In this article, Kinjalkini Rai Choudhury pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses whistleblowing Policy in India.


The term ‘whistle-blowing’ is a recent entry into the vocabulary of corporate and financial affairs but the concept is not new. The meaning of the term whistle blowing is the act for which an employee or any former employee of disclosing whatever he believes to be unethical in nature or illegal behavior to the higher management (internal whistle blowing) or to any of the outside or external authority or to the public (which is the external whistle blowing). The process of whistle blowing is not to be viewed as an individual event. The four important process which involves the whistleblower, the complaint or revelation, the party to whom the revelation or the complaint needs to be made and the particular organization against whom it will be made. The basic aim of whistle blowing policy is to protect the interest of the public.

Who Are Whistleblowers?

Whistleblowers are individuals who exposes information regarding any wrongdoing, any sort of corruption or mismanagement or fraud and reports such actions inside the organization to the Chief executive officer or to any senior management member unknown to be internal whistleblowers. Where any individual who reports such kind of wrong doings outside the organization that is to the media, law enforcement agencies, etc. are known as the external whistleblowers. In simple words whistleblowing is the act of exposing misconduct and any sort of malpractices, which is going within an organization. In India incidents of whistleblowing are few and they are far between.

Whistleblowing Policy And legislation In India:

The Companies Act, 2013 and whistleblowing policy

With the coming of the Companies Act 2013, the pressure has been towards fraud elimination and to put an effective corporate vigilance mechanism. The Companies Act 2013 has been developed to eliminate various corporate scandals, loophole by prescribing more strict compliance and norms than which were there earlier. The Sections 206-229 of the Companies Act 2013 has incorporated detailed provision, which is relating to the inspection, investigation and injury. Under Section 208 of the Act there will be appointment of an Inspector who is different from the Registrar to inspect records, which is unlike to the provisions of the old act of 1956. The Inspector has the power to recommend and conduct investigation in matters as required. Under Section 10 the Central Government may order any investigation in the affairs of the company either on the report of the Inspector or Registrar of the company or by special resolution, which is passed in which the matters of the company needs to be investigated if mentioned and for public interest. The SFIO, which stands for Serious Fraud Investigation Office, is now a statutory body that has the power to arrest for offences, which are specified as frauds, and this is mentioned under 211 of the Act. There is also responsibility on auditors at to act as whistleblowers and they have to report directly to the Central Government if they have any reason to believe that there is any fraud being committed against the company by any of its officers or any employees. Under the schedule iv of Section 149(8) of the Companies Act 2013 sates about professional conduct and behavior of independent director, it is much more elaborated in part iii of the schedule iv and also ensures that the company has adequate and functioning vigilance mechanism and the interest of the people using it are not harmed. The independent directors are also given the task for reporting any concern over any wrong or suspected fraud or an unethical behavior for the violation of any code or policy of the company. Actions will be taken for such violation.

SEBI and the Whistling blowing policy

SEBI stand for The Securities Exchange Board of India on circular dated 2003 amended its principles on corporate governance, which is given in the standard listing agreement. The annexure I D or clause 49 of the Listing Agreement states that the company will have mechanism for employees to report to the management about any concerns or unethical behavior, any suspected fraud or any kind of violence against company code of conduct or any ethical policies. This mechanism will protect against the victimization of employees who will avail this mechanism will also be provided direct access for the Chairman of the Audit committee in any exceptional case. The existence of such mechanism will be communicated within the company.  Though its not mandatory for companies to have whistle blowing policies, but beside that the company will have mandatory requirement to disclose all its report on corporate governance to the extend of the non mandatory practices. Many companies in India now have started to adopt the practice of taking in and putting into effect whistle-blower policy which is quite an encouraging stand but this policy is either used to uphold the corporate governance standards of the company or for the fear of being regarded as the late entries among the well governed companies group.

The Whistleblower Protection Bill of 2011

This bill is another piece of legislation, which was passed by Rajya Sabha in 2014 and got the permission from the President in May 2014, but unfortunately it has not come into force yet. This Bill will aim to protect ones officials from any wrong harassments with protecting persons making public interest a sort of disclosure. Under Section 4 of sub-section 6 the Act stops or puts a bar on the competent authority from enquiring any complaint which may be anonymous and has made it compulsory for all the complains to make the disclosure and reveal their true identity. The Hon’ble Supreme Court of India made an interference in this regard passing an order which is dated 20th November 2014 and legitimized the practice of anonymous whistleblowing which can turn out to be a great help and gift for anonymous whistleblowers in India.

Advantages Of Whistleblowing Policy

Whistleblowing policy can be extremely beneficial for any organization; there employees, shareholders, society and the general public will be benefitted at large. The violation and misconduct and any sort of malpractices, which would be harmful for the stakeholders and those who will be guilty, will be duly punished. Whistleblowing policy will help removing many ambiguities also educates and make the employees aware about different wrong doing which might take place in the organization. The underline spirit of the policy helps in identifying risks and fights those risks with efficient mechanism. The Berger Paints in India has adopted this whistleblowing policy. It only helps in registering any direct complaints regarding the violation of the company’s code of conduct and also specifies its results and also reports if there is any violation of the policy.

The Challenges Faced By This Policy

Corruption in India

India is a place where there is a democratic system of Government but the dark and dense network of beuracracy stops genuine victims from reaching the point of justice. People who try to raise their voice against the maligned systems ends up being tortured and harassed by the apex of the system. One example of such incident was the murder of Satyendra Dubey in 2003 who was an engineer and was charged for taking on corruption in a highway project and bowed the whistle and became one of the major example in the fate of whistleblowers in India. Another example of the lack of protection of whistleblowers was the case of Manjunath Shanmugam who was a employee of the Indian Oil Corporation Ltd and was brutally murdered for clamping down the oil adulteration racket in the state of Uttar Pradesh.

Problems due to the gap in the present legislation

It is very sad that despite of having specific legislation for public disclosures known as The Whistleblower Protection Bill, 2011 the Central Government could not yet bring it to force. Another Bill, which is pending before, the Parliamentary Standing Committee, which is about correcting a ‘patent error’ in the Whistleblowers Act, is also left to be done. The court cannot also compel or force the Government to bring such act into force and so the Executive can annul such Act by inaction. This Bill basically defines the term ‘disclosure’ as any complaint, which has any relation to any criminal offence or corruption or any willful misuse of power, which leads to the loss of Government or any kind of game to the public servant. Another reason for the lagging behind of the legislation is that there is no penalty against any public servant who may be victimizing the complaint, and it also does not protect witnesses during investigation and any trial despite their guidelines laid by the Law Commission for such identity protections.

Lacking Holistic Power of the Legislation

Both the SEBI and the Companies Act 2013 establishes an efficient mechanism for whistleblowing in the growing corporate scams and scandals which cannot be overlooked Companies Act provides for vigilance, trough the clause 49 of SEBI of the Listing Agreement mentions it as a non-mandatory requisite for provision of whistleblower mechanism. Till time there has been no proper set of rules provided by legislation specifying what the whistleblowing policy should contain and there is still ambiguity in it. The absence of holistic law clarifies all the vagueness with the establishment of whistleblower mechanism, which is a major way of achieving efficient corporate governance.

An Ideal Whistle Blowing Policy

The wrong doings of an organization when remains unblown leads to a brand disruption and the company incurs financial loses. Appropriate whistle blowing legislation needs to enforce it and support a culture of openness, commitment and integrity. The main tings required for a whistleblowing policy to be perfect are that it should have all the anonymity of information in which the whistleblower feels safe and secure. Secondly, the purpose of whistleblowing is to remove unethical practices, which are harming the economy and morality and didn’t swallow the bitter pill of the extra burden of frivolous complains. Lastly, it should be said that whistleblowing policies should be inclined towards the desires of treating the employees fairly. Initiating both ways of communication will not only clear the communication channel but also eliminate doubts, which will generate trust.


In order to defeat all the scandals and scams and rise above in an organization efficient whistleblowing mechanism should be incorporated. There should be more employment of internal auditors to strengthen the inside control system and other methods through which the organization will be able to control whistleblowing activities. There is no way to deny that whistleblowing policies will not only be extremely beneficial to the organization and its employees but will also help the share holders, society and the nation in a large way. Formulating concrete holistic laws and implementing such laws can reduce the ever-rising label of corruption and malpractices and this policy will also create a corporate world, which will be free from frauds and scams. This policy will not give immediate outcomes but will have a proverbial magical touch in it. The seed has already been sown and only active participation is needed for nurturing this policy then only the seed will blossom into flowers of a corruption free society.






Did you find this blog post helpful? Subscribe so that you never miss another post! Just complete this form…


  1. Thanks for sharing such a useful information here. i have clear some doubt about Whistleblower Act in India keep it up with good work

  2. I want To disclose the details of one company which is located iN bangalore please someone can help to with a mail id or contact details so that i can show his real face of then.