12/01/2018
Analysis of CODS and way forward
By CS Alok Kumar Kuchhal
M.Com., LL.B., FCS
I am pretty sure that every one of you had gone through with the provisions of CODS 2018 and the following “News and update” item flashing on the MCA website since last couple of hours:
“Stakeholders of Condonation of Delay Scheme (CODS) (notified vide General Circular No.16/2017 dated 29th December 2017) may kindly note that the process for ‘reactivation’ of the DINs in respect of disqualified Directors has been completed and the status of the relevant DINs can be checked now. Stakeholders are therefore requested to file necessary ‘overdue documents’ as per the scheme. They may further note that the scheme is not applicable for those Directors who may have been associated with a company which was struck off under Section 248(1) of the Companies Act-2013 and DINs for such individuals shall bere-activated only upon receipt of orders for revival of the said company, as per due process laid down under Section 252 of the Companies Act-2013.”
Now, after doing a detailed analysis of CODS 2018, one of the several questions which every professional is having in his mind is “What would be the fate of the directors of Strike off Companies?” Though MCA has tried to answer this question in the CODS itself by way of insertion of a proviso which says that such companies can move an application for Restoration of their name u/s 252 (1) of the CA, 2013 and once the name is restored, the aggrieved directors can approach to the ROC for activation of their DIN and then only the Company can avail the benefit of CODS 2018. The said proviso raises several other pertinent questions such as
a) Whether the NCLT will be able to revive any company within a short span of 2½ months?
b) Also, considering all the Benches of NCLT are of the opinion that for Restoration of the name of the company, the Company must be a functional one and are refusing the restoration for Non-functioning companies, what would happen to
i. Companies and their directors who are not functioning on the date of Strike off?
ii. Assets and /or liabilities outstanding as on the date in the hands of such companies?
It’s again reiterated that the disqualification of Directors under Section 164(2) shall be for 5 years, and the silence will definitely going to be more harmful for various other reasons including the following:
a) Income tax had already started the attachment of “Benami” assets which can be substantiated by the news item published in various news papers on 12 Jan 2018,
Times of India news clip is as follows:
NEW DELHI: The income tax department has stepped up action under the prohibition of the benami property transactions act, which came into force from November 1, 2016 and has attached properties worth Rs 3,500 crore including immovable properties of more than Rs 2,900 crore across the country.
b) Freezing of Bank accounts – Current accounts of all such companies has already been freezed, saving accounts of Directors of such companies will be next in the row.
c) Various penal actions for defaults under Companies act and various other acts.
d) The names of such directors may also be recorded in the files of Registrars of Companies (RoCs) and of Serious Fraud Investigation Office (SFIO).
Therefore, the aggrieved Directors removed / suspended like this can file a writ Petition / PIL against the action of Ministry / ROC with Hon’ble High Court or Hon’ble Supreme Court of India and to seek appropriate relief in order to safeguard the position.
