16,734 cases may be taken back under simplified plan

The ministry of company affairs will soon initiate action to withdraw 16,734 cases of technical offences against companies as recommended by the expert committee on technical offences headed by OP Vaish.

The ministry will examine the recommendation to offer a new Company Law Simplified Settlement Scheme in a majority of the 19,000-odd cases which are in progress or where notices have been served.

"We will soon initiate steps to clear minor cases so that the government can focus on serious violators," Company Affairs Minister, Prem Chand Gupta said at a press conference.

The government will focus on the 5,107 compoundable cases relating to NBFCs, chit funds companies, plantation companies, serious fraud investigation cases, vanishing companies, listed companies, cases involving securities scam(s) and other cases of similar nature which involve public interest

"Once the modernisation project MCA 21 is complete in April 2006, we will deploy the RoC staff for investigations and pursuit of serious cases," Komal Anand, company affairs secretary, said.

The Vaish committee has recommended that in 1,072 non-compoundable cases where imprisonment is prescribed and compounding of such cases is not permissible, an in-house structure should be created under MCA for dealing with cases.

"In the new Companies Act, RoCs will be able to deal with technical offences and levy penalty and, therefore, such backlog will not be created," the minister said.

The government set up the committee in the backdrop of over 300,000 companies not complying with the requirements of the law relating to filing of documents. With over 45,000 prosecution cases pending in various trial courts in the country, the pendency has been growing by nearly 2,000 cases every year.

This is due to the fact that it takes about 5 years to dispose off a case.

The process of litigation does not result in any gain for the government as the average cost per case awarded to the government comes to Rs 573 and average fine comes to Rs 2,247.