Ashneet Hanspal , Guneet Mayall
September 12, 2023
The Indian Ministry of Commerce and Industry tabled the Jan Vishwas (Amendment of Provisions) Bill for consideration in the Parliament of India as of December 22, 2022, with the objective of decriminalizing and rationalizing certain offences to promote ease of living and doing business in India. During the recent monsoon session of the Parliament in July – August 2023, the updated Jan Vishwas (Amendment of Provisions) Bill, 2023 was taken up and approved by both houses of Parliament. As of August 11, 2023, the Jan Vishwas (Amendment of Provisions) Act, 2023 (“Act”) has received assent from the President of India. The Act amends a total number of 183 provisions across 42 Indian statutes with the intent to equipoise severity of the offence or violation committed and the gravity of the prescribed punishment, which is planned to be implemented in a phased-out manner.
Importantly, the Act contains a slew of amendments that are of interest to – and as and when implemented, are bound to impact – businesses operating in India as well as the businesses which seek to prospectively operate in India, including but not limited to the decriminalization of various offences through either: introducing compounding of certain offences, removing prescribed imprisonment terms for certain offences by converting these to a financial penalty (or removing prescribed imprisonment terms for certain offences while enhancing a prescribed fine, if any, for such offence) and/or revision and removal of both prescribed imprisonment terms and fines. Interestingly, the Act provides for a periodic increase in the fines and penalties prescribed thereunder by 10% of the minimum amount every three years. The Act also provides for the appointment of adjudicating officers and the establishment of appellate authorities under certain statutes.
Impact of Key Amendments: We’ve analyzed and provided our observations as regards the impact of key amendments introduced in major statutes covered by the Act hereinbelow. Notably, while certain amendments provided thereunder are indisputably welcome and likely to provide relief to businesses, a few amendments have been met with contention from stakeholders.
Changes which are getting favourable reception from the masses:
A noteworthy (and welcome) amendment presented by the Act under the Indian Information Technology Act, 2000 (“IT Act”) is the omission of the highly contentious Section 66A, which formerly prescribed punishment for any person sending offensive information using a computer or electronic device. The section remained in the statute (and was used to prosecute citizens) despite the order of the Supreme Court of India in 2015 (in the case of Shreya Singhal vs. Union of India), per which section 66A was declared unconstitutional on grounds of violating the right to freedom of speech guaranteed under the Constitution of India. Further, the Act (per its objective) has also several amended and decriminalized penalties prescribed under the IT Act including penalties in respect of failure to furnish information, return etc. (to the authorities appointed under the IT Act), the penalty for failure to preserve and retain information by online service providers or platforms etc. – in favor of retaining financial penalties and increasing the quantum of compensation payable thereunder.
Similarly, the Act also introduces several amendments under the Trade Marks Act, 1999, the Patents Act, 1970 and the Geographical Indication of Goods Act, 1999 – which are largely expected to provide relief to intellectual property owners in India. Some notable amendments in the Trade Marks Act include the removal of penalties for improperly describing a place of business as connected with the Trade Marks Office and the removal of imprisonment terms for certain offences (while increasing the monetary penalty prescribed for the same) – such as the offence of falsely representing a trade mark. The Act likewise removes penalties for improperly describing a place of business as connected with the Geographical Indications (GI) registry and falsification of entries in the register of the GI registry from the Geographical Indication of Goods Act. In the Patents Act, the Act similarly removes the penalty for implying a false connection with the patent office. Meanwhile, in the Copyright Act, the Act entirely removes the penalty for making false statements for the purpose of deceiving or influencing any authority or officer.
Other key statutes amended by the Act include the Cinematograph Act, of 1952 and the Cable Television Networks (Regulation) Act, of 1955. With respect to the former, the Act introduces substantial changes to the penalties associated with various offenses related to the exhibition and use of films (and considerably increases the quantum of prescribed fines in this regard). With respect to the latter statute, the Act summarily removes the imprisonment terms prescribed for contravening the Act's provisions. In lieu thereof, per the amendments stipulated in the Act provides, a person which contravenes the Cable Television Networks (Regulation) Act, 1955 is liable for advisory, or censure, warning, or a payment of fines (the prescribed amount of which has been increased) for such contravention (subject to whether it is the first contraventions or a subsequent contravention in three years).
The Act amends the Legal Metrology Act, 2009, which sets and enforces standards for weights and measures, regulate trade and commerce involving weight, measure, or number of goods in India. This Act has innumerable imprisonment clauses, the contravention of which is rectifiable and not grave. The changes introduced by the Act for decriminalizing minor offences herein may give relief to the business houses and may further help to reduce the burden on courts with backlog cases.
The Act also decriminalizes offences which were not of a significant nature under the Payments and Settlement Act, 2007 like residuary offences and offence related to failing to produce any statement, information, returns or other document asked for which may also be an acclamatory step the era of electronic payments.
The Act amends four environment-related acts: The Indian Forest Act, 1927 (“IFA”); Environment (Protection) Act 1986 (“EPA”); Air (Prevention and Control of Pollution) Act 1981 (“Air Act”); and Public Liability Insurance Act 1991 (“PLI”). The Act made a substantial reduction in the monetary penalty for offences under the three environmental legislations (EPA, Air Act and PLI). For instance, the minimum penalties for certain violations under Air Act is reduced by 90% (from INR 1 Lakh to INR 10 Thousand), and the maximum penalty is reduced by 85% (from INR 1 Crore to INR 15 Lakhs).
Contrarily, the Act on the other hand has invited concern and criticism for the amendments it has made to the following Acts.
The Act amends Drugs and Cosmetics Act, 1940, the Food Safety and Standards Act, 2006 and the Pharmacy Act, 1948 in relation to replacing punishment with penalty and allowing compounding of an offence at some places. Critics have stated that this may allow people involved in these sensitive industries to get away leniently.
The Act omits all the offences under the Indian Post Office Act, 1898. Offences being removed here include those committed by officers employed in post offices, such as theft or dishonest misappropriation of postal articles, fraud in connection with postal marks and illegal or unauthorised opening of postal articles or mail bags. Where theft, misappropriation, etc. is still covered by other statutes like Indian Penal Code 1860, unlawful opening of postal articles or mail bags still remains uncovered and removing punishments for this offence may lead to unjustified invasions of privacy and is against ‘right to privacy’ recognized as ‘right to life’ by the Supreme Court of India. This amendment is also criticized on the ground that it does not align with the objective of the Act of ‘ease of business’ and ‘ease of life’.
Some of the amendments proposed in the IT Act have also been contended as not being in line with the Act’s objective. For instance, the Act amends but does not decriminalize section 70B of the IT Act, which prescribes punishment for failure to provide information to the Indian Computer Emergency Response Team or comply with its directions. It retains the imprisonment term prescribed in this section, while also increasing the quantum of fine prescribed thereunder to INR 1 crore (USD 10 million approx.).
In conclusion, it cannot be denied that criminal consequences attached to the unintended or slightest defaults by the business house act as a hindrance for an entrepreneur who is considering to setup a business domestically in India. For the established companies especially the ones which comes under the radar of stringent disclosure obligation regulations of Securities Exchange Board of India (“SEBI”), notices carrying threats of arrest of key managerial personnel or directors adversely affect the public conception of the company globally. Similarly, a foreign investor envisaging to invest in India critically examines the criminal consequences of the existing defaults of the company. These amendments may promote domestic business setup giving reasonable comfort to the directors as well as enhance the chances of Indian companies to acquire more foreign investments.
To this extent, in view of the above, it is clear that the Act with the name ‘Jan Vishwas’ seeks to place faith on people and businesses to act with integrity suo-motu without their hanging a sword of compliance burden and remove the apprehension of imprisonment for non-severe offences.
However, stakeholders have contended that the Act – while being an enabling move by the Indian Government – in many cases, simply removes imprisonment clauses with monetary fines or penalties and does not substantially ‘decriminalize’ the statutes it covers and addresses a less significant number of statutes and maybe just a stanza in the whole poem. It will be interesting to see the impact of the Act once it is implemented by various Indian Ministries in the near future.
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