All Corporate bodies around the globe are influenced by stakeholders at varying degree. These stakeholders tend to be the original owners of the company, whose financial position would be affected depending upon the performance of the company in every financial year. The shareholders of the company not only would expect to sow fruitful returns for their investments, but would also want their money to be secured from any possible frauds.

Such responsibility of protecting the investors' money resides with the company's management (the board of directors), since the shareholders would be scattered widely. Hence it gives rise to the need to have an effective whistleblowing policy and vigil mechanism.[1]

Whistle blowing basically means bringing attention to wrongdoing within or outside the organization, where many people's interests are at risk. One only makes noise with the intention of alerting others to misconduct or theft. The intention should not be to incite panic; rather, it should be to raise alarm. Due to the variety of disclosures made, it can be viewed as extremely risky at times.

Before raising an alarm, a whistleblower must ensure that certain factors are taken into account. They must ensure that the information provided is accurate and not based on rumors. In any other case, it runs the risk of creating unnecessary tension among stakeholders and weighing the personal risks posed by whistleblowing.[2]

Vigil Mechanism And Whistleblowing Policy Frameworks And Its Importance:

The Securities and Exchange Board of India (SEBI) released a circular on 26th of august, 2003 which mandated the companies to have their own whistleblowing policy for the ease of the employees or its directors to report any irregularities occurred in the company to the concerned management. The said guidelines were amended by SEBI into Clause 49 of the Listing Agreement in 2003. [3]

The Whistle Blowers Protection Act 2014 (Whistle Blower Protection Act); A legal mechanism for members of an organization to report illegal, unethical, and illegitimate practices is provided by this Act. The Act, on the other hand, only applies to public sector undertakings and public servants.[4]

The essence of the Clause 49 mentioned above in Listing Agreements 2003 is in the Regulation 18 of the SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015. It is an agreement between all the listed companies with their stock exchanges for mandatorily placing a functional whistleblowing policy.[5]

In the famous case Chanda Kochhar v. ICICI Bank, the irregularities in the loan provided to Videocon Group was exposed to the public based on a complaint filed by a whistleblower. Similarly in the case of Punjab State Warehousing Corp v. Bhushan Chander & Anr, the misappropriation of goods from the warehouse by the accused was apparently brought to the light after a whistleblower notified the authorities of a criminal breach of trust of such nature.

The whistleblowing policy is absolutely necessary for an organization as it enables the employees of the company to be vigilant and bring up to the notice of the management for any frauds, illegal activities or any unethical behavior which had caught their attention on. As per the clauses, an employee who would want to report any such activities must be given access to the company's Audit Committee. It is the responsibility of the company to transfer the information received by them to all the other employees working under it.

Such employees could be victimized by their colleagues as an addendum to, or as an extra push provided to the employees to report malicious activities that could potentially destabilize the company, the regulation provides special protection to the rights and privileges of the employees who report such issues.[6]

Section 177 of The Companies Act, 2013 provides for the need to establish a vigil mechanism in the company for its directors and employees to report the issue in a particular method as prescribed. The whistleblowing policy is moreover like a necessity to provide a balance between morality and law by making the employees understand their moral obligation towards the society.

Employees usually would prefer looking away from any sorts of illegitimate activities within the company to avoid any trouble which they would possibly land in, so this is indeed a necessary tool to provide them all protection from the predicaments which they could fall into.[7]

The increasing number of corporate scams makes the vigil mechanism an unavoidable need of the hour. Some of the employees withdraw themselves from speaking up due to the fear of defamation if the information disclosed by them are proved to be false later on in the investigation. Further the confidentiality clause included in the service contract of the employee could threaten them from reporting.

Conclusion
When we look back at all the scams which were committed by huge corporate big shots, who were so dreaded by the general public, which in fact have had impacted the lives of millions of people around the globe. We understand that there is indeed a need for an even stronger and sturdy whistleblowing policy and a vigil mechanism with a secured structure. The select few who would have the bravery to speak out against their companies may have been hindered by the lack of adequate protection for whistleblowers.

If a proper enactment was in place for these private entities, many such scams could have been avoided. It is the responsibility of the government to ensure a healthy and safe environment for employees to encourage and allow them to report illegal activities in their workplaces, even though it is their personal choice. In addition to the SEBI Regulations and Section 177 of the Companies Act of 2013, it would be interesting to see if there was a separate Whistle Blower Protection Act for the private sector.

End-Notes:

1. 'A Study On Whistle Blowing Mechanism In Corporate India'; Dr. Singam Sunitha; IOSR Journal of Business and Management (IOSR-JBM); Dept.of commerce, St.Francis College for Women, Osmania University, India
2. IBID
3. IBID
4. Whistleblowing in India: The Way Forward; Bhumesh Verma, Managing Partner and Abhisar Vidyarthi, Student Researcher, Corp Comm Legal;(2019) PL (CL) September 84
5. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
6. Whistleblowing in India: The Way Forward; Bhumesh Verma, Managing Partner and Abhisar Vidyarthi, Student Researcher, Corp Comm Legal;(2019) PL (CL) September 84
7. The Companies Act, 2013

References:

1. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
   URL: https://www.sebi.gov.in/legal/regulations
2. Clause 49 of the Listing Agreement; SEBI
   URL: https://www.sebi.gov.in/legal/circulars/aug-2003
3. 'How a whistleblower complaint sank ex-ICICI Bank CEO & MD Chanda Kochhar' Business Standard (Mumbai, 24 January 2019)
   URL: https://www.business-standard.com/article/news-ians/the-fall-of-chanda-kochhar- how-it-began-from-whistleblower-s-complaint-119012401277_1.html
4. 'A Study On Whistle Blowing Mechanism In Corporate India'; Dr. Singam Sunitha; IOSR Journal of Business and Management (IOSR-JBM); Dept.of commerce, St.Francis College for Women, Osmania University, India
5. Whistleblowing in India: The Way Forward; Bhumesh Verma, Managing Partner and Abhisar Vidyarthi, Student Researcher, Corp Comm Legal;(2019) PL (CL) September 84
   URL: https://www.scconline.com/blog/post/2019/09/07/whistleblowing-in-india-the-way-forward/#_ftnref2
6. Punjab State Warehousing Corpn. v. Bhushan Chander, (2016) 13 SCC 44