India Entry & Business Startup Consultings

Condonation of Delay under Companies Act 2013 and FEMA 1999

Condonation of Delay under Companies Act 2013 and FEMA 1999

What is the condonation of Delay?

Every law requires certain compliances to be adhered to like making of any application, filing of any document etc. If the parties fail to adhere to the compliances, a remedy is provided by the law where parties can pray for condonation of delay and proceed as if no delay has been caused in the first place. Here is a guide for condonation of delay under the Companies Act, 2013 and Foreign Exchange Management Act, 1999 (herein referred to as FEMA).

Companies Act, 2013

Condonation of delay is governed by Section 460 of the Companies Act, 2013. Section 460 overrides all the other sections of this act to empower the Central Government to condone the delay in respect of the following matters:

  • Where any application in respect of any matter is required to be made under any provision of this act to the Central Government and has not been made within the specified time and
  • Where under any of the provisions of this act, any document is required to be filed with the registrar and has not been filed within the specified time.

Central Government shall record the reasons in writing for condonation of such delay.

The Central Government, using the powers conferred as above, introduced various schemes over a period of time to provide condonation of delay to the companies. This includes:

  • Company Law Settlement Scheme, 2014
  • Condonation of Delay Scheme, 2018
  • LLP Settlement Scheme, 2020
  • Companies Fresh Start Scheme, 2020

Under these schemes, timelines were relaxed, and delay in filing various documents by the companies were condoned by relaxing penalties and punishments for delay. Apart from the above, companies can also make specific applications for condonation of delay directly to the Central Government by following the below procedure.

Procedure for application for Condonation of Delay

If the company sought to obtain condonation of delay, then it needs to apply to the Central Government by following the procedure prescribed herein:

  • The company shall pass a resolution in the board meeting to approve the condonation of delay application to be filed before the Central Government.
  • It shall authorize any Director of the company or CFO of the company or company secretary of the company to make an application to the Central Government. The application shall be made in Form CG-1 supported with a copy of the board resolution and other required documents.
  • The Central Government shall, after scrutinizing the application, pass an order of approval or rejection of the application.

The order of the Central Government shall be filed by the company with the Registrar in Form INC-28 along with the payment of applicable fees and required documents. The documents, for which condonation of delay was sought, shall thereafter be filed along with the applicable fees and stating SRN of the Form INC-28 filed earlier.

Foreign Exchange Management Act, 1999

Condonation of delay under FEMA, 1999 is not governed by an explicit section as in the case of Companies Act, 2013. However, it allows condonation of delay in filing appeal by incorporating similar provisions under various sections. Following are the matters for which the authority is empowered to authorize condonation of delay under FEMA, 1999:

1) Appeal to Special Director (Appeals) - [Proviso to Section 17(3)]

As per Section 17(1), a person aggrieved by the order of Adjudicating Authority may file an appeal before Special Director (Appeals) within 45 days from the date on which the copy of the order was received by the aggrieved person.

In case, the aggrieved person fails to file such appeal, then if the Special Director (Appeals) is satisfied that delay was due to sufficient cause, then it may entertain the appeal after the expiry of 45 days.

2) Appeal to Appellate Tribunal – [Proviso to Section 19(2)]

As per Section 19(1), an aggrieved person may file an appeal against the orders of the Adjudicating Authority or the Special Director (Appeals) within 45 days of receipt of the order.
In case, the aggrieved person fails to file such appeal, then if the Appellate Tribunal is satisfied that the delay was due to sufficient cause, then it may entertain the appeal after the expiry of 45 days.

3) Appeal to High Court – [Proviso to Section 35]

As per Section 35, an aggrieved person may file an appeal against the orders of the Appellate Tribunal to the High Court within 60 days of receipt of the order.
In case, the aggrieved person fails to file such appeal, then if the High Court is satisfied that the appellant was prevented from filing the appeal by sufficient cause, then it may entertain the appeal after the expiry of 60 days.

4) Repeal and Saving – [Proviso to Section 49(5)(c)]

When the erstwhile Foreign Exchange Regulation Act, 1973 was repealed, the appeal against the orders of Appellate Board of FERA, 1973, if it was not filed before the commencement of FEMA, 1999, had to be filed before the High Court within 60 days of commencement of FEMA, 1999. Similar condonation of delay relaxation was provided as in the case of Section 35 above.

   In case you require any assistance with respect to Secretarial Compliance and Secretarial Audit, please feel free to contact the ASC Group

ALSO READ: Private Placement- Section 42 of the Companies Act, 2013

 

Leave a Reply

Your email address will not be published. Required fields are marked *

 

SUBSCRIBE OUR NEWS LETTER