SD Israni charts out the short and tumultuous history of the MCA. The last three and a half years has witnessed four changes at its helm and has failed to even pass the Companies Bill.
The Sunday reshuffle of the Union Cabinet of the United Progressive Alliance (UPA) government saw several changes in cabinet portfolios with some ministers promoted and others demoted or relegated. One of the ministries, ministry of corporate affairs (MCA), was in the public eye due to its pivotal role in the Gadkari affair, where information has been pouring into the public domain, with great regularity.
MCA has had a chequered past during its short existence of little under a decade. Prior to 2004 it was known as Department of Company Affairs (DCA), and was a mere department of the Government of India, which had been part of different ministries from time to time right since its creation. Depending upon the thinking of the government of the day and its political exigencies, DCA used to be tagged along with different ministries. For a long time DCA was a part of ministry of heavy industries; then part of the law ministry; then part of the finance ministry. However, right until the year 2004, DCA was never thought of as an independent ministry and, rightly so, the main job of the DCA was the administration of the Companies Act along with some other enactments.
During the tenure of UPA-1, one of its staunch supporters was the redoubtable Lalu Prasad Yadav. His right hand man at that time was Prem Chand Gupta, or PC Gupta in short, and he had to be accommodated as a minister in the Union Cabinet. The government hit upon the idea of divesting the DCA from the ministry of finance and designated DCA as a separate ministry vide Cabinet Secretariat Notification No.DOC.CD-160/2004 dated 27 May 2004, to function under Minister of State with independent charge. So, with a little flourish of the pen DCA donned a new name — Ministry of Company Affairs. Prem Chand Gupta, who was not made a full-fledged cabinet minister, was very clear that he had to be an independent minister, so he was given independent charge of the Ministry of Company Affairs. I still recall the fact that the minister was fussy about the fact that he had independent charge and that should be boldly mentioned everywhere including at each and every function, meeting or a seminar. Later on he became a full-fledged minister, and the ministry was then re-christened to Ministry of Corporate Affairs (MCA). Mr Gupta held the position till 22 May 2009, when the country had its general elections. One must admit that he did take a lot of personal interest in the functioning of the ministry and did try to speed up the disposal of matters.
While the first innings of the UPA government gave stability to the MCA, the second innings has done the reverse. The last three and a half years has witnessed four changes at the helm of MCA. The game of musical chairs started with Salman Khurshid. He was the Union Minister of State (with independent charge) of corporate affairs and minority affairs when he took over as minister on 29 May 2009. However, in the Cabinet reshuffle of 2011, he gave up MCA and was elevated as Cabinet minister for law and justice, and minority affairs. Before Mr Khurshid could do much for the ministry it was time for him to move on.
Now it was the turn of Murli Deora, who was until then the petroleum minister, to take charge of MCA. One must admit that though Mr Deora was a minister in charge of MCA for relatively a very short time, he made an impact not only on the functioning of the ministry but also simplified many of the provisions that were the bane of the corporate sector. In his true businessman style he was keener on finding solutions to the problems faced by businessmen. His initiative resulted in simplification of several provisions of the Companies Act, 1956, by making the full use of the rule making power which hitherto the babus were not very much inclined to do so.
However, in 2011 Mr Deora had to make way for Mr Veerappa Moily, a lawyer and a senior Congress leader who promised a lot. He went on a whirlwind tour of the country trying to generate a new found enthusiasm and promising a new company law without any further delay. Once again before Mr Moily could display any results for all his efforts, he shifted to the important Ministry of Petroleum and replaced by Sachin Pilot, a young and upcoming Congress leader. Hopefully, the new young minister Mr Pilot, who has over a year before the 2014 general elections process commences, will be able to do better than his seniors.
While on the one hand the UPA government has been proclaiming the importance of MCA, but at the same time the game of musical chair seems to be suggesting something else. The ministry has miserably failed to get the Companies Bill passed during the last half a decade. Instead the Companies Bill finds itself renamed, with the change in the year being reflected in the name.
(Dr SD Israni, advocate & partner, SD Israni Law Chambers, is one of India’s leading authority on corporate, commercial and securities laws. He was a member of the Naresh Chandra Committee for simplification of Company Law relating to private and small companies. He has been on SEBI's committee on disclosures (called the Malegam Committee) and the one on buy-back of shares. Dr Israni has been a member of the Legal Affairs Committee of the Bombay Chamber of Commerce and Industry, Indian Merchants' Chamber and Indian Council of Arbitration. Dr Israni is an active member of the Institute of Company Secretaries of India and was on its Central Council for four terms and headed the Capital Markets Committee of the ICSI.)