CONDONATION OF DELAY SCHEME, 2018- A MUCH AWAITED AND FINAL RELIEF TO DISQUALIFIED DIRECTORS

BY CS Rasu Sharma & Praveen Singh

As we all knows that all companies whether domestic or foreign registered under the Companies Act, 2013 are required to file their annual financial statements and annual returns with the jurisdictional Registrar of Companies (hereinafter referred to as the “RoC”) in the prescribed forms and non filing of these forms construed as an offence under the Companies Act, 2013 (hereinafter referred to as the “Act”).

Further, it is pertinent to mention here that Section 164(2) (a) read with 167(1) (a) of the Act provides for disqualification of a director in case a company did not file its annual return or a financial statement for a continuous period of three financial years.

In September 2017, the Ministry of Corporate Affairs (Hereinafter referred to as the “MCA”) identified 3,09,614 directors associated with the companies that had failed to file financial statements or annual returns from 2013-14 to 2015-16. The Registrar of Companies (“RoC”), which comes under the MCA, had disqualified directors of companies that defaulted in filing annual returns, balance sheets and profit and loss statements in a sudden move and barred them from accessing the online registry and till November 30, as many as 2.24 lakh companies had been deregistered.

Thereafter, Ministry of finance directed the banks to restrict operations of bank accounts associated with such companies. This action of striking-off defaulting companies and blocking their bank accounts was done with a view to combat the issue of black money and illicit fund flows, disguised in the form of shell companies. A list of such directors was also published on the website of MCA.

Disqualified directors were barred from sitting on boards for five years. Several high-profile independent directors were among those adversely affected by the move. The disqualification involved suspension of the Director Identification Number (“DIN”) of these directors. Under the Companies Act, 2013, only those individuals who have an active DIN can be appointed to company boards. Once a DIN is suspended, a director cannot file returns or any documents with the RoC. This had created an acute problem for SMEs, many of which found all their directors disqualified.

Following the move, concerns were raised that many directors of genuine companies have also been disqualified. Besides, some individuals moved courts against their disqualification. Apart from this MCA had also received various representations, including from the industry, seeking an opportunity for the defaulting companies to comply with the requirements while many affected parties moved various high courts.

To provide a three-month window for defaulting companies to submit their filings, the Ministry i.e., MCA come out with the “Condonation of Delay Scheme 2018”. A move that come as an absolute relief for disqualified directors. The “Condonation of Delay Scheme” is in force from January 1 to March 31, 2018. This is the second time that the ministry is coming out with such a scheme after the Companies Act, 2013 came into effect from April 1, 2014.

The MCA had earlier also launched a “Company Law Settlement Scheme 2014” providing an opportunity to the defaulting companies to clear their defaults within the time specified therein. The directors had been penalised after it was found that their companies had not filed annual returns and financial statements with the RoC for three consecutive years. Over two lakh companies had defaulted in filing their statutory reports.

It is to be noted that Director Identification Numbers (“DINs”) of the disqualified directors that have been de-activated would be ‘temporarily activated’ during the scheme period. Right now it isn’t activated. To activate the same one need to submit a letter with the Roc physically or wait for some more time.

           

After submitting the filings under the scheme, a company concerned would have to file a separate form known as Form eCODS seeking condonation of the delay along with a fee of INR 30,000. Form eCODS can be filed by directors who were disqualified.

Further, in case of defaulting companies whose names have been removed /Struck off from the register and have filed applications for revival, DINs of the directors concerned would be re-activated subject to NCLT order and other conditions.

The main objective of this scheme is to provide an opportunity for non-compliant, defaulting companies to rectify the default. All defaulting companies other than those that have been struck off or removed from the register of companies are eligible to apply for rectification of records. [For more please read the Scheme below]

The scheme will allow defaulting companies to submit all documents that were due for filing till June 30, 2017. A fee mentioned above will be charged for condoning the delayed filing of the documents. Once all annual filings and form eCODS is submitted with the RoC all the pending prosecution for defaults in filing of annual reports and financial statements will be withdrawn and disqualified directors will be free from all liabilities and no further action can be taken against them.

The main text of the scheme is as follows:

MCA wide General Circular No.16/2017 dated 29th December, 2017 in exercises of powers under Sections 403, 459 and 460 of the Companies Act, 2013 had launched “The Condonation of Delay Scheme, 2018” active from 1st January 2018 to 31st March 2018.

The COD-2018 is not applicable to companies which have been stuck off from the register of companies under Section 248(5) of the Act (companies who are out of business). During the validity of the scheme, the DINs of the disqualified directors will be temporarily activated to enable them to file the overdue documents.

Important definitions

a). Overdue documents’ means the financial statements or the annual returns or other associated documents, as applicable, in the case of a defaulting company and refer to documents mentioned in paragraph 5 of the scheme.

b). Defaulting company’ means a company which has not filed its financial statements or annual returns as required under the Companies Act, 1956 or Companies Act, 201.3, as the case may be, and the Rules made thereunder for a continuous period of three years.

APPLICABILITY OF THE SCHEME

As stated above, the “Condonation of Delay Scheme, 2018” is applicable to all defaulting companies (other than the companies which have been stuck off/whose names have been removed from the register of companies under section 248(5) of the Act).

In the period as provided under the scheme defaulting companies are permitted to file its overdue documents which were due for filing till 30.06.2017.

THE CODS SCHEME SHALL ONLY BE APPLICABLE TO BELOW MENTIONED DOCUMENTS:

Ø  Form 20B/MGT-7- Form for filing Annual return by a company having share capital;

Ø  Form 21A/MGT-7- Particulars of Annual return for the company not having share capital;

Ø  Form 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, AOC-4, AOC-4(CFS), AOC (XBRL) and AOC-4(non-XBRL) – Forms for filing Balance Sheet/Financial Statement and profit and loss account;

Ø  Form 66- Form for submission of Compliance Certificate with the Registrar;

Ø  Form 23B/ADT-1- Form for intimation for Appointment of Auditors.

PROCEDURE TO BE FOLLOWED FOR THE PURPOSES OF THE SCHEME:-

After understanding the above facts the question which will definitely comes in mind is that what should be done by the directors in order to get rid off from their default, what procedure need to be followed by them and how to get relief etc., The scheme specify the procedure which need to be follow in order to file overdue documents necessary to be filed under the scheme, The procedure is hereby enumerated for easy references:

PROCEDURE TO BE FOLLOWED BY THE DIRECTORS TO IN ORDER TO AVAIL BENEFIT OF CODS SCHEME

In the case of defaulting companies (The word “defaulting company” has been defined above) whose names have not been removed from register of companies,-

Ø  The DINs of the disqualified directors de-activated at present shall be temporarily activated during the validity of the scheme to enable them to file the overdue documents;

Ø  The defaulting company shall file the overdue documents in the respective prescribed eForms paying the statutory filing fee and additional fee payable as per section 403 of the Act read with Companies (Registration Offices and fee) Rules, 2014 for filing these overdue documents;

Ø  The defaulting company after filing documents under this scheme, shall seek condonation of delay by filing form e-CODS 2018 along with a fee of Rs. 30,000/- as prescribed under the Companies (Registration Offices and Fee) Rules, 2014 well before the last date of the scheme;

Ø  Disqualified Directors who have not avail the scheme shall be continue to remain disqualified after this scheme for a period of 5 years in terms of section 164(2) (a) read with 167(1) (a) of the Act.

*Form eCODS will not be available for download on the MCA Portal until 20th February 2018.

It is to be noted that in the event of defaulting companies whose names have been removed from the register of companies under Section 248 of the Act and which have filed applications for revival under section 252 of the Act up to the date of this scheme, the Director’s DIN shall be re-activated only by NCLT order of revival subject to the company having filing of all overdue documents.

Once any Disqualified directors availed this scheme and have filed all overdue documents, paid fee as prescribed under the Act or rules made therein. The jurisdictional Registrar shall be duty bound to set him free and to withdraw the prosecution(s) pending if any before the concerned Court(s) for all documents filed under the scheme.

However, this scheme is without prejudice to action under section 167(2) of the Act or civil and criminal liabilities, if any, of such disqualified directors during the period they remained disqualified.

The concerned Registrar shall take all necessary actions under the Companies Act, 1956 or 2013 against the companies who have not availed the Scheme and continue to be in default in filing the overdue documents.

EXTRACT OF RELEVANT SECTIONS UNDER THE COMPANIES ACT:

Section 164. “(2) No person who is or has been a director of a company which—

(a) has not filed financial statements or annual returns for any continuous period of three financial years; or

(b)....”

shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.

Section 167 (1) The office of a director shall become vacant in case—

(a) he incurs any of the disqualifications specified in section 164

.....”

(2) If a person, functions as a director even when he knows that the office of director held by him has become vacant on account of any of the disqualifications specified in sub- section (1), he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.

Section 248 Power of Registrar to remove name of company from register of companies

(5) At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand dissolved.

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 RASU & ASSOCIATES - Company Secretaries

+91 97164-13016 | +91 80768-19231
mail@csrasu.com | mail.rasu.cs@gmail.com

NCLT ALLOWED RESTORATION OF NAME OF THE COMPANY IN THE REGISTRAR OF THE COMPANIES- ORDER DATED 17 OCTOBER, 2017

PETITIONER: M/S GILL HEAVENS FAMES PVT. LTD.

RESPONDENT: REGISTRAR OF COMPANY (ROC), HARYANA & DELHI

ORDER DATED: 17/10/2017

BRIEF FACTS OF THE CASE:

The present petition has been filed under Section 252(3) of the companies Act, 2013 by M/s Gill Heavens Fames Pvt. Ltd. (Herein referred to as the “Petitioner Company”) with the National Company Law Tribunal (“NCLT”) praying for restoring its name in the Register of the companies maintained by the Registrar i.e., Registrar of Companies (Herein referred to as the “Respondent”).

The above company was incorporated in the year of 1997 with the Registrar of Companies, NCT of Delhi and Haryana, The Company inter-alia engaged in the business of dairy farming, stud farms, animals breeding including sheep, horses, rabbits, pigs, fisheries and dairy farm produce of all kinds, milk, cream butter, cheese, paltry eggs, fruits and vegetables condensed milk etc.

The Registrar suo-moto struck off the petitioner company after issuing notification under Section 560(5) in the official gazette. The reason behind strike off was that the company have not filed its statutory returns and other documents since its incorporation.

CONTENTION OF THE PETITIONER:

Petitioner contended that due steps have been taken in accordance with the statutory provisions before striking off the name of the petitioner company from their registrar. The action was initiated as the petitioner company did not file the Balance Sheet and Annual Return since incorporation which was in contravention of section 159/220 of the Companies Act, 1956, which compelled the Roc to believe that the petitioner company was not carrying on any business and not in operation.

Further, petitioner also contended that the notices issued u/s 560 are not readily traceable as the records of the ROC, NCT of Delhi & Haryana have been shifted to Indian institute of corporate affairs (IICA). 

The respondent also failed to prove that due steps were not taken in compliance of the mandatory provisions of the Sections 560(1), 560(2), 560(3) of the Companies Act, 1956, which are pre-requisite for striking off the name of a company from its registrar.

In the absence of any material to substantiate adherence to the mandatory provisions, the impugned action of the Respondent would be arbitrary, illegal and against the principals of natural justice.

Below are Judgements followed before the order was pronounced:

M/s Purushottamdass and Anr (Bulakidas Mohta Co. P. Ltd.) V. Registrar of Companies, Maharashtra & Ors., (1986) 60 Comp Cas 154 (Bom);
M/s Ascot shoes private limited V. Registrar of Companies;
M/s Pancham Hotel Private Limited V. Registrar of Company;
M/s Medtech Pharma (India) Pvt. Ltd V. Registrar of Company;
M/s Santaclus Toys Pvt. Ltd V. Registrar of Company;
M/s Deepsone Non-ferrous rolling mills Pvt. Ltd V. Registrar of Company;
M/s Kakku E and P Control Pvt. Ltd V. Registrar of Company;
M/s Sohal Agencies Pvt. Ltd V. Registrar of Company.

DECISION BY NCLT

After considering the aforesaid judgements and foregoing, facts and circumstances NCLT allowed the restoration of the name of the petitioner company in the Registrar of the companies.

However, the Hon’ble court directed the petitioner company to pay INR 1,00,000 to the Prime Minister Relief Fund and do all compliance which should be done as if the company was not struck off like filing of Annual return and Balance Sheet or any other formalities to restore the name in the register of the Registrar.

Link to download judgement:

http://nclt.gov.in/Publication/New_Delhi_Bench/2017/Others/95.pdf

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REGISTRATION OF GOODS AND SERVICES PRACTITIONER STATED

GST law (Rule 83 of the CGST Rules, 2017) provides for below mentioned person to act as a GST practitioner, viz.

1.  that he is a retired officer of the Commercial Tax Department of any State Government or of the Central Board of Excise and Customs, Department of Revenue, Government of India, who, during his service under the Government, had worked in a post not lower than the rank of a Group-B gazetted officer for a period of not less than two years; or
2.  that he has enrolled as a sales tax practitioner or tax return preparer under the existing law for a period of not less than five years;
3.  he has passed,

(i)      a graduate or postgraduate degree or its equivalent examination having a degree in Commerce, Law, Banking including Higher Auditing, or Business Administration or Business Management from any Indian University established by any law for the time being in force; or

(ii)    a degree examination of any Foreign University recognised by any Indian University as equivalent to the degree examination mentioned in sub-clause (i); or

(iii)  any other examination notified by the Government, on the recommendation of the Council, for this purpose; or

(iv)  has passed any of the following examinations, namely:-

(a) final examination of the Institute of Chartered Accountants of India; or

(b) final examination of the Institute of Cost Accountants of India or

(c) final examination of the Institute of Company Secretaries of India.

Further, various stakeholders filed applications for the same in the month of July however, these applications were pending as there was no one appointed and given power to access and verify the particulars of the applications.

Now, the wait is over as the Board (“Central Board of Excise and Customs”) vide Circular No. 9/9/2017- GST, dated 18/10/2017 has appointed Assistant Commissioner/Deputy Commissioner (Herein referred to as the “AC/DC”) having jurisdiction over the address in the application for enrolment as Goods and Service Tax Practitioner in FORM GST PCT-1 to verify the particulars specified in the application and after due consideration rejecting and approving the application.

Further, the applicants (“GST Practitioners”) are free to choose Centre or the State as the enrolling authority.

Circular No. 9/9/2017- GST, dated 18/10/2017

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ACQUIRING ARMS LICENSE IN DELHI- A SHORT AND BRIEF ARTICLE ON PROCESS

It may be happened with you that somebody threatened you over street, in market or some other places to get something from you it may be money, things you are carrying or anything else and you were wondering to have something in your pocket to save yourself.

Nowadays, threatening is a very basic business practice in markets for dealers or people dealing in selling and purchasing goods which involve transaction of money in cash.

Dealers/businessmen are being threatened many times during their ways to home or at work for getting killed. Many of my clients ask me, should they get a revolver or pistol in their pocket for safety purpose. Here is a short article alongwith the safety tips to get a license of arms and how to use it after getting the same.

Government has made it very easy for people desiring an arms license. The process for applying for the license is online and once you apply it online you need to submit the physical copies of the documents as prescribed alongwith the application with the concerned police station.

FOLLOWING ARE THE DOCUMENT REQUIRED TO TAKE ARMS LICENSE:

• Application to be applied online; (in Delhi through http://www.delhipolicelicensing.gov.in/);
• 4 passport size photographs (self attested on the back side);
• An Undertaking for safe storage;
• Medical Certificate- to be issued by a registered MBBS Doctor on their letter head or on prescribed proforma by a Govt. Doctor);
• Self attested copy of the Date of birth proof (it may be Matriculation certificate or School leaving Certificate, Passport, PAN card etc);
• Proof of Identity- Aadhar card is Mandatory.

Note: In case the applicant does not have Aadhar Card, a written declaration in the form of an Affidavit to be submitted in this regard an alternative identification proof like Passport or Voter ID card;

CONSULTANT FOR GUN LICENSE 8510058386 or email Id cspraveensingh111@gmail.com

• Residence Proof: In case the applicant does not possess Aadhar Card or Passport, which may include Voter ID Card or Electricity bill or Landline telephone bill or Rent deed or Lease deed or property documents or any other documents to the satisfaction of the Licensing Authority;
• Posting-cum-residence certificate / recommendation from the Commanding / supervisory Gazetted Officer is mandatory (In case of Armed Forces Personnel, and paramilitary forces only). Police personnel may also submit this proof;
• Financial status proof like Income Tax Return (ITR)/Salary Slip or any other proof.
• In case of threat, attach a copy of FIR/Complaints to justify the threat if any,

IN CASE OF DEATH/TRANSFER OF WEAPON ON INHERITANCE BASIS:

• Arms license of the deceased or the transferor as the case may be;
• Consent on affidavit of licensee, in case of transfer of weapon the who intends to transfer his weapon;
• An indemnity bond, in case of death of licensee, from the applicant and NOCs from all the other legal heirs;
• Approval from office of DGO’s, DHQ, in case the weapon is Non-Service-Pattern (NSP).

GUN LICENSE IN CASE OF EMPLOYEES/SERVICE:

• NOC from Department;
• Proof of Official address, if any;
• Date of retirement (Copy of order issued by the office in case of Govt. Servant / Army/ CPO /Police /DHG personnel);
• An undertaking is to be submitted by the security guard duly signed from his employer regarding the requirement and his training.

GUN LICENSE IN CASE OF BUSINESSMAN:

• Papers like MCD / NDMC / Delhi Cantonment Registration Certificate / Sales Tax receipt / Service Tax Receipt / VAT receipt;
• Annual  Income;    
• Annual  Turnover;
• Daily cash Transaction;
• No. of employees;
• Any other document as may be demanded by the concerned officer.

FEES FOR OBTAINING GUN LICENSE

Government fees for obtaining gun license vary from 500 to 2000 depending on the weapon you wanted to hold.

PROCEDURE:

The application form as above along with the requisite documents can be submitted in the Licensing Unit on any working day from 9.30 AM to 12.30 PM.

The sample forms can be downloaded from the hyperlinks provided on the government portal or else can be obtained from the licensing Unit.

TIPS FOR USING YOUR GUN

1. Always keep it in safe custody;
2. Don’t give it to anyone for showing off yourself;
3. It should be unloaded before giving to anyone;
4. Keep it away from people who are drunk;
5. Always keep it away from children, it is not a toy
6. Always treat the gun as loaded.

*****

CONTACT FOR GETTING THE LICENSE:

Praveen Singh

85100 58386

RASU & ASSOCIATES
http://www.rasu-cs.com  

Email ID: cspraveensingh111@gmail.com/

References/Source:

1. http://www.delhipolicelicensing.gov.in;

2. Section 3 read with section 4 of Arms Act of 1959 and Rule 4 of Arms Rules, 1959;

3. https://indiansforguns.com/viewtopic.php?t=504;

4.http://timesofindia.indiatimes.com/city/delhi/Need-arms-licence-Your-reason-better-be-good/articleshow/735190.cms;

5.https://www.wikiprocedure.com/index.php/New_Delhi_-_Apply_for_New_Firearm_(Gun)_License;

6. https://blog.ipleaders.in/obtain-gun-license/