This article is authored by Sanskriti Goel, a 1st-year law student from Chanderprabhu Jain College of Higher Studies and School of law, GGSIPU. The article discusses various laws which aim at protecting whistleblowers against victimization in India. The article also critically analysis the practicality of such laws.
“Our nation is strengthened, not weakened, by those whistleblowers who are courageous enough to speak out on violations of the law.”
There are two kinds of whistleblowers. First, an internal whistleblower, who reports the wrongdoings to the senior authority of the organisation. Second, an external whistleblower, who reports the misconduct to someone outside the organisation such as a higher government authority or media.
As per a news article published in the Times of India, a whistleblower officer of the horticulture department was suspended as he called out a senior official for being a ‘covid-carrier’. The senior was purportedly flouting social-distancing norms after testing positive. The suspended officer has been earlier suspended twice for whistleblowing against numerous scams of the department. This incident is not one of its kind. In many instances, it is observed that employees usually deter from informing about corrupt practices due to fear of suspension or even termination in some cases.
With the intent to protect the interest of whistleblowers, the Indian Parliament enacted The Whistle Blowers Protection Act, 2014, but the Act is yet to be operationalised in India. The Whistle Blowers Protection (Amendment) Bill, 2015 (hereinafter ‘Amendment Bill’) has been passed by the Lok Sabha which aims to amend the aforementioned Act to prohibit disclosures that may prejudicially affect the sovereignty and integrity, security and strategic, scientific or economic interest of India, etc. However, the Amendment Bill was not passed by the Rajya Sabha and hence lapsed. Moreover, The Companies Act, 2013 and the Securities and Exchange Board of India (hereinafter ‘SEBI’) both lay down a certain set of rules for whistleblowing policy in public limited companies.
The Whistle Blowers Protection Act, 2014
Objectives of the Act are as follows:
- To establish a complaint mechanism system so as to provide a trustworthy platform for registration of disclosures relating to acts of corruption, wilful misuse of power, or wilful misuse of discretion;
- To inquiry into any such disclosures; and
- To provide an appropriate safeguard against victimisation of complainants.
Section 2 of the Act states that the provisions mentioned under this Act do not apply to the armed forces as they are protected under Special Protection Group Act, 1988.
The Act requires the complainant to make disclosures to a ‘Competent Authority’. Section 3 specifies the Competent Authority for each category of public servants. As per this section, it would be the Prime Minister for any Union Minister, the Chief Minister of state or union territory for any State Minister, the High Court for district court judges and arbitrators, the Central or State Vigilance Commission for government officials.
Section 4 states that any public servant or any other person from any non-governmental organisation can make a public interest disclosure before the Competent Authority. Earlier, the Act also stated that disclosures can be made even if they are prohibited under the Official Secrets Act, 1923 which prohibits disclosures relating to national security. But the Amendment Bill aims to amend this provision under Section 4 of the Whistle Blowers Protection Act, 2014 and forbids any disclosures prohibited under the Official Secrets Act, 1923.
The Companies Act, 2013
The Companies Act, 2013, and rules thereunder, provide that listed companies should establish a ‘vigil mechanism’ to report concerns relating to unethical behaviour, fraud, violation of the Codes of Conduct, etc. Further, the Act requires such companies to specify the details of the aforementioned mechanism on their websites. Such companies are also required to provide appropriate safeguards against victimisation of whistleblowers.
SEBI has instructed all the listed companies to adopt a whistleblower policy. Such companies are also required to make their employees aware of the policy so adopted to enable employees to report instances of insider trading. Recently, SEBI has also initiated a ‘reward mechanism’ under which it would reward whistleblowers for informing of insider trading.
Law Applicable to Private Companies
There is no specific law in India that applies to private companies that requires them to incorporate a whistleblower policy into their regime. Regardless of this fact, some private companies in India have voluntarily adopted an appropriate complaint mechanism system which aims to encourage the employees, contractors, suppliers of such companies to lodge a complaint about any actual or suspected illicit practice that might be taking place in the organisation. Such companies also take adequate preventive measures against the victimisation of persons who use the mechanism.
INFOSYS WHISTLEBLOWER CASE
India’s one of largest multinational companies in the IT sector, Infosys, received whistleblower complaints in September 2019. It was alleged that the company was taking unethical steps to boost its short-term profit. The company later released a statement saying that the complaint was placed before the Audit Committee. Subsequently, in January 2020, Infosys again issued a statement saying that the Audit Committee, after an exhaustive investigation, found no unethical practice being undertaken by the company and its top executive including the CEO and CFO and therefore, had given a clean chit to the company.
Crititcal Analysis of Laws Protecting Whistleblowers
While whistleblower complaints are on a rise in India, the government seems to do less about the handling of such complaints in an efficient manner. The Whistle Blowers Protection Act was enacted in 2014 but unfortunately, it is yet to be operationalised in India. This somehow defeats the entire purpose of the legislation being enacted. Some public servants still deter from informing about illegal activities that might be taking place in their departments due to fear of victimisation.
The Companies Act, 2013 mandates that every listed company must have a vigil mechanism but the Act fails to address the manner in which the mechanism must be regulated. Moreover, the Act does not lay down any fixed procedure for conducting inquiry into the alleged wrongdoings. Further, there is no instrument to determine whether a listed company has a fully functional vigil mechanism or is it just on papers.
Interestingly, the law does not even obligatorily require private employers to incorporate any whistleblower policy. Does that mean no private companies indulge in unethical practices? Of course not. Even though certain large multi-national corporations have voluntarily adopted a whistleblower policy, the company would not invite any legal penalty if in any case it does not comply with the policy.
Nevertheless, the government has also undertaken certain steps in order to ensure that nobody misuses the safeguards given under The Whistle Blowers Act, 2014 by introducing the Amendment Bill which ensures that national security is not compromised at the hands of whistleblowers. But this is not enough. It must be taken into account that even if employees or public servants notice some corrupt practices going on in their organisation, they usually refrain from reporting them due to fear of suspension, termination or victimisation. Not to forget that in many instances whistleblowers are martyred for raising voice against the violations of law. All in all, as employee vigilance is increasing in India, the need of the hour is to enact more stringent laws in order to provide adequate protection to whistleblowers along with a proper inquiry procedure.
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