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Offences proposed to be decriminalised are not venial breaches: Experts


Chennai: While welcoming the intent of the central government to decriminalise minor offences, experts are of the view that the government is whittling down the select penal provisions under various laws governing the players in the financial sector.

The central government has also proposed to decriminalise or remove the jail term for dishonouring of cheques under the Negotiable Instruments Act.

"The breaches as listed in the illustrative table of Department of Financial Services (DFS) cannot by any stretch of imagination be construed as technical or venial breaches calling for kid gloves treatment of the offenders," a Supreme Court advocate told IANS, preferring anonymity.

"The government's move is a welcome step as its intention is to decriminalise minor offences where 'mens rea'/motive or intent is not proven," a senior official in a financial services company not wanting to be quoted told IANS.

The DFS while calling for views of the stakeholders on the penal provisions of various laws listed by it reasoned that decriminalisation of minor offences is one of the thrust areas of the government.

The risk of imprisonment for actions or omissions that aren't necessarily fraudulent or the outcome of malafide intent is a big hurdle in attracting investments, the DFS said.

According to DFS, the principles that are to be kept in mind when deciding on reclassification of criminal offences to compoundable offences are: (i) Decrease the burden on businesses and inspire confidence amongst investors; (ii) Focus on economic growth, public interest and national security should remain paramount; (iii) Mens rea (malafide/criminal intent) plays an important role in imposition of criminal liability, therefore, it is critical to evaluate nature of non-compliance, i.e. fraud as compared to negligence or inadvertent omission; and (iv) The habitual nature of non-compliance.

The DFS had also listed the penal provisions in 19 laws for amendments. The Acts are: Insurance Act, SARFAESI Act, PFRDA Act, RBI Act, Payment and Settlement Systems Act, NABARD Act, NHB Act, State Financial Corporations Act, Credit Information Companies (Regulation) Act, Factoring Regulation Act, Actuaries Act, Banking Regulation Act, General Insurance Business (Nationalisation) Act, LIC Act, Banning of Unregulated Deposit Schemes Act, Chit Funds Act, DICGC Act, Negotiable Instruments Act and Prize Chits and Money Circulation Schemes (Banning) Act.

Even though the government speaks about 'mens rea'/malafide, criminal intent, certain violations proposed to be decriminalised may have 'mens rea', said an expert.

"For example, Section 38 (1) (a) of Actuaries Act states that use of a common seal of Institute of Actuaries of India so as to deceive or likely to deceive as an offence which is proposed to be decriminalised which may not be justified," he pointed out.

The government also proposes to decriminalise the offence of anyone falsely claiming himself to be a qualified actuary.

"Similarly, all cases of businesses carried on without IRDAI (Insurance Regulatory and Development Authority of India) registration cannot be treated as without intent," he added.

On the proposal to decriminalise or remove the jail term for dishonouring of cheques under the Negotiable Instruments Act, Saroja S, Director, Citizen Consumer and Civic Action Group (CAG), told IANS: "This is definitely against the common man. The threat of jail term acted as a deterrent for issuers of cheques from dishonouring them. If that fear is not there, then everyone will issue a bouncing cheque."

"I am against any dilution of any penal provision. At a time when the country is facing Covid-19 pandemic, the government should not come out with proposals that will have far reaching impact on the people. The protection of common man will be a question," she added.

According to a legal eagle, the DFS may like to impress upon the Sectoral Regulators to move away from micro managing regulated entities and resort to the "control by exception" principle within the broad regulatory framework and that would be conducive for ease of doing business rather than clogging the corridors of the regulator's offices at the whims and fancies of the regulators.

Ease of doing business can be ensured by the regulators by shunning their "reason to suspect" approach by fostering "reason to believe" approach.

The government's endeavour for ease of doing business should not give way to ease of escaping from the clutches of well thought out statutory provisions by corporate honchos, an industry official said.

The central government has sought the views of various stakeholders on the proposals by June 23, 2020.

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