A parliamentary committee has expressed concerns over the working of several regulatory bodies under the corporate affairs ministry as most of them have high vacancies and huge backlog of pending cases.
The BJP MP Jayant Sinha-led standing committee on finance, in its report on demand of grants 2020-2021 for corporate ministry submitted to parliament on Thursday, said bodies like SFIO (serious frauds investigation office), competition commission of india (CCI) and the NCLT (national company law tribunal) were running short of the sanctioned strength that impacted their work.
The panel also has former PM Manmohan Singh as a member, among other MPs from across the parties.
The Committee noted that SFIO, an investigation agency set up under the Ministry of Corporate Affairs in 2003 to investigate serious frauds, had only utilized only 79.32 per cent of the budget allotted to it for last fiscal. SFIO had a total of 1171 prosecution cases filed so far, out of which 456 cases were disposed and conviction has been secured for 325 cases, with 615 cases are still pending.
“The Committee find it alarming that in a key multi-disciplinary statutory investigative body like SFIO, 37 per cent of posts are lying vacant, with only 84 out of the total 133 sanctioned posts in place at present,” the report said. It added that the committee found the vacancy rate unacceptably high given the quantum and complexity of case load and specialised skills required to handle the same, with obvious consequences for the efficiency of the organisation.
The panel suggested that the ministry ensures that the investigative body remains well-equipped with professionally trained personnel with proven integrity, given that it has been vested with significant powers including that of arrest. The parliamentary committee suggested that instead of relying only on deputationists, SFIO should also develop and nurture their own permanent, trained cadre at least up to middle-levels. SFIO must improve its performance standards and level of efficiency, it said.
“It is also necessary that the personnel on the investigation and prosecution side are provided comprehensive training in all relevant areas/methodologies and are also adequately sensitized to legal jurisprudence. Also, the investigation wing of SFIO should be separated from the prosecution wing. For that purpose it would be prudent to create a separate directorate of prosecution, independent of the investigation wing,” the report said.
The working of another key body, the Competition Commission of India (CCI), came for review by the standing committee.
“The Ministry have informed that out of the total sanctioned posts of 195, 73 posts are lying vacant and that the mode of recruitment in the office of the Director General (DG), CCI is only through deputation, where as many as 23 posts are lying vacant out of the 41 sanctioned. The Committee are alarmed to note that an important office like that of the DG, CCI is functioning with less than half of the required staff and even the post of DG is lying vacant,” the report said, expressing concerns over the high vacancy rates. The CCI which completed 10 years has handled 150 cases.
In the case of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT), constituted in 2016, there were 5,345 pending cases transferred from the Company Law Board (CLB) to NCLT on its formation. As of December 31, 2019, 62,127 cases have been received by NCLT, out of which a huge pile-up of 20,542 cases are still pending.
These tribunals were set up through the provisions of the Companies Act, 2013 for faster resolution of corporate disputes and reducing the multiplicity of agencies, thereby promoting 'ease of doing business' in the country.
The ministry told the parliamentary panel that 11 members of the NCLAT are in position while in NCLT, only 48 members out of the sanctioned strength of 63 members are in position right now, and as far the staff is concerned, only a meagre 44 out of the 320 regular sanctioned strength are in position
Another body under the corporate ministry, the investor education and protection fund (IEPF), which undertakes investor education and makes refunds of unclaimed amounts to eligible shareholders, had high pendencies. Since it was made functional in 2016, the number of claims has increased manifold from 343 in 2016-17 to 4026 in 2017-18, 19,188 in 2018-19 and 13075 in 2019-20 (till January 31, 2020). The total number of claims for which verification report is received in the Authority is 23,585, out of which only 8,028 claims have been settled and as many as 15,557 claims are still pending. The committee recommended that in order to deal with the mounting claims, the authority should strive towards the creation of an adequate and permanent cadre equipped with the specialised skills required.