Environmental, Social and Governance (ESG) - Principles and Practice · Business Ethics, Code of Conduct and Anti-Bribery

Section 9 Prevention of Corruption Act: Bribery by Commercial Organisations

Updated 11 October 2026 · Fact-checked

Section 9 makes a commercial organisation punishable with fine if a person associated with it gives or promises an undue advantage to a public servant to obtain or retain business or an advantage in its conduct. The organisation's defence is proving it had adequate procedures, as prescribed in guidelines, to prevent such conduct.

Understand Section 9: Bribing a Public Servant by a Commercial Organisation

Before 2018, only individuals were targeted for bribery. The Prevention of Corruption (Amendment) Act, 2018 inserted a new section 9 (w.e.f. 26-7-2018) to hold the company itself liable when bribes are paid on its behalf. This matters because most bribes are paid by agents, consultants or employees, not by the board directly.

The offence has a simple chain. A person associated with the organisation gives or promises an undue advantage to a public servant. The intention must be to obtain or retain business for the organisation, or to obtain or retain an advantage in the conduct of its business. If this is met, the organisation is punishable with fine.

Section 9 depends on section 8. The person is treated as having given the advantage if he is alleged to have committed the offence under section 8, whether or not he has been prosecuted. So the organisation can be proceeded against even if the individual briber is never tried.

Commercial organisation is defined widely. It covers a body incorporated in India carrying on business in India or outside; a body incorporated outside India carrying on business or part of it in India; a partnership firm or association of persons formed in India carrying on business anywhere; and a similar foreign-formed partnership or association carrying on business or part of it in India. Business includes a trade, a profession or providing service.

A person is associated if he performs services for or on behalf of the organisation. His capacity does not matter. He may be an employee, agent or subsidiary. This is decided on all relevant circumstances, not just the label of the relationship. If he is an employee, it is presumed he performed services for the organisation unless the contrary is proved.

Section 10 then reaches the people in charge. If a section 9 offence is proved in court to have been committed with the consent or connivance of a director, manager, secretary or other officer, that person is guilty. Punishment is imprisonment of not less than three years, extendable to seven years, and fine. For a firm, a director means a partner.

Key rules to remember

Section 9(1) offence: Associated person + gives/promises undue advantage + to a public servant + intent to obtain/retain business or advantage in its conduct → organisation punishable with fine; The punishment on the organisation is fine only. No imprisonment for the organisation under section 9.
Defence (proviso to section 9(1)): Organisation proves adequate procedures, in compliance with prescribed guidelines, to prevent associated persons from such conduct; The burden of proving the defence is on the organisation.
Link to section 8 (section 9(2)): Person alleged to have committed section 8 offence = person who gave/promised undue advantage, prosecuted or not; Prosecution of the individual is not a precondition.
Associated person (section 9(3)(c)): Performs services for or on behalf of the organisation; capacity irrelevant (employee, agent, subsidiary); Employee is presumed to be associated unless the contrary is proved.
Person in charge (section 10): Section 9 offence + consent or connivance of director/manager/secretary/other officer → imprisonment 3 to 7 years + fine; Offence must be proved in court. Minimum is three years.
Cognizability (section 9(4)): Offences under sections 7A, 8 and 9 are cognizable; Applies notwithstanding the Code of Criminal Procedure, 1973.
Guidelines (section 9(5)): Central Government prescribes guidelines after consulting stakeholders; These guidelines define what counts as adequate procedures.

How to solve Section 9: Bribing a Public Servant by a Commercial Organisation questions

Use this sequence for any case-based question on section 9. Apply it to the facts given and end with a clear conclusion.

1Identify the entity and test whether it is a commercial organisation under section 9(3)(a): Indian or foreign, company, firm or association, and whether it carries on business.
2Identify who paid or promised the advantage and test whether that person is associated under section 9(3)(c): services for or on behalf, whatever the capacity.
3Check that there was an undue advantage given or promised to a public servant, directly or through a third party.
4Test the intention: to obtain or retain business, or an advantage in the conduct of business, for the organisation.
5Link to section 8: the person is alleged to have committed that offence. Note that prosecution of the person is not required. Check whether the compulsion exception in section 8 applies.
6Examine the defence: did the organisation have adequate procedures per the prescribed guidelines, and can it prove them?
7Apply section 10: was there consent or connivance of a director, manager, secretary or other officer, proved in court?
8Conclude with the liability of the organisation (fine), the individual officers (3 to 7 years and fine) and compliance recommendations.

Quickest way: Five-check shortcut

When to use it: Use it when time is short and the facts are long. Write one line for each check.

Organisation: is it a commercial organisation?
Associate: did someone performing services for it pay or promise?
Intent: was it for business or advantage in business?
Defence: any adequate procedures proved?
Officers: consent or connivance under section 10?
Close with: organisation liable to fine unless defence proved; officers liable to 3 to 7 years and fine.

Common mistakes in Section 9: Bribing a Public Servant by a Commercial Organisation

Saying the organisation can be sentenced to imprisonment under section 9.
Students mix section 9 with sections 7, 8 and 10, which carry imprisonment.
Fix: Remember: section 9 punishes the organisation with fine only. Imprisonment applies to individuals, including officers under section 10.
Limiting associated persons to employees.
Everyday thinking links company liability to staff.
Fix: Quote section 9(3)(c) and the explanations: employees, agents and subsidiaries all qualify, based on all relevant circumstances.
Saying the organisation is liable only after the individual briber is convicted.
Students assume company liability is derivative of a conviction.
Fix: Section 9(2) says alleged commission of the section 8 offence is enough, whether or not prosecuted.
Treating the adequate procedures defence as automatic because a code of conduct exists.
Students equate having a policy with having adequate procedures.
Fix: The organisation must prove procedures that comply with the prescribed guidelines and are meant to prevent associated persons from such conduct.
Applying section 10 to any director automatically.
Students read it as vicarious liability of all directors.
Fix: Section 10 needs consent or connivance of the officer, proved in court. Mere position is not enough.
Ignoring foreign bodies.
Students assume the Act covers only Indian companies.
Fix: A body incorporated outside India carrying on business or part of it in India is also a commercial organisation.

Worked examples

Example 1

Surya Infra Ltd, an Indian company, hires a consultant, Mr Rao, to secure a municipal road contract. Mr Rao pays ₹5,00,000 to a municipal officer to ensure Surya Infra is chosen over other bidders. The company had no anti-bribery policy. The managing director knew of the payment and approved the consultant's fee knowing its purpose. Discuss the liability.

Show the solution

Surya Infra Ltd is a body incorporated in India carrying on business, so it is a commercial organisation under section 9(3)(a)(i).
Mr Rao performs services for and on behalf of the company. His capacity as a consultant or agent does not matter, so he is an associated person.
He gave an undue advantage to a public servant to obtain business for the company. This is the section 8 conduct, and under section 9(2) it suffices that he is alleged to have committed it, whether or not prosecuted.
The company has no policy, so it cannot prove adequate procedures in compliance with the prescribed guidelines. The defence fails.
The managing director knew and approved the fee, which indicates consent or connivance. If proved in court, section 10 applies to him.
Conclusion: the company is punishable with fine under section 9. The managing director is liable to imprisonment of not less than three years, extendable to seven years, and fine. Mr Rao is liable under section 8.

Answer: Surya Infra Ltd is punishable with fine under section 9. The managing director is liable under section 10 to imprisonment of 3 to 7 years and fine if consent or connivance is proved in court.

Example 2

Greenline LLP, a partnership firm formed in India, has a sales executive who offers ₹40,000 to a public servant to get a tender specification altered in the firm's favour. The firm has a documented anti-bribery programme aligned to the prescribed guidelines, with training, due diligence and a reporting channel, all followed. The executive acted against instructions. Can the firm be punished?

Show the solution

Greenline LLP is a partnership firm formed in India carrying on business, so it is a commercial organisation under section 9(3)(a)(iii).
The sales executive is an employee. Under Explanation 3, he is presumed to perform services for the firm, so he is an associated person.
He promised an undue advantage to a public servant to obtain an advantage in the conduct of the firm's business. The elements of section 9(1) are present on their face.
The proviso gives the firm a defence if it proves adequate procedures in compliance with the prescribed guidelines to prevent such conduct.
The firm has a documented programme with training, due diligence and reporting, and it was followed. If the firm proves this, it is not punishable.
The executive remains personally liable under section 8. Section 10 does not apply to partners unless they consented or connived.

Answer: The firm can avoid punishment under section 9 if it proves its adequate procedures. The executive remains personally liable under section 8.

Exam tips

Answer in the order of provision, facts, conclusion. Name the section number for each element you apply.
Write the definition of commercial organisation with all four limbs when asked. Cover foreign bodies and partnerships.
Always discuss the adequate procedures defence. Say who bears the burden, namely the organisation.
Keep the punishments straight: fine for the organisation under section 9; 3 to 7 years and fine for officers under section 10. Section 8 allows up to seven years or fine or both.
Add a practical close: anti-bribery policy, third-party due diligence, training, gift register and reporting channel.

Practice questions from Business Ethics, Code of Conduct and Anti-Bribery

Section 9: Bribing a Public Servant by a Commercial Organisation: frequently asked questions

What is a commercial organisation under section 9?

It includes a body incorporated in India carrying on business anywhere, and a body incorporated outside India carrying on business or part of it in India. It also includes partnership firms and associations of persons formed in India or outside, on the same business tests. Business includes a trade, profession or providing service.

Who is a person associated with a commercial organisation?

Anyone who performs services for or on behalf of the organisation. It does not matter whether he is an employee, agent or subsidiary. An employee is presumed to be associated unless the contrary is proved.

What is the defence available to the organisation?

The organisation must prove that it had in place adequate procedures, in compliance with the prescribed guidelines, to prevent associated persons from giving or promising undue advantages. Having a policy on paper is not enough. It has to be proved.

What is the punishment under section 9 and section 10?

Under section 9, the organisation is punishable with fine. Under section 10, a director, manager, secretary or other officer who consented or connived, as proved in court, faces imprisonment of not less than three years, extendable to seven years, and fine.

Is the section 9 offence cognizable?

Yes. Section 9(4) states that offences under sections 7A, 8 and 9 are cognizable, despite anything in the Code of Criminal Procedure, 1973.