The Ministry of Finance vide a statement released on 08.06.2020 proposed the decriminalisation of numerous economic offences minor in nature.

The reason cited by the Ministry for the above-mentioned proposal was  improvement of business sentiment and unclogging of court procedures especially in times of COVID-19 pandemic when it is pertinent to revive economic growth of the country and improve the judicial system. As per the statement released, imprisonment for actions or omissions that aren’t necessarily fraudulent or malafide in nature creates a big setback in attracting investments.

It was further mentioned that it was due to the pendency of cases in all tiers of courts and the long trials taking place for resolving disputes that a balance needs to be established to punish malafide intent and compound other minor offences. The statement further implicated the long-term benefits that could be gained by decriminalising such crimes and how this would help the government achieve India’s objective of ‘Sabka Saath, Sabka Vikas and Sabka Vishwas’.

The statement also released the following set of principles to be kept in mind while deciding on reclassification of criminal offences to compoundable offences:

  1. Decrease the burden on businesses and inspire confidence amongst investors;
  2. Focus on economic growth, public interest and national security should remain paramount;
  3. Mens rea (malafide/ criminal intent) plays an important role in imposition of criminal liability, therefore, it is critical to evaluate nature of non-compliance;
  4. The habitual nature of non-compliance;

The relevant sections proposed to be decriminalised as per the statement are as follows:

  1. Section 12, Insurance Act, 1938.
  2. Section 29, SARFAESI Act, 2002.
  3. Section 16(7), 32(1), PFRDA Act, 2013.
  4. Section 58B, RBI Act, 1934.
  5. Section 26(1),26(4), Payment and Settlement Systems Act, 2007.
  6. Section 56(1), NABARD Act, 1981.
  7. Section 49, NHB Act, 1987.
  8. Section 42, State Financial Corporations Act.1951.
  9. Section 23, Credit Information Companies (Regulation) Act, 2005
  10. Section 23, Factoring Regulation Act, 2011
  11. Section 37, Actuaries Act, 2006.
  12. Section 36AD(2), 46, Banking Regulation Act, 1949
  13. Section 30, General Insurance Business (Nationalization) Act, 1972.
  14. Section 40, LIC Act, 1956.
  15. Section 21, Banning of Unregulated Deposit Schemes Act, 2019.
  16. Section 76, Chit funds Act, 1982.
  17. Section 47, DICGC Act, 1961.
  18. Section 138, Negotiable Instruments Act, 1881.
  19. Section 4 &5, Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

The Finance Ministry in its statement then informed about a stakeholder consultation exercise to be conducted in order to develop consensus for the said proposal. On account of the same, the Ministry invited comments from the State Governments/ UT Administrations, Civil Society/NGOs, Academicians, Public and Private Sector Organisations, Multilateral Institutions and members of the public to submit their suggestions to the Department of Finance at the email address bo2@nic.in within 15 days, i.e., by 23rd June, 2020.

 

Order:Ministry of Finance statement dated 8th June 2020

Image: https://i0.wp.com/www.scconline.com/blog/wp-content/uploads/2019/02/mof-647_022117042319.jpg?fit=1330%2C887&ssl=1