JAN VISHWAS ACT: TRANSITION FROM PUNITIVE REGIME TO TRUST BASED REGIME
-Raghav Parthasarathy* & Shiladitya Mishra**
Introduction
NDA-led alliance ushered in the principle of “Maximum Governance, Minimum Government” when it acquired the helm at the centre. In wake of this, the ruling party has attempted to sweep away laws, rules and regulations which would otherwise cause an impediment in its effective realization. But the intention that carries the most weight behind this principle, is the upscaling in the ‘Ease of Doing Business’ index which has been one of the highlights of this regime. At this onset, the latest upheaval of such laws, rules and regulation is the Jan Vishwas (Amendment of Provisions) Act, 2023[1] (hereafter ‘the JV Act / Act’). The Act reintroduces the necessity of “trust” in a democracy[2] and stresses how the pre-amended regulations are outdated and not resonating with the “philosophy of the Government”. The Act sets out to achieve twin objects of ease of doing business and ease of living for the citizens. By bringing about amendments relating to decriminalisation of minor offences, increase in fines and penalties to act as a deterrence rather than imprisonment. The Government is exceedingly pouring in efforts to achieve a seamless transformation from the vintage conservative policy approach to contemporary business requirements. The said objectives are also in consonance with the Make in India Policy[3] to achieve design and manufacturing prowess.
Continuing Saga of Economic and Legal Reforms
In the last 75 years post-independence, successive Governments have introduced several policy reforms, to facilitate the growth of business and achieve economic prosperity. The previous decade of 1990-2000 saw radical economic reforms made in the aftermath of the Balance of Payment crisis. The government intervention in various sectors led to debt accumulation along with below-par performance. The economic reforms opened up the private sector for foreign investors in the forms of investment, protective de-regulation and market predictability. In continuance with the larger policy changes, India gears up to amend the redundant laws as a response to its improved Ease of Doing Business[4] ranking by World Bank. Albeit the rankings have been stopped since 2020, the government is treating it as a continuing exercise to uphold the values of a freer market by trying to achieve three things in sequence by amending the existing laws to decriminalise by reducing unnecessary imprisonment leading to ease of doing business ultimately achieving Ease of living. The further objective is to reduce compliance burden to drive business restructuring so as to better ease of living of people.[5]
Jan Vishwas Act attempts to change provisions in up to 42 legislations, coming off as a glimpse of large-scale statutory amendment feature of the civil law systems. However, it also majorly reflects the feedback of the Courts in the course of adjudication as a feature of the common law system. For e.g., the striking down of Section 66A as unconstitutional in Shreya Singhal v Union of India[6] has finally been addressed in the Act in furtherance of trust-based governance. Even the non-utilisation of provisions like Section 38 of the Warehousing Corporation Act, 1962 and Section 41 of the Food Corporations Act, 1964, have been done away because of no judicial application.
Transition from judicial punishment to administrative penalty
It is apparent that the amendments further the objective of “trust” based governance by replacing punishments decreed by the court to penalties imposed by administrative bodies. This may have the effect of foreshadowing the values which the criminal provision sought to protect[7] with wider ambit for organized crime to propagate. This effect is most noticeable to the amendments under the Prevention of Money-laundering Act, 2002. The Department of Revenue raised its concerns in the amendments made via the changes proposed to the Trademarks Act, 1999, the Information Technology Act, 2000, the Environment Protection Act, 1986 and the Air (Prevention and Control of Pollution) Act, 1981. The following provisions from each of the above acts were omitted:
- Section 107 (2) of the Trade Mark Act, 1999.
- Section 72 of the Information Technology Act, 2000
- Section 15 read with Section 7 and 8 of the Environment Protection Act, 1986
- Section 37 of the Air (Prevention and Control of Pollution) Act, 1981
The common thread running through the above provisions is the potential to engage in money-laundering activities if the corresponding punishment is not provided for. Take for instance, Section 107(2) of Trademark Act, 1999, which establishes the punishment for falsely representing a trademark as registered. It was viewed that the provision had a needless application because there were already punishments covering the offence of counterfeiting in the Indian Penal Code, 1860 (IPC), particularly Section 465 for forgery or even Section 482 for using a false property mark. However, an incongruous situation arises here since the punishments are not specifically dealing with counterfeit trademark but any instance of counterfeit movable goods in general. The last time IPC provisions relating to trademark were amended when the Trade and Merchandise Marks Act, 1958 came into force which resulted in the deletion of Section 481. But with the considerable changes proposed in the present Act, we might have an impending interpretative lacuna to overcome if the amendments are not again made to accommodate provisions for trademark counterfeit.
Similarly, the changes made with the deletion of Section 72 of the Information Technology Act, 2000 highlights the discontentment of the Department of Revenue. The view propounded by them foretells the danger of generating proceeds by misusing the data of a third-person. The concerned Ministry of Electronics and Information Technology reiterates that the changes shall be ushered in through the Digital Personal Data Protection Act[8]. Notwithstanding the reassurances, the proposal for deleting Section 72 has been met by scepticism even by the Joint Committee reviewing the JV Act. Given that the IPC is too archaic to deal with the confidentiality breaches on its own, the enactment of Digital Personal Data Protection Act will aim to address the breach of confidentiality provision altogether.
While the provisions above attempt to do away with the redundant criminal prosecutions against companies which they tackle in the course of business, the amendments to the Environment Protection Act, 1986 (EP Act) and the Air (Prevention and Control of Pollution) Act, 1981 come off as an unpleasant surprise. Sabotaging acts against the environment not only harms the people in vicinity but also generations to come. Section 15 read with Section 7 and 8 of the EP Act, criminalises these sabotaging acts inter alia, the offences of emitting environmental pollutants and handling hazardous substances in contravention to the scheduled protocol. Likewise, the decriminalisation of Section 37 of the Air (Prevention and Control of Pollution) Act, 1981 also raises concerns regarding the sanctions for not operating at the industry standard. It is at this juncture that the difference between a punishment and a penalty really creates an impact. Punishment is inclusive of two instances: first, which is the punishing provision for the wrong-doer and second, an avenue to impose remedial measures[9]. The well-developed doctrines under Environmental law act as tools for Court to estimate damages in each case to make suitable reparations to the victim; but with the transition to administrative penalties in the environment paradigm the remedies often pursued by the Court shall become a road less travelled since penalties by their very inherent quality limits to the statutory boundaries[10]. The perturbation does not cease there. Environment related crimes include money-laundering which was again rightly noticed by the Department of Revenue. The raison d’etre behind excluding the criminalisation is based on an unconvincing a posteriori argument that: statistics show that out of 1737 criminal cases under environmental norms, only 39 people were convicted[11]. Leading with the above argument shall only be conducive of logical fallacy plaguing the environmental law jurisprudence, affecting not only the victims but also the public at large.
A Departure from Separation of Powers?
It would be wrong to quote that the Act attempts to do away with the separation of powers. To say, in the very least, that the criminal character of the sanction imposed has been changed to accommodate executive exercise of powers would be an overemphasis. In overall, the JV Act brings amendments to 42 Acts; besides the Prevention of Money Laundering Act, 2002, the Act also amends lesser notable acts such as The Warehousing Corporation Act, 1962, The Tea Act, 1953, The Indian Forest Act, 1927, The Rubber Act, 1947, The Indian Post Office Act, 1898, among others in lines of trust-based reform. An inspection of Minutes of the First Sitting of the Committee divulges that the proposed amendments have been made keeping in mind the following:
“Ease of living and ease of doing business in line with the Government mandate;
Decrease the burden on businesses and inspire confidence amongst the investors;
Focus on economic growth, public interest and national security should remain paramount;
Mens rea (malafide / criminal intent) plays an important role in imposition of criminal liability – therefore, it is critical to evaluate nature of non-compliance i.e. fraud as compared to negligence or inadvertent omission;
The habitual nature of non-compliance.”[12]
The effectiveness of the proposed amendments, no doubt, would manifest since the imprisonment and fine clauses are not failing to keep up with the progress of the society. Take for example, the proposed change to Section 26 of the Indian Forest Act, 1927 which shall abrogate imprisonment for cattle grazing in the forest- a tremendous aid to the forest dweller and forest dependent communities, replaced with a penalty provision of five-hundred rupees to be imposed by an adjudicating officer. The proposed changes to the Deposit Insurance and Credit Guarantee Corporation Act, 1961, lies at the juncture of separation of powers. The changes to Section 47 eliminate the criminal character of the proceedings against the inability to present obligatory evidentiary documents under the Act. Instead, the quantum of penalty is decided by the Corporation and enforced by a Civil court. The Department of Financial Services under the Ministry of Finance felt it was a better route for the penalty to be decided through judicial determination in case a conflict arose regarding the penalty amount. This goes on to show that the Act very well inculcates the modern theory of separation of powers, where each branch should coordinate efforts in the interest of good governance[13].
An important concern that surfaces though- what about the rebuttal of accusation by the delinquent? Will the quasi-judicial authority possess satisfactory niche to evaluate the nature of non-compliance? Would mens rea be revealed sufficiently without the procedural fairness of the court? It remains to be seen how well the adjudicating authorities envisioned in this Act function to impose the penalties. However, prudence of the Committee can be seen in their suggestions to the Ministries to include appellate mechanisms so that the delinquent is given a forum to appeal within the administration which simultaneously would also aid in reducing the burden on courts. The suggestions made to the proposed changes in the Patents Act, the Trade Marks Act and the Environmental Protection Act, include a mechanism for adjudication with provisions for appeal. A hierarchy is introduced, where the lowest form of authority is the quasi-judicial adjudicating officer imposing the penalties, the next level consists of a forum for appeal against the decision of the quasi-judicial authority. If the delinquent is still somewhat dissatisfied with the quasi-judicial decision, only then can they approach the courts for determination of rights. Hence, the right to trial of the delinquent is not compromised while overlaying multiple levels of quasi-judicial hierarchy to unclog the judiciary.
Conclusion
In overall, the JV Act has undertaken a comprehensive exercise to revamp the archaic laws and bring them up to the modern standards. Until and unless, minor infractions in the course of business are decriminalised, failure to induce confidence in the foreign investors as well as the budding domestic entrepreneurs would continue. The Act represents change in three stages: identification of existing provisions which stimuli distrust in government, decriminalisation of the identified provisions wherever necessary, in order to refine market predictability, ease of doing business and ease of living. The move to decriminalise and develop a trust based legal and regulatory framework, would enure to the benefit of overall economic growth.
A continued narration of economic reforms from 1991 is found in the objectives, albeit, there appears to have been irregularities in the amendments to the Prevention of Money Laundering Act, 2002, some minor tweaks such as retaining the criminal provisions would further imbibe a trust-based governance. The Act has rightly included quasi-judicial authorities for imposing higher monetary penalties and appropriate adjustments in quantum of penalties, rather than imprisonment or fines to deter recurrence; and inspires good governance by incorporating modern theory of separation of powers.
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[1] Jan Vishwas (Amendment of Provisions) Act, 2023 was passed by both houses of Parliament and received Presidential Assent on August 11, 2023, and published in the official gazette.
[2] Report of the Joint Committee on the Jan Vishwas (Amendment of Provisions) Bill, 2023, https://loksabhadocs.nic.in/lsscommittee/Joint%20Committee%20on%20the%20Jan%20Vishwas%20(Amendment%20of%20Provisions)%20Bill,%202022/17_Joint_Committee_on_the_Jan_Vishwas_(Amendment_of_Provisions)_Bill_2022_1.pdf (last visited on Aug 16, 2023)
[3] Make in India Policy entails focus on various areas including Foreign Direct Investments, Intellectual Property, Skill Development, Road and Infrastructure Development, MSME Empowerment along with other crucial sectors of economy. https://loksabhadocs.nic.in/Refinput/New_Reference_Notes/English/12032020_151355_102120474.pdf (last visited on Sept 09, 2023)
[4] Ease of Doing Business (EoDB) is a ranking system established by World Bank, among the 190 nations, India ranked 62nd, jumping 79 positions from 149 in 2014 to 62 in 2020. https://www.makeinindia.com/eodb (last accessed on Sept 09, 2023).
[5] Seamless transformation from existing provisions to the Ease of Doing Business includes – Removal of imprisonments for minor offences, lesser fines and penalties, fear of punishment and distrust on Government.
[6] AIR 2015 SC 1523
[7] Anna Sergi, Organised Crime in English Criminal Law: Lessons from the United States on Conspiracy and Criminal Enterprise, 18 Journal of Money Laundering Control.
[8] Digital Personal Data Protection Act, 2023, enacted to provide for processing of digital personal data in a manner that recognizes both the right of individuals to protect their personal data and the need to process such personal data for lawful purposes, received Presidential assent on August 11, 2023. https://www.meity.gov.in/writereaddata/files/Digital%20Personal%20Data%20Protection%20Act%202023.pdf (last accessed on Sept 09, 2023).
[9] Kent Greenawalt, Punishment, 74 J. Crim. L. & Criminology (1983).
[10] The Imposition of Administrative Penalties and the Right to Trial by Jury. An Unheralded Expansion of Criminal Law?, 65 J. Crim. L. & Criminology 345 (1974).
[11] Supra note 1, at 132
[12] Supra note 1 at 393-394
[13] Ashwani Kumar v. Union of India, (2020) 13 SCC 585 at p.10
* Raghava Parthasarathy, is an Academician and Advocate practising in Bengaluru, Karnataka.
** Shiladitya Mishra, is a graduate of Law from Ramaiah College of Law, Bengaluru
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