Faceless adjudication- an initiative by Ministry of Corporate Affairs

 

The Ministry of Corporate Affairs vide its press release on 6 April 2020, announced that it would upgrade its online services offered to the companies through the MCA21 portal. It aims to enable adjudication of certain specified offences remotely through electronic means and social distancing. Thus, the companies can now settle specified offences under the Companies Act, 2013/ 1956 and pay penalty or fine, as applicable, without court’s interference.

 

The concept of using technology to eliminate human interface and bureaucratic discretion is not a new initiative in the Indian legal system. In the Union Budget 2019, the Government proposed the introduction of a scheme of faceless e-assessment.

 

The Companies (Amendment) Act, 2019, which was notified on 31 July 2019, reclassified 16 offences as civil defaults and authorised the adjudicating officers to levy penalty/ fine instead of going to the court to decide on the said offences. These offences include matters relating to issuance of shares at a discount and default in filing annual returns. The Companies (Amendment) Bill, 2020 placed before the Parliament seeks to decriminalise a few more offences as part of an effort of the Government to make the Act more humane and enhance ease of doing business in the country.

 

Though this is considered a good move which ensures speedy adjudication of offences at quicker timelines, experts are of the opinion that businesses should be given the facility to make a video presentation if communication by other means and sending documents fails to put across their case in an effective way.

 

An official notification from the MCA is awaited in this regard.

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