The activating of the benami law brooks no delay. And the Companies Act should also be amended to provide for disgorgement.

S. Murlidharan

Justice has many hues and objects. The one that comes immediately to a layman's mind however is the deterrent effect it has, which of course has implications of retribution eye for eye which the outraged nation is demanding out of Santosh Singh who killed Priyadarshini Mattoo after slaking his lust in a most diabolical manner.

Retributive justice is justified more on the ground that it would deter others from committing the same crime because law in its majesty cannot seek eye for eye. The second is reformative justice normally recommended for juveniles and non-hardened criminals.

Borstals for juvenile convicts are a classic example of reformative justice. Restorative justice is what most clamour for because this is the kind of justice which is seen to be done. This is practised in its crudest form in an African country where a murderer is ordained to marry the deceased's widow and provide her economic sustenance the way her deceased husband would have.

Disgorgement of ill-gotten assets

A US district judge has sentenced the former Enron CEO to 24 years and four months imprisonment for his shenanigans in the infamous Enron scam that emptied the employees' savings schemes of a whopping $2 billion, among others through sharp accounting practices and breach of trust. More importantly, the judge has also ordered disgorgement of ill-gotten assets by him estimated to be a mind-boggling $60 million, of which $45 million would be used in a restitution fund for the victims who were thus swindled in a white-collar crime.

We in India have been pining for this kind of justice system for long but in vain, except perhaps recently in the demat scam where the accused will have the mortification of surrendering the shares which she got by manipulating her name and addresses not once but as many as 6,000 times roughly with a view to getting allotment out of the quota reserved for retail investors.

Harshad Mehta, who masterminded the share market scam of epic proportions in the 1990s that rocked the nation for several years died of a massive heart attack incidentally, Kenneth Lay, the Enron Chairman, also died of a massive heart attack on being convicted before he could be incarcerated for his stupendous white-collar crimes by subverting the banking system.

His allies in the Machiavellian cunning too got away lightly with a just a slap on their wrists. It is not as if we don't have laws providing for disgorgement. The Companies Act provides the winding up court with this power in case it is convinced that the ruination and its winding up of a company on its last legs were presided over by persons with gluttonous greed.

Powers unused

The Sick Industrial Companies (Special Provisions) Act, 1985 also gave similar powers to the BIFR, which sadly remained largely unused to the chagrin of creditors and small investors. The possible difficulty could be the ubiquitous practice of holding ill-gotten wealth

benami

in this country to overcome which alone the government passed a law empowering the it to confiscate property held

benami

as far back as in 1995.

Successive governments have failed to activate this law, perhaps out of the fear that it would target the political class more than others and thus recoil on them. The activating of the

benami

law brooks no delay. Of course, like with any law its rough edges must be smoothened from time to time. The Companies Act should also be amended to provide for disgorgement even while a company is a going concern and not on its last legs.

(The author is a Delhi-based chartered accountant.)

(This article was published in the Business Line print edition dated November 16, 2006)
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