WHISTLEBLOWING LAWS IN INDIA: SAFEGUARDING TRANSPARENCY AND ACCOUNTABILITY

Shravani Gupta,

UPES, Dehradun 

INTRODUCTION

A growing number of whistle-blower complaints have highlighted the need for a robust mechanism to protect them, highlighting the importance of whistle-blower protection in India. A transparent structure and effective and transparent communication are key benefits of this development for organizations. Whistle-blowers are driven by principles such as ethics, honesty, and truthfulness. Employees who feel compelled to expose an organization's unethical and corrupt practices are such individuals.

Most whistle-blowers are employees of the organization in question, so protecting them becomes crucial. Several instances have occurred where efforts to control and silence whistleblowing activities have been highlighted by the media. As a result of these occurrences, this article examines the legal aspects of India's whistleblowing regime, which provides safeguards for whistle-blowers.

NEED FOR PROTECTION OF WHISTLEBLOWERS

Whistle-blowers are essential to maintaining corporate governance, free speech, democracy, and other values. But they frequently experience severe repercussions including threats, harassment, and even murder, which poses a serious danger to these beliefs. Whistle-blowers face animosity from their colleagues or senior management, administrative harassment, hazards to their personal and family safety, and the chance of losing their jobs when they reveal the true state of an organisation.

Fraud and corruption not only inhibit social improvement but also economic progress. People who courageously confront their own organisations to put an end to wrongdoing deserve protection from influential groups. Sadly, India has seen a number of events that highlight the critical need for strong laws to protect whistle-blowers and their interests. Remarkable instances like the Satyendra Dubey case from 2003 and the Shanmugam Manjunath case serve as reminders of the need for strict legislation to handle whistle-blower cases in India. (Tamanna Phukan, 2020)

·       Case of Satyendra Dubey: Dubey, an exceptionally competent engineer from IIT Kanpur, focused his attention on the Golden Quadrilateral. While working on the project, he discovered numerous inconsistencies, including the awarding of contracts based on forged documents, the subcontracting of work to incompetent firms, and the misuse of public monies. He contacted the NHAI (India's National Highways Authority) and the Prime Minister with his concerns and that action be taken. Sadly, he was shot and killed in November of 2003. As a result of this tragedy, a lot of people started talking about how important it is to safeguard people who blow the whistle on corruption and wrongdoing.

·       In the Manjunath Case, a manager at the Indian Oil Corporation in Uttar Pradesh named Shanmugam Manjunath boldly exposed rampant oil adulteration and wrongdoing. He foresaw the threat posed by low-quality fuel and took it upon himself to shut down several petrol stations that were participating in illicit activity. He was tragically shot and killed after his name was revealed as a result of his brave deeds. Public indignation at the brutal murder of Manjunath prompted the Central Bureau of Investigation (CBI) to take up the case. All eight defendants were found guilty after a trial in 2007. Seven of them received life sentences, and Pawan Kumar was executed for his role in the crime. The necessity to fight corruption and safeguard its avengers was brought into sharp focus by this case.

·       Case of Air Asia: Pilot Gaurav Taneja acted with tremendous honesty and integrity by reporting widespread infractions of airline safety procedures. He found that Air Asia was putting passengers' lives in danger by disregarding established protocols meant to assure safety during the COVID-19 outbreak. Unfortunately for Gaurav Taneja, rather than receiving praise for his dedication to security, he was punished severely. The airline even accused him of defamation after he was fired unfairly. Aside from raising questions about how people who fearlessly speak up against carelessness and misconduct are treated, this case emphasises the significance of maintaining safety standards in the aviation industry.

EVOLUTION OF THE LAW

The official secret Act 1923

The British government in India enacted the Official Secrets Act of 1923 to prevent the leak of classified information. The government feared that this news could compromise national security if it became public. The Act mandated harsh penalties, including jail terms of three to fourteen years. However, the principles of open government and access to information were violated by this legislation.

The Public Interest Disclosure (Protection of Informers) Act, 2002 was proposed by the Law Commission of India in 2003 to rectify this discrepancy. The Public Interest Disclosure and Protection of Person Making Disclosure Bill then made its way into the Lok Sabha in August of 2010. In 2011, the measure was revised and renamed the Whistleblowers Protection Act to reflect its new purpose. The Whistleblowers Protection Act, 2011 was officially signed into law by the President of India on May 9, 2014.

The purpose of the Whistleblowers Protection Act was to offer legal protection to those who come forward with information that could benefit the public. The passage of this law was a major milestone in the fight for open government and the freedom of information in this country. (Aditi Shobha, 2021)

The Whistle-blower Protection Act, 2011

The disclosures covered by the Whistle-blowers Protection Act of 2011 are as follows:

·       The first type of information it shields is that which relates to violations or attempted violations of the Prevention of Corruption Act, 1988. This encompasses both bribery and the accumulation of wealth out of proportion to the official's salary.

·       Second, it includes information about deliberate actions that cost the government money or benefit others unfairly.

·       Finally, it protects information that could incriminate a public official who has committed or attempted to commit a criminal offence.

The Act safeguards the complainant from retaliation. However, this defence is optional. To seek redress, the victim must submit an application to the appropriate responsible authorities. The onus of proof that the individual is not being victimised shifts to the public authority, generally the employer. Although victimisation of the complainant is prohibited by the Act, it is not a separate offence.

Whistle-blowers Protection Act, 2014

Under the Act, anyone can go to the proper authority and submit a public interest disclosure. According to Section 8 of the Act, there are times when a person is exempt from providing information in response to an investigation. These issues are relevant to India's independence, territorial integrity, and national security, as well as its diplomatic ties with other countries. They also include things like defamation or incitement to crime, as well as contempt of court, public order, or morality. The publication of central or state cabinet deliberations is an example of the kind of sensitive material covered by this clause. In addition, according to Section 18(2) of the Act, an officer is also considered guilty of an offence if it was done with the officer's knowledge or with the officer's cooperation.

Whistle-blowers Protection (amendment) bill 2015

The Act places a number of limitations on when particular information may be disclosed. Information on safety, sovereignty, integrity, security, and matters of national interest, as well as information about how cabinet meetings are conducted, cannot be revealed. Information that has been specifically restricted from publication by a court or tribunal or that would constitute contempt of court is likewise off limits. The Act also limits the release of material that would jeopardise parliamentary or state legislative privileges. Aside from information received via the RTI Act of 2005, there are limits on information pertaining to commercial confidence, trade secrets, and intellectual property. A person acting in their fiduciary capacity may collect information under the RTI Act, 2005, in which case it may be provided. The Act also prohibits the disclosure of information that was given to a foreign government in confidence, information that could endanger someone's life or physical safety, information required for security or law enforcement operations, information that obstructs an investigation or a prosecution, and information that infringes upon someone's privacy without authorization.

TYPES OF WHISTLE-BLOWERS

·       Internal whistleblowing is the practise of informing management or the highest-ranking officials about misconduct within an organisation. 

·       In contrast to internal channels, external whistleblowing is reporting the violation to other organisations like the media or law enforcement. 

·       When a former employee of a company divulges information regarding misconduct within that company, this is known as an alumni whistle-blower. 

·       Open whistleblowing is the practice of reporting misconduct when the whistle-blower’s identity is known or made public.

·       When an individual reports organisational wrongdoing that directly impacts or targets them, this is known as personal whistleblowing.

·       Whistleblowing that is impersonal occurs when the misbehaviour exposed hurts other people or has wider societal repercussions. 

·       Information concerning official misbehaviour or corruption may be revealed through government whistleblowing. 

·       Exposing wrongdoing or misbehaviour within a business body is referred to as corporate whistleblowing. 

PROCESS OF WHISTLE-BLOWING

Procedure

1.     Concerns Should Be Addressed Quickly: It's important to talk about problems as soon as they come up. While verbal communication is permitted, it is advised to send emails or write down any complaints. This makes it possible to have a precise record of the issue, along with pertinent background data and any available witnesses. 

2.     Reporting to the Compliance Officer: As soon as a concern is expressed, it should be reported right away to the organization's authorised compliance officer. Such problems are handled by the compliance officer, who also makes sure the proper steps are performed. 

3.     Professional Investigation: Usually, it is not advised for whistle-blowers to carry out their own investigations. This might taint the information, jeopardise the validity of the proof, or even endanger the whistle-blower’s safety. Instead, after receiving the concern, the organisation will start an investigation. An investigative officer may be assigned to manage the situation in more severe and serious circumstances. 

4.     Communication of Findings: The whistle-blower should be notified of the investigation's conclusions and the next measures afterwards. The organisation may decide to take no further action or to move on with the disciplinary process depending on the nature of the findings. It is significant to remember that the whistle blower might not be given substantial information about the inquiry due to the necessity for confidentiality. 

5.     Escalation of Concerns: The whistle-blower should get in touch with an executive director, the head of the internal audit, or the chair of the audit committee if they believe their concerns have not been adequately handled or if they believe wrongdoing is still going on. These people are in higher positions within the company and can offer more oversight and help to resolve the issue. To secure an appropriate conclusion, it is essential that whistle-blowers feel empowered to raise their concerns if necessary.

Steps followed 

·       Establishing a Comprehensive Policy and Monitoring mechanism: To address whistleblowing concerns successfully, the organisation should create a strong policy and put in place a thorough monitoring mechanism. This guarantees that a formal framework is in place to deal with disclosures and safeguard the interests of all parties involved. 

·       Publication of the Vigil Mechanism in a Transparent Manner: If appropriate, the organisation should proactively make its whistle blower mechanism's specifics available on its official website and in the board's report. This promotes transparency and shows how dedicated the company is to upholding moral standards and responsibility. 

·       Ensuring Whistle-blower Protection: It is crucial to put in place sufficient protections to protect anyone who uses the whistleblowing mechanism from any type of victimisation or reprisal. The organisation should put in place safeguards to protect their privacy, allow them to remain anonymous if they so want, and take the necessary steps to protect them from injury or other negative effects. 

·       Handling Frivolous complaints: The audit committee or the nominated director (as applicable) shall have the power to take appropriate action in the case of repeated frivolous or unsubstantiated complaints. This prevents the whistleblower mechanism from being abused and enables the fair and effective resolution of sincere concerns without unwarranted interference.

Organisations must create a thorough policy, uphold openness in their watchdog process, safeguard informants, and respond appropriately to unfounded claims. These actions support a climate where real concerns are addressed and people are encouraged to speak up when they have knowledge of misconduct. (Bhavya Gupta and Kumar Rishabh Parth, 2021).

Some important points while complying with this policy

Disclosures made by whistle-blowers should be accompanied by their full names. Concerns submitted anonymously will be considered at the discretion of the compliance officer, who will consider the nature and severity of the issues raised, the credibility of the concern, and the availability of corroboration evidence from known sources. The name of the whistle-blower will be protected by the compliance officer unless doing so would compromise the inquiry. However, the identity of the information provider may become public knowledge over the course of the investigation, and the whistle-blower may be called upon to testify. False complaints may result in disciplinary action for employees or a review procedure for volunteers, as outlined in this policy.

CRITICISM OF THE PROTECTION TO WHISTLE-BLOWERS ACT

Whistle-blower protection laws are essential in motivating people to report instances of fraud, corruption, and other misconduct in businesses and government institutions. Despite India's efforts to provide a legislative framework for whistle-blower protection, there are a number of issues and concerns with the current law. Here are a few crucial points-

·       Limited scope: One popular complaint is that the Whistle-blowers Protection Act of 2014, the current statute, has a narrow scope. It does not apply to the commercial sector and only covers revelations about corruption and power abuse by public employees. This omission weakens the overall efficacy of the law and exposes employees in private enterprises to risk.

·       Lack of protection: Detractors claim that whistle-blowers are not given enough protection by the law. Because confidentiality and anonymity are not expressly guaranteed under the Act, people are reluctant to share information for fear of being punished. The effectiveness of the law is weakened by the lack of specific protections and remedies against victimisation.

·       Lack of independent authority: The Act does not have an independent body in charge of receiving and looking into complaints. Whistle-blowers are forced to seek authorised officials within their organisations or governmental agencies instead, which can result in conflicts of interest and possible cover-ups. The process's legitimacy and objectivity are compromised by the lack of an impartial body.

·       Investigations and legal actions are frequently delayed in whistle-blower cases, and these delays can be significant. Whistle-blowers face protracted uncertainty as a result of the law's lack of precise deadlines for resolving complaints. Potential whistle-blowers may be discouraged from coming forward by the length of investigations and legal proceedings.

·       Inadequate incentives and rewards: Opponents claim that the law does not offer whistle-blowers enough incentives and benefits. When faced with potential dangers to their personal and professional safety, people may be reluctant to expose misconduct without adequate compensation or protection systems. More whistle-blowers may come forward if they are offered financial rewards or job stability.

·       Lack of understanding and application: Many potential whistle-blowers in India are not aware of their rights or the protections that are available to them. The underuse of the law is a result of insufficient informational initiatives and limited awareness raising. Concerns concerning the uneven application of whistle-blower protection laws in various states have also been raised, further compromising the law's efficacy. (Karthik Shiva, 2021)

CORPORATE WHISTLEBLOWING AND REGULATORY COMPLIANCE

The Companies Act, 2013

All publicly traded firms must have a reliable surveillance mechanism for their employees and top executives, according to Section 177(9) of the Firms Act, 2013. Furthermore, it is now necessary to put in place a whistle-blower policy that offers thorough protection against any kind of reprisal against whistle-blowers.

The organization's sincere desire to develop and apply a whistle-blower policy is necessary for it to be effective. In addition to offering instructions for reporting any infractions, such a policy ought to clearly state the consequences. Failure to report should also be regarded as a breach of the policy in the most serious situations. Some of the points for understanding the framework can be-

·       A formal procedure and defined channels for reporting policy infractions at all levels of the organisation must be established. The Chairman of the Board is responsible for monitoring these channels to ensure that they are fair and efficient.

·       Employees at all levels, from new hires to executives, should be able to report policy infractions through the company's whistle-blower policy. Discrimination, wilful disregard for quality standards, collusive fraud, and improper use of funds are all examples of wrongdoings that should be reported.

·       Senior management will investigate such reports immediately. It is important to note that any fake evidence or malicious intent in making such reports will be handled seriously and punished.

·       The whistle-blower policy must clearly protect whistle-blowers from harassment. It should clearly clarify that management would not retaliate against the violator. The policy forbids and punishes revenge.

·       The policy must guarantee complete anonymity for the whistle-blower throughout the entire procedure. At no time will the identity of the person reporting the infraction be revealed, protecting both their anonymity and their safety.

·       If the claims are baseless and made with malicious intent, the whistle-blower policy should exclude protection from disciplinary punishment. This prevents people from making false charges and preserves the reporting procedure.

Sections 206 to 229 of the Companies Act of 2013 provide a comprehensive framework for inquiries, investigations, and inspections. These clauses make it easier for third parties to report wrongdoing, thus giving them the status as external whistle-blowers.

An Inspector (who is not the registrar) may review documents and make recommendations for further investigation when reasonable doubt is raised per Section 208 of the Act. Even if a company's special resolution doesn't specifically request an investigation, the Central Government can nonetheless order one under Section 210 if the registrar, inspector, or the public interest so requires it.

In accordance with these regulations, Section 211 has resulted in the creation of the Special Fraud Investigation Office (SFIO), an agency with the power to make arrests for crimes linked to fraud. In the past, auditors' primary responsibility was to report instances of fraud; they lacked the legal authority to directly ascertain such cases. But now it's up to auditors to blow the whistle on any wrongdoing by reporting it immediately to the federal government or anybody else needs to know. (Dr. Meenu, 2022)

Securities & Exchange Board of India (SEBI)

The Principles of Corporate Governance were revised by the Securities and Exchange Board of India (SEBI) on August 26, 2003, and this revision became part of the industry-standard Listing Agreement. This change, referred to as Clause 49 of the Listing Agreement, highlighted the need for corporations to have a Whistle-blower Policy. Although such policies were not required at the outset, many businesses voluntarily adopted them after seeing the positive effects on compliance and governance.

Companies were required to declare whether or not they had a Whistle-blower Policy in place, the total number of events recorded under the policy, and the resolution or pending status of each case under Clause 49.

However, the SEBI (Listing Obligations and Disclosure Requirements), 2015 Regulations are now in place instead of the Listing Agreement. All publicly traded companies are now required by Regulation 22 to provide employees and directors with a way to report wrongdoing within the company. This rule mandates that businesses have a reliable channel for employees to report and discuss any instances of misbehaviour or unethical behaviour.

As part of its mission to improve corporate governance and transparency in listed businesses, SEBI has implemented an obligatory whistle-blower system. The Securities and Exchange Board of India (SEBI) mandates this process so that businesses can demonstrate their commitment to accountability, integrity, and ethical behaviour.

·       In order to protect the privacy of its directors and staff, the designated organisation will implement a rigorous reporting structure.

·       All directors, employees, and other individuals who use the reporting mechanism will be protected from retaliation thanks to the safeguards built into the system.

·       The vigil system would enable immediate access to the audit committee chairperson in unusual or appropriate situations. (Abhishek Choudhary, 2019).

CONCLUSION AND RECOMMENDATIONS

The importance of whistle-blowing in the workplace has been brought to the forefront, but many employees still choose not to speak out when they witness malfeasance on the job. It takes moral fortitude and the willingness to put the public interest ahead of one's own while blowing the whistle.

People have mixed feelings about whistle-blowers; some see them as heroes for speaking out against wrongdoing in the workplace, while others view them as disruptive outsiders who don't belong there. Some people think workers should avoid blowing the whistle on their employers in order to safeguard the company's good name.

Evaluating the awareness, usefulness, and reliability of grievance reporting systems in Indian organisations across different industries is essential for determining whether or not a whistle-blowing process is effective. Before going public, whistleblowers should try to report misconduct through proper internal means. Possessing proof sufficient to persuade a reasonable person of the grave hazards stemming from the offence is essential. Whistleblowing is an internal control and accounting strategy that helps prevent fraud and misbehaviour, which in turn helps minimise white-collar crime and protects organisations from collapse.

A strong ethical culture and a sense of moral duty are vital to inspire members to come out and reveal injustice inside their companies and play a crucial role in protecting organisations. Despite the novelty of India's whistle-blowing landscape, with recent laws demanding responsibility for specific corporations, businesses should take the initiative to integrate whistle-blowing systems into their governance framework, beyond the minimum standards set by regulators.

India must enact strict and thorough rules to safeguard anyone who choose to blow the whistle. These laws are meant to send a message to dishonest workers that they will be held accountable for their activities, making them more likely to contribute to the betterment of their company and the country as a whole.

REFERENCE

1.     Tamanna Phukan, Whistle Blowing in India, Vol. 1, Issue 1, JUCL, 301-307(2020), https://www.juscorpus.com/wp-content/uploads/2021/02/4.-Tamanna-Phukan.pdf.

2.     Aditi Shobha, “Whistleblower Protection in India - Protecting the Unsung Heroes | KnowLaw” (KnowLaw, August 7, 2021), https://knowlaw.in/index.php/2021/08/07/whistleblower-protection-india/.

3.     “Whistleblowing in India” (Lexology), https://www.lexology.com/library/detail.aspx?g=061bbd45-c51f-49c2-826c-9e9cbe90177e.

4.     “Whistle Blowers Protection Act, 2014: A Cracked Foundation? - Whistleblowing - India” (Whistle Blowers Protection Act, 2014: A cracked foundation? - Whistleblowing - India, October 4, 2021), https://www.mondaq.com/india/whistleblowing/1118060/whistle-blowers-protection-act-2014-a-cracked-foundation.

5.     IJLMH, “Redeveloping Whistleblowing Policy in India: A Fight for Better Corporate Governance - International Journal of Law Management & Humanities” (International Journal of Law Management & Humanities, August 30, 2020), https://www.ijlmh.com/redeveloping-whistleblowing-policy-in-india-a-fight-for-better-corporate-governance/.

6.     Bhavya Gupta and Kumar Rishabh Parth, Protection of Whistle-Blowers in India: A Need? Vol. 1, Issue 2, LCJLS (2021), https://lawcolloquy.com/journals/4v1c2.pdf.

7.     Dr. Meenu, Whistle-blowers and Corruption in India: A Critical Analysis, Vol. 2, Issue 4, South Asian Res J Human Soc Sci, 250-253(2022), https://www.researchgate.net/publication/359815940_Whistleblowers_and_Corruption_in_India_A_Critical_Analysis.

8.     Abhishek Choudhary, Whistle Blowing Policy in India – Challenges and Suggested Reforms, Vol. 9, Issue 3, IJREISS, 171-181(2019), http://indusedu.org/pdfs/IJREISS/IJREISS_3229_68657.pdf.

9.     Karthik Shiva, “Whistleblower Protection Law in India - Safeguarding the Guardians of Good Governance” (Whistleblower Protection Law in India - Safeguarding the Guardians of Good Governance by Karthik Shiva :: SSRN, January 8, 2021), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3724381.

10.  “Calling for Attention: Efficacy of Whistleblowing Laws in India - International Journal of Law Management & Humanities” (International Journal of Law Management & Humanities) https://www.ijlmh.com/paper/calling-for-attention-efficacy-of-whistleblowing-laws-in-india/.