New Delhi, May 4
THE Ministry of Company Affairs has constituted an expert group under the chairmanship of senior advocate Mr O.P. Vaish to evolve a mechanism to reduce the pendency of litigations. The panel has been asked to submit its report by July.
The expert group will have a nominee of the Ministry as well as representatives from the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India.
Expressing concern on the increasing number of cases relating to the Ministry in different courts, Mr Prem Chand Gupta, Minister of State (Independent Charge) for Company Affairs, said, "Our objective is to effectively administer the Companies Act but at the same time not increase the unproductive work. The group should look into various issues and suggest ways and means through which the Government can serve the desired objectives of reducing litigation and become more effective."
"The courts are already over-burdened. It is important for us to work in the direction of reducing this burden," he said adding, "Besides, why should corporates suffer for years for small and technical defaults."
As per the Ministry, for the year ended March 31, 2004, there were 45,562 prosecution cases arising out of violations of the provisions of the Companies Act pending in different courts of the country. Many of these cases, relating to technical and procedural violations, have been pending for several years.
In fact, the Minister has also indicated that there is a need to improve the prosecution mechanism and revisit the provisions relating to penalties. These 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, Mr Gupta is understood to have stated.