To improve business environment and remove obsolete laws, industry body CII has suggested the government to decriminalise several provisions in business facing laws, arguing that “offences which are of a technical nature or those that do not affect public interest prejudicially should be considered to be decriminalised”.
The Confederation of Indian Industry (CII) has recommended 12 alternate ways to work towards decriminalisation of laws and amend legislations to change criminal penalties to civil penalties. CII said many company directors and senior management personnel are fearful of the criminal implications of the various laws.
In its suggestions shared with Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, CII suggested making summons cases concerning relatively minor offences compoundable, transparent mechanism for no-guilt admission and settlement of technical offences with penalties and not prosecution, introduction of dispute settlement mechanism, deferred prosecution agreements with exceptions and one-time settlement schemes.
Its other suggestions include award of costs where courts have observed that there is frivolous litigation, creating a process for a without-admission of guilt settlement of tax and economic offences with exceptions, among others. “There have been increasing incidents recently where commercial and civil disputes are being treated as criminal complaints, thereby creating a fear factor among company directors, young entrepreneurs and foreign investors,” CII said, adding directors today are fearful, and this impacts corporates negatively since they are resigning due to the fear of criminal implications of the laws.
“For such business and economic legislations which fall within the domain of arbitration or civil courts, the government should consider decriminalising the laws, unless there is an intent of fraud or misdoings,” CII president Vikram Kirloskar said.
However, periodic or habitual offenders should be treated differently and punished with higher penalties as may be decided by the adjudicating authority. “This will not only increase confidence of both domestic and global players but also provide boost to ease of doing business in India,” he said.
In the Budget 2020-21, the Centre has stressed that criminal liabilities for Acts that are civil in nature will be amended in the Companies Act and other laws would also be examined.
Senior Finance Ministry officials said the Centre’s intent is to improve its trust with the business community. The Centre has earlier tried to limit criminal proceedings for non-compliances of minor, technical or procedural nature for the Companies Act, 2013 by setting up the Company Law Committee, which submitted its interim report in November 2019 and recommended amendments in 46 penal provisions.
Last year, the government had also clarified that violations of corporate social responsibility (CSR) norms under the companies law will be treated only as a civil liability and not as a criminal offence.
“It is also important to prescribe a time frame or filing a complaint for economic related offences and for completion of investigation and adjudication with a few agreed exceptions … Malafide actions, frauds and criminal activities by businesses deserve strong punitive measures. However, for technical or procedural lapses of non-serious nature, civil liability would be adequate as a deterrent,” CII said.
It has listed amendments to a total of 37 legislations related to the Companies Act, IBC, environmental protection, consumer protection and labour interests.
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