This article is written by PRADEEP KUMAR PATWA, RAJJU BHAIYA UNIVERSITY PRAYAGRAJ, LL.B (3 YEAR) during my Internship at LeDroit India.

Introduction

A whistleblower is considered as any individual who makes a ‘disclosure’. Broadly, a disclosure refers to a concern, usually raised by an employee or group of employees of the Company or even a third party, in writing and in good faith, which discloses or demonstrates information about an unethical or improper activity with respect to the Company and based on actual facts and which complaint is not speculative. The intent has always been to give the terms ‘whistleblower’ and ‘disclosure’ the widest possible amplitude.

Whistleblowers play a crucial role in uncovering white-collar crimes, often bringing to light fraudulent activities that would otherwise remain hidden. Ensuring their protection is essential for encouraging the reporting of such crimes.

Whistleblowing in India

Whistleblower complaints in India, the need for a robust legal regime for protection of whistleblowers has gained importance. Publicly-known attempts to grapple with whistleblower complaints in listed multi-national companies and banks have made it to the front page of every leading newspaper and channel. In this context, we examine whether the existing legal regime provides adequate clarity and support to companies and whistleblowers alike in the management and resolution of whistleblower complaints.

Whistleblower Protection Act, 2014

This is applicable only to public servants. It was enacted with the intent to establish a mechanism to:

• receive complaints relating to disclosure of any allegation of corruption, willful misuse of power/discretion against any public servant;
• to inquire or cause an inquiry into such disclosure; and
• to provide adequate safeguards against victimization of the person making such complaint

This act provides protection to individuals who expose corruption and misconduct within public sector organizations. It ensures confidentiality and safeguards against retaliation.

The Whistle Blowers Act may be utilized by any person to make a public interest disclosure. An amendment to the aforementioned Act was proposed in the form of the Whistleblowers Protection (Amendment) Bill, 2015 (“Amendment Bill”). The Amendment Bill sought to, inter alia, incorporate necessary safeguards against disclosures which may prejudicially affect the sovereignty and integrity of the country, security of the State, etc. However, the Amendment Bill was not passed by the Rajya Sabha and consequently, it lapsed.

Law applicable to Listed Companies:

The Companies Act, 2013

Provide that certain companies should establish a “vigil mechanism” to report genuine concerns. Further, the Companies Act states that such mechanism should be accompanied by adequate safeguards against the victimization of persons who use the mechanism.

The board of directors. The Companies and (Meetings of Board and its Powers) Rules, 2014 further provides that in case of repeated frivolous complaints being filed by a director or an employee, the audit committee or the director nominated to play the role of audit committee may take suitable action against the director or the employee including reprimand.

The Securities Exchange Board of India (“SEBI”)

It mandated that every listed company should have a whistle-blower policy and make employees aware of such policy to enable employees to report instances of leak of unpublished price sensitive information.6 With effect from December 2019, the SEBI has also introduced a reward mechanism for incentivizing ‘Informants’ to report violation of insider trading laws to SEBI.

Private Employers

There is no specific law on whistleblowing applicable to private employers in India. Some progressive companies (especially subsidiaries of MNCs) have incorporated a whistleblower policy as part of extending their global policies which includes individual employees or group of employees and in some cases even third parties. The purpose of any whistleblower policy is to encourage employees (or any other person for that matter) to report matters without the risk of subsequent victimization, discrimination or disadvantage.

Challenges Faced by Whistleblowers

Whistleblowers often face significant challenges:

1.       Retaliation:

Many whistleblowers experience retaliation from employers or colleagues. This can include job loss, demotion, harassment, or exclusion from workplace activities.

2.     Legal Repercussions:

Whistleblowers may face lawsuits, defamation claims, or other legal actions from the entities or individuals they report on, particularly if they are accused of violating confidentiality agreements.

3.       Social Isolation:

Colleagues may distance themselves from whistleblowers due to fear of association or retribution, leading to social and professional isolation.

4.       Financial Hardship:

Loss of employment, legal costs, and the difficulty of finding new jobs in their industry can lead to financial difficulties for whistleblowers.

5.       Emotional and Psychological Stress:

The pressure of coming forward, coupled with retaliation and public scrutiny, can lead to anxiety, depression, and other mental health issues.

6.       Lack of Protection:

Despite legal protections in some countries, whistleblowers may still struggle to receive adequate protection from retaliation, making it difficult to expose wrongdoing without facing severe consequences.

7.       Damage to Reputation:

Whistleblowers often face efforts to discredit them personally or professionally, which can damage their reputations and future career prospects.

These challenges often discourage potential whistleblowers from reporting misconduct.

Leading Cases

India is a classic example where many high profile whistleblower cases have come to surface exposing both the deep impact that corruption has on society and of course harrowing tales about how these whistleblowers were hounded simply because they had exposed what needed be shunned! The most salient ones include:

1.     Satyendra Dubey Case (2003)

Back in 2003, an engineer by the name of Satyendra Dubey who was serving as an official at National Highways Authority of India (NHAI) exposed frauds happening in the Golden Quadrilateral highway project.

Effect: He penned a letter to the Prime Minister’s Office highlighting how contractors were used for shady dealings However, he was named when his request to keep it a secret fell upon deaf ears.

Controversy: Dubey was killed in 2003, which raised questions over the safety of activists blowing the whistle. An enraged public was followed by widespread outcry for more effective whistleblower protection laws in India. Result His case triggered the creation of a bill on which he worked, known as the Whistleblowers Protection Act, later

2.     Manju Nath Shanmugam (2005)

Manjunath Shanmugam was an Indian Oil Corporation (IOC) officer who found that the petrol station dealers in Uttar Pradesh were selling adulterated fuel.

Impact: Manjunath not only shut two petrol filling stations for selling adulterated fuel, but the stern action against oil mafia resulted in his brutally murder.

Covering many aspects of Dubey story, Manjunath challenge as well faced life-threatening consequences to some extent for exposing corruption and results most obviously convey the risks of taking on powerful interests.

Result: This incident added fuel to the prevailing fire that exists when it comes to protecting whistleblowers and spurred calls for an act like Manjunath Shanmugam Trust – a trust dedicated in promoting honesty and transparency.

3.     Ashok Khemka Case (2012)

News: senior IAS officer Ashok Khemka had uncovered discrepancies in the land transactions related to high-profile businessman & Congress President Son-in-law Robert Vadra.

Impact: Khemka’s actions drew national attention to the dubious land deals and raised questions about the involvement of politicians in corrupt activities.

Challenges: Khemka faced multiple transfers (over 50 in his career), bureaucratic backlash, and political isolation. Despite his efforts, he continues to face difficulties in his work.

Outcome: While the case brought greater awareness of corruption at high levels, Khemka continues to deal with career stagnation and political challenges due to his whistleblowing

4.     Sanjiv Chaturvedi Case (2005 – ongoing)

Background: Sanjiv Chaturvedi, an Indian Forest Service officer, exposed corruption in various government departments, including embezzlement in the All India Institute of Medical Sciences (AIIMS).

Impact: Chaturvedi uncovered large-scale fraud and misuse of public funds during his tenure in several departments.

Challenges: He has faced frequent transfers, harassment, and suspension. Despite receiving the prestigious Ramon Magsaysay Award in 2015 for his integrity, he continues to encounter opposition within the system.

Outcome: His case reflects the systemic resistance whistleblowers face, even when they receive recognition for their work. Chaturvedi remains vocal about the need for stronger whistleblower protections

5.     Shehla Masood Case (2011)

Background: Shehla Masood was an RTI (Right to Information) activist and whistleblower who worked to expose corruption in Madhya Pradesh’s mining and forest sectors.

Impact: Masood filed multiple RTI applications to expose corrupt practices, including misuse of resources and environmental violations.

Challenges: She was murdered outside her home in Bhopal in 2011. Her death underscored the dangers faced by whistleblowers, especially in sectors involving powerful corporate and political interests.

Outcome: Her case led to a long-drawn investigation, and eventually, arrests were made. However, the systemic threats to whistleblowers in such cases remain a significant concern

6.     Amit Jethwa Case (2010)

Background: Amit Jethwa was an environmental activist and whistleblower who exposed illegal mining activities around the Gir Forest in Gujarat.

Impact: Jethwa’s efforts exposed a nexus between politicians, miners, and bureaucrats involved in illegal mining.

Challenges: He was shot dead near the Gujarat High Court in 2010. Investigations pointed toward the involvement of a powerful politician, which delayed justice.

Outcome: The case remains a landmark in the fight for environmental justice and against political corruption, but it also highlights the extreme risks whistleblowers face in India.

Key Challenges Highlighted in These Cases:

Lack of Anonymity: Despite laws in place, whistleblowers often find their identity revealed, which exposes them to personal danger.

Delayed Justice: Investigations and legal action in cases involving powerful figures are often delayed, leaving whistleblowers vulnerable.

Weak Legal Protection: The Whistleblowers Protection Act, 2014 is often criticized for being weak, as it lacks proper enforcement mechanisms and does not provide adequate safety to whistleblowers.

Retaliation and Harassment: Whistleblowers frequently face transfers, demotions, and harassment in their workplace, as seen in the cases of Ashok Khemka and Sanjiv Chaturvedi.

These cases reflect the serious personal risks and professional challenges faced by those who dare to expose corruption in India, even as their actions lead to significant societal impact

Conclusion

Whistleblowers are vital in uncovering white-collar crimes and maintaining corporate integrity. Strengthening legal protections and support mechanisms is essential to encourage whistleblowing and ensure the accountability of organizations. While employee vigilance is increasing, and whistleblower complaints are on the rise, the law on the manner of handling such complaints and protecting whistleblowers is unclear and still being developed. To that end, having a robust whistleblower policy in place is critical. Companies should be cognizant of the several nuances involved in framing whistleblower policies.

Needless to state, it may take some time to develop a mature whistleblower protection regime in India, which is responsibly utilized by companies and employees alike. India may not be ‘there yet’ – but is certainly getting there quickly, with amendments in the law such as the recent CARO 2020, and an increased awareness in companies to address whistleblower complaints and the protection of whistleblowers with sensitivity and seriousness.

On the one hand, while companies need to have a robust mechanism in place for investigating and resolving whistleblower complaints, the companies must ensure adequate protection to whistleblowers in the form of non-retaliation policies and anonymity (if the whistleblower prefers to remain anonymous). The policy should also take into account the various jurisdictions in which

Today’s global companies operate and ensure compliance with laws in each of such jurisdictions. These may impinge on the effectiveness of the investigation itself e.g. privacy laws are consistently being tested by the regulators during the course of investigations. It is understandably difficult to balance the whistleblower policies as there also exists a possibility of frivolous or malicious whistleblowing to harm the company or its executives. There is a need to create a compliance culture and focus on importance of reporting and strengthening anti-retaliation policies. The need of the hour is to make employee.

Whistleblowers play in exposing corruption and malpractice, often at great personal and professional cost. The cases of individuals like Satyendra Dubey, Manjunath Shanmugam, and Sanjiv Chaturvedi reveal the profound impact of whistleblowing on public awareness and legal reform, but also underscore the severe challenges whistleblowers face, including threats to their lives, career retaliation, social isolation, and legal harassment. While these courageous acts have led to greater accountability and transparency, they also highlight the inadequacies in India’s legal protections for whistleblowers. The Whistleblowers Protection Act, 2014, although a step forward, remains insufficient in providing robust safety measures. Strengthening these protections and ensuring timely justice are crucial steps to encouraging more whistleblowers to come forward and fostering a culture of integrity and transparency in India.

References

• The Whistleblowers Protection Act, 2014
• The Companies Act, 2013
• Ashok Khemka and Sanjiv Chaturvedi.