In the wake of COVID-19 pandemic and the ensuing lock-down,
the Finance Minister of India on June 08, 2020 has proposed to
decriminalise minor offences for bettering enterprise sentiment and
unclogging courtroom processes. The Central Government has additionally sought
strategies and objections from public on the identical.

Decriminalisation of minor offences was beneath Government’s
consideration since 2019, however the resolution on the identical was in
pipeline. However, given the current financial disaster,
decriminalisation of minor offences at this stage shall be a
vital step in the direction of bettering the economic system.

The proposed decriminalisation of minor offences consists of cheque
bounce circumstances beneath part 138 of the Negotiable Instruments Act,
1881 (“NI Act“) and few different statutes,
inter alia, pertaining to the monetary sector.
Introducing decriminalisation of minor offences will re-categorise
these offences of prison nature into civil (and compoundable)
offences, which suggests there would not be a punishment in kind
of imprisonment for such offences. The proposal goals to substitute
prison legal responsibility with (stiff) compoundable financial penalties of
a civil nature that may act as deterrents and assist encourage
investor sentiment.

As per Finance Ministry’s proposal dated June 08, 2020,
sure provisions of the next nineteen (19) Acts are proposed
to be decriminalised:

1. Insurance Act, 1938,




2. The Securitisation and Reconstruction
   of Financial Assets and Enforcement of Securities Interest Act,
   2002 (“SARFAESI Act“),




3. The Pension Fund Regulatory and
   Development Authority Act, 2013 (“PFRDA
   Act“),




4. Reserve Bank of India Act, 1934
   (“RBI Act“),




5. Payment and Settlement Systems Act,
   2007,




6. The National Bank for Agriculture and
   Rural Development Act, 1981 (“NABARD
   Act“),




7. The National Housing Bank Act, 1987
   (“NHB Act“),




8. State Financial Corporations Act,
   1951,




9. Credit Information Companies
   (Regulation) Act, 2005,




10. Factoring Regulation Act, 2011,




11. Actuaries Act, 2006,




12. Banking Regulation Act, 1949,




13. General Insurance Business
    (Nationalisation) Act, 1972,




14. Life Insurance Corporation Act, 1956
    (“LIC Act“),




15. Banning of Unregulated Deposit
    Schemes Act, 2019,




16. Chit funds Act, 1982,




17. The Deposit Insurance and Credit
    Guarantee Corporation Act, 1961 (“DICGC
    Act“),




18. Negotiable Instruments Act, 1881,
    and

Prize Chits and Money Circulation Schemes (Banning) Act,
1978.

The Finance Minister on June 12, 2020 has additional proposed to
decriminalise sure sections beneath the Securities and Exchange
Board of India Act, 1992, the Securities Contract Regulation, Act,
1956 and the Depositories Act, 1996. Public feedback and
strategies are referred to as for on the identical.

In addition to the above proposal, the Ministry of Corporate
Affairs (“MCA“), on June 19, 2020,
launched a press release of purpose proposing decriminalisation of
compoundable offences beneath the Limited Liability Partnership
(“LLP“) Act, 2008 (“LLP
Act“), for larger ease of doing enterprise for legislation
abiding LLPs and declogging of prison justice system. MCA has
additional referred to as upon the stakeholders to supply their feedback and
strategies on such proposition. The train to establish and
decriminalize the provisions of LLP Act is aimed toward incentivizing
compliance, de-clogging of prison justice system and selling
congenial enterprise local weather.

The LLP Act because it stands at this time, inter alia criminalises
minor violations which impinges upon the enterprise sentiments.
Therefore, with a view to supply enterprise ease, MCA plans to
evaluate the penal provisions of LLP Act, to decriminalize
compoundable offences involving minor, procedural or technical
violations of the LLP Act, or offences which can not contain any
hurt to public curiosity.

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Originally printed 27 June, 2020

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