Assignment Submitted As A Partial Fulfilment Of Semester-V

ANALYSIS OF LEGAL FRAMEWORK OF WHISTLEBLOWERS IN

CASES OF CORPORATE MISCONDUCT IN INDIA

Submitted to- Dr.Vinay Sharma

Submitted by- Rindha Meenakshi Mahankali (SL21ULBA031)

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 ACKNOWLEDGMENT

I would like to express my immense gratitude to our Company Law-I Professor. Dr.
Vinay Sharma for giving me this opportunity and graciously helping me in every step of
the research process. This paper would not have been possible without his timely
suggestions and guidelines. A special thanks to my classmates and friends for motivating
me to better in every step of the way and clarifying my doubts at the most ungodly hours.
I would also like to extend my heartfelt gratitude and thanks to my parents for labors
above and beyond call

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 TABLE OF CONTENTS

S.NO.(1) ACKNOWLEDGMENT Pg. No. 2

S.NO.(2) RESEARCH PROPOSAL Pg. No. 4-6

S.NO.(3) INTRODUCTION Pg. No. 7-8

S.NO.(4) WHO IS A Pg. No. 8-12

WHISTLEBLOWER?

S.NO.(5) WHISTLEBLOWING Pg. No. 9-12

MECHANISM IN INDIA

S.NO.(6) ANALYSIS OF Pg. No. 15-18

WHISTLEBLOWING
POLICIES IN INDIA

S.NO.(7) SUGGESTIONS FOR

IMPLEMENTING AN Pg. No. 18-19
EFFECTIVE
WHISTLEBLOWING
MECHANISM

S.NO. (8) CONCLUSION Pg. No. 19

S.NO. (9) BIBLIOGRAPHY Pg. No. 20

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 RESEARCH PROPOSAL

INTRODUCTION

The term whistleblower means any person who discloses information about anything that is
being done illegally, illicitly, or fraudulently in any organization. There is no standard
definition that can be attributed to whistleblowing. Whistleblowers are usually the employees
of the company but they might include third parties as well as those who are acquainted with
the affairs of the company. The role of the whistleblowers is similar to that of umpires who
alert and bring forth to the notice of the public about any foul in the game. The cost cannot be
equated as it does not involve only monetary aspects but it involves psychological as well as
emotional turmoil. Whistleblowers are known as the conscience keepers as they put their jobs
and consequences at abeyance and bring forth the information out for the greater good and
public benefit. Sometimes there are employees or other stakeholders who are aware of the
misconduct in the organization but do not bring it to the notice of the public due to the fear of
retaliation and other associated risks. Section 177(9) 1 and (10)2 of the Companies Act 2013
provides for listed companies to establish a vigil mechanism and the Whistleblowers
Protection Act, 20143 which is passed by both the houses is only limited to public servants
and public sector undertakings and the act has been amended in 2015 but has not yet been
passed by the Rajya Sabha and there is no specific law in force that governs whistleblowers
in private companies in India so through this research paper the author tries to examine if
there are any laws and the need for a proper legal framework to protect whistleblowers.

STATEMENT OF PROBLEM

Whistleblowers are the persons who protect the stakeholders from danger and try to alert the
government and enforcement agencies to take necessary action against the misconduct. In
order to protect the whistleblowers, the government enacted certain legislations but still, there
is no robust framework which is there in force to protect the whistleblowers which serves as a
pitfall as the country is trying to represent itself on international forums. So, through this
research paper, the author tries to examine different legislations and analyse if the current

1
The Companies Act, 2013 § Section 177(9)
2
The Companies Act, 2013 § Section 177(10)
3
The Whistleblowers Protection Act, 2014

4
legal framework is sufficient to protect whistleblowers and suggest the needed reforms to
ensure and promote an environment wherein the whistleblowers can bring the issues to the
notice without any hesitations.

RESEARCH OBJECTIVES

Whistleblowers are the ones who promote integrity and ethics and this indeed is an aspect of
corporate governance. The author through this research paper tries to understand the laws
related to the whistleblowers and find the lacunae if any and propose the needed framework
to protect whistleblowers and ensure that no one takes a step back to provide information due
to lack of proper mechanism and fear of retaliation.

RESEARCH QUESTIONS

1.What are the different laws which are enacted to protect whistleblowers?

2.Which companies have a policy to protect whistleblowers and can take the protection of
law?

3.Is the current legal framework sufficient to protect whistleblowers?

4. What is the lacunae if any in implementing the laws to protect whistleblowers?

HYPOTHESIS

1.Whistleblowers ensure in protecting stakeholders from loss and protect the public interest
but the current legal framework is not sufficient to protect the whistleblowers from the wrath
of their employers if they put forth any information about the misconduct in the companies.

2.Effective implementation and a robust framework to protect whistleblowers will ensure in

promoting and encouraging to bring forth any illegal activities that are being done under the
veil.

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RESEARCH METHODOLOGY

The research methodology that will be adopted for the research of this paper will be doctrinal
research. The research would involve a detailed and meticulous study of the origin of the
concept of whistleblowing, acts and statutes, case laws and also take into account the
legislations in different countries which deal with whistleblowers. Through this paper the
author would like to do a detailed study of the legal framework to protect the whistleblowers.

RESEARCH PLAN/TENTATIVE CHAPTERISATION

The first chapter would focus on the brief introduction and history of the concept of
whistleblowing.

The second chapter would focus on as to who is a whistleblower and the types and different
perspectives of whistleblowers.

The third chapter would focus on whistleblowing mechanism in India and the legal
framework

The fourth chapter would focus on the analysis of the whistleblowing policy in India

The fifth chapter would focus on the legal framework to be implemented to protect
whistleblowers and the course of action to be taken and recommendations.

The final chapter would be the conclusion of the overall research paper.

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I.INTRODUCTION

A corporation is not a single entity but involves the interests of various stakeholders i.e.,
employees, shareholders, customers, society and government. The board or the authorities
exercising power and control cannot act according to their whims and fancies and should act
prudently by taking into account the interests of the stakeholders. So, in order to ensure that
there is a conducive environment in the organisation it must adhere to certain set of rules and
regulations. There must be certain ethics and values which should be followed. The
stakeholders are not only concerned about the profits of the company but they also want to
see to it that their interests are protected and are not in conflict with those of the management.
Corporate governance deals with how an organisation has to be regulated by complying with
certain code of ethics which is concerned with morals and values within which an
organisation operates. It comprises a set of guidelines and structure which sets forth for the
efficient working of the organisation by taking into account collective and individual interests
of all the stakeholders. In the present-day competitive world transparency, fairness and
information disclosure plays a vital role in the proper functioning of the organisation. There is
no uniform set of rules which are to be dealt by the corporate governance but they are tailored
according to the needs of the organisation. Whistle blowing is an aspect of corporate
governance. It is an act wherein any person brings forth any wrongdoing in the organisation
to the authorities or the public. This term is said to be coined by U.S. civic activist Ralph
Nader to replace the term snitches which conveyed a negative connotation. The term
whistleblower can be associated with the practice of English bobbies commonly known as the
police officers who would blow their whistles to alert the public and enforcement agencies
when they noticed any act of commission of crime. There is no particular definition of
whistleblowing which is accepted universally. It can be referred to as an act of free speech, an
anti-corruption tool or an internal management dispute mechanism. Many definitions came
up due to lack of uniformity. In the 1980s US academics, Near and Miceli defined
whistleblowing as “the disclosure of organizational members (former or current) of the
illegal, immoral or illegitimate practices under the control of their employers to persons or
organizations that may be able to effect action”. The whistleblower need not necessarily be an
employee or former employee of the organisation but it can be even a third person who might
not have any interest in the organisation. The concept of whistleblowing is related to the
concept of organisational behaviour. Various theories have been propounded to understand
the concept of whistleblowing. One of them is the complicit theory propounded by Michael

7
Davis wherein he stated that “it is the moral wrong and not the harm caused that is
important and the information to reveal would have been got as a part of the work done by
the employee in the organisation”. The person brings forth the information for the greater
public benefit without paying heed to the consequences he might face as a result of his action.
Usually, it is said that there are five factors which influence whistleblowing to be effective
i.e., characteristics of the whistleblower, characteristics of the report recipient, characteristics
of the wrongdoer, characteristics of the wrongdoing, and characteristics of the organisation.
The United Nations Convention against Corruption states whistleblowing as “any person
who reports in good faith and on reasonable grounds to the competent authorities any facts
concerning offences established in accordance with this convention”. Basically,
whistleblowing is concerned with the wrongdoings in the organisation it is not necessarily
pertained to financial wrongdoings but involves anything which causes damage to the
organisation in a long term. Whistleblowing can be claimed to be a paradoxical state
especially when done by a stakeholder who is related to the working of the organisation
wherein on one side it involves disclosing illegality or misconduct in an organisation and on
the other side, they are under some contractual obligation not to disclose the information
which they did so. So, if these obligations are taken into account prima facie, then the act of
whistleblowing is to be considered as breach of the contract entered into and also affects the
trust which the organisation has in the stakeholder. If whistleblowing is seen from the
perspective of breach of agreement it can never be considered as an act which is legally
justified but it has to be viewed from the lens of ethical conduct and principles of the
organisation in order for the act to be a justified one.

II.WHO IS A WHISTLEBLOWER?

The term whistleblower has been widely discussed but as said there is no particular definition
which can be attributed it but in general parlance it is referred to as any person who reveals
the wrongdoing within the organisation to the senior authorities or the public in order to
safeguard the interests of the stakeholders. It is assumed that the whistle blower has some
insider information which is not generally accessible and affects the working and interests of
the stakeholders and organisation. Ralph Nader defined whistleblower as “A man or a
woman who, believing that public interest overrides the organisational interest which he/she
serves, blows the whistle that the organisations is involved in some corrupt, illegal, harmful

8
or fraudulent activity”. They are the persons who are regarded as selfless persons who give
high regard to the public interest. According to David Banisar, around the world
whistleblowers have been hailed as heroes for revealing corruption and fraud in the
organisations and preventing potentially harmful mistakes from leading to disasters. They are
said to be the persons who stand out among the mass without inappropriate influences and
not being swayed away by the collusive interests of the management. They are the persons
who are considered to make disclosure about the illegal and unethical activities like fraud,
abuse of power, corruption mismanagement in the organisation. In the case of Manoj H
Mishra vs Union of India & Ors4 it was held that whistleblower is a person whose primary
motive to raise the issue is in for the public benefit. A whistleblower is a person who possess
the qualities of a crusader. The person should not blow the whistle due to some vengeance or
ulterior motives but it should be a selfless act to protect the interest of the stakeholders. They
are to be considered to be torchbearers of the truth. Whistleblowers can make their allegations
either internally or externally. Whistleblowers are the ones who are committed for the welfare
of the stakeholders by putting in abeyance their material interests. They are accused of
committing the truth. They are referred to as the “canaries in the coalmine”. But they have
been termed by few as snitches or dobbers in order to attain fame. But if we see the act of
whistleblowing is not something easy which can be done as it involves lot of courage and
audacity to bring forth the information which is not generally accessible. Generally, people
do not consider to even attempt to bring out the information due to the consequences
associated with it i.e., fear of retaliation, losing networks, future employment prospects etc.

Types of Whistleblowing

(a)Internal Whistleblowing: When any act in the organisation which affects the working
and interests of the organisation and stakeholders is reported by the employee or employees
of the organisation to the higher officials. Internal whistleblowing usually involves acts of
disloyalty, disobedience, improper conduct etc.

(b)External Whistleblowing: When any activity which is unethical or affects the interests of
the stakeholders is bought forth or reported to the people other than the people within the
organisation then it is termed as external whistleblowing. It is usually reported to
enforcement agencies, media houses, social organisations etc.

4
Civil appeal arising out of SLP No 9126 of 2010

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(c)Alumni Whistleblowing: When the wrongdoing in the organisation is reported by a
former employee of the organisation then it is termed as alumni whistleblowing.

(d)Personal Whistleblowing: When any person whose interests are getting affected by the
wrongdoing in the organisation reports it is termed as personal whistleblowing. It can be done
either internally or externally but usually it is done internally since it does not affect the
interests of huge number of people

(e)Impersonal Whistleblowing: When any person who is not affected by the wrongdoing in
the organisation or is not materially interested in the working of the organisation but reports
the wrongdoing as it affects the interests of others it is termed as impersonal whistleblowing.

(f)Open Whistleblowing: When the whistleblower reports the wrongdoing without

concealing his identity is known as open whistleblowing.

(g)Government Whistleblowing: When the whistleblowing is concerned with the illegal or

unethical activity in a government organisation or by government servants it is termed as
government whistleblowing.

(h)Corporate Whistleblowing: When the whistleblowing is concerned with disclosing an

illegal or unethical act in a corporate organisation it is known as corporate whistleblowing.

According to organisational culture there are seven dimensions that influence the Employee
Reflection Process to blow the whistle about the wrongdoing in the organisation are:

(i)Vigilance

(ii)Engagement

(iii)Credibility

(iv)Accountability

(v)Empowerment

(vi)Courage

(vii)Options

Whistleblowers are generally equated with informers. Informers are considered to have a bad
reputation as they are considered to obtain information which they should not have and it is
presumed that they have obtained the information through illegal means. Usually, it is that the

10
informants are themselves involved in some sort of illegal activity or unethical enterprise and
use the disclosure of information as a channel through which they try to reduce their liability
either voluntarily or due to coercion. This aspect can be attributed to the concept of plea
bargaining in Indian Criminal law. They are in an inferior position to the person or body they
are reporting the information and in turn must follow their orders or face sanctions. And the
major distinction is that informants usually claim remuneration or favours for their
disclosures. Whereas it is contrast in whistleblowers i.e., they do the act voluntarily and
receive no benefits except their identity is not disclosed rather whistleblowers face
consequences in the form of retaliation, ostracization etc.

Corporate Governance And Whistleblowing Policy

Corporate governance is a concept which stems from organisational structure and is beyond
the realm of law. It fosters a system wherein the organisation is operated in an efficient and
effective manner. The concept of corporate governance is not something new but can be dated
back to third century wherein Chanakya emphasised the importance of good governance for
smooth and efficient working of the system. The term governance has evolved from the Latin
word ‘gubernare’ which means rule to steer. Basically, corporate governance is to manage the
working of the organisation by following a certain structure and procedure. The Organisation
for Economic Cooperation and Development states corporate governance as “the structure
through which the objectives of a company are set, and the means of attaining those
objectives and monitoring the performance are determined”. Corporate governance is not
something which is pertained only to management but it involves operating and controlling
an organisation in such a way that the company is set to achieve long term goals by satisfying
every person associated with the company by complying with law. The Cadbury Committee
report defined corporate governance as “the system by which companies are directed and
controlled”. Corporate governance is about the ethical principles and values on basis of which
the organisation operates. It helps in protecting the interests of the stakeholders of the
organisation. Whistleblowing is one of the mechanisms if corporate governance. It ensures in
complying with the interests of the stakeholders without comprising on the objectives of the
company. It is an effective tool in ensuring healthy culture in the workplace. It helps in
encouraging individuals to make disclosures of any wrongdoing without any fear of the
consequences or associated risks. Whistleblowing if properly implemented can result in

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effective corporate governance and helps in promoting good governance by developing a
sound and efficient system which in turn results in bringing profits to the organisation.
Whistleblowing helps in developing an effective communication system in the organisation
wherein the employees or any other person can communicate without any barriers. It also
helps in solving the issues internally without causing damage to the reputation of the
organisation. A survey conducted by Deloitte stated that organisations which had employed
effective and robust whistleblowing mechanisms have coped up with the shift to hybrid mode
efficiently during the Covid-19 as it helped in resolving the conflicts if any efficiently. In the
present-day world whistleblowing cannot be neglected. It is presumed that every company
shall have a whistleblowing policy which is robust and well-structured to encourage the
practices of good governance.

III.WHISTLEBLOWING MECHANISM IN INDIA

When it comes to the concept of whistleblowing in India it is not something new which arose
suddenly it has been prevalent since the ancient times. It can be traced back to Treta Yug
where Vibhishan, younger brother of Ravana informed Lord Ram about the whereabouts of
Sita. Although there has been vast growth in the corporate sector in India post-independence
but there has not been much focus on the concept of whistleblowing. Especially post
liberalisation, globalisation, privatisation in the 1990’s the competitiveness increased at the
same time there was increase in corruption and other acts which lead to the need for
whistleblowing mechanism. In 1993, Mr.N.Vittal then Chief Vigilance Commissioner
requested the law commission to draft a bill encouraging to disclose corrupt practices on the
part of public functionaries and protecting honest persons from such disclosures. Considering
the rampant increase in the corruption on a global level and the need for its eradication the
law commissioner considered it necessary to prepare a report to provide some measures. The
law commission on the recommendation in its 179th report 5 prepared The Public Interest
Disclosure (Protection of Informers) Bill, 20026 has been proposed and the commission has
also recommended for enacting a legislation on the same lines. The Veerappa Moily
Commission on Administrative Reforms II in its fourth report on Ethics in Governance has

5
Law Commission 179th Report, “THE PUBLIC INTEREST DISCLOSURE AND PROTECTION OF
INFORMERS”, D.O. No 6(3) (72) /2001-LC (LS), (2001)
6
The Public Interest Disclosure (Protection of Informers) Bill, 2002

12
also recommended for the need of legislation for protection of whistleblowers 7. In
conjunction with the Freedom of Information Act, a Whistleblowers Protection Act indeed
can be a potent tool for promoting good and transparent governance in the country. In 2004
the aftermath of the Satyendra Dubey of National Highways Authority of India the Supreme
court and the then ruling National Democratic Alliance government proposed a mechanism to
protect the whistleblowers as the enactment of the law was still pending. The Ministry of
Personnel, Public grievances and Pensions notified a resolution empowering the Central
Vigilance Commissioner to look after and act on the complaints of whistleblowers and to
protect them. But there were several issues grappled with it as the jurisdiction of the Central
Vigilance Commissioner was restricted to only employees of central government or public
sector companies but does not include employees of state government. Although this
provision is enacted this was not of a much use as the recommendation of the Central
Vigilance Commissioner was not binding on the government. In 2006, The Public Services
Bill 2006 (Draft) stated that within six months of the commencement of the act there must be
mechanisms in place to provide protection to whistleblowers. The United Nations Convention
against Corruption to which India is a signatory since 2005 which provides for states to
facilitate reporting of corruption by public officials and provide protection against retaliation
and other associated risks to the whistleblowers. On August 26, 2010 Union Minister of State
for Personnel, Public Grievances and Pensions, Prithviraj Chavan introduced the Public
Interest Disclosure and Protection to Persons Making the Disclosure Bill, 2010 in the Lok
Sabha. Certain amendments were made to the bill which was again passed in Lok Sabha on
December 27, 2011. Finally in 2014 the Public Disclosure Bill was approved by the
parliament and was passed in the form of The Whistleblowers Protection Act, 2014. But there
arose an issue i.e., when the bill was circulated in the Rajya Sabha certain amendments were
made but these amendments were not incorporated when the bill was finally passed in Rajya
Sabha on February 21, 2014. So, in order to address this issue on May 11, 2015 the
Whistleblowers Protection (Amendment) Bill, 2015 8 was introduced and has been passed by
the Lok Sabha but the bill is still pending in the Rajya Sabha.

The Companies Act, 2013

7
Department of Administrative Reforms and Public Grievances, Ministry of Personnel, Public Grievances and
Pensions, Government of India, ‘Administrative Reforms commission’s 4th Report titled ‘Ethics in
Governance’, (2011)
8
The Whistleblowers Protection (Amendment) Bill, 2015

13
Section 177 (9) of the companies act, 2013 read with the Companies (Meeting of Board and
in Powers) Rules, 2014 imposes an obligation on all the public listed companies and such
class or classes of companies to establish a vigil mechanism for the directors and the
employees of the company to report any issue or concerns. Section 177 (10) of the act states
that the vigil mechanism shall provide for adequate safeguards against victimisation of
persons who use such mechanism to report any concern or issue and provide for direct access
to the chairperson of the Audit Committee in appropriate or exceptional cases. The companies
have to disclose the report of such mechanism on its official website. Section 177 of the act
provides for constitution of the audit committee of a company. At the time of inception of the
act this was only applicable to every listed company. Now after the amendment in 2017 it
was changed to every public listed company. This provision is indeed a welcomed one in the
present competitive world. Since the vigil mechanism is provided alongside the audit
committee it is presumed that it shall deal with financial aspects, valuation of assets, financial
controls implemented by a company, independence of auditors, issues related to breach of the
code of conduct of a company, disclosures etc although the issues have not been mentioned in
the act. The Companies (Meeting of Board and its Powers) Rules, 2014 9 sets a bar that if
repeated frivolous complaints are being filed by any director or an employee then the audit
committee may take appropriate action against such director or employee. Chapter XIV
Section 206 to 22910 of the Companies Act, 2013 deals with inspection, inquiry and
investigation.

SEBI Equity Listing Agreement Clause 49

Listing agreement is an agreement between the recognised stock exchange and the company
listed on that exchange which contains conditions of listing the breach or violation of any of
them would result in delisting of that company. Clause 49 11 of the SEBI deals with aspects of
corporate governance measures. It provides for establishment of mechanism for
whistleblower protection. Every listed company is proposed to have its own whistleblower
policy. This was a non-mandatory clause. The onus is on the company to make employees
aware of the policy and provide channels for reporting as well as provide protection against
victimisation of employees and directors. But now SEBI replaced this listing agreement and
notified SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 12 making

9
The Companies (Meeting of Board and its Powers) Rules, 2014
10
The Companies Act, 2013
11
Securities and Exchange Board of India, Listing Agreement Clause 49,2006
12
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

14
it mandatory for listed companies to establish a whistleblower mechanism. In order to
promote the practice as well as incentivize employees SEBI from December, 2019 has
provided for a reward mechanism for those who report any wrongdoing in the organisation.

Companies (Auditor’s Report) Order, 2020

Companies (Auditor’s Report) Order, 202013 was published by the Ministry of Corporate
Affairs on 25th February, 2020. It was published with an objective of promoting and
strengthening the corporate governance framework under the Companies Act, 2013. The
order applies to every listed company including a foreign company as provided under the
Companies Act, 2013. This order mandates the companies to provide information about
whistleblower complaints received during the year in the audit report and the manner in
which the complaints were dealt including the nature of the complaint and quantum involved.
This order was introduced based on the premise of the concept of Caveat Emptor i.e., buyer
be beware as this disclosure will lead in helping the stakeholders to gain insights and
knowledge about the financial state and affairs of the companies and also the quality of
internal control mechanism of the companies.

IV.ANALYSIS OF WHISTLEBLOWING LEGISLATIONS IN INDIA

Whistleblower Protection (Amendment) Bill, 2015

The Whistleblowers Protection Act, 2014 when passed in the Rajya Sabha on February 21,
2014 did not incorporate the changes which were made in the Rajya Sabha on August 5, 2013
when the bill was circulated. Although the 2014 act was only pertained to public officials,
public sector undertakings and listed companies the amendment bill has further restricted the
application of the act and had several fallacies. The word disclosure in the act and bill was
referred to as complaint which is concerned with any offence or abuse of power that was gain
to the particular official or employee but loss to the government. But the act or the bill did not
incorporate the recommendation of the law commission which was inclusive of mal

13
Companies (Auditor’s Report) Order, 2020

15
administration that contained unjust actions, causing negligence, undue influence, fraud etc.
By excluding these the officials or employees shall go unpunished. The 2014 act mandates
every complainant to reveal their identity however the vigilance commission is to protect the
identity of the complainant but it is not mandatory under all the circumstances. The act
provides that the commission shall reveal the identity to the superior authorities but it does
not provide under which circumstances the identity shall be revealed. Earlier the 2014 act
permitted disclosures which were prohibited under the Official Secrets Act, 1923 14 but the
2015 amendment did not allow for this by precluding the disclosures. The motive behind the
prohibited categories in the 2015 bill is that it has been modelled on the basis of the Right to
Information Act, 200515. Further the bill provides for disclosure under prohibited categories
only if the information can be availed under the RTI Act. But on a daily basis this cannot be
the scenario as officials or employees might come across situations of wrongdoing in the
course of their duty without requiring RTI Act to access the required information. It is seen
that the RTI Act permits the appropriate public authority to disclose information that comes
under the per view of the prohibited categories of the information and the Official Secrets
Act, 1923 if revealing the information serves public interest more than it harms the protected
interests. In addition, the 2014 act provides for a two-stage mechanism to appeal against a
decision to withhold information. However, the 2015 amendment bill lacks such mechanism
in spite of it being on similar lines with the RTI Act. The bill also has another drawback
which is that if the public interest disclosure falls under any of the ten prohibited categories,
then it will be referred to a government authorised authority after which the decision of such
authority shall be binding. The bill does not specify as to which authority the matter shall be
referred to which creates confusion as it might be referred to a subordinate officer to the
official who made the disclosure. So, since the amendment bill has not yet been enacted it
would be appropriate for the government to refer the bill to an expertise committee and
reformulate the bill on the recommendations of such committee.

The concept of whistleblowing is in very nascent stage in India. It is an evolving concept.

Having a policy does not make much difference the effectiveness of it can only be tested
when it is put into practise. The onus is on the companies to create an environment wherein
14
The Official Secrets Act, 1923
15
The Right to Information Act, 2005

16
the any person can report any concern or issue. Trustworthiness is prima facie in
implementation of whistleblowing policy. Whistleblowers are the ones who are to be
considered as selfless martyrs for their actions they are the unsung heroes in the present-day
world. In India there have been several instances wherein whistleblowers have been
retaliated, harassed, ostracised, humiliated, levelled with false accusations, death threats, etc.
Although the parliament enacted a law for implementation of whistleblowing policy (the
amendment of 2015 is still pending in the Rajya Sabha). The major lacuna in the
Whistleblower Protection Act, 2014 is that it only provides protection to public servants and
public sector undertakings and listed companies as per the Companies Act, 2013 but it does
not extend to protection for private, unlisted companies to adopt a whistleblowing
mechanism. Most of the companies in private sector have adopted it on a voluntary basis in
order to promote the practices of good corporate governance. Another drawback is that the
act does not provide a specific procedure to deal with the complaints reported. The manner of
investigation into the complaint is vague and unclear although the Companies Act, 2013
provides that a vigil mechanism must be established there is no procedure as to how it should
be operated. There is no yardstick as to when or at which stage of the investigation the
complaint is to be raised. Although the law gives protection to the identity of the
whistleblowers it does not provide for anonymous complaints to be filed. Not all persons are
willing to reveal their identity given the protection so it must be seen that there is a provision
for anonymous complaints with certain regulatory compliances. The law does not provide as
to what the term victimisation means as it can range from physical assault, threats to
retaliation. Supreme Court in the case of Common Cause vs Union of India has held that if
any disclosure is made in public interest the whistleblower cannot be punished even if the
complaint is not proved even the act provides that disclosure must be in favour of public
interest. But there is no clarity as to what is public interest and this might lead to several
interpretations and confusions at the same time it might lead to increase in unwarranted
complaints. In the case of Manjit Singh Khera vs State of Maharashtra 16 it was held that the
identity of the whistleblower should not be revealed as it poses a threat to their lives. Section
1717 of the act provides for penalising a person who reports false complaints but there is no
provision which provides for incentives or reward for bringing forth the wrongdoing in the
organisation. Providing incentives or rewards encourages persons to raise issues or
complaints. Whistleblowers are the persons who take the at most risk and bring forth the

16
(2013) 9 SCC 276
17
The Whistleblowers Protection Act, 2014 § Section 7

17
issues for the welfare of the public which needs to be recognised. It is high time for India to
realise that it is lacking in several aspects in providing protection for whistleblowers
especially with regard to private companies as India is trying to compete with other nations
and represent itself on the global forum it should reconsider the act and make the provision of
applicability of the act for all the companies irrespective of it being private or public.

V.SUGGESTIONS FOR IMPLEMENTING AN EFFECTIVE WHISTLEBLOWING

MECHANISM

It is the need of the hour for India to effectuate a whistleblowing act which mandates all kinds
of companies to have a whistleblower policy. Whistleblowing plays a very vital role in
boosting the standards of the corporate sector in the country. The government should enact a
legislation which protects the whistleblowers as they bring into light the unethical activities
or any wrongdoing in the organisation which affects the stakeholders by allowing the
management to benefit unjustly. Ensuring adequate protection to whistleblowers is needed
because whistleblowers set aside their personal interest and brings forth the issues sometimes
at the cost of their lives. Establishing a whistleblowing mechanism within the organisation is
a pressing concern and at the same time helps in establishing a level playing field wherein the
interests of the organisation as well as the stakeholders are protected.

The Whistleblowing Protect act should ensure in extending the application of the act to
private as well as unlisted companies rather than restricting itself to public sector and listed
companies. The act should ensure in strengthening the laws after witnessing several incidents
wherein the cost of disclosure is losing their lives. It should ensure in imposing criminal
punishment against such actions. As seen in US there are almost 37 laws dealing with
protection to whistleblowers so it should be seen in such a way that whistleblowing policies
shall be tailored according to the needs of the particular field which helps in ensuring
effective operation of the policies. The environment should be created wherein trust and
confidence are built up which form the basis for the efficient functioning of whistleblowing
mechanisms. It should be mandated that the Board of Directors shall promote and bring
awareness among the employees about the whistleblowing mechanism in the organisation.
The Whistleblowing Protection Act should be tailored in such a way wherein any person
associated with the organisation can raise any issue without any fear or hesitation. As seen in
the recent case of ICICI Bank wherein the MD Chanda Kochhar has been accused of

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committing a fraud the whistleblower Arvind Gupta and even Hari Prasad who revealed the
Punjab National Bank scam should be rewarded for their acts as they have done the act in
furtherance of public interest. The government should see to it that they are offered protection
as they might face any consequences from the people or organisations against whom they
have blowed the whistle. Recently even a TCS employee has filed a complaint with SEBI as
to the effectiveness of the vigil mechanism of the company which conveys a picture wherein
there is no appropriate policy to deal with such complaints. The government by taking into
account the high rise of the whistleblower complaints in the country must see to it that a law
is enacted which provides a safety valve to the whistleblowers as well as the organisations.
This in turn promotes the economy of the country.

VI.CONCLUSION

It is a situation wherein India has to reevaluate, its policy making in the corporate sector in
order to be in par with the global standards. Despite an increase in the awareness of the need
to adopt whistleblowing policy worldwide still India is lacking in it. Whistleblowing is an act
wherein many people do not come forward to raise the issues due to the consequences
associated with it. The persons who perform this act are considered to be selfless who set
aside their whims and fancies and put public interest at the forefront. It does not only involve
monetary consequences but also affects the psychological status of the person as they face
resentment from colleagues, superiors, subordinates and other associated persons with the
organisation as they have breached their duty and violated the agreement not to damage the
organisation’s image and reputation. In order for whistleblowing to be effective the
organisation should develop an effective internal mechanism to disclose any wrongdoing
without affecting the interests of the organisation. Whistleblowing should be promoted by the
organisation itself in order to promote the practice of good governance which in turn benefits
the company in long term. An effective whistleblowing mechanism should be implemented in
India by taking into account the needs of all kinds of companies and ensure an effective and
efficient corporate sector in the country which is sound on its principles and values.

BIBLIOGRAPHY

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https://www.icsi.edu/media/webmodules/45th_nc/
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The Hindu

Economic Times

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