Extension of statutory vigil mechanisms to additional classes of companies is a policy decision beyond judicial mandate.

The Petitioners, former employees of HP India Sales Pvt. Ltd. and GlaxoSmithKline Consumer Healthcare Ltd., alleged they were subjected to retaliation and eventually terminated after reporting unethical practices and environmental violations to their respective managements.

They challenged the constitutional validity and adequacy of Section 177(9) and (10) of the Companies Act, 2013, Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, and Regulation 22(1) of the SEBI (LODR) Regulations, 2015.

The Petitioners argued that these provisions fail to provide sufficient safeguards against victimisation and exclusion of unlisted/private companies from the mandatory vigil mechanism.

1. Whether the existing statutory vigil mechanism under the Companies Act and SEBI Regulations provides inadequate safeguards against the victimisation of whistleblowers.

2. Whether the Court can issue a Writ of Mandamus directing the Government to extend the mandatory vigil mechanism to unlisted or private limited companies beyond the currently prescribed classes.

The Court applied Section 177(9) of the Companies Act, 2013, which mandates a vigil mechanism for listed companies and prescribed classes of companies to report genuine concerns.

It further relied on Section 177(10), which requires such mechanisms to provide "adequate safeguards against victimisation" and direct access to the Audit Committee Chairperson.

Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, was applied to identify the specific classes of companies—including those accepting public deposits or having bank borrowings exceeding Rs. 50 crore—required to establish such mechanisms.

The Court also referenced the principle of separation of powers, noting that extending legislative mandates to new categories of entities constitutes a policy decision rather than a judicial function.

The Court observed that the legislature has already codified a vigil mechanism for listed and significant unlisted companies (those with high debt or public deposits) to ensure oversight by an Audit Committee dominated by independent directors.

Regarding the demand to extend these rules to all private/unlisted companies, the Court reasoned that such an expansion involves complex policy considerations, stakeholder consultations, and assessments of the nature of complaints within specific industries.

The Court determined that it cannot perform a "legislative exercise" via judicial order, as determining which legal entities require mandatory whistleblowing protections is a matter of state policy.

Consequently, while the Court cannot mandate the law's extension, it has the authority to direct the executive to review the policy's scope.

However, the Court disposed of the petitions by directing the Ministry of Corporate Affairs to undertake a stakeholder consultation to decide, within a reasonable period, whether the vigil mechanism should be extended to any additional classes of companies beyond those currently prescribed.

The final holding leaves the expansion of whistleblower protections to the executive's legislative discretion following due consultation.