How various measures of decriminalization can help businesses overcome minor mistakes and hence ease of doing business.

The proposal of Finance Ministry, department of Financial Services to relax the punishment w.r.t offences falling under various Acts which at present are punishable with both imprisonment and fine by making them compoundable offences i.e. wherein the Adjudicating authority as defined under the respective Act can decide the penalty to be imposed if anybody found to be liable for such offences, will definitely is another step from the Government towards ease of doing business as at times the default(s) may arisen due to omission not necessarily a deliberate attempt to cause fraud. The relaxation proposed is also in line with announcement by Hon’ble Finance Minister in her fifth series of announcement in series of announcement(s) made in Atamnirbhar Abhiyan.

The change in punishment includes changes in SARFAESI Act, LIC Act, Negotiable Instruments Act, Payment and Settlement Act, etc. ”

The present paper put forward for comments, is in also in line with earlier amendments approved by Cabinet wherein it relaxed the provisions of Companies Act, 2013 wherein more than 50 changes were proposed in Companies Act, 2013 including omitting certain offences (Compoundable) which were technical defaults.

The deterrent of imprisonment definitely works and reduces the chances of offences however for somebody who with no mala-fide intent have caught in such offences due to omission will have to suffer and run through long judicial process before actually the decision is made. We all are aware the quantum of cases at present the courts are dealing with and to decide a particular case the minimum time period if we may count is approximately two (2) years considering the stages involved.

Moreover, if the punishment for such offence is imprisonment then even if such offence is due to omission one has to suffer the consequences as there is no other alternative available to make it good. The decimalization of offences will reduce the process as well as give ease to make the default good by paying monetary fine.

The decriminalization of offences will also be a welcome move not only for domestic business but will also help in proving further ease in doing business in India and attracting foreign investors, as for them minor offences with major punishment acts is a cause of worry and a demotivated factor to invest especially in case of investment in Company where in some cases each and every officer in default is made liable.

Authored by
Daizy Chawla
Managing Partner, S&A Law Offices