Professor Bajpai answers questions on the Union Ministry of Finance’s proposal to decriminalise minor economic offences in order to improve ease of doing business and unclog court processes.
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THE Union Ministry of Finance, through a invitations for comments and suggestions released on June 8 and 12, 2020, proposed to decriminalise a host of minor economic offences, and invited public comments on decriminalisation of particular offences along with the rationale for the same. The attempt to decriminalise minor offences from 19 legislation, including the Negotiable Instruments Act, 1881 [NIA], the Reserve Bank of India Act, 1934 [RBI Act], and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, among others, is to improve ease of doing business and unclog court processes.
The statement of reasons of the proposal maintains that the risk of imprisonment for actions or omissions that are not necessarily fraudulent or outside of mala fide intent creates a big hurdle in attracting investments. It further points out that a balance needs to be maintained so that mala fide intent is punished while other less serious offences are compounded. These steps are pertinent in the post COVID-19 response strategy to help revive economic growth and improve the justice system.
To understand the implications of the ministry’s proposal, The Leaflet approached Prof. (Dr.) G.S. Bajpai, Vice-Chancellor of the Rajiv Gandhi National University of Law, Punjab, and member secretary of Committee on Criminal Law Reforms under the aegis of the Union Ministry of Home Affairs, for an interview. Dr. Bajpai acknowledges the research assistance of Dr. Ivneet Walia, Associate Professor of Rajiv Gandhi National University of Law, Punjab, for answering the questions here.
Excerpts from the interview:
Q: What are your views on the government’s attempt to decriminalise minor economic offences? How do you think this will impact our present judicial system and prison infrastructure?
A: The purpose of decriminalising minor economic offences is to deter illegal practices and ease the process of innovation, business activities and living. Here, I would like to quote (American professor of law and psychology) Tom R. Tyler who argues that, “perceptions of unfairness undercut the legitimacy of legal prohibitions, making citizens less likely to respect Rule of Law” as mentioned in his work, Procedural Justice, Legitimacy and Effective Rule of Law.
While deciding about decriminalisation, one must assess whether the total cost of criminalisation outweighs the benefits. It also concerns making the choice between strictly punishing the criminal intent that is mens rea or taking a liberal stance on negligence or omission. The purpose of segregating good faith omissions from mala fide intention cases is to propel the ease of doing business.
The process of decriminalisation is the first step towards unclogging the criminal justice system in the country and subsequently reducing the prison population. The major offence cases are generally ignored and result in pendency due to minor offence trials, thus overburdening the judicial mechanism.
The process of decriminalisation is the first step towards unclogging the criminal justice system in the country and subsequently reducing the prison population. The major offence cases are generally ignored and result in pendency due to minor offence trials, thus overburdening the judicial mechanism. One must also look at the criminalization part concerning procedural lapses and minor non-compliances, which hamper the freedom of doing business.
There is a necessity to relook at the procedural provisions which do not cause any impact on national security or deplete the public interest. The Supreme Court of India, in a plethora of cases, has endorsed the government’s opinion; to mention a few, such as Meters & Instruments Private Ltd. versus Kanchan Mehta (2017) and Makwana Mangaldas Tulsidas versus State of Gujarat & Ors (2020), in which the Supreme Court talked about decriminalising or compounding at the initial stage in cases of cheque dishonour.
As a suggestion, I would like to say that the element of criminality may be replaced by civil liability. Decriminalisation should be followed by some alternate measure like departmental enquiry, fine, compensation or any other consequence.
Also read: Will Decriminalisation of Section 56(1) of NABARD Act help business grow or create hurdles?
Q: The Government set up the R. Ramanujam Committee way back in 2014 to consolidate information on statutes that are redundant and need to be repealed. The Committee submitted a comprehensive report (four Volumes) and identified 1,741 Central Acts, including those in the socio-economic context, which can be repealed without adversely affecting the governance in any manner. What is taking the government so long to act upon it?
A: To answer this question, let’s look at the background of Law Commission reports and the Ramanujan Committee reports. If we look at the Law Commission reports, then the 248th report gave us a list of nearly 1,086 Union laws and recommended the repeal of 72 laws. This report also found out that the 253 laws that were recommended by previous Law Commission reports for repeal were still continuing to be part of the statute books. The 249th Report recommended 113 laws for a repeal, which included 77 laws for total repeal, 11 permanent ordinances and 25 laws for partial repeal. Then the 250th Report identified 73 more laws that were required to be repealed.
In addition to the above recommendations, the 251st Report added 30 more statutes, bringing the total number to 288 laws that need to be repealed. Then came the Ramanujam Report, which was a voluminous work identifying nearly 1,741 central acts for repeal out of the 2,781 existing as on October 15, 2014 in the statute books.
Decriminalisation should be followed by some alternate measure like departmental enquiry, fine, compensation or any other consequence.
One may be overwhelmed by the numbers quoted above but the ground reality is the acknowledgement of the fact that statutes are not always completely repealed. There may be situations where the statute needs to be retained, but requires certain sections to be scrapped. In other situations, there may be a need for consolidation and harmonisation. Even more, in other instances, repeal must match up the expectations of the new legislation filling in the gaps and lacunae.
This answers your question on delay, as these exercises are time consuming and require not haste but utmost attention.
Also read: Should India reform its system of imposing fines for offences?
Q: According to you, what legal provisions on minor offences need to be decriminalised?
A: The Ministry of Finance has already proposed decriminalisation of nearly 36 sections across 19 legislation which include the RBI Act, NIA, The Life Insurance Corporation Act, 1956, and so on. Other than minor economic offences, changes could be made to the Narcotic Drugs and Psychotropic Substances Act, 1985 to decriminalise possession of small quantity of drugs, thereby decriminalising offences related to personal consumption and helping courts take a lenient view on people found in possession of small quantities. A proposal in this regard is already under legislative consideration.
Another aspect to consider is whether a criminal penalty is the appropriate regulatory response in the Maintenance and Welfare of Parents and Senior Citizens Act, 2007. This legislation criminalises the non-payment of maintenance. It is interesting to observe how imprisonment will achieve the welfare of the senior citizens, and why the legislatures do not consider alternate measures like attaching the property.
Another example is that of the Bihar and Uttar Pradesh (Alteration of Boundaries) Act, 1968 and the Haryana and UP (Alteration of Boundaries) Act, 1979, which provide penalty for wilful injury to removal of state boundary pillars. It is pertinent to mention here that there is no other state with such kind of legislations and on record these states, comparatively, have not performed better than others by preserving the state borders.
Only a structured framework on deciding punishments will add the element of deterrence and caution.
This reminds me of British criminologist Anthony Bottoms, who defines the use of criminal law as populist punitiveness. This phrase of ‘populist punitiveness’ raises questions on the excessive criminal law legislations and rationality attached to it.
Q: The Government is likely to insert a penalty in all the legal provisions that it would decriminalise. Do you think it will act as enough deterrence?
A: By going liberal on commission of minor economic offences, one does not completely ignore the sanctions attached to negligence and omissions. By decriminalising, there will be a mutation in the form of the sanction, which will be both proportional and facilitative for business enterprises. The alternate liabilities can be resorted to in case of minor breach or non-compliance instances.
Also, this is already in practice globally, where nations have followed a similar trend to mitigate litigation and instil confidence in industry. For instance, in the United States, environmental offences can be compounded and a fine is imposed. The United Kingdom is following the ‘plea bargaining’ principles to power the compounding process. But it is true that only a structured framework on deciding punishments will add the element of deterrence and caution.
Lastly, certain principles must be considered when deciding on reclassification of criminal offences for the purpose of compounding: (i) Growth of confidence amongst investors and reduction of compliance burden; (ii) utmost priority to national security, public interest and financial stability; (iii) evaluation of mens rea is crucial in case of economic offences; and lastly, (iv) prevention of recidivism in non-compliance matters.
