Institutional Bias And Conflict Of Interest In IC Composition

The PoSH Gap Series – Strengthening Workplace Investigations

This article, the third in our PoSH Gap Series, examines the issue of institutional bias arising from improper Internal Committee ("IC") composition that results in the denial of a fair and impartial hearing to respondents.

What does the law say about the constitution of the IC?

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("PoSH Act") requires every IC to comprise at least four (4) members, which should include a presiding officer (a senior woman employee) and one (1) external member from an NGO or association with experience in women's rights issues. Further, at least 50% of the members must be women.

The intention behind this structure is to ensure neutrality and bring diverse perspectives to the inquiry process. However, the reality is more complicated. IC members are typically senior employees who may be reporting to the same leadership that may be involved in or affected by the complaint and often have professional relationships with the parties. When these conflicts exist, can an IC truly conduct an independent inquiry? Or will institutional pressures, whether explicit or subtle, influence the outcome?

This article will focus on how courts have addressed institutional bias in IC investigations and provide practical strategies to ensure neutrality and independence.

How have courts viewed institutional bias?

The Delhi Industrial Tribunal in X vs Internal Committee, Standard Chartered Bank¹ made significant observations regarding institutional bias in the composition and functioning of the IC. In this case, the appellant (complainant) challenged the report of the IC that held the respondent guilty but failed to recommend punishment under the PoSH Act. Further, the IC allowed an anonymous witness to testify and asked the anonymous personal questions that were outside the scope of the investigation with the intention to "malign the appellant". The court observed that the IC chairpersons/presiding officers, who are senior-level employees of an organisation, often have "leanings with the employer" and make efforts to absolve the employer to protect the organisation's reputation. The court added that the IC's approach in this case was prejudicial and biased towards the appellant and held that the IC's findings were illegal.

Building on these concerns about institutional bias, the Kerala High Court² took an even stronger stance, where it described the IC's report in the case as unilateral and biased, and expressed concern that the majority of IC reports it had encountered appeared to favour institutions. In this case, the IC recoded the statements of the witnesses and the respondent but failed to record the statement of the complainant and was unable to provide a justification for this omission. The court emphasised that when ICs demonstrate bias toward protecting institutional reputation rather than conducting fair inquiries, their findings lack credibility and cannot be relied upon to prevent further legal proceedings, including criminal prosecution.

Recognising these recurring patterns across cases, the Delhi High Court in Rashi vs Union of India & Anr.³ laid down 16 guiding principles on the constitution and working of the IC, which include the following:

• IC members should not have any personal knowledge or interest in the case, or be connected to the case;
• IC members should have blemish-less credentials;
• complete neutrality and objectivity should be maintained during the proceedings;
• there should be no undue pressure or influence from the senior management; and
• a clear and a precise procedure should be adopted by the IC to investigate the complaints

How can ICs and Organisations Navigate this Challenge?

Eliminating all potential for bias may be impossible in ICs, but ICs and organisations can take meaningful steps to enhance neutrality and credibility:

1. Pre-inquiry checks: Before commencing any inquiry, all IC members should do pre-inquiry checks to rule out conflicts of interest. The pre-inquiry checks should specifically focus on a few points, including any professional relationship of the IC members with the parties, any personal relationship with the parties and if a member has any interest in the outcome. If conflicts are disclosed, the member should be replaced for the specific inquiry.
2. Document independence: In order to document the pre-inquiry conflict, the IC's inquiry report should contain a section where the outcome of the pre-inquiry check is recorded. This proactive disclosure demonstrates a commitment to neutrality and makes it harder for parties to later challenge the inquiry on bias grounds.
3. Rotate IC membership regularly: Avoid having the same individuals serve on the IC for extended periods. Regular rotation reduces the risk of IC members developing entrenched relationships with potential parties and brings fresh perspectives.

Why does this matter?

Institutional bias is one of the most dangerous flaws in PoSH investigations because it erodes confidence in the entire redressal system. When employees are made to believe the IC is more focused on protecting the organisation than ensuring justice, they hesitate to raise complaints, allowing harassment to go unreported and unaddressed. Courts have repeatedly observed that a biased inquiry process invalidates the inquiry process and, more importantly, casts a doubt on an organisation's commitment to a safe workplace. Accordingly, investing in an impartial IC helps an organisation fulfil the statutory requirements and, in parallel, helps instil a sense of trust amongst employees, thereby promoting a healthy work environment.

Footnotes

1 X vs Internal Committee, Standard Chartered Bank, RCA DJ No. 2/22.

2 Amith vs State of Kerala, CRL MC. 8581 of 2024.

3 Rashi vs Union of India, WP (C) 3396/2019

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.