After the Jan Vishwas law comes into force, businessmen will be able to act without fear of imprisonment for minor, technical or procedural lapses
On August 12, the President of India, Droupadi Murmu gave assent to Jan Vishwas Bill 2023, to become a law, which was passed in Parliament on August 2. The purpose of this law is to promote the ease of doing business by decriminalising several offences into penalties and eliminating imprisonment for many offences but on its own, the number of provisions this law addresses is statistically insignificant. And yet, this is one of the most awaited reforms and a possible game-changer for India’s entrepreneurs.
Since the British era in India, 69,233 compliances regulate doing business under 26,134 imprisonment clauses across the Centre and State governments to put an entrepreneur in jail as a penalty for non-compliance. It plagues India's business compliance regulation framework, and has been haunting entrepreneurs since pre-independence! The compliances criminalization hasn’t created honesty but has painful consequences like breeding corruption, sabotaging job creation, and diluting justice. In 76 years of independence, can an entrepreneur hope that The Jan Vishwas Law could envisage redefining the regulatory landscape of the country under the Ease of Doing Business Reforms?
A significant level of decriminalisation missing
The Jan Vishwas law decriminalises only 113 clauses out of 26,134 total (less than half per cent) imprisonment clauses dealing with the regulation of economic activities and business at an aggregate. According to the Observer Research Foundation's report, “ There are 534 imprisonment clauses in Union labour laws, which will change once the Labour Codes are notified, leaving 4,705 imprisonment clauses awaiting rationalisation”.
The compliances related to 42 central acts administered by 19 Ministries/Departments in major ten categories- labour and employment, power, chemical and fertilisers, secretarial, environmental health, and safety, finance, and taxation, industry-specific, commercial and general and regulators such as RBI, SEBI and CBIC resulted in 105 recommendations, of which only six have been accepted; and the balance 98 being specific provisions. Of the hundreds of business laws with imprisonment clauses that could be compoundable, excluded in the Jan Vishwas law-2023, very few of these are mentioned here.
Industrial Disputes Act, 1947: 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. 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. A maximum penalty is imprisonment for three months along with a fine of up to Rs one lakh or both.
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. 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. 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. 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, and section 449 for false evidence. The jail terms range from three months to as high as 10 years.
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. 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.
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. Hence, there is a pressing need to decriminalise numerous penal offences, such as sedition (Section 124A of the IPC), offences under the UAPA and the NDPS Act, anti-conversion laws, and more. It is crucial to assess these and similar offences based on principles and evaluate the need for decriminalization. As a result, the law cannot achieve a significant level of decriminalisation. It is important because decriminalising frivolous compliances is an important policy action of reducing, if not ending.
The Way Forward
For 76 years since Independence, we have heard the expression ‘Inspector Raj’. Our job creators and job seekers deserve better. Imagine a US$10 trillion GDP aspiration, our lawmakers need to up the entrepreneurs' aspirations. Hopefully, the Jan Vishwas Law will speed up to accomplish and simplify business operations throughout the nation to ensure that businesses can operate without fear of imprisonment for minor, technical or procedural lapses by bringing all business reforms under this single overarching legislation, infusing dignity to an entrepreneur.
