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(GIST OF YOJANA) DELICATE BALANCE REGULATORY ENFORCEMENT and FAVOURABLE BUSINESS ENVIRONMENT

(JANUARY-2024)

DELICATE BALANCE REGULATORY ENFORCEMENT and FAVOURABLE BUSINESS ENVIRONMENT

Introduction:

The JAN VISHWAS (Amendment of Provisions) Act, 2023 makes a significant milestone in India’s regulatory landscape. By decriminalising 183 provisions across 42 Acts administered by 19 ministries/departments, the Act strives to strike a delicate balance between regulatory enforcement and creating a favourable business environment. This ground-breaking move is poised to reshape the Ease of Doing Business in India.

Major principles:

FICCI has formulated some basic general principles of decriminalisation while submitting suggestions and these are as follows:

Directors (or at least independent directors) not to be held liable for operational non compliances.
No criminal liability for technical errors/lapses only financial penalties
No criminal liability for first-time offences under the majority of laws
Graded penalty system as a deterrent for subsequent non compliances
Establishing mens rea for offences committed.

Directors are still held responsible even for operational or procedural lapses under various laws, e.g., under the Factories Act, Section 92, general penalties are prescribed for offences for the violation of provisions related to health & safety, working hours, welfare, compensation, and non-maintenance of records, returns, and registers. Here also, it is suggested that:

For technical lapses/errors such as maintenance of records, filing of returns, etc., only monetary penalties areto be there, whichcould be graded for subsequent lapses.
First-time offences should only have monetary penalties, which could be enhanced further to create a deterrent effect.
Provision for compounding an offence where otherwise there is compliance with the law.
Criminal prosecution for minor offences leads to disruption in business operations as the focus shifts to defending prosecution. As per the provisions of Section 252 of the Code of Criminal Procedure, 1973 (CPC), if an accused pleads guilty (even for minor offences), the Magistrate may convict the accused, at his discretion, with imprisonment or with a fine.
Legal Metrology Act, 2009- While the Jan Vishwas Act addresses many provisions, Section 36 related to the penalty for selling nonstandard packages was not included in the decriminalisation. There is a need to remove imprisonment provisions and have only graded fines and monetary penalties for this provision as well.
Rationale: Currently, packaging regulation provides opportunities for legal metrology inspectors to issue notices on frivolous grounds of minor/technical non-compliance. For example, even a difference in font size makes a package nonstandard, even though it is readable.
Labour Codes- Some of the new codes enacted have retained the provisions of criminalisation.
For instance, the Occupational Health, Safety, and Working Conditions Code 2019 under Sections 102 and 103 prescribes enhanced penalties involving both imprisonment and fines.
Similarly, the Code on Wages 2019 provides, under Section 54(1)(d), a penalty for subsequent conviction (within 5 years from the first such conviction) for contravening any other provision of the ‘Code-Imprisonment’ up to 1 month, or a fine, or both.

Way Forward

There are many such examples, as listed above, that will require decriminalisation. The Jan Vishwas (Amendment of Provisions) Act, 2023, is a transformative step towards creating a more business-friendly environment in India. Going forward, it is important to address the issues of decriminalisation at the State level. Due to the existence of overriding Central Legislations, State Governments are unable to decriminalise minor criminal provisions. We need a targeted approach for the examination of such identified Central Acts that will have profound effect through the subsequent decriminalisation of all subordinate State Legislations.