Condonation Of Delay Scheme For Defaulting Companies’ Directors: Delhi HC Orders To Give Wide Publicity [Read Order]

 In one such case titled Shikha Pahuja vs Ministry of Corporate Affairs and Anr, Justice Vibhu Bakhru of the Delhi High Court had ordered that wide publicity be given to the COD scheme.

The Ministry of Corporate Affairs (MCA) has issued its ‘Condonation of Delay Scheme, 2018’ after a large number of directors who were disqualified on account of default by a company in filing annual return or financial statement for a continuous period of three years, moved various high courts seeking relief from disqualification.

The Condonation of Delay (COD) scheme will benefit 3,09,614 directors associated with the companies that had failed to file financial statements or annual returns in the MCA21 online registry for a continuous period of three financial years 2013-14 to 2015-16 as per Section 164(2) of the Companies Act.

The scheme will come into effect from January 1, 2018, and will remain in force up to March 31, 2018.

The COD-2018 is not applicable to companies which have been stuck off from the register of companies under Section 248(5) of the Act (companies who are out of business).

During the validity of the scheme, the DINs of the disqualified directors will be temporarily activated to enable them to file the overdue documents.

A defaulting company can fill up the e-form and pay Rs 30,000 as fee for availing the COD scheme.

The COD scheme has been launched following a spate of representations from the industry and various petitions in different high courts.

In one such case titled Shikha Pahuja vs Ministry of Corporate Affairs and Anr,Justice Vibhu Bakhru of the Delhi High Court had ordered that wide publicity be given to the COD scheme.

The court said so when the director of a company moved the high court in October 2017, saying her name features in the list of disqualified directors issued by the MCA and that she was not issued any show cause notice prior to the disqualification.

She later withdrew her petition when the court was informed about the COD scheme saying she would want to avail of the same.

“It would be apposite to ensure that wide publicity is given to the Condonation of Delay Scheme - 2018. The Registrar (Computers), High Court of Delhi is directed to forthwith place the scheme on the website of this Court,” Justice Bakhru had ordered.

It is to be noted that the Companies Act requires all companies to file their annual financial statements with the Registrar of Companies.

Section 164(2) provides for disqualification of director of company in default.

The MCA had earlier also launched a ‘Company Law Settlement Scheme 2014’ providing an opportunity to the defaulting companies to clear their defaults within the time specified therein.

In September 2017, the MCA identified 3,09,614 directors associated with the companies that had failed to file financial statements or annual returns in the MCA21 online registry from 2013-14 to 2015-16 and barred them from accessing the online registry.

A list of such directors was published on the website of MCA.

Following this, the MCA received many representations while many affected parties moved various high courts pursuant to which the COD scheme has been launched.