Whistleblowing is a practice that serves as a beacon of accountability and transparency in the complex web of corporate governance. Whistleblowing has changed dramatically in India as a result of corporate social responsibility standards, legal demands, and the general acceptance of Environmental, Social, and Governance (ESG) concepts. Nonetheless, the success of whistleblowing depends not just on the existence of rules but also on developing an organisational culture that values accountability and openness. Whistle blower is a person internal to the organization who exposes any act of fraud, or wrong doing taking place in the company to the public. Whistle blowers are so called, because they ‘blow the whistle’. A whistle blower is usually an employee or worker who raises a specific concern confidentially, usually to their employer or an external regulator, regarding an actual or suspected danger, fraud or other illegal or unethical conduct that affects the company.

It was Clause 49 for the first time that incorporated the establishment of a whistle blower mechanism as a non-mandatory requirement. The whistle blower policy would allow employees to report to the management concerns about violation of any rule or regulation, abuse of authority, mismanagement and wastage of funds. In India, the case of Satyam highlights how the letters of a whistle blower to the Audit Committee were not acted upon appropriately. Following this, Companies Act, 2013 mandated the establishment of a vigil mechanism to allow whistle blowers in certain types of companies.

A whistle blower may be an employee, former employee or member of an organisation, a government agency, who have willingness to take corrective action on the misconduct. As per Sec.177 of the Companies Act,2013, every listed company and the companies belonging to such class or classes companies have to establish Vigil/Whistle-blowing mechanism to report any unethical behaviour or other concerns to the management. Further, regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations {SEBI (LODR) Regulations} inter-alia provides for a mandatory requirement for all listed companies to establish a vigil mechanism called ‘Whistle Blower policy’ for directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the company’s code of conduct or ethics policy. Further SEBI (LODR) Regulations also provides that the company should devise an effective whistle blower mechanism enabling stakeholders, including individual employees and their representative bodies, to freely communicate their concerns about illegal or unethical practices.

 Vigil mechanism has to be provided for use by directors and employees to raise genuine concerns and grievances, and provides for adequate safeguards against victimization. It acts as an early warning system and makes it possible for the concerns to be raised internally, thus reducing the risk of external regulators being involved or adverse media publicity. For the contravention of provisions on vigil mechanism the company and officer who is in default is liable for a fine which shall not be less than Rs. 1,00,000 but may extend up to Rs. 5,00,000. Independent Directors can also be held liable if they fail to set up an adequate and effective vigil mechanism. Just as in the case of ICICI BANK VS CHANDA KOCHHAR, where a whistle blower Arvind Gupta wrote a letter to the hon’ble prime minister about the alleged scam of 2016 which was worth of re 3000 crores. He levelled allegations of quid pro quo on the former ICICI Bank MD and CEO in his letters. The CBI registered a preliminary inquiry about Videocon Chairman Venugopal Dhoot allegedly paying crores of rupees to a firm promoted by Deepak Kochhar and a few relatives six months after Dhoot’s group got the Rs 3,250 crore loan from the ICICI Bank. One of the most extensively publicised allegations in the nation, it led to the filing of both civil and criminal cases against the then-chairman by a number of law enforcement organisations, including the Income Tax Authorities, the Enforcement Directorate, and the Central Bureau of Investigation. At last, Chanda Kochhar resigned from her position in 2020.

However, it is very important to develop a proper whistle blowing policy which encourages the ID’S to raise their voice if they have any legitimate complaints about misdeeds or illegal activities going on in the organization. The whistle blowing policy helps to establish an approachable procedure for fair and impartial investigation. For creating a free and effective whistle blowing environment, it is required that the whistle blower policy be made mandatory with clear cut guidelines for prosecuting the defaulters without retaliation against the company.

conclusion – Now the Corporate(s) will have to institute rigorous policy to allow employees to bring unethical and illegal practices to the forefront and also train managers and executives on how to encourage openness. Some of the companies already have a Whistle-Blower policy as a good corporate governance practice and now most of the companies are started to frame this policy to comply with section 177 of the Companies Act 2013 &Corresponding Rules. What is lacking in most policies is the goal of promoting a culture of ethical values with encouragement to whistle blowers, communicating, and explaining the WB policy to the employees at all levels. That culture cannot be built without the active support of the top management and the regulators. Moreover, there is no mandatory provisions for the private companies. As a result, only few private companies set their vigil mechanism at their discretion and thus, private companies’ employees are deprived of the whistleblower policy and have a high probability of being treated unfairly if they act as whistle-blower, in absence of a vigil mechanism.


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