Public Servant Purchasing Shares As ‘Benami’ Does Not Come Within Purview Of S.17A Prevention Of Corruption Act: Kerala High Court

The Kerala High Court recently ruled that a public servant buying shares through a benami arrangement—i.e. in someone else's name —does not fall under Section 17A of the Prevention of Corruption Act, 2018. Section 17A mandates prior sanction/approval from a government authority before initiating inquiries/proceedings against public servants for offences under the Act, so long as those offences are committed in the discharge of their official duties. In this case, the complaint was about the alleged transfer of ~1,20,000 ESOP (Employee Stock Ownership Plan) shares of Cochin International Airport Ltd (CIAL) to a non-employee in 2004 by its then Managing Director. The Court held that purchasing shares—even if benami—is not covered by Section 17A, since such purchase does not directly relate to the public servant’s official function (i.e. discharge of duty). The Court also referred to precedents, such as State of Rajasthan v. Tejmal Choudhary and others, to hold that Section 17A is not retrospective, and that the sanction requirement should only apply to acts clearly covered under the PC Act as official functions. The plea also considered whether the provision applies to earlier years; the Court observed that the prior approval for the case was being sought by the prosecution.