Lok Sabha Question No. 249 (STARRED), answered on 2023-08-07
Subject: Withdrawal of Cases
Ministry: CORPORATE AFFAIRS
Asked by: Shrirang Appa Barne, Sanjay Sadashivrao Mandlik

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS LOK SABHA

## STARRED QUESTION No. *249

ANSWERED ON MONDAY, AUGUST 7, 2023/SRAVANA 16, 1945(SAKA)

## WITHDRAWAL OF CASES QUESTION

*249 . SHRI SHRIRANG APPA BARNE : SHRI SANJAY SADASHIVRAO MANDLIK :

Will the Minister of Corporate Affairs be pleased to state:

- (a) whether in the first phase plan, the Government had withdrawn 14,247 prosecutions during a special drive in 2017 and if so, whether the Government proposes to withdraw 7,338 prosecutions pending before various courts in the second drive;
- (b) if so, the details thereof and the reasons therefor alongwith the steps taken/being taken by the Government in this regard;
- (c) whether  the  Government  has  set  up  any  committee  in  this regard to undertake a thorough review of all the pending cases and if so, the details thereof;
- (d) whether  the  said  committee  has  identified  the  long  pending prosecutions for various offences for withdrawal;
- (e) if so, the details thereof alongwith the nature of such cases and if not, the time by which it is likely to be done; and
- (f) the  manner  in  which  this  step  will  unclog  the  courts  in  the country and provide growth of corporate sector?

## ANSWER

The Minister of Finance & Corporate Affairs. (SMT. NIRMALA SITHARAMAN)

(a) to (f): A statement is laid on the Table of the House.

STATEMENT  REFERRED  TO  IN  REPLY  TO  LOK  SABHA STARRED QUESTION NO. *249 FOR ANSWER ON

07.08.2023.

- (a): Yes Sir, in the process of first phase plan the Government had withdrawn 14,247 prosecutions. Now, in continuation to the earlier drive  the  Government  proposes  to  withdraw  7,338  prosecutions pending  before  various  courts,  in  the  special  Arrears  Clearance Drive-II.
- (b) to (f) : The  ROC  wise  list  giving  the  number  of  prosecutions proposed to be withdrawn is enclosed at Annexure-A.

The Ministry of Corporate Affairs set up a Committee in 2017 comprising  of  7  Regional  Directors.  The  Committee  has  to  give recommendations  regarding  withdrawal  of  long  standing  cases, which are  technical  and  procedural  in  nature  and  lay  down  broad principles to review pending prosecutions.  In the year 2022 a similar Committee was set up to review pending prosecutions filed by field offices  of  the  MCA  in  order  to  recommend  further  withdrawal  of pending  prosecution  in  various  Courts.    The  main  objective  with which these Committees were set up was to free the Courts from dealing with offences that are procedural and technical in nature in order to ensure that Courts can concentrate on serious offences.  The idea  was  to  entrust  cases  of  procedural  and  technical  nature  to Regulatory Authorities to handle them through inhouse mechanism, i.e. through adjudication process. The main criteria for withdrawal of cases in 2022 are as under:

- A. Cases covered under either of the three categories are to be included for withdrawal of prosecution:
2. A.1. Where  prosecutions  under  Companies  Act,  1956  and Companies  Act,  2013  are  pending  for  more  than  two  years against defaulting companies which otherwise are fit for action u/s 248 of the Companies Act, 2013;
3. A.2. All prosecutions under Companies Act, 1956 and Companies Act, 2013 are pending for at least 5 years other than those  arising  out  of  inquiries  [u/s  206(1),  206(3)  and  206(4)], inspections and investigations where notice remains unserved, and the offences involved are compoundable offences;
4. A.3. Where  prosecutions  under  Companies  Act,  1956  and Companies Act, 2013 are pending for more than 2 years and the cases are barred by limitation (limitation applies to  offences where maximum term of imprisonment is up to three years only) and application for condonation of delay has been filed but the

delay has yet to be condoned by the court. Section 468 of Cr. P.C. may be referred for the period of limitation.

- B. However, notwithstanding anything stated above the following companies are excluded from the ambit of withdrawal of prosecution

B.1. Companies  which  have  earlier  availed  the  Companies Fresh  Start  Scheme,  2020  (CFSS-2020),  after  verification  of present filing status of the said companies;

- B.2. Companies against whom any non-compoundable offence or action for fraud has been filed;
- B.3. Companies against whom there are complaints of public cheating/ acceptance of public deposits/ fraud and 3i is ongoing or has been completed and further action is pending.
- B.4. Listed companies;
- B.5. Vanishing companies;
- B.6. Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;
- B.7. Companies, which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
- B.8. Companies having charge which are pending for satisfaction; and
- B.9. Companies registered under Section 25 of the Companies Act, 1956 or Section 8 of the Companies Act, 2013.

Instructions  were  issued  to  the  Regional  Directors  to  advise Registrar of Companies for placing withdrawal applications before concerned courts, after final review by the concerned ROC's. Action taken under these Drives I & II is expected to reduce more than 21000 cases from different courts and help unclog courts.

*******

## Annexure refer to in reply to Part - (b) to (f) of Lok Sabha Starred Question No. *249 for answer on 07.08.2023

## ANNEXURE - A

## ROC-wise Break-up Data

| Sl. No.   | Office of       | Category A1   | Category A2   | Category A3   | Total number of cases recommended for withdrawal (3+4+5)   |
|-----------|-----------------|---------------|---------------|---------------|------------------------------------------------------------|
| (1)       | (2)             | (3)           | (4)           | (5)           | (6)                                                        |
| 1.        | ROC-Chennai     | 177           | 20            | 0             | 197                                                        |
| 2.        | ROC- Coimbatore | 0             | 0             | 0             | 0                                                          |
| 3.        | ROC-Kerala      | 28            | 02            | 0             | 30                                                         |
| 4.        | ROC- Puducherry | 0             | 06            | 0             | 6                                                          |
| 5.        | ROC-Delhi       | 12            | 11            | 0             | 23                                                         |
| 6.        | ROC-Kanpur      | 142           | 0             | 0             | 142                                                        |
| 7.        | ROC-Jammu       | 4             | 0             | 0             | 4                                                          |
| 8.        | ROC- Ahmedabad  | 222           | 7             | 0             | 229                                                        |
| 9.        | ROC-Gwalior     | 97            | 113           | 0             | 210                                                        |
| 10.       | ROC-Jaipur      | 0             | 10            | 0             | 10                                                         |
| 11.       | ROC-Bilaspur    | 0             | 10            | 0             | 10                                                         |
| 12.       | ROC-Mumbai      | 0             | 55            | 0             | 55                                                         |
| 13.       | ROC-Pune        | 241           | 0             | 0             | 241                                                        |
| 14.       | ROC-Goa         | 63            | 0             | 0             | 63                                                         |
| 15.       | ROC-West        | 260           | 4851          | 0             | 5111                                                       |
| 16.       | ROC-Cuttack     | 44            | 91            | 0             | 135                                                        |
| 17.       | ROC-Ranchi      | 126           | 0             | 0             | 126                                                        |
| 18.       | ROC-Patna       | 307           | 367           | 0             | 674                                                        |
| 19.       | ROC-Guwahati    | 41            | 31            | 0             | 72                                                         |
|           | Total           | 1764          | 5574          | 0             | 7338                                                       |