Industry seeks decriminalisation of offences committed under business legislations

Offences committed under the business or economic legislation should be treated as civil instead of criminal offences and punishment be limited to penalties rather than fines or imprisonment, industry body CII has demanded.

In representations to Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, the CII suggested that offences which are of a technical nature or those that do not affect public interest prejudicially should be considered to be decriminalized.

The Confederation of Indian Industry's recommendations in this regard cover 37 laws and Acts ranging from the partnership Act of 1932 to the Insolvency and Bankruptcy Code of 2016.

Hard selling his administration's pro-business approach, Prime Minister Narendra Modi in December had said the government is working to decriminalise provision of Companies Act to make it easier to do business in the country.

Sitharaman in her budget for 2020-21 also announced that the government will amend the Companies Act and other laws to remove the criminality clause on tax issues.

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, CII stated.

“For such business and economic legislation 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.

Directors today are fearful, and this impacts corporates negatively since they are resigning due to the fear of criminal implications of the laws, the industry body observed.

It has argued that changing the nature of the punishments to make them more rationale will also help reduce litigation and de-clog the judiciary.

The proposed changes in the Companies Act where offences like not meeting obligations under CSR is now being decriminalised is a step in this direction, CII said.

CII has come out with 12 alternative ways that can help achieve this goal in its compilation – Decriminalization of Business and Economic Legislation - that has been shared with the prime minister and Sitharaman as part of its consultative deliberations on the subject.