The Hindu Business Line : Panel to examine prosecution mechanism under company law

WITH an objective to make the existing prosecution mechanism under the company law more effective, the Ministry of Company Affairs is setting up an expert group.

According to the Minister of State (Independent Charge) for Company Affairs, Mr Prem Chand Gupta, "the group would be asked to look into various issues and suggest ways and means through which the Government can serve the desired objectives of reducing litigation and becoming more effective."

The Ministry currently has about 50,000 cases pending in different courts. The Minister also said that quality of inspection work is another area, which needs special attention of the field officers.

"Though the number of inspections done in 2004-05 has increased compared to last year, most of the officers have failed to achieve the targets set for them. On quality front also, much is required to be done," he stated.

Mr Gupta felt that substantial improvement was needed in launching timely prosecution and pursuing the same vigorously.

The Minister also indicated that there was a need to revisit provisions relating to penalties.

"The provisions were last reviewed in 2000 and introduced through amendments to the Act. Even while the J.J. Irani Committee is examining these matters, it would be useful to also internally re-examine the effectiveness of the penal structure and quantum of penalties," he stated.

To avoid doing post mortem, the Minister has asked the regional directors (RDs) and the registrar of companies to take measures to improve the process of scrutiny of balance sheet.

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