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Time for course correction in Kerala
May 6, 2024What is Crime in Business Laws?
Operating a business entails potential consequences if documents requested during an inspection are not provided, potentially leading to imprisonment for up to three months for the employer. This situation is common in the country, which is on its journey to become “Viksit” (developed) by 2047. Various laws, both at the central and state levels, govern businesses. In Kerala, imprisonment provisions can be found in statutes like the Kerala Agriculture and Workers Act of 1974, the Kerala Beedi and Cigar Industrial Premises (Regulation of Conditions of Work) Act of 1961, the Industrial Establishment (National and Festival Holidays) Act of 1958, and the Kerala Industrial Infrastructure Development Act of 1993, among others.
Businesses, being the primary generators of wealth and drivers of economic progress, must navigate a complex web of laws and regulations. Even minor infractions, often procedural in nature, are treated as criminal offences. This raises questions about how we should define a crime within the realm of business laws and how to decriminalise the laws.
The traditional starting point of criminalization is the ‘harm principle’, where John Stuart Mill, a British philosopher, stated that the only purpose for which power can be rightly exercised over the members of a civilised society against their will is to prevent harm to others. There are several differences that distinguish a crime from a non-crime; however, what becomes relevant when discussing decriminalisation is the criminal punishment or punitive sanction associated with that crime. The main objective of punishment is to reform the accused and make them a fit subject for society.
The process of decriminalisation involves a lengthy process in which persons who participate in criminalised actions begin to challenge the assumptions behind such laws. Certain conduct may be decriminalised as the use of criminal penalties, such as imprisonment and death, starts to seem out of place or excessive in relation to that conduct.
As per data retrieved from the Integrated Case Management System (ICMIS) by the Supreme Court of India, as of July 1, 2023, there were 69,766 cases pending in the Supreme Court. The total number of cases pending before various courts in India has crossed the five crore mark. The current legal system in India suffers from overcriminalization. This means that there is an overuse of criminal punishments within the legal system. The same has been attempted to be remedied with the passing of the Jan Vishwas (Amendment of Provisions) Act, 2023. The purpose of this Act is to shun the baggage of antiquated laws by decriminalising minor offences and rationalising punishments under forty-two Central laws.
Decriminalisation as an action of a democratic state is an interesting indication of the prevailing views of society at that point in time. However, this need not always be the perspective from which decriminalisation should be viewed. It may also occur to relieve the burden on the judiciary while doing away with antiquated laws.
The existence of criminal provisions for procedural, structural or minor offences in business laws is an indication that violations of rules and non-compliances are offences of serious nature that require imprisonment as part of the punishment. As business regulations play a crucial role in shaping the economic landscape of a country, it is important to examine the impact of decriminalisation on businesses and the overall business environment. Decriminalisation of business laws is a process of removing or reducing the criminal penalties for certain offences that are of a technical or procedural nature and do not involve any fraud, harm or public interest. Decriminalisation can promote a trust-based approach to compliance, which can ultimately improve the ease of doing business.
Critics of imprisonment clauses often argue that these provisions are seldom enforced. However, if they are rarely applied, their necessity should be evaluated based on their merit, as maintaining a redundant law weakens the effectiveness of essential legislation. The failure to distinguish between what is necessary and what is superfluous perpetuates apprehension and raises doubts about the intentions of lawmakers, ultimately contributing to the criminalization of entrepreneurship and business entities.
To initiate the decriminalisation process effectively, it is imperative for the state to proactively collaborate with stakeholders to grasp the practical hurdles of adhering to existing laws. Comprehensive scrutiny of each law and its provisions is necessary to identify outdated ones for elimination. Penalties, particularly imprisonment for minor offences, should be reconsidered, along with consistent review processes for amendments. Ultimately, the focus should be on fostering an ecosystem within the state that mirrors the overarching goal of boosting growth and productivity.
This article is authored by CPPR Senior Research Associate Anu Anna Jo, Research Interns Bokka Ashwika, & Impana Halgeri.
Views expressed by the author are personal and need not reflect or represent the views of the Centre for Public Policy Research.
Anu Anna Jo is a Senior Associate, Research at CPPR. Anu, by qualification holds an M.sc. in Economics (specialised in Environmental Economics) from Madras School of Economics and B.A. Honors Economics from Jesus and Mary College, Delhi University. She has been associated with Madras School of Economics as a Research Assistant since 2018 on various projects. She has also interned with Dept. of Economic Affairs, Ministry of Finance, Government of India in 2014.
Bokka Ashwika
