Letter to BS: Review of penal provisions in Companies Act a welcome step

Apropos your editorial “Relief for India Inc” (July 18), the ministry of corporate affairs’ announcement to examine and review penal provisions in the Companies Act is indeed a welcome step and should help us move up a little on the Ease of Doing Business index and also act as a confidence building measure for industry.

Such a move should also help bring more competent independent directors who are often shy of accepting a board seat for fear of getting involved in criminal litigation due to actions — intentional or otherwise — of the company's management, on which they may not have full control.

The proposed step would also reduce pressure on the clogged subordinate jury. It would lead to many more civil cases in the court. With civil suits often dragging on for 10 years or more, the logic of freeing up the judiciary doesn't seem workable at all. The root cause of the problem however lies in the "ingrained suspicion of the private sector" leading to the law drafters presuming that penalties other than a jail term would be insufficient.

Seventy years after independence the bureaucracy still seems to harbour the notion that every businessman is a crook unless proven otherwise. Sad that such thinking still exists. The feeling is also reciprocated that industry assumes that government is there only to obstruct their efforts. Everyone talks of public-private partnership as the cornerstone of economic growth but how can there be a "partnership" if the two sides do not have faith in each other? Partnerships last only on the basis of trust and a clear division of responsibilities.

I share your hope that the “MCA initiative would also be followed up in other spheres and by the state governments also”.

---

Krishan Kalra  Gurugram

Letters can be mailed, faxed or e-mailed to:

The Editor, Business Standard

Nehru House, 4 Bahadur Shah Zafar Marg

New Delhi 110 002

Fax: (011) 23720201  ·  E-mail: letters@bsmail.in

All letters must have a postal address and telephone number