A person with knowledge of the matter said that the corporate affairs ministry plans to withdraw prosecution proceedings in certain cases, which do not involve serious violations of law, to eliminate avoidable litigation and improve efficiency in the system.
Accordingly, the prosecution proceedings pending for two years or more shall be withdrawn thereby removing the name of the company from the record. Also, prosecution proceedings arising out of inquiry, inspection and investigation, besides prosecution proceedings pending for at least five years where notices have not been issued and the offenses involved are compoundable, will get the benefit of the government’s move.
Prosecution is also likely to be withdrawn in cases pending for more than two years and stayed because of the period of limitation, and where the delay has not been condoned by the courts. The Criminal Procedure Code stipulates different period limits for taking cognizance of cases depending on the gravity of a case.
“We are probing the plan to withdraw prosecution in long pending cases. Continuing them is a burden on the exchequer. However, these do not involve any serious violations, and withdrawing prosecution proceedings will improve efficiency in the system. The decision to withdraw the prosecution will be taken on a case-by-case basis after careful investigation,” said a second person aware of the development. The list is being prepared, he said.
An emailed query to the spokesperson of the Ministry of Corporate Affairs on Friday at the time of publication had not been answered.
The benefit of withdrawal of prosecution will not be available to certain types of companies including listed entities. Companies facing fraud charges will also not be eligible to withdraw prosecution. Companies under the description of disappearing companies – which do not file returns, or maintain a registered office at the declared address, and whose directors cannot be traced – are not eligible for such relief.
If companies default on their annual return filing obligations, after the prosecution is withdrawn, officials will go ahead and remove their names from official records.
The move is part of the Centre’s campaign for ease of doing business and ease of life, for which steps have been taken to criminalize laws, reduce litigation and rationalize penalties. The government has already decriminalized over 60 penal provisions in the Companies Act after two rounds of legislative amendments in 2018 and 2020. The Department for Promotion of Industry and Internal Trade is working on another bill to ease business laws to ease the compliance burden. Enterprise.
In September, Finance and Corporate Affairs Minister Nirmala Sitharaman had asked tax officials to expeditiously dispose of the long pending petitions for grievance redressal.
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