminal liability under the Prevention of Corruption Act, 1988 (“PC Act”) applied primarily to government officials, civil servants, and public sector employees. Corporate officers assumed that their legal liabilities were strictly confined to corporate law, tax compliance, and regulatory enforcement. 

The Delhi High Court's judgment in Chitra Ramkrishna v. Union of India & Anr. (W.P.(CRL) 3343/2023, decided July 9, 2026) challenges this traditional view. By upholding the application of the PC Act to senior executives of a private corporate entity performing statutory functions, the court established a vital legal boundary: statutory anti-corruption laws evaluate the nature of the duty performed, not the employer's corporate structure.

From "Entity" to "Function" 

The former Managing Director and CEO of the National Stock Exchange (“NSE”) contested the constitutional validity of Sections 2(b) and 2(c)(viii) of the PC Act before the Delhi High Court. The petitioner argued that these provisions which define "public duty" and “public servant” were unconstitutional and vague when applied to officers of private institutions. The defence emphasised that NSE is a corporate entity rather than a state organ, making its employees private professionals.

A pision Bench comprising Justice Navin Chawla and Justice Ravinder Dudeja rejected these arguments. The court held that Section 2(c)(viii) applies to anyone who holds an office authorized or required to perform a "public duty". Section 2(b) defines public duty as any duty where the State, the public, or the community at large has an interest.

The High Court observed that recognized stock exchanges perform critical regulatory and economic functions that directly affect market integrity and investor protection. Consequently, these institutions cannot be treated as standard commercial enterprises. Because an organization operates through its key management, executives heading such bodies cannot separate themselves from the public functions performed by the institution.

Impact on Regulated Private Sectors 

This ruling expands the scope of criminal accountability for the broader private sector. The framework affirmed by the court clarifies that an inpidual does not need to draw a government salary or hold a formal civil post to be prosecuted as a "public servant". When a private entity operates within a regulated sector and carries out duties that impact the public interest, its key decision-makers face exposure under anti-corruption statutes. This functional test directly affects several private sector categories:

• Market Infrastructure Entities: Stock exchanges, clearing corporations, and depositories.

• Banking & Financial Institutions: Private sector banks, credit rating agencies, asset management companies, and payment gateways.

• Infrastructure & Utilities: Power distribution companies, telecom operators, and private concessionaires operating under public-private partnerships (PPP).

• Certifying & Administrative Bodies: Private entities authorized to issue statutory certifications or manage public data infrastructure.

In these sectors, internal corporate breaches such as preferential system access, improper executive appointments, or undisclosed conflicts of interest can be prosecuted as criminal abuse of position under the PC Act.

Practical Compliance Safeguards 

The judgment demonstrates that traditional Anti-Bribery and Anti-Corruption (ABAC) policies require immediate updating. Many corporate compliance frameworks focus exclusively on preventing direct cash bribes, physical kickbacks, or political payments. To address the liabilities highlighted in Chitra Ramkrishna, private companies and their boards must update their internal controls across key operational areas:

• Role Mapping: Organizations must audit internal positions that handle regulatory duties, manage public resources, or control infrastructure feeds to evaluate specific PC Act exposure.

• Equitable System Access: Misuse of proprietary server architecture or asymmetric data feeds can lead to criminal allegations. Companies need automated access logs and independent IT audits.

• Governance in Hiring: Non-standard executive appointments, discretionary compensation hikes, or fast-tracked roles must undergo strict oversight by Nomination and Remuneration Committees (NRC) to prevent claims of unauthorized favor.

• Board Sanction Frameworks: Corporate boards must institute legal protocols for handling law enforcement requests for prosecution sanctions under Section 19 of the PC Act.

Conclusion 

The ruling by the Delhi High Court reinforces a clear principle in Indian anti-bribery law: function takes precedence over corporate form. While the PC Act does not extend to the private sector as a whole, it can apply to inpiduals in private entities who perform duties of a public nature or discharge functions in which the State, the public, or the community has a significant interest. As private enterprises manage vital financial markets, public data, and economic infrastructure, the line between private management and public duty continues to blur. Private sector executives who exercise duties tied to the public interest must recognise that they operate under the scope of the PC Act, requiring risk management strategies that reflect this reality.