oppn parties Companies Act: Making Less Serious Offences Compoundable Is Sensible

News Snippets

  • EMI's set to rise after the RBI hikes key policy rate
  • Calcutta HC says that the right to privacy does not end with the death of a person
  • Supreme Court says that a delayed order of preventive detention makes it invalid
  • Shashi Tharoor posts an erronous map of India in his manifesto, rectifies the error after criticism
  • Sonia Gandhi to take a call on who will be Rajasthan chief minister
  • Mallikarujun Kharge to be the new candidate to oppose Shashi Tharoor in the Congress presidential elections
  • RBI says that the September inflation rate may be higher than 7%
  • RBI hikes key rates by 50bps, downwardly revises FY23 growth rate to 7% from 7.2% earlier
  • Stocks recover well on Friday: Sensex gains 1016 points to0 57426 and Nifty 276 points to 17094
  • Mirabai Chanu wins gold easily at the National Games
  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
RBI hikes key rates by 50bps, stocks jump and recover 50% of the losses incurred in the last few session
oppn parties
Companies Act: Making Less Serious Offences Compoundable Is Sensible

By A Special Correspondent
First publised on 2018-07-17 23:11:34

Forming a company, collecting public funds and vanishing was a good way to make money for devious ‘entrepreneurs’ in the past. Changes in the Companies Act over the years have made it very difficult for promoters to do the vanishing act. Still, entrepreneurs have found other ways – mainly that of looting the banks by taking loans they know they will never repay. Hence, there are several provisions in the act that are non-compoundable ensuring punishment by imprisonment or imprisonment and fine both. The government is now thinking of setting up an expert panel to suggest which of these offences can be decriminalized. This is a good idea.

At one stroke, the burden on the clogged judiciary will be lessened and time and money will be saved. There are many such minor offences that can be made compoundable and the company officer violating the law can just pay a fine and avoid prosecution. To make the system really effective, the fine for the first offence of any kind should be kept substantially high and if the same offence is committed repeatedly, it should be made non-compoundable after the third time. This would serve as a warning to erring officials that the law is going to pardon them with a fine for violating it by mistake, but will not spare them if they are negligent or stupid enough to continually repeat the mistake.

But it is certain that no serious offences, like outright fraud, for example, can be brought under this system. Some commentators have also suggested that some offences can be brought under US-style plea bargaining under the consent mechanism, citing its success in that country. Although Sebi has been settling disputes through plea bargaining, several laws would have to be amended to make it applicable to the Companies Act. It is worth a try as long as long as serious and repeated similar offences are kept out and unscrupulous lawyers are not allowed to subvert the system.