To decriminalise business compliances, The Jan Vishwas Bill is a good initiative but it needs to be made more effective by increasing its reach

India has created the world’s largest democracy on the infertile soil of the world’s most hierarchical society on the strong foundations of the positive freedoms in our Constitution. But in the 75-year journey of India’s independence carrying forward The British rules having 26,134 jail provisions for an entrepreneur. The imprisonment risks faced by Indian entrepreneurs across the Centre and States are 1,536 laws in seven categories- labour, secretarial, environmental health, and safety, finance, and taxation, industry-specific, commercial, and general. This excessive criminalization hasn’t created world-beating honesty but has painful consequences like breeding corruption, sabotaging job creation, and diluting justice. The compliance is to be treated as a ‘civil wrong’ and not a crime to stay afloat.

To decriminalize business compliances ‘The Jan Vishwas (Amendment of Provisions) Bill 2022’, is a good initiative of the Central government but it proposed the decriminalization of only 42 laws out of a total of 678 business laws with 26,134 criminal provisions out of which only 3400 to be replaced with monetary penalties. The Punjab government also scrapped 1498 mandatory compliances to ease out regulations around doing business, still there are 1427 compliances and 1273 imprisonment clauses in the state. The Centre and State governments have to make sure that future alterations in compliance are divested of criminal provisions. This purge must extend to end the criminalization of business compliances to restore dignity to entrepreneurship that creates millions of jobs, wealth, and the economy. Therefore, more amendments are needed in Jan Vishwas Bill to decriminalize the business laws which are irrelevant in technology-driven ‘New India’.

Of the hundreds of business laws with imprisonment clauses excluded in the proposed Bill, very few of these are mentioned worthy here.

1) The Factories Act, of 1948: Under section 11, failure to whitewash the canteen kitchen and washrooms of business establishments invites a jail term to an entrepreneur extendable from three months to three years or with a fine which may extend to Rs 2 lakh or both.

2) Industrial Disputes Act, 1947: Sections 25-U, 26, 27, 28, 29, 30,31 A and 33 prescribe imprisonment of up to six months or with a fine of up to Rs 5,000. Under section 29, any person who commits a breach of any term of any settlement or award, which is binding on him under this Act, shall be punishable with imprisonment for a term which may extend to six months or with a fine of Rs 1000 or with both.

3) Labour Laws: Section 54 -b of The Code on Wages specifies penalties for offences committed by an employer, such as paying less than the due wages or contravening any provision of the Code. Penalties vary depending upon the nature of the offence, with the maximum penalty being imprisonment for three months along with a fine of up to Rs one lakh or both.

4) Maternity Benefit Act, 1961: Under section 6, the violation shall be punishable with imprisonment of three months but may extend to one year and with a fine. Subject to the provisions of this Act, every woman shall be entitled to, and her employer shall be liable for, the payment of maternity benefit at the rate of the average daily wage for the period of her actual absence.

5) Employee State Insurance Corporation Act, 1948: Section 85 is prescribed for different types of offences in terms of imprisonment of up to one year and a fine of up to Rs 5000. Section 85-A prescribed 3 years imprisonment and not less than 6 months, where an employer deducts contributions from the wages of his employees but does not pay the same to the corporation which amounts to a criminal breach of trust.

6) Goods and Services Tax Act of 2017: Under section 132, where the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds imprisonment for a term which may extend to three years.

7) Companies Act, 2013: Section 447 prescribes punishment for a false entry in any document concerning the company or body corporate, furnishing false statements, mutilation, and destruction of documents, section 449 for false evidence. Section 453 prescribes Punishment for improper use of Limited or Private Limited. The jail terms range from three months to as high as 10 years.

8) The Patents Act, 1970: Section 124 A prescribed for the person falsely represents that any article sold by him is patented in India or is the subject of an application for a patent in India. Where the person fails to comply, shall be punishable with imprisonment for a term which may extend to one year, or with a fine up to Rs 25,000 which may extend to five lakh rupees, or with both.

9) The Air (Prevention and Control of Pollution) Act, 1981: Under section 39D, Offences for failure to comply and for failure to pay a penalty are to be punishable with imprisonment for a term of two years but which may extend to seven years and with a fine.

10) The Environment (Protection) Act, 1986: Under section 15F, Where any person fails to pay the penalty or additional penalty within ninety days of such imposition, he shall be liable for imprisonment that may extend to three years or with a fine which may extend to twice the amount of the penalty or with both.

11) The Trade Marks Act, 1999: Under section 112 A, Where the person fails to comply with the order made within a period of ninety days from the date of the receipt of the order, shall be punishable with a fine of Rs one lakh or imprisonment for a term may extend to one year or with both.

12) The Motor Vehicles Act, 1988: Under section 192A, using a vehicle without a permit shall be punishable for the first offence with imprisonment of six months or a fine of ten thousand rupees, or with both and for any subsequent offence with imprisonment which may extend to one year with fine or with both.

13) The Public Liability Insurance Act, 1991: The owner who has control over handling hazardous substances is required to take an insurance policy and pay a matching amount to the Environment Relief Fund. Under section 17B, Where any person who fails to pay the penalty imposed for non -compliance with the directions, shall be liable for imprisonment up to 3 years or with a fine up to Rs 15 lakh or with both.

14) The Geographical Indications of Goods (Registrations and Protection) Act, 1999: Under section 37 A, where the person fails to comply with the order within a period of ninety, shall be punishable with imprisonment upto one year, or with a fine of Rs 25,000 but which may extend to Rs 5 lakh, or with both.

15) The Information Technology Act, 2000: Under section 70 B, Any service provider, intermediary, data centres, body corporate or the person who fails to provide the information called for or comply shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to one crore rupees or with both.

The Way Forward

• Imprisonment should be applicable only in cases of willful destruction of the environment, negligence in food and workforce safety, loan defaults, and evasion of taxes.
• An integrated institutional regulatory body could be set up to end the criminalization of business compliances and to trim down corruption.
• Before giving thumbs up to ‘The Jan Vishwas (Amendment of Provisions) Bill 2022’, It seeks to deepen the debate around ease of doing business reforms in the world’s fifth-largest economy, which is headed towards becoming the world’s third-largest before 2030.

(The Writer is Vice-chairman of the Sonalika group and vice-Chairman of the Punjab Economic Policy and Planning Board. Views expressed are personal)