We wrote a piece for ibnlive.com on the major differences between the government’s Lok Pal Bill, 2011 and the Jan Lok Pal Bill drafted by Anna Hazare’s group.  The note is reproduced below.   The streets are witnessing a demand that the government’s Lok Pal Bill be replaced by the Jan Lok Pal Bill (JLP) as drafted by the team led by Anna Hazare.  There are several significant differences between the two bills.  In this note, we describe the some of these differences. (See here for more on the Lok Pal Bill).   First, there is a divergence on the jurisdiction of the Lok Pal.  Both bills include ministers, MPs for any action outside Parliament, and Group A officers (and equivalent) of the government.  The government bill includes the prime minister after he demits office whereas the JLP includes a sitting prime minister.  The JLP includes any act of an MP in respect of a speech or vote in Parliament (which is now protected by Article 105 of the Constitution).  The JLP includes judges; the government bill excludes them.  The JLP includes all government officials, while the government bill does not include junior (below Group A) officials.  The government bill also includes officers of NGOs who receive government funds or any funds from the public; JLP does not cover NGOs.   Second, the two Bills differ on the composition.  The government bill has a chairperson and upto 8 members; at least half the members must have a judicial background.  The JLP has a chairperson and 10 members, of which 4 have a judicial background.   Third, the process of selecting the Lok Pal members is different.  The JLP has a two stage process.  A search committee will shortlist potential candidates.  The search committee will have 10 members; five of these would have retired as Chief Justice of India, Chief Election Commissioner or Comptroller and Auditor General; they will select the other five from civil society.   The Lok Pal chairperson and members will be selected from this shortlist by a selection committee.  The selection committee consists of the prime minister, the leader of opposition in Lok Sabha, two supreme court judges, two high court chief justices, the chief election commissioner, the comptroller and auditor general, and all previous Lok Pal chairpersons.   The government bill has a simpler process.  The selection will be made by a committee consisting of the prime minister, the leaders of opposition in both Houses of Parliament, a supreme court judge, a high court chief justice, an eminent jurist, and an eminent person in public life.  The selection committee may, at its discretion, appoint a search committee to shortlist candidates.   Fourth, there are some differences in the qualifications of a member of the Lok Pal.  The JLP requires a judicial member to have held judicial office for 10 years or been a high court or supreme court advocate for 15 years.  The government bill requires the judicial member to be a supreme court judge or a high court chief justice.  For other members, the government bill requires at least 25 years experience in anti-corruption policy, public administration, vigilance or finance.  The JLP has a lower age limit of 45 years, and disqualifies anyone who has been in government service in the previous two years.   Fifth, the process for removal of Lok Pal members is different.  The government bill permits the president to make a reference to the Supreme Court for an inquiry, followed by removal if the member is found to be biased or corrupt.  The reference may be made by the president (a) on his own, (a) on a petition signed by 100 MPs, or (c) on a petition by a citizen if the President is then satisfied that it should be referred.  The President may also remove any member for insolvency, infirmity of mind or body, or engaging in paid employment.   The JLP has a different process. The process starts with a complaint by any person to the Supreme Court.  If the court finds misbehaviour, infirmity of mind or body, insolvency or paid employment, it may recommend his removal to the President.   Sixth, the offences covered by the Bills vary.  The government bill deals only with offences under the Prevention of Corruption Act.  The JLP, in addition, includes offences by public servants under the Indian Penal Code, victimization of whistleblowers and repeated violation of citizen’s charter.   Seventh, the government bill provides for an investigation wing under the Lok Pal.  The JLP states that the CBI will be under the Lok Pal while investigating corruption cases.   Eighth, the government bill provides for a prosecution wing of the Lok Pal.  In the JLP, the CBI’s prosecution wing will conduct this function.   Ninth, the process for prosecution is different.  In the government bill, the Lok Pal may initiate prosecution in a special court.  A copy of the report is to be sent to the competent authority.  No prior sanction is required.  In the JLP, prosecution of the prime minister, ministers, MPs and judges of supreme court and high courts may be initiated only with the permission of a 7-judge bench of the Lok Pal.   Tenth, the JLP deals with grievance redressal of citizens, in addition to the process for prosecuting corruption cases.  It requires every public authority to publish citizen’s charters listing its commitments to citizens.  The government bill does not deal with grievance redressal.   Given the widespread media coverage and public discussions, it is important that citizens understand the differences and nuances.  This may be a good opportunity to enact a law which includes the better provisions of each of these two bills.  

Recently, there have been instances of certain collective investment schemes (CISs) attempting to circumvent regulatory oversight.  In addition, some market participants have not complied with Securities and Exchange Board of India's (SEBI) orders of payment of penalty and refund to investors. In August, the Securities Laws (Amendment) Bill, 2013 was introduced in the Lok Sabha to amend the Securities and Exchange Board of India Act, 1992 (the SEBI Act, 1992), the Securities Contract (Regulation) Act, 1956 (SCRA, 1956) and the Depositories Act, 1996. The Bill replaced the Securities Laws (Amendments) Ordinance, 2013. The Bill makes the following key amendments: a) Definition of Collective Investment Schemes The SEBI Act, 1992 defines CISs as schemes in which the funds of investors are pooled, yield profits or income and are managed on behalf of investors.  It also exempts certain types of investments which are regulated by other authorities. The Bill introduces a proviso to the definition of CIS.  This proviso deems any scheme or arrangement to be a CIS if it meets all three of the following conditions: (a) funds are pooled, (b) it is not registered with SEBI, or it is not exempted by SEBI Act, 1992, and (c) it has a corpus of Rs 100 crore or more.  These provisions could potentially lead to some schemes not conventionally defined as CIS to fall under the definition. For instance, partnership firms operating in the investment business or real estate developers accepting customer advances could be termed as CISs. SEBI has been given the power to specify conditions under which any scheme or arrangement can be defined as a CIS. This raises the question of whether this is excessive delegation of legislative powers - usually the parent act defines the entities to be regulated and the details are entrusted to the regulator. b) Disgorgement (repayment) of unfair gains/ averted losses SEBI has in the past issued orders directing market participants to refund i) profits made or ii) losses averted, through unfair actions.  The Bill deems SEBI to have always had the power to direct a market participant to disgorge unfair gains made/losses averted, without approaching a court.  This power to order disgorgement without approaching a court is in contrast with the provisions of the recently passed Companies Bill, 2011 and the draft Indian Financial Code (IFC) which require an order from a court/tribunal for disgorgement of unfair gains. Further, the Bill specifies that the disgorged amount shall be credited to the Investor Education and Protection Fund (IEPF), and shall be used in accordance with SEBI regulations.  The Bill does not explicitly provide the first right on the disgorged funds to those who suffered wrongful losses due to the unfair actions, unlike the draft IFC. c) Investigation and prosecution The Bill empowers the SEBI chairman to authorise search and seizure operations on a suspect’s premises.  This does away with the current requirement of permission from a Judicial Magistrate.  This provision removes the usual safeguards regarding search and seizure as seen in the Code of Criminal Procedure, 1973, the recently passed Companies Bill, 2011 and the draft Indian Financial Code. The Bill also empowers an authorised SEBI officer to, without approaching a court, attach a person’s bank accounts and property and even arrest and detain the person in prison for non-compliance of a disgorgement order or penalty order.  Most regulators and authorities, with the exception of the Department of Income Tax, do not have powers to such an extent. d) Other Provisions of the Bill The Bill retrospectively validates consent guidelines issued by SEBI in 2007 under which SEBI can settle non-criminal cases through consent orders, i.e., parties can make out-of-court settlements through payment of fine/compensation.  The United States Securities and Exchange Commission settles over 90% of non-criminal cases by consent orders. The Bill retrospectively validates the exchange of information between SEBI and foreign securities regulators through MoUs. The Bill sets up special courts to try cases relating to offences under the SEBI Act, 1992. For a PRS summary of the Bill, here.