Even as the Opposition alleged that the government was trying to appease corporates by proposing to reduce the penalty for defaulters, the Centre on Tuesday introduced a Bill to amend the Companies Act 2013 and decriminalise various offences under it was introduced in Lok Sabha.
Rejecting the opposition charges, Minister of State for Finance Anurag Thakur — while introducing the Companies (Amendment) Bill, 2020 — said the government was not looking to decriminalise non-compoundable offences. “This Bill seeks to decriminalise minor procedural and technical defaults which do not involve fraud or injury to the public interest. It is going to reduce the burden on the NCLT (National Company Law Tribunal) for compounding of offences and the criminal court where the prosecutions are today filed for those minor defaults. We could see the number of cases pending in these courts,” he said.
The introduction of the Bill was opposed by BJD’s Bhartruhari Mehtab, TMC’s Saugata Roy and Congress’ Adhir Ranjan Chowdhury, with the main concern raised by the opposition leaders being about the Yes Bank crisis.
Mahtab said that through this Bill, the government was seeking to decriminalise certain offences and reducing penalty for others. “Now, with decriminalising offences under the Companies Act, and reducing penalties, will this not be in favour of such delinquent people, who will now find it easy to get away with lesser punishment,” he asked.
Talking about that the new chapter added to the Bill on producers’ companies that are essentially engaged in agricultural activities, he said, “The objective is to promote migration of farmers’ cooperatives to companies’ structure. I believe this would be detrimental to the interests of farmers. While cooperatives, which are managed by farmers themselves, serve their mutual interest, companies on the other hand, are professionally run bodies where farmers will have very little say.”
Mahtab also asked whether it was an opportune time to introduce the Bill when a large private bank has collapsed. On March 5, the Reserve Bank superseded the board of Yes Bank in the wake of a deepening crisis, mainly due to huge bad loans, and a moratorium was imposed on it. Under a revival plan, SBI and some private banks have made investments in Yes Bank. Number of companies are folding up because of the activities of promoters, Mahtab said.
Meanwhile, Roy echoed similar concerns. Pointing out that the Centre is bringing in as many as 75 amendments, he said, “Today, (former) CEO of Yes Bank is in Enforcement Directorate custody he government is seeking to decriminalise certain regulations in the name of ease of doing business.”
“It seems to me that the government is heavily influenced by the representatives of the industry chambers. Whatever they are saying, is good for ‘ease of doing business’, and it is being accepted,” the TMC leader added.
Agreeing with the two opposition leaders, Chowdhury said: “This government has been diluting the CSR regime in order to facilitate the corporate sector to further exploit the common people of our country. That is why, the government has been offering the opportunity under the rubric of ‘ease of living life, ease of doing business’. These are nothing but to appease the corporate sector. The government is an appeaser of the corporate sector.”
Thakur countered that corporate social responsibility (CSR) obligations were not being diluted. “Only procedure is being eased. We have already made CSR spending mandatory in the Companies (Amendment) Bill, 2019. The issue is that our government is committed towards ease of doing ethical business and ease of doing honest business which is very important. We would like to adopt a balanced approach on this issue wherein businesses are accorded due respect and faith,” the Minister of State for Finance said.
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