When an honest person who believes that a business should be conducted ethically and fairly decides to stand up for the truth and disclose any illegal or unethical practices or corruption within the company, this is called whistleblowing. This has happened a lot of times in the corporate world, but often due to a lack of laws for the protection of whistleblowers and a lack of proper whistle mechanisms, some truths or facts remain hidden.
This blog is about the Whistleblowing law in India; it explains what whistleblowing is, how you can report it, and how the law governs it. Furthermore, if you’re looking for legal assistance regarding a whistleblowing case in India, you can speak with our experienced corporate lawyers; they can help you protect your rights and avoid unfair treatment.
Who are Whistleblowers?
Under the Whistleblower Protection Act, a whistleblower is generally a person who discloses corruption, fraudulent activity, manipulation of reports, or other unethical activity within the organisation.Â
The whistleblower can disclose this information to anyone; it can be a higher authority in the organisation (internal whistleblowing), or an outsider, like the media, police, or any government official (external whistleblowing).
Confused about the exact kind of information shared in whistleblowing? Well, here’s a small list:
- Corruption or abuse of power
- Financial fraud and accounting manipulationÂ
- Insider trading and securities violationsÂ
- Workplace and environmental safety violationsÂ
- Employment and governance misconduct
What Laws Govern Whistleblowing in India?
The Whistle Blower Protection Act
The Whistle Blower Protection Act was passed by the Parliament in 2014, but its functions are still most misunderstood. This Act was formed to provide corporates a legal mechanism for whistleblowing, to ensure the correct information reaches the right person, and for the protection of whistle blowers involving the public sector. However, the Act has not been brought into force by the central government.
The Company Act, 2013 – Section 177 (Vigil Mechanism)Â
Due to the unclear law regarding whistleblowing, most real protection in India today comes from corporate governance rules. As per Section 177(9) and (10) of the Companies Act, every listed company, companies that accept public deposits, and companies that have borrowed over Rs. 50 crores must establish a Vigil mechanism where the employees and directors can report their concerns. It provides safeguards against victimisation and direct access to the Audit Committee chairperson in exceptional cases.Â
SEBI’s Informant Mechanism (PIT Regulations)Â
The SEBI’s informant mechanism is for reporting any insider trading or manipulation happening with the stock prices. This regulation also provides informants monetary rewards based on applicable conditions.
How can a Whistleblower Report Wrongdoing in India?
In India, we have various methods to report different kinds of wrongdoing happening in a business. Knowing this process of reporting is essential to avoid compliance mistakes. Such as:
- Government employees: For complaints regarding corruption or misuse of powers, you can file the complaint at the Central Vigilance Commission (CVC) or at your department’s vigilance officer. And if the case is serious, you can file a complaint at the Lokpal.
- Private Sector: If you’re an employee at a listed company, or one that accepts public deposits or has borrowed over ₹50 crore, you can report the wrongdoing at the organisation’s vigil mechanism.Â
- Insider Trading: If you have evidence of insider trading or securities market misconduct, you can report it at SEBI’s informant mechanism.
- If you’re a citizen trying to expose government decisions, contracts, or spending, filing an RTI request is often the fastest route to documentary evidence, even though it doesn’t carry whistleblower-specific legal protection.
Step-By-Step Process of Reporting the Wrongdoing in India
Step 1: Verify the Information
Before raising any complaint, the complainant must verify the information and collect evidence like documents, emails, or any transaction receipts in support of it before reporting it to a higher authority.
Step 2: Identify the correct reporting channelÂ
For complaint filing in the private sector, the whistleblower can file the complaint at the company’s vigil mechanism. For the public sector, they can file it at the Central Vigilance Commission (CVC) or Lokpal. Or, for any information related to the stock market, they can file it at SEBI.
Step 3: Acknowledgment and Investigation
After receiving the complaints, the authority must recognise them and conduct a formal investigation.
Step 4: Final Decision by the AuthorityÂ
After they verify the misconduct information provided by the whistleblower, they must take appropriate legal action and corrective measures against the wrongdoing in the organisation.
Penalties for Providing False Information
As per Section 17 of the Whistleblowers Protection Act, Whistleblowers must know that if they knowingly make false allegations with the intention of harm or to accuse someone of a false allegation, then they can be punished with a fine of Rs. 30000 and imprisonment up to 2 years.
What Protection Is Available to Whistleblowers in India?
When a whistleblower discloses important information about misconduct happening in the organisation, it puts them at risk of losing their job, workplace harassment, blackmail, personal safety risks, and threats to their life.
Corporations are instructed to have an audit committee or a certain protection mechanism for the whistleblowers; it provides them protection against being laid off, cannot postpone their promotions, or being harassed.Â
In certain cases, the investigation team is required to keep the identity of the whistleblower confidential to avoid safety risks for them.Â
And under Section 16 of the Whistleblower Protection Act, if someone reveals the identity of an informant in bad faith, then they can face penalties.
With our previous clients, we have often come across cases of dismissal or mistreatment at work due to disclosing the misconduct happening within the company. And we always advise clients not to stay silent and to speak up and get legal assistance for the protection of their legal rights.
Judgments on Whistleblowing and Whistleblower Protection in India
Case Study 1: Satyendra Dubey v. Union of India (Writ Petition (Civil) No. 539/2003)
Whistleblower: Satyendra Dubey
Facts: In this case, Mr. Satyendra, an NHAI engineer, reported corruption happening in the Golden Quadrilateral highway project. He requested that the system keep his identity hidden for security purposes, but still the complaint was forwarded without masking his identity, and he was murdered in Gaya in November 2003.Â
Conclusion: This case has been a major turn into India’s whistleblowing history, leading the government to set up a protection mechanism for whistleblowers. This case paved the way for the Whistle Blowers Protection Act, 2014.
Case Study 2: Vishal Tiwari v. Union of India (2024)
Facts: This case was reported after the Hindenburg Research report raised allegations of stock manipulation against the Adani Group; under this, Vishal Tiwari filed petitions seeking the Supreme Court for an independent investigation.
Conclusion: To this, the Supreme Court refused to transfer the order to an SIT/CBI probe, and directed SEBI to complete the remaining investigation. The case highlights the importance of proper regulatory scrutiny if corporate misconduct is reported.
How Companies can Incorporate a Reporting System for Whistleblowing?
Having an internal mechanism established for reporting misconduct, unfair treatment, or corruption is really helpful for the organisation. It helps in preventing any future risk by identifying the issues at an early stage, and it is also helpful in protecting the employees of the company.Â
Incorporation of Vigil Mechanism
Even though it’s been made mandatory for certain private sectors to have a vigil mechanism, especially for the reporting of misconduct. But corporations should not be limited to those certain classes of companies; even if it’s not required legally, having internal reporting channels is good for the corporation and its employees.
And most importantly, all employees, whether it’s new onboarding, interns, or legal compliance trainers, everyone should be aware of such reporting channels existing in the corporation.Â
What can be reported?Â
- Frauds or corruption
- Misuse of company assets
- Regulatory violations
- Insider trading/securities misconduct
Not every complaint needs to be a whistleblowing complaint; it can be general unethical and unfair management of the departments within the organisation.
The Companies Should Include Anti-Retaliation Safeguards
The company can provide safeguards for the complainants against:
- Dismissal or delayed promotions
- Unfavourable transfer
- Harassment and threats
- Discrimination
- Unjustified disciplinary action
Before submitting a whistleblower complaint, check:
We are providing this checklist so you can ensure that you have all the required information and documents for reporting:Â
- You have verified the alleged wrongdoing.
- You have identified the correct reporting channel.Â
- You have all documents to support your claims.
- You have preserved evidence lawfully.
- You have separated facts from assumptions.
- You have kept a copy of your complaint.
- You have documented any subsequent retaliation.
When Should You Consult with a Legal Professional
- Consult a lawyer if you’re facing workplace harassment for disclosing a fact.
- When you’re being threatened with your job or a delayed promotion.
- If you’re being falsely accused of providing information.
Consider getting legal advice before disclosing any information to avoid unnecessary issues at your job and have a strong legal stand in your support in case something goes wrong. At Kamal & Co. Advocates, we provide complete assistance to whistleblowers, from evidence assessment and choosing the right authority to protect their legal rights.
