Positive side of mca scheme
Technological advancements like MCA portal for online corporate filing were welcome. They made incorporation fast and reduced risk. Pace of company formation increased. Compliance became easier for corporates. Positive side is speed and transparency. But there is negative side also. Portal is being misused and it is halting functioning of companies, especially private limited companies planning expansion.
Case study facts: board war and fake filings
Company had 3 promoters. "A" took all risk and grew business in 1 year. "B" and "C" were inducted as shareholders and directors. Later other directors exited. "A" arranged investors for them. At dispute stage, board had "A", "B", "C". "A" and "C" are husband and wife. Difference arose between "A" and "B & C". "B & C" being majority on board appointed relatives as directors and uploaded forms with MCA. "A" being in actual control also uploaded forms showing his men as directors. "B & C" filed 397/398 in CLB seeking drastic measures and investigation under 237. CLB passed interim orders. "A" also has grievance because fictitious forms are on ROC record. He cannot allege oppression easily because that may lead to winding up or independent board.
Why fictitious forms are dangerous
Once form is uploaded, it has public visibility. Banks, investors, vendors rely on MCA data. Getting it removed is hard unless CLB orders. 397/398 cases involve disputed facts and take time. During pendency, company operations freeze. Loans, contracts, statutory filings get stuck. Majority or minority both suffer. In private companies, groupism makes this weapon easy. Public companies are guarded, but private companies face this frequently.
Clb dilemma and limitations
MCA scheme complicates 397/398 proceedings. CLB has to follow procedure and settled principles. It cannot give instant order on version alone. Often both groups have some illegality. So confidence to represent case is low. Board must think of company, creditors, employees. It cannot act only on urgency. Criticism of CLB is easy but solution is not. Meanwhile fictitious forms continue to damage.
Conclusion
Fictitious filing mca portal 397 398 case study shows urgent gap. Illegal uploading of forms is real problem in 2010. It doubles burden on CLB which already has complicated responsibilities and limitations. Government must create quick mechanism to remove fake filings without full trial. Else MCA, meant to help corporates, will become tool for oppression.
