Whistle Blowers Protection Act, 2014

Evolution

• The issue of protection for whistleblowers got serious when National Highways Authority of India (NHAI) engineer Satyendra Dubey, a whistleblower, was murdered in November 2003 after he exposed corruption in the construction of highways. While he had requested the authorities that his identity be kept secret, his representation was forwarded to various concerned departments without doing so. This led to a public outcry and in response to a PIL, the Supreme Court pressed the government to put in place protection mechanisms for Whistleblowers
• As an outcome the Department of Personnel and Training (DoPT) in 2004 issued and notified The Public Interest Disclosures and Protection of Informers Resolution (PIDPI). The Second Administrative Reforms Commission also suggested that whistle blowers be protected by enacting a new legislation.
• To rectify International treaties: In 2005, India signed the UN Convention against Corruption which offers adequate protection and safeguards for those who complain and facilitates reporting on corrupt public servants.
• The Whistle Blowers Protection Bill was introduced in 2011 and became an act in 2014.

Salient features of the act

• Protecting whistle-blowers: It provides a mechanism for protecting the identity of whistleblowers (people who expose corruption). It provides a system to encourage people to disclose information about corruption public servants.

• Limited time frame for complaint filing: The law prohibits anonymous allegations and expressly specifies that until the plaintiff establishes his or her identity, no action can be taken by a competent authority.

• A complaint can be filed within a span of seven years.

• Criminalise false claims: Anyone who unintentionally or maliciously discloses the identity of a plaintiff faces a sentence of up to three years in prison and a fine of up to Rs 50,000.
• Appeal to high court: Any individual who is aggrieved by a Competent Authority order has sixty days from the date of the order to file an appeal with the concerned High Court.

• The act does not apply to staff and officers of the Special Protection Group (SPG), which was formed under the Special Protection Group Act of 1988.

• The Whistle Blowers Act supersedes the Official Secrets Act of 1923, allowing a claimant to make public interest disclosures to competent authorities even though they are in violation of the latter act but do not jeopardise the nation's sovereignty.

The Companies Act of 2013 requires publicly listed companies to establish an audit committee to investigate whistle blower allegations.

Issues with Whistle Blowers Protection Act, 2014:

• Anonymous complaints are not recognized: A complaint is only acted upon if the complainant discloses his identity in the complaint.
• No reward to a whistleblower: The Act does not provide for any reward being granted to a whistleblower upon successful investigation of his claims.
• Lack of neutrality: The Competent Authority investigating a complaint under the Act is usually the senior official in the same hierarchy of the person against whom a complaint is being made. This negates the neutrality of the investigation and the findings reached at are usually biased.
• Organizational execution is ineffective: In several industries, the whistle blower policy manual is not used to offer instructions to workers on the whistle blower programme.
• Issue with Whistle-blower amendment bill 2015: It diluted several provisions of earlier act, for example:
• Disclosures cannot be made under the Bill, if it is prohibited under the OSA.
• Incorporates provisions to keep issues of national security out of its purview.
• Too many exemptions: It makes a lot of information inaccessible to the public on various grounds.

Measures required:

2nd ARC recommended the following measures:

• Appropriate legislation must be enforced to protect innocent whistleblowers.
• Legislation should be enacted immediately to provide protection to whistleblowers on the following lines proposed by the Law Commission:
• Whistle blowers exposing false claims, fraud or corruption should be protected by ensuring confidentiality and anonymity, protection from victimization in career, and 
• other administrative measures to prevent bodily harm and harassment.
• The legislation should cover corporate whistle blowers unearthing fraud or serious damage to public interest by wilful acts of omission or commission.
• SEBI recently introduced tipping mechanism. SEBI will award up to ?1 crore for information and successful action against insider traders. It has also created a “cooperate and confidentiality" mechanism.
  

Case study

• All listed firms are required by the Securities and Exchange Board of India to establish a whistleblower policy. It has a separate office dedicated to receiving and processing such complaints. It established a method in 2019 for informants to file complaints directly with Sebi.
• In 2021, a large pharma company paid Rs 56 lakhs to settle a case that involved whistle-blower complaints alleging that the company and its subsidiary were diverting funds through its sole distributor.
• Allegations by a group of anonymous Infosys employees came up in 2019, complaining against the management for being involved in financial irregularities.

Other examples:

• Panama Papers leak revealed information about tax evasion by the Global Rich through offshore entities as well as shell corporations in tax havens.
• Uber Files revealed unethical practices of Uber in order to achieve world dominance in the ride-hailing segment.