Condonation Of Delay Scheme For Defaulting Companies

Vide general circular no. 03/2021 dated 15

th January 2021, the Ministry of Corporate Affairs introduces the scheme for condonation of delay. The Scheme applies to the companies which are restored, under provisions of section 252 of the Companies Act, 2013, on the Register of Companies between the period 1st December 2020 to 31st December 2020. The details of the Scheme for condonation of delay are briefly explained in the current article.

Background and objective of the Scheme

The Ministry of Corporate Affairs introduced

Companies Fresh Start Scheme 2020, vide General Circular No. 12/2020 dated 30th March 2020. Basic features of the scheme are explained here-

As per the scheme, the defaulting company is permitted to file belated documents/ returns on payment of normal fees only. In other words, under the Scheme, the defaulting company was not required to pay additional fees payable on delay in filing of the respective documents/ returns.
The scheme was effective from 1st April 2020 to 30th September 2020.

Vide General Circular No. 30/2020 dated 28

th September 2020, on account of COVID-19 pandemic, the duration of the scheme was extended from 30th September 2020 to 31st December 2020. In nut-shell, the scheme was ineffective from 1st January 2021. Noticeably, against the orders of the striking off the name of the company, an appeal can be preferred under section 252 before the National Company Law Tribunals. Various favorable orders were passed by the National Company Law Tribunals during the month of December 2020 restoring the name of the company. Due to the proceedings in process, such companies were not able to take the benefit of the Companies Fresh Start Scheme 2020. Accordingly, such companies get liable to pay additional fees for delay filing of belated documents/ returns. In order to enable the specific defaulting company, to avail the benefit of the Companies Fresh Start Scheme 2020, the Ministry of Corporate Affairs introduced a new Scheme for condonation of delay. The said scheme is briefly explained below.

Scheme for condonation of delay

Applicability of the Scheme for condonation of delay- The Scheme is applicable only if the following conditions are satisfied-

Company has filed an appeal, under section 252, against striking off the name before the National Company Law Tribunal; and
The order restoring the name of the company is passed by the National Company Law Tribunal during the month of December 2020.

Benefit available under the Scheme for condonation of delay- The eligible company can file all the e-forms by paying normal fees as per the Companies (Registration Offices and Fees) Rules, 2014. Here, as per the scheme, the defaulting companies are not liable to pay any additional fees payable on account of delay in filing of respective documents/ e-forms. Notably, the following forms are not covered within the Scheme-

e-Form SH-7, wherein, there is an increase in authorized capital, and
Charge related documents filed in e-Form CHG-1; e-Form CHG-4; e-Form CHG-8 and e-Form CHG-9.

In nut-shell, as a benefit, the defaulting companies are allowed to file the documents/ forms belatedly without payment of any additional fees. Effective period of the Scheme for condonation of delay- The Scheme for condonation of delay is effective from 1

st February 2021 till 31st March 2021. Meaning thereby that the defaulting companies are required to file all the pending documents/ e-forms within 31st March 2021.

Synopsis of the Scheme for condonation of delay

Particulars	Details
Applicability of the Scheme	Companies restored by the National Company Law Tribunal between 1st December 2020 to 31st December 2020.
The effective date of the Scheme	The scheme is effective from 1st February 2021 to 31st March 2021.
Benefit available under the Scheme	The eligible companies are not required to file any additional fees leviable for the delay in filing of documents/ forms.

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Frequently Asked Questions

Common questions about Condonation of Delay Scheme for Defaulting Companies.

The Scheme for condonation of delay is introduced by the Ministry of Corporate Affairs to allow defaulting companies, whose names were restored by the National Company Law Tribunal (NCLT) during December 2020, to file belated documents or returns without paying any additional fees for the delay. This scheme aims to provide relief to companies that could not avail the benefits of the Companies Fresh Start Scheme 2020 due to ongoing NCLT proceedings.

A company is eligible for the Scheme for condonation of delay if it had filed an appeal under Section 252 of the Companies Act, 2013, against striking off its name, and the NCLT passed an order restoring the company's name during the month of December 2020.

The primary benefit offered under the Scheme for condonation of delay is that eligible companies can file all pending e-forms or documents by paying only the normal fees as per the Companies (Registration Offices and Fees) Rules, 2014, without any additional fees for the delay in filing.

Yes, the fee waiver under the Scheme for condonation of delay does not apply to e-Form SH-7 (for increase in authorized capital) and charge-related documents filed in e-Forms CHG-1, CHG-4, CHG-8, and CHG-9.

The Scheme for condonation of delay is effective from February 1, 2021, to March 31, 2021. Eligible companies must file all pending documents or e-forms within this period to avail the benefits of the scheme.

The Scheme for condonation of delay was introduced to enable specific defaulting companies, whose names were restored by the NCLT in December 2020, to avail the benefits of the Companies Fresh Start Scheme 2020, which they could not take advantage of due to ongoing NCLT proceedings.

The Companies Fresh Start Scheme 2020, introduced by the Ministry of Corporate Affairs, allowed defaulting companies to file belated documents or returns by paying only normal fees, without any additional fees for the delay, from April 1, 2020, to December 31, 2020.

No, charge-related documents filed in e-Forms CHG-1, CHG-4, CHG-8, and CHG-9 are not covered under the Scheme for condonation of delay, and companies will have to pay the applicable fees, including any additional fees for delay.

Yes, the Scheme for condonation of delay has a specific deadline of March 31, 2021. Eligible companies must file all pending documents or e-forms on or before this date to avail the benefits of the scheme.

No, the Scheme for condonation of delay is strictly applicable only to companies whose names were restored by the NCLT during the month of December 2020. Companies restored before or after this period are not eligible for the scheme.