Sterling Biotech, an Indian pharmaceutical company, was recently subject to multiple allegations of loan fraud, ultimately culminating in the Central Bureau of Investigation (CBI) registering an FIR based on complaints filed by a consortium of banks led by Andhra Bank. The Supreme Court, however, in a recent order, decided to quash any and all criminal prosecutions, including for money laundering, corruption, black money, etc lodged against Sterling Biotech’s promoters – the Sandesara brothers.
The quashing order was subject to a deposit of ₹5,100 crore. While this order contained no direct reference to plea bargaining, this amount was reached through negotiations taking place between the banks and the accused. However, despite this judgment, there is a general apprehension about allowing plea negotiations to take place in matters dealing with serious economic offences. In fact, this stance is even reflected in the Sandesara matter, as the Supreme Court recorded that the order passed shall not be treated as a precedent.
Apprehensions surrounding the incorporation of plea bargaining within our criminal justice system has been recorded in several Supreme Court judgments and in a recently published report on the Department of Justice’s website. In addition to highlighting how its specific provisions are utilised in practice, the report also points out that the source of this general apprehension stems from a continuing fear that liberal approaches towards criminal justice may dilute the sanctity of sanctions and will lead to situations where victims are not truly compensated for the harm done.
In the context of economic offences and large-scale financial fraud, this view is especially true and a recent judgment of the Supreme Court in the Sarvodaya Highways reflects it. While dealing with a quashing petition filed under Section 482 of the erstwhile Criminal Procedure Code, 1973 (CrPC), the Court was of the opinion that settlements in criminal proceedings involving serious economic offences cannot be quashed as it is not merely the bank that stands defrauded, but society at large.
Chapter XXIII of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) deals with plea bargaining in its entirety. From Section 289, it is evident that the main condition of applicability depends on whether the accused has allegedly committed an offence punishable with up to seven years of imprisonment. However, it excludes offences affecting the socio-economic condition of the country. It is relevant to note that such offences are not judicially determined, but are subject to a government notification, as provided for in sub-section (2) thereof.
Under Section 290 of the BNSS, an application for plea bargaining must be filed within 30 days from the framing of charges. After the application is made, the parties involved come together to work out a “mutually satisfactory disposition” under Section 291. This process primarily involves the accused and the victims. It will be relevant to note that this disposition does not take away the court’s power to award a sentence. This is similar to the procedure laid down in the United States of America, as sentencing ultimately depends on the judge. Under Section 293 of the BNSS, the relevant court retains absolute discretion in awarding a suitable sentence. This provision merely provides for how the court “may” act in accordance with the guidelines laid down. For example, under clause (c), if the punishment has a minimum sentence prescribed, the court “may” sentence the accused to half of the minimum.
Due to the BNSS’s applicability to other criminal statutes, its plea bargaining provisions would apply to special statutes such as the Prevention of Money Laundering Act, 2002 (PMLA), as money laundering is punishable with imprisonment for up to seven years. While the PMLA contains an overriding provision, Section 65 of the same expressly provides for the BNSS’ applicability in the absence of a direct provision-to-provision inconsistency. Section 47 of the PMLA extends the BNSS’ applicability to proceedings before special courts. Accordingly, where a special statute does not expressly bar plea bargaining and no government notification has been issued under Section 289, Chapter XXIII of the BNSS would continue to apply.
In the USA, more than 94% of prosecuted state criminal cases and 97% of federal criminal cases end in plea bargains. While plea bargaining in the USA may be subject to its own criticisms, this article restricts itself to the point that there are no bars to entering into plea deals for federal offences, even embezzlement or other financial crimes. Contrasted with the USA, the BNSS not only incorporates a ceiling restriction, but also lacks a framework allowing for different plea arrangements to be entered into. Special statutes like the PMLA or other similar legislation penalising only one crime or a set few (like the Black Money Act, 2015) make it easier for plea bargaining to be implemented, as very rarely do charges involving multiple crimes get clubbed during their respective proceedings. The issue arises when charges are framed under legislation such as the Bharatiya Sakshya Adhiniyam, 2023 (BSA), or other laws involving the commission of multiple offences that are commonly clubbed together.
Since there is no concept of charge-bargaining under the BNSS, if allegations were to cover multiple charges and even one of them exceeded the seven-year threshold, then the accused would not be permitted to enter into an agreement agreeing upon the applicability of a lesser charge instead of the more serious one. As seen from the earlier discussion on the BNSS’ framework, negotiations can only take place between the parties to decide upon compensation and sentencing (subject to the court’s discretion).
Moreover, if even one of the charges exceeded the seven-year ceiling, then plea bargaining would be ruled out altogether. Accused in such instances would have no choice but to opt for a quashing petition. This is evident in cases such as Sarvodaya, wherein charges were filed under various provisions of the Indian Penal Code, 1860 (IPC), including Section 467 (forgery of valuable security), which is punishable with imprisonment for life or for a term of 10 years. Section 467 of the IPC is a very common charge levied in large-scale economic offences and was even one of the charges listed in the CBI FIR filed in the Sandesara matter.
Along with the lack of a charge bargaining provision, the BNSS also lacks provisions for other common plea arrangements, such as the plea of nolo contendere. Rule 11 of the Federal Rules of Criminal Procedure in the USA describes this plea as one that allows a defendant to enter into a no-contest sentencing. The primary benefit of entering into such a plea is that it does not constitute a formal admission of guilt and the accused is shielded from other civil remedies wherein a guilty plea would have otherwise opened the door to damages arising out of a guilty verdict.
The BNSS does not contemplate a nolo contendere arrangement; participating in a plea bargain would result in the accused pleading guilty to the alleged crime and receiving a sentence accordingly. In fact, the report also raised this as a point of concern, stating that if an accused can afford bail and better legal representation, they would likely reject plea bargaining as an option and prefer concluding the trial by obtaining an order of acquittal rather than settling by pleading guilty. Entities or individuals engaging in large-scale financial fraud would be able to afford the best legal protection. Thus, there is no incentive for them to settle via plea bargaining in such instances.
A nolo contendere provision is not foreign to Indian laws; its presence is established in the Securities and Exchange Board of India (SEBI) consent settlement mechanism. In matters pertaining to the violation of securities laws, accused have the option to settle by either admitting guilt or without admitting or denying guilt. A noteworthy example of its application is in the instance of SEBI’s probe into Rakesh Jhunjhunwala’s alleged insider trading, which was settled without the admission or denial of guilt.
Plea bargaining in India also suffers from the inexperience of lawyers and general confusion with regard to its applicability. In the report on plea bargaining referred to above, it was noted that parties undertook plea bargaining even in offences against women – something which the BNSS and the erstwhile CrPC expressly barred.
The Sandesara matter, though unique, still reflects the general apprehension courts have towards settlements in instances involving serious economic offences. But it is not the fact of settlement which the courts are most concerned with; it is the very idea of quashing criminal proceedings in lieu of such settlements. Sarvodaya and other judgments, including a recent one from the Bombay High Court dismissing a quashing petition after a SEBI consent settlement, all point to how quashing petitions cannot be entertained, as such crimes are often done against the public and have wide ramifications.
A strong plea bargaining framework would be beneficial as it would cure the general apprehension of courts towards quashing such offences. Sentencing powers would still remain with the courts and no agreement could take this away. Therefore, if the plea bargaining framework is strengthened to not only include a broad range of offences and arrangements such as charge bargains and nolo contendere pleas, but also a consolidated plea for multiple offences, this would result in meaningfully encouraging settlements without sacrificing public deterrence.
A comparison between the plea bargaining provisions in the CrPC and the BNSS would show changes made with respect to punishments and time periods within which applications are to be filed, showing that the government is trying to make these provisions workable. However, the incorporation of the proposed changes would significantly address the serious issue of long-pending criminal trials in appropriate cases. A properly designed plea bargain not only ensures financial restitution, but also the continued effect of criminal sanction. As it stands, litigants are forced to pursue actions such as quashing petitions, which courts are less likely to entertain, given the current sentiment against economic offenders.
Vyapak Desai is an independent counsel and Ruben Zachariah is an intern at Vyapak Desai Law Chambers.