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The Confederation of Indian Industry (CII) has urged the government to take urgent steps to decriminalise provisions in several business-facing laws and Acts to help improve investor confidence and ensure ease of doing business in the true spirit.
For this purpose, it has identified 12 alternative ways and listed them in the apex industry chamber’s compilation — Decriminalisation of Business and Economic Legislation — that was shared with Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman recently.
“A change in the nature of penalty provisions in business and economic laws represents the next stage of reforms in ease of doing business. Divesting criminal penalties from business laws — unless well-defined criminal actions are found — will strengthen confidence among young entrepreneurs and investors in doing business,” Vikram Kirloskar, President, CII, said.
Echoing the principle of establishing trust, the CII has sought intervention from different arms of the government to examine how the current criminal provisions in the laws can be treated as civil offences with penalties.
The CII’s recommendations — which cover 37 laws and Acts ranging from the partnership Act of 1932 to the Insolvency and Bankruptcy Code of 2016 — have said that offences that are of a technical nature or those that do not affect public interest prejudicially should be considered, to be decriminalised.
Lately, there have been increasing incidents where commercial and civil disputes are being treated as criminal complaints, thereby creating a fear factor among Directors, young entrepreneurs and foreign investors, the chamber has said.
"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,” the CII President said.
Directors today are fearful, and this impacts corporates negatively since they are resigning due to the fear of criminal implications of the laws, the chamber has said.
Changing the nature of the punishments to make them more rational will also help reduce litigation and de-clog the judiciary, according to the CII.
The proposed changes in the Companies Act, where offences like not meeting obligations under CSR are now being decriminalised, are a step in this direction. The CII has recommended 12 alternative ways to work towards decriminalisation of laws and amend legislations to change criminal penalties to civil penalties.
These are: provide for many summons cases concerning relatively minor offences to be compoundable; revisit/prescribe limitation period for assuming Jurisdiction; transparent mechanism for no-guilt admission & settlement of technical offences with penalties and not prosecution; introduce dispute settlement mechanism; introduce deferred prosecution agreements — with exceptions; introduce one-time settlement schemes; consider making summons cases compoundable by expanding the scope of Section 320 of the Criminal Procedure Code, 1973.
The remaining are: award costs where courts have observed that there is frivolous litigation or dilatory tactics; expeditious filling up of vacancies so as to ensure that Benches act in full strength; create a process for a without-admission of guilt settlement of tax and economic offences with exceptions to reduce the pipeline of future matters and take some pending matters out; increase the role of technology in courts with e-filings and the like and allow plea bargaining/settlement mechanism.
The CII also said that, globally, countries have been following a similar trend to mitigate litigation and provide confidence to industry.
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