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Explained | Aircraft (Amendment) Bill 2020 gives teeth to DGCA, just like Companies Act 2013 did to SFIO

The 2013 Act empowered the Serious Fraud Investigation Office to make arrests. In a similar manner, the DGCA will now be empowered to keep a closer check on erring airlines and airport operators

September 16, 2020 / 03:45 PM IST
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The Aircraft (Amendment) Bill 2020, passed by Rajya Sabha on September 15, aims to give the much-needed teeth to some of the government agencies and, thereby. ensure safety in aviation operations, something that has come under spotlight because of the Kozhikode crash in August.

That is interesting. What is the amendment about?

Let us take one point at a time. The bill, once it clears all the procedures, will convert agencies under the Ministry of Civil Aviation, into statutory bodies. These agencies are Directorate General of Civil Aviation (DGCA), Bureau of Civil aviation security (BCAS) and Aircraft Accident Investigation Bureau (AAIB).

A statutory body is one that is backed by a law and has the powers to take penal action.

The DGCA is an industry regulator. Didn't it already have the power to do so?

In a way, yes. It could set guidelines and directions to airlines and airport operators. But the legal sanction behind these measures were limited. Sure, the regulator could cancel the license of an airline, or suspend a pilot or engineer, but that may not be the ideal punishment for each and every error.

What can kind of penalties can it impose now?

That brings us to the second point of the amendment. The Bill proposes to increase the fine amount for violations from Rs 10 lakh to Rs 1 crore. With the sanction to give monetary penalties, the DGCA can now have a stricter hold over the industry operations.

The move is akin to the amendment in Companies Act, in 2013, that immensely increased the power of SFIO to investigate corporate fraud, says Zulfiquar Memon, Managing Partner at MZM Legal, a legal firm.

How so?

Till the amendment came in 2013, the Serious Fraud Investigation Office, or SFIO, could investigate and recommend prosecution for white collar crimes. But it could not arrest anyone.

The change in 2013, in the Companies Act, added that much needed power in hands of the SFIO. The Office, of recent, has been in the news for its investigations into IL&FS. Last year, it had arrested Ramesh Bawa, MD & CEO of IL&FS. It is also probing former ICICI Bank chief Chanda Kochhar and her husband Deepak Kochhar.

Now, the DGCA will be strengthened by the amendment in the Aircraft Act that allows the regulator to impose monetary fine. "The change itself will ensure that airlines are more careful," says Vasanth Rajasekaran, Partner, Phoenix Legal, a legal firm.

That is good. But, does it mean if a passenger violates the guidelines on photography - remember the Kangana Ranaut episode - he or she will have to pay a fine of Rs 1 crore?

Relax. It is not so. The highest fine is of Rs 1 crore. The fine will be graded according to the error.

And, hold on. The Bill is considerate too in another way too. Memon points out:

"There is a provision of compounding of first or rare contraventions of the acts. In other words, if an airline, which is otherwise compliant, commits an error, the DGCA or the other two agencies, can let it pass. The first offence is compoundable. However, the second offence within a space of five years is not compoundable.

Cannot argue that, can we?

Agreed. How about the other agencies, such as AAIB?

Yes, the bureau will have similar powers. Industry experts are hoping that the Bureau, which is investigating the Air India Express flight crash in Kozhikode that led to the death of 18, will use these powers to come down heavily on those found guilty.

Does it mean AAIB will be more independent too?

Maybe. But, the amendment in the Aircraft Act also empowers the central government in many ways, including power to constitute the three agencies, to specify their responsibilities. The government can also issue directions to the three agencies and even review, including rescind or modify, their orders.

While this may not amuse safety experts who have been critical of the control that Ministry of Civil Aviation has on these bodies, the amendment will improve India's safety record.

How so?

Explains Memon:

"The amendment makes provisions for securing the safety of aircraft operations in India and carrying out civil aviation operations as per the internationally accepted standards, procedures and practices as laid down by the International Civil Aviation Organisation (ICAO)."

ICAO, which is an aviation watchdog, has been critical of the absence of a statutory backing to DGCA and other agencies. This has impacted India’s safety rankings.

According to ICAO’s universal safety oversight audit for India in November 2017 and February 2018, the country’s score fell to 57.44 percent from 65.82 percent in 2017. This score was below that of Pakistan and Nepal, and the global average of 65 percent.

This score will improve now.

Prince Mathews Thomas
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.
first published: Sep 16, 2020 03:45 pm