MCA Approves Withdrawal Of 7,338 Prosecutions Pending In Courts Under Companies Act

The Ministry of Corporate Affairs (“MCA”), Government of India has issued a Press Release dated 14.07.2023, notifying that it has approved withdrawal of another 7,338 prosecutions pending before courts under Special Arrears Clearance Drive-II, in order to promote Ease of Doing Business and decriminalize compoundable offences under Companies Act, 2013. Withdrawal will lead to 21.86% reduction in pending prosecutions being pursued by Central Government. However, prosecutions related to serious non-compoundable offences such as cheating, fraud, acceptance of deposits, pending charges, etc. are not considered for withdrawal. Brief background The Ministry of Corporate Affairs (“MCA”), Government of India had introduced the Companies (Amendment) Act, 2020 for decriminalizing offences under the Companies Act, 2013, to facilitate the smooth functioning of businesses and minimize lengthy litigations before courts. Previously a similar Special Drive- I was conducted in 2017 whereby 14,247 prosecutions were withdrawn by the Central Government. Now the Government is conducting Special Arrears Clearance Drive-II to withdraw another 7,338 prosecutions, which are pending before various courts. The MCA had constituted a committee to undertake a thorough review of all the pending litigations. A Press Release dated 14.07.2023 has been issued by MCA on the website of Press Information Bureau in this regard. The step has been taken to promote of Ease of Business and to decriminalize compoundable offences under the Companies Act, 2013. Besides, it is also part of the principle that the Central Government should not be a compulsive litigant. However, prosecutions related to serious non-compoundable offences such as cheating, fraud, acceptance of deposits, pending charges, etc. are not considered for withdrawal. “This would be a significant decrease of 21.86% in the pending prosecutions being pursued by the Central Government. The Government’s “Action Plan for Special Arrears Clearance Drives” for reducing the number of pending litigations had previously resulted in withdrawal of 14,247 prosecutions during the Special Drive-I in the year 2017…This decisive step will also unclog the courts as well as foster the growth of corporate sector in India, while maintaining a healthy corporate governance framework”, the MCA Press Release states. Click HereTo Read/Download Press Release

MCA Approves Withdrawal Of 7,338 Prosecutions Pending In Courts Under Companies Act

Pallavi Mishra

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