Ease of doing biz: More minor offences to be decriminalised

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November 27, 2020 7:40 AM

Income tax, customs, excise, pharma, labour acts are also being reviewed. Certain ministries feel that some aspects of criminalisation is necessary for efficient enforcement.

In this context, NITI Aayog has undertaken an exercise the with ministries concerned to identify the specific provisions under different Acts where decriminalization can be attempted.Stating that in case of other emerging economy, private debt to GDP ratio is well beyond 100 per cent, Kumar said that "so we need to increase private debt and this will happen when our banking sector will expand".

After decriminalising minor offences under the Companies Act, the Narendra Modi government has embarked on reducing the risk of imprisonment for omissions that aren’t necessarily mala fide, under 28 economic and financial sector statutes, including the income tax Act, Prevention of Money Laundering Act (PMLA), Sebi Act, RBI Act, Banking Regulation Act, SARFAESI Act and the Collection of Statistics Act.

Criminal penalties, including imprisonment for minor offences, are one of the major reasons for subdued business sentiments and are seen to hinder investments both from domestic and foreign investors.

“The Cabinet secretary has instructed all the ministries to go through all Acts under their jurisdiction and identify provisions, which could be potentially decriminalised. As many as 128 provisions across 28 statutes could be considered over the next 2-3 months,” a government official said.

Finance minister Nirmala Sitharaman in the Union Budget 2020 speech mentioned that the government would look into making amendments to the Companies Act, 2013 and other laws where certain provisions impose criminal penalties on acts that are essentially civil in nature. In this context, NITI Aayog has undertaken an exercise the with ministries concerned to identify the specific provisions under different Acts where decriminalization can be attempted.

With pendency matters in all tiers of the courts being in excess of 4 crore and the inordinate time taken for disputes to be resolved, and India’s continued challenges in enforcement of contracts, such legislative measures are needed to help restore trust in doing business, officials feel.

In September, Parliament gave its nod to amendments to Companies Act, 2013 to decriminalise certain offences. The amendments omitted punishment with imprisonment in 12 offences and increased monetary penalties in most cases. At least six ministries including finance, pharma, labour and statistics are now either in the process of or have already put out in public domain provisions in certain Acts for stakeholders comments for decriminalising minor offences.

The department of financial services in the finance ministry has undertaken public consultation on criminal provisions under 19 Acts recently including Insurance Act, SARFAESI Act, PFRDA Act, RBI Act, Payment and Settlement Systems Act, NABARD Act, NHB Act, State Financial Corporation Act, Credit Information Companies (Regulation) Act, Factoring Regulation Act, 2011, Actuaries Act, Banking Regulation Act, General Insurance Business (Nationalisation) Act, LIC Act, Banning of Unregulated Deposit Schemes Act, Chit Funds Act, DICGC Act, Negotiable Instruments Act and Prize Chits and Money Circulation Schemes (Bannning) Act.

It is contemplating doing away with imprisonment provisions for two offences in the Banking Regulation Act, 1949. Under Section 46 of the Act, violators making a false statement or wilfully omits to make a material statement, attracts imprisonment up to three years. Similarly, Section 58B (1) of the RBI Act, 1934 entails imprisonment up to three years for whoever provides wrong information or statement.

Income tax, customs, excise, pharma, labour acts are also being reviewed. Certain ministries feel that some aspects of criminalisation is necessary for efficient enforcement.

Section 11C Sub-section (6) of Sebi Act entails that If any person fails without reasonable cause or refuses to produce to the Investigating Authority or any person authorised by it in this behalf any book, register, other document and record, can be punished with imprisonment of 1 year and fine. Section 24 of the Act even imposes a harsher jail term of up to 10 years and fine if any person fails to pay the penalty imposed by the adjudicating officer or the Board or fails to comply with any directions or orders.

There are nine proposed amendments to decriminalise offences under Collection of Statistics Act, 2008: Section 16 of this Act provides imprisonment of up to 6 months or Rs 1,000 fine in the case of a person and extendable to Rs 5,000 in case of a company or both for wilfully making any false or misleading statement. The ministry of statistics has proposed a higher monetary penalty (10 times higher) would be a more effective deterrent than imprisonment as it is more easily enforceable.

“The effort is to balance ease of doing business with genuine requirement of stricter punishment. Certain ministries feel that certain aspects of criminalisation is necessary for enforcement,” an official said.

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