Protection of whistle-blowers in Indian perspective!!

Blog Disclaimer: The material on our web site has been prepared and published for general information, educational purposes only. This information is not intended to constitute, and should not be considered, legal reference or legal advice. Non-profit, educational or personal use only.

Introduction

We are living in a complex society. Every conclusion or decision that we make is based upon our health, safety, economic and human rights. At times the decisions made are by the corrupt, immoral, ethical, incompetent and lethargic, which leads to the settlement of the ethical standards of our society. Accidents happen or corruption flourishes because of employees or staff who know about the wrong doings but are scared of losing their jobs or work. In the present society, the significance of whistle blowing is increasingly being acknowledged as a measure to reduce corruption and avoid dangerous circumstances by encouraging the discovery of unethical, illegal or prohibited activities performed by private or the government institutions.[1] It also helps to develop the inter-organizational culture and helps improve internal management and efficiency.

Who is whistle blowers?

Whistle-blower, an individual who, without permission, discloses private or classified information about an organization, usually related to wrongdoing or misconduct. Though the term was first used to refer to public servants who made known governmental mismanagement, waste, or corruption. A whistle blower is a person who reports, what in his perception is a concern or a feedback or conduct which is detrimental to the interests of the organization and its stakeholders, to those in positions of authority within the organization for appropriate action. [2]

It now covers the activity of any employee or officer of a public or private organization who alerts a wider group to setbacks to their interests as a result of waste, corruption, fraud, or profit seeking. All organizations, in any jurisdiction, anywhere in the world, whether public or private, desirous of providing stakeholders with a secure internal communication platform for reporting their concerns to them can participate in this initiative.

The legislative framework in Indian perspectives?

In India, whistle-blowers are protected by the different statute.

The Companies Act, 2013

Under section 177(9) of companies Act, 2013 provide that, every listed company or such class or classes of companies, as may be prescribed, shall establish a vigil mechanism for directors and employees to report genuine concerns in such manner as may be prescribed.[3] Further, it has been mandatory to all listed and public sector to have a establish the whistle-blower policy with strong and satisfactory safeguards against victimisation of whistle-blower

In addition to above section, details framework of inspection, inquiry and investigation under the chapter-XIV section 206 to 229 of the companies Act, 2013.

The Securities Exchange Board of India (“SEBI”)

Clause 49 of Securities Exchange Board of India (“SEBI”), listing agreement was introduced to improve the quality of corporate governance in listed companies in the year 2003. It has mentioned the formation of whistle-blower policy; however, it was not mandatory to put policy in place. In the year 2014, SEBI issued amendments to clause 49 to align it with the new companies Act of 2013. So as per new regulation of SEBI, whistle blower policy and vigil mechanism are mandatory for the listed companies. The Company should formulate and implement an effective whistle-blower mechanism and disclose the same.[4]

Whistle Blowers Protection Act, 2014

This law provides for the shelter of their identity and also has stringent norms to prevent their victimization. The Whistle Blowers Protection Act, 2014 Act was passed in parliament on Feb. 2014. Currently this Act is not in force, because The Whistle Blowers Protection (Amendment) Bill, 2015 was passed in Lok Sabha May, 2015, this Bill is presently pending in Rajya Sabha.[6]

Others

Statutory enactment alike Indian Penal Code, 1860, Code of criminal procedure, 1973, Code of civil procedure, 1908, Information Technology Act, 2000, The Maharashtra Control of Organised Crime Act, 1999 (MCOCA), The Unlawful Activities (Prevention) Act, 1967 with Amendment ACT, 2019 etc. all these acts provides means for fighting against the civil and criminal wrongdoer.

Constitution of India

Constitution of India is guaranteed to all citizen, under Article 19(1) (a) freedom of speech and expression under the control of Article 19(2) imposing the reasonable restrictions. Also Article 21 protect the life and personal liberty to all the person whether citizen or non-citizen of India. Article 21 confers on all the person a right to know which includes the right to received information. Currently there is no explicit regulation on whistleblowing relevant to private companies or businesses in India. Some MNC have executed a whistle-blower policy as part of their international policies which comprises individual employees or group of employees. Governments and organizations around the world are progressively accepting the critical role of whistle-blowing in exposure and deterring secret or unaddressed wrongdoing and in growing accountability and strengthening the fight against corruption and mismanagement.

Need for and significance of the whistle-blower policy

The chain of corporate failures like Xerox, Satyam, Sahara, King Fisher, ICICI etc., resulted in overseas investors lose confidence. India being a growing economy needs huge foreign investments to pour in, as Indian government is looking at MNCs to provide capital and technical know-how to fund the major projects.

• Good business and risk management and good corporate governance
• Deter malpractice and avoid wrong-doing thus maintaining or improving performance
• To protect staff, customers and the public
• To meet the expectations of regulators
• By encouraging employees to raise matters internally, it avoids the potential for external disclosure
• It can reduce financial losses
• Letting employees know that wrong-doing will not be tolerated can improve staff morale
• Demonstrating a commitment to good governance is likely to enhance the employer’s reputation and increase investor confidence[5]

Conclusion

Whistle blowing policy are very crucial for success stories of whistle blowing by employees in any organization. By adopting whistle blowing policy it is possible to inspire good and dishearten bad. The effective combination of whistle blowing policy, whistle blowing mechanism to be considered while blowing the whistle provides the required protection to the interest of all.

REFERENCES

1. https://www.ukessays.com/essays/marketing/whistle-blowing-with-examples-from-asia.php
2. https://www.britannica.com/topic/whistleblower
3. http://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
4. https://www.sebi.gov.in/sebi_data/attachdocs/1357290354602.pdf
5. 5) https://www.dlapiper.com/en/us/insights/publications/2013/11/whistleblowing--an-employers-guide-to-global-com__/
6. https://www.prsindia.org/billtrack/the-whistle-blowers-protection-amendment-bill-2015-3784
7. https://www.cwiportal.com/
8. Image, https://pixabay.com/photos