Fear of imprisonment for minor offences and the associated harassment/social taboo can hamper individual confidence and the growth of the business ecosystem. Broadly, this is the rationale stated in the Statement of Objects and Reasons of the Jan Vishwas (Amendment of Provisions) Bill, 2022, which attempts to decriminalise minor offences across 42 legislations in India.
In the past, the incumbent government has taken measures to decriminalise minor offences to reduce the disproportionate burden and increase the ease of doing business. For instance, in 2018, several offences (a total of 16) were decriminalised under the Companies Act, 2013. Consistent with the past approach, the government has introduced a Bill which proposes to amend as many as 42 central legislations, which includes important statutes, like Information Technology Act, 2000 (IT Act); Patents Act, 1970; Copyright Act, 1957; Payment and Settlement Act, 2007 (P&S Act) and Drugs and Cosmetics Act, 1940.
Some of the salient features of the Bill are:
- Decriminalisation through deletion or amendment of provision
Several offences have been proposed to be decriminalised by either deleting the existing provision or amending the provision to change the nature of punishment from criminal to civil. These changes can be better understood from the following two scenarios.
Scenario 1: No more punishment
In this situation, the entire provision has been proposed to be deleted which provided for imprisonment for certain violations. This means that the act will be no longer considered a violation (which means no consequences) under that given statute. For example, section 66A of the IT Act provides for imprisonment with a fine for sending offensive messages through a communication service. This section has been proposed to be deleted after a long gap of seven years. The Supreme Court, in 2015, had declared Section 66A of the IT Act as unconstitutional in the Shreya Singal case. Similarly, Section 68 of the Copyright Act provides for imprisonment or a fine or both for making false statements for the purpose of deceiving or influencing any authority. Section 68 has been deleted.
Scenario 2: Punishment by monetary penalty
Under this scenario, the provision has been only amended (not deleted) to the effect that the existing act continues to amount to a violation. However, the punishment will be no longer imprisonment but a monetary penalty. For example, Section 67C of the IT Act provides for imprisonment and a fine when intermediaries fail to preserve and retain information. Imprisonment has been replaced with an increased monetary penalty which can go up to Rs 25 lakh.
Similarly, under Section 72A of the IT Act, the punishment for disclosure of information in breach of lawful contract is imprisonment or a fine up to Rs 5 lakh or both. The Bill substitutes the current punishment with an enhanced monetary penalty which can go up to Rs 25 lakh.
2. Substitution of offence & fine with penalty
Certain violations have been proposed to be decriminalised by changing the nature of punishment from offence to civil in nature (like default, violation, breach, non-compliance etc) and the resulting punishment from fine to penalty. In 2018, a similar exercise was undertaken to decriminalise several offences under the Companies Act, 2013, where the term ‘offence’ was replaced with ‘penalty.’ For instance, under the Patents Act, 1970, a person selling a falsely represented article as patented in India commits an offence (i.e. criminal act, although there is no imprisonment for that offence) and is subjected to a fine of up to Rs 1 lakh. The Jan Vishwas Bill proposes to replace the offence and fine with a penalty. Similarly, under Section 26(3) of the P&S Act, the expression offence and fine have been replaced with penalty.
To better understand how this substitution of expression from offence and fine with penalty amounts to decriminalisation, the difference between offence & civil violation like default and their respective repercussions i.e., fine and penalty needs to be understood. These differences have been discussed by the Supreme Court and High Courts.
- Offence is criminal in nature, whereas defaults (non-compliance, violation, failure, breach etc) unless classified as an offence, are civil in nature. The concept of offence originates from the Indian Penal Code (IPC) which deals with different types of offences. For example, chapter 11 of the Indian Telecommunication Bill, 2022, deals with offences and prescribes fines for the commission of such offences. However, the Digital Personal Data Protection Bill, 2022, uses the term financial penalty instead of offence and fine.
- Fine is an outcome of the commission of a criminal act, i.e. offence, whereas a penalty is paid for civil violations. To elaborate, even when there is no imprisonment and only a fine is paid for an offence, the act remains criminal in nature. This understanding comes from the IPC, which lays down five kinds of punishments and a fine is one of them. For instance, when one pulls the chain of a moving train without reasonable cause, one can either pay a fine or go to jail. But although the fine is paid and the person does not go to jail, the act (i.e. offence) remains criminal in nature.
- Offences are adjudicated by courts and thereafter, a fine is imposed. Whereas in the case of a civil violation, the government appoints an adjudicating authority for the imposition of a penalty. For instance, the Jan Vishwas Bill proposes to vest the Controller of Patents as the adjudicating authority for the determination of penalties for certain kinds of violations under the Patents Act.
Similarly, under the P&S Act, the Reserve Bank of India (RBI) will adjudicate a penalty for violation under section 26(3) of the said Act.
3. Settlement through compounding
For certain violations, there is no option of compounding, which means imprisonment is the only punishment. By allowing compounding, the liability can be extinguished by paying a certain amount of penalty. For instance, offences (when committed for the first time) under the Drugs and Cosmetics Act (section 32B) are now proposed to be compoundable. This was not allowed earlier. Similarly, the Bill proposes to make offences under Section 200 of the Motor Vehicles Act as compoundable. However, such compounding is available only on the first occasion and not in case of repeated violation.
4. Periodic revision of fine and penalty
Perhaps this is the first instance where there is a legislative proposal for periodic enhancement of fines and penalties. For this, the Bill proposes to increase the minimum amount of fine and penalty levied (to be increased by 10 percent), after the expiry of every three years, once the Bill becomes a law. Perhaps this change has been proposed keeping in view factors like inflation and efficacy of the financial deterrence.
Questions for examination
Jan Vishwas Bill, as the name suggests, intends to increase the confidence of businesses in India by reducing the possibility of harassment which often arises due to criminal punishment for committing minor offences. Probably, this Bill can also reduce the administrative burden on the courts so their resources can be better prioritised for important matters. While the government has undertaken a commendable task by doing a comprehensive review of several laws, the Bill needs to be examined carefully to understand some of the issues:
- What could be the possible impact (compliance burden) of the proposed amendments to the relevant legislation on the industry? For instance, imprisonment for certain violations has been replaced with a high penalty. However, can an increased quantum of penalty lead to increased enforcement action? Are the safeguards against disproportionate enforcement actions adequate?
This becomes an important consideration as the overall safeguards available in case of imprisonment are not available in case of monetary penalty. Further, is there a need to review the existing adjudicating/appellate mechanism under the concerned legislation? For example, under the IT Act, the Bill proposes to raise the amount of fine (retains the imprisonment, i.e. no decriminalisation) for violating directions from the Indian Computer Emergency Response Team (CERT) from the existing Rs 1 lakh to Rs 1 crore.
- There is no statutory definition of minor offences and hence, it is usually understood depending on the nature of the violation in each statutory context. Probably, the government has used this principle in the Bill for identifying minor offences, which in its wisdom, merits rationalisation. However, how the Bill fares in its objective of decriminalising and rationalising minor offences remains a question. For example, whether the Bill comprehensively covers all such minor offences which merit decriminalisation but are not part of the Bill. For instance, industry associations have made representations in the past to decriminalise more than one minor offence under the Copyright Act, 1957. However, in the Bill, only Section 68 of the Copyright Act (false representation made to the Authority) has been dropped.
- Whether there are instances where proposals to decriminalise could result in an incentive for bad actors to treat monetary penalties as acceptable costs and not as a credible deterrent? For this, it may be worth looking at the past experience of decriminalisation of other laws like the Companies Act, 2013.
Since the Bill has been referred to the Joint Parliamentary Committee (JPC) for scrutiny, it would be interesting to wait and see whether we find answers to any of the above-mentioned issues in the finding of the JPC.
The writer is a public policy consultant. Views expressed are personal.
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