Understanding The Context:

  • The overwhelming victory of Modi in May,2014 and his govt. formation subsequently, was seen as a mandate against corruption.
  • Previous govts. failed to rein in corrupt practices, especially in business.
  • Shadow economy was a hurdle in the growth of the economy and development of the country.
  • Economic frauds, money laundry, hoarding- were rampant.
  • Authorities and Regulators failed miserably in performing their duties.

Stringent Action:

  • Demonetization in November, 2016, was the first major step by the present govt. to prove its intention towards cleaning the economy.
  • The Income Tax Dept. with the cooperation of the Banks, were able to pinpoint accounts which transacted heavy amounts during demonetization.
  • The Ministry of Corporate Affairs ‘struck off’ nearly 2.20 lakh companies in 2017, dropping a bombshell on the industry.
  • As a chain reaction, 3 lakh Directors’ DIN was deregistered, which was an unprecedented action in the history of the country.
  • A task force has been formed to identify ‘shell companies’ and which has collaborated with all agencies to gather intelligence and acted on it.
  • By looking at these figures we can assess the quantum of companies impacted by RoCs action-
    • 12,205 – Ahmedabad
    • 22,145 – Bangalore
    • 6,303 – Gwalior
    • 71,530- Mumbai
    • 53,312- Delhi

Instantaneous Reaction:

  • There was a lot of complaints, protests from the aggrieved Companies and Directors.
  • The Industry came out in support and put pressure on the govt. to work on solutions.
  • The removal of Directors also adversely affected other companies even if they were doing fair business.

Consequential Steps Taken:

  • Although the Companies Act has a provision of redressal through appeal to The Tribunal and The National Companies Law Tribunal, but they were time taking procedures.
  • Looking at the humongous number of affected people, combined with the pressure from the Industry, the MCA opened a window for redressal in the form of CONDONATION OF DELAY SCHEME, 2018(CODS).

The Condonation of Delay Scheme, 2018, is an olive branch extended by the Govt. to help the defaulters in securing instantaneous relief.

Isha Malik (Company Secretary, MUDS Management Pvt Ltd)

Circulars Published Regarding Cods:

#1: GENERAL CIRCULAR, 16/2017, DATED: 29.12.2017

Explaining The Action:

  • In an extensive circular of 915 words, the MCA explains in detail the need to introduce the scheme even when other measures were already in place.
  • The MCA has mentioned that all companies registered under the Companies Act, 2013/1956 are required to file their Annual Returns and Financial Statements with the Registrar of Companies.
  • Sections 164(2) and 167(1), under which provisions were made with effect from 01.04.2014, the non-compliance would lead to disqualification of a Director, if the company has not submitted the same for 3 years in continuation.
  • It goes on to explain that Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014, clearly states that every Director needs to inform the concerned company of his disqualification under section 164(2) in the form DIR-8.
  • The MCA had provided an opportunity to defaulting companies under the scheme Company Law Settlement Scheme, 2014, to clear their defaults.
  • Yet there were many companies which did not comply and therefore, 3,09,614 Directors were barred under section 164(2) and 167(1) of the Act.
  • The Annual Returns and financial statements from 2013-2016 were not filed on the MCA21 online portal.

Explaining The Need For Condonation of Delay Scheme, 2018:

  • Although the MCA had taken action as per the provisions of the Companies Act yet there was a big uproar over the ‘Mass-disqualification’ of Directors.
  • The Industry, the defaulters and the affected people appealed fervently to the govt. to find a solution for fast redressal.
  • Some of the defaulters filed writ petitions begging instant relief.
  • Exercising its powers granted under sections 403,459 and 460, the Central Govt. took the step to introduce the COD Scheme, 2018.
  • The main aim of the Govt. was to provide an opportunity to the defaulters to rectify their mistake.

Duration Of The Condonation of Delay Scheme, 2018:

  • The scheme duration mentioned is 01.01.2018-31.03.2018


  • ‘Act’ means the Companies Act, 2013/1956
  • ‘Overdue’ documents refer to Financial Statements and Annual Returns of the defaulter company.
  • ‘Company’ refers to company as defined in clause20 of section2 of the Companies Act,2013.
  • ‘Defaulting Company’ means a company which has not filed its Annual Returns or Financial Statements.
  • ‘Designated Authority’ refers to the Registrar of Companies.


  • This scheme was applicable to all the defaulting companies except those which had been removed under section 248(5) of the Act.


  • On applying for the revival of struck off company the removal of  Directors disqualification occurred automatically, although temporarily.
  • This was done so that they could file the overdue documents.
  • The defaulter company had to pay the filing fee and the additional fee applicable under section 403 of the Companies Act.
  • After filing the documents the company sought condonation of delay by filing e-CODS, 2018 and paying a fee of 30,000 rupees prescribed under the Companies Rule, 2014.
  • Forms to be duly filled:
    • Form No. 208/MGT-7
    • Form No. 21A/MGT-7
    • Form No. 23
    • Form No. 66
    • Form No. 238/ADT-1
  • The DINs of the Directors of the defaulting companies that had not done the needful and their record does not exist on MCA21 portal and if they are found disqualified at the conclusion of the scheme, then it would be deactivated once again, on the expiry of the scheme.
  • Those companies which have been removed under section 248 and have applied for revival of the struck off company under section 252 of the Act, the removal of the directors disqualification took place only after NCLT’s order of revival.
  • Those companies which have not availed this scheme, the Registrar would take action in accordance with the Act.

The COD Scheme, 2018, gives a genuine opportunity to

the aggrieved parties to rectify their error in a smooth manner.

Divya Gupta (Market Analyst, MUDS Management Pvt. Ltd)

2#: GENERAL CIRCULAR, 02/2018, DATED: 28.03.2018:

  • This circular mentions the extension of the date of the scheme up to 30.04.2018 on the request of stakeholders.

3#: GENERAL CIRCULAR, 03/2018, DATED: 27.04.2018:

  • This circular notifies the extension of the scheme by one day i.e. 01.05.2018 in lieu of holiday on 30.04.2018.

4#: GENERAL CIRCULAR, 05/2018, DATED: 17.05.2018

  • The subject of this circular is Clarification as the MCA has tried to bring clarity on all ambiguities through this Circular.
  • The Circular in the beginning states that the Ministry had received numerous doubts about the filing of e-CODS in cases where they have filed a plea under section 252 under Companies Act, 2013, to NCLT.
  • They wanted clarity if they were eligible to file CODS after 01.05.2018.
  • As a clarification, the Circular quotes para 4 (V) of the General Circular No. 16/2017, stating that such DINs can be reactivated only after the NCLT’s order of revival.
  • It also directed that the Registrars of Companies can raise a ticket through Change Requirement Form (CRF) on the MCA portal.
  • They can then reactivate the DINs of affected Directors.
  • However, these Directors should not be linked to any other company which has been struck off under section 248(1). This the RoCs can cross check before raising CRF.
  • The Rocs were further instructed to be extra vigilant and cautious while dealing with such cases.

The Advantages Of Condonation of Delay Scheme, 2018:

#1: It came as a much-needed relief for those impacted.

#2: The scheme was seen as an instant relief for restoration of Directors disqualification and restoration of DIN was reactivated immediately (although temporarily).

#3: The companies applauded this scheme as it gave a window of opportunity to rectify their fault. As it was enabling revival of struck off companies.

#4: The industry viewed this as a justified act by the Govt.

#5: It worked as a warning bell to the other companies.

#6: The scheme through its circulars has spread awareness about the Companies laws and provisions.

#7: The provisions of the scheme have been kept straight and simple; sending a strong message that the govt. does not want to harass the genuine businesses.

#8: The Directors have been jolted to the core; now they understand that their role as a guardian and guide is pivotal for the company’s progress.

#9: Ethical and judicious approach is essential for all companies who want to survive and succeed.

#10: If not for the timely announcement of the scheme, there would have been a flood of writ petitions in all the courts of India.

Roadmap For The Companies:

  • The companies need to keep their records straight.
  • Due-diligence should be the baseline for the smooth working of the companies.
  • Work ethics should be promoted.
  • They need to appoint Directors who can guide them on the right path.
  • Checks and balances should be in place so that they can deal with anomalies before they go out of hand.
  • Thorough knowledge of the Companies Act is essential.
  • A no tolerance policy should be there against Corrupt practices.
  • Self-regulation and assessment from time to time will keep them on the right track.
  • Transparency in dealing with money matters will ensure that they don’t come in the line of fire.

Making Future ‘Perfect’:

The past should always be treated as a learning curve; it gives insight into the right and the wrong, the positives and the negatives, learning from mistakes, overcoming hurdles and most importantly not to repeat an error.

The present is a stepping stone to the ‘Perfect’ future, so the initiatives, the plan, the methodology- all should be meticulously planned and executed.

A country’s GDP growth is entirely dependent on the optimum use of resources, fiscal measures, thriving industries, robust farming, developing infrastructure and investing in research. Our country has a human resource which can lead us to be a leader if guided properly.

Initiatives By The Govt:

The govt. needs to lead by example and in this context, it needs to tighten its control on all depts. To begin with, different agencies need not only to formulate the rules and policies but also to educate the target audience. Awareness campaigns will make sure less defaults are made.

In the given context, the basic need is that all the related agencies like MCA, SEBI, IT, ED, etc. come together and collate an extensive data. This data bank will help them nail the defaulters at an early stage.

The govt. can pick out some outstanding performers and present them as examples. This will help motivate others and propagate a healthy competition.

Efforts of The Industry:

The Industries image as a whole suffers when negative news of such huge proportions come to limelight. The sheer number of defaulters is an evidence that something is amiss in the Industry.

To overcome such situations in the future, the Industry should formulate self-regulations. They can also develop contact programs and meet at regular intervals. In this way they can keep an update on the policies and amendments.

Organizing Seminars and Lectures will be an initiative which would help them in understanding the new laws and policies. Being aware of the provisions can save them from committing errors. Cooperation with each other will be mutually beneficial to all.

Role of The Media:

In this modern age, Media plays a pivotal role in making or breaking the image of someone/something. This industry runs mostly on self-regulations: they need to work ‘ethically’, report with neutrality and stay away from bias or prejudice.Corruption in this field leads to creating misconceptions which tarnishes the image of someone/something.

Media should take an initiative towards highlighting the positive news and shun negativism and sensationalism. A neutral stand, projecting the facts and figures will help people in understanding a situation without any presumptions.


Although the reverberations and repercussions of removal and strikeoff is immense, yet the CONDONATION OF DELAY SCHEME, 2018 has provided some respite to the affected parties. The message which comes out after minutely studying this incident is that:

  • Rules need to be followed at all times.
  • Ignorance is not always a bliss.
  • Problems become ‘monstrous’ if left unattended.
  • The captain of the ship (the leader) should be forthright and capable.

History is full of examples of incidences that being ethical and straightforward always pays heavy dividends in the end.

Any problem becomes a CRISIS when it’s left unattended- can be due to ignorance or intentional. Keeping this in mind, the Companies should seek advice and help at every juncture and keep themselves safe-guarded.

Shweta Gupta (Founder and CEO, MUDS)

Any unanswered questions or doubts, feel free to contact us:

call at 9599653306 or [email protected]

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June 2021