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Mounting pressure of litigation in India Inc
Department of Justice (DoJ) has expressed its concern over the increasing litigation in the corporate sector, while highlighting the severe problem of closing down of several units across the country. The Secretary of the Department of Justice chaired a meeting with Ministry of Corporate Affairs (MCA).
New Delhi : Department of Justice (DoJ) has expressed its concern over the increasing litigation in the corporate sector, while highlighting the severe problem of closing down of several units across the country. The Secretary of the Department of Justice chaired a meeting with Ministry of Corporate Affairs (MCA).
DoJ reviewed the mounting pressure of litigation from the corporate sector and felt the need to take up corrective measures to prevent the closure of units. It’s estimated that about 18 percent of the units closed down during the past few years.
“At the end of April 2017, there were 16.5 lakh registered firms. Of them, 303,086 companies were closed, and 838 companies were assigned dormant status as per the Companies Act-2013,” the Ministry of Corporate Affairs said in the review meeting here.
“There has been continued concern on account of ever increasing litigation and the need for reducing the arrears and backlog of cases in the courts is imperative. The review of these pending cases is long overdue,” the order said citing a recent meeting chaired by the Secretary of the Department of Justice.
The government has decided to chalk out an ‘action plan for special arrears clearance drives’ in order to reduce the number of court cases.
The MCA will review pending litigations under companies law in different parts of the country, as part of larger efforts to reduce backlog of cases. In this regard, the Ministry, which is implementing the Companies Act, has constituted seven regional committees. Each of them would be chaired by the regional director concerned.
The committees would review all the prosecutions/ pending litigations in their regions, including cases filed by the official liquidators, according to a recent order from the Ministry.
As part of the review, cases that can be withdrawn would also be identified. For such cases, the committees concerned would list out the reasons for withdrawal along with details of cases, including the courts where those litigations are pending.
“Each committee shall submit its report to the Ministry clearly indicating road map for withdrawal of cases and the percentage of cases getting reduced as a result of such withdrawal,” it added. Reports have to be submitted to the Ministry within two months.
