Corporate Affairs Ministry directed Lok Adalats to review pending Corporate Cases

The ministry of corporate affairs (MCA) directed all regional directors (RDs) to organise lok adalats for reviewing pending prosecution cases to ascertain where the offence of companies are compoundable and prosecutions may be withdrawn. Currently, there are around 75000 cases pending.

The RDs were directed to conduct lok adalats in the offices of concerning registrar of companies (ROCs) in cases where offences range from not filing annual returns to not providing information sought by the ministry. The cases will have to be cleared then and there, and orders will be passed.

The ministry has also directed the registrar of companies to review prosecutions filed against independent directors and withdraw cases where independent directors were not liable.
The exercise of the directions is expected to settle around 60 per cent of the pending prosecution cases and provide resources and time to the ministry to focus on more serious violations and offence.

The ministry had in March 2011 asked the RoCs to take extra care in examining the cases of independent and nominee directors and mentioned that the independent and nominee directors should not be held liable for an action by the company or its executives which occurred without their knowledge.

The circular from the ministry stated that in case of maintenance of accounts and balance sheet, and for complying with the provisions of the Companies Act, the managing director, the manager and the company secretary are liable for prosecution.