CII suggests 12 alternative ways to decriminalise business and economic laws

Our Bureau New Delhi | Updated on February 09, 2020 Published on February 09, 2020

Directors today are fearful and this impacts corporates negatively, says apex industry chamber

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.

Fear factor

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.


Published on February 09, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.