| Date | Version | May 20, 2022 | 1.0 |
| Keywords | ‘Whistle-blower’s law’, ‘Corporate Governance’ |
| List of Legislation Referred |
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| Jurisdiction | India |
Abstract: This write-up examines the efficacy of the ‘whistle blower’ regime in India and the way forward.
INTRODUCTION
As the name suggests, a ‘whistle blower’ is one who blows the whistle. Who is eligible to blow the ‘whistle’ and concerning ‘what’ is a matter determined by the regulatory regime. A ‘whistle blower’ is generally understood as ‘one who reveals something covert or informs against another, especially an employee who brings wrongdoing by an employer or by other employees to the attention of a government or law enforcement agency’ [Merriam-Webster].
It is logical to expect that any regulatory regime seeking an effective outcome would take into consideration the following:
- Protection for the person who blows the whistle.
- Checks and balances to ensure that the whistle-blower or the perpetrator does not abuse the process.
LEGISLATIVE FRAMEWORK IN INDIA
Vigil with Public Servants
A brief legislative history:
- 2001: The Law Commission of India recommended enacting legislation to protect whistle-blowers [Law Commission Report].
- 2004: The Supreme Court directed the Central Government to put administrative machinery to act on complaints from whistle-blowers until the law was enacted. The ‘Public Interest Disclosure and Protection of Informers Resolution (PIDPIR)’ empowered the Central Vigilance Commission (CVC) to act on complaints. The jurisdiction of CVC covers employees of the Central Government, corporations, societies, or local authorities owned/controlled by the Central Government. State government employees are excluded [PIDPIR Resolution].
- 2005: India signed and later ratified the United Nations Convention against Corruption [UN Convention].
- 2007: The Second Administrative Reforms Commission recommended a law to protect whistle-blowers [Ethics in Governance].
- 2014: The Whistle Blowers Protection Act, 2014 was enacted. Complaints can relate to corruption, willful misuse of power, or criminal offenses by public servants. Anonymous complaints are not investigated. Competent Authority must ascertain identity and conduct enquiry. Certain disclosures are excluded if already investigated under other statutes or beyond 7 years from alleged action. Penalties apply for negligent or malicious disclosure [Whistle Blowers Protection Act, 2014].
- 2015: The Whistle Blowers Protection (Amendment) Bill, 2015 prohibits reporting of certain categories of information and refers some disclosures to government-authorized authority [Amendment Bill].
Vigil concerning the private sector
Not all businesses fall under SEBI or Companies legislation. Listed companies and others accepting deposits or borrowing >50 crore INR must have a vigil mechanism overseen by an audit committee. Conflicts of interest must be managed. Protection for whistle-blowers is not always adequate.
SEBI LODR 2015 [SEBI LODR] requires listed entities to enable stakeholders to communicate concerns freely and disclose material events affecting subsidiaries. Ambiguity remains around whether a complaint under the vigil mechanism constitutes ‘material’.
CONCLUSION
Transparency should be encouraged for government bodies and businesses, with exceptions for sensitive information (foreign affairs, security, trade secrets, IP). Minimizing secrecy reduces overreach and abuse, protecting whistle-blowers and allowing anonymous complaints when justified.
