E-Consultation in MCA21 V3: Connecting the People and the Law

This article is written by Srijeeta Chakraborty & Tridib Mandal, 2nd Year Students, West Bengal National University of Juridical Sciences, Kolkata.

1)   Introduction:

In a democratic country where every citizen has the right to voice their opinions, laws have generally been monopolised by either the intelligentsia or politically powerful and influential groups. Laws have primarily been implemented from ivory towers with blatant disregard for the people’s actual needs. In the course of such ongoing trends, the e-consultation facility launched by the latest version of the Ministry of Corporate Affairs (MCA21 V3) is a shift from this traditional attitude. It finally allows the public to express their opinions on policy decisions and draft laws. 

In this paper, the authors have tried to look into the intricacies of the e-consultation facility and have attempted to analyze the overall pros and cons in the current overall socio-political context.

2)   E- Consultation Policy for Corporate Law’s Decision Making:

In its budget announcement of 2021, the government laid the foundation of the MCA21 Version 3 (MCA21 V3). According to the ministry, the project is envisioned to revamp the corporate sector so as “to strengthen enforcement, promote ease of doing business, enhance user experience, facilitate seamless integration and data exchange among regulators.” Before understanding the present model of MCA 21, we need to first look into the functioning of MCA21 as such.

2.1)      Functioning of MCA21:

Project MCA21 was launched on February 18, 2006 on a pilot basis. The nationwide roll-out was completed across all the Offices of 20 Registrars of Companies by September 4, 2006. For the implementation of the project, a comprehensive statutory framework was introduced under Section 610B of the Companies Act, 1956, with the enactment of the Companies (Amendment) Act, 2006. It planned to provide easy and secure online services through the use of information technology to various stakeholders. In 2006, TCS was selected as the operator for conducting the project pertaining to electronic filing, storage, retrieval, viewing, processing and transmission of company data required to be filed under the Act. In a way, MCA21 aimed at digital transformation in India. The prior manual process was transferred to the digital sphere to bring about efficiency in the system.

The MCA21 was, however, characterized by frequent malfunctioning as stakeholders were unable to login, sign, prefill, upload, pre-scrutinize forms. Other problems in this system included a shift in the service provider from time to time, which resulted in a change in the operation causing hindrance to the people who were not tech-savvy.  The prime problem was that of system-crashing due to an overload of files. The system was marked by a need for a chunk of attachments which slowed the process. In short, the interface was not user-friendly and efficient, resulting in filing delays.

Such a hindrance was a serious setback to the Startup India and Make In India visions of the government, which envisioned promoting India as user-friendly by providing a convenient and feasible digital platform. This is achieved by the e-consultation facility provided under Version 3 of MCA21, which provides a more straightforward approach to the system and greater transparency by ensuring public scrutiny.

2.2)      MCA21 Version 3:

In 2020, the NITI Aayog, in association with the Agami, Omidyar Network India, and Confederation of Indian Industry, in a virtual setup invited the key stakeholders to be part of its meeting for the advancement of Online Dispute Resolution Mechanism in India. In 1985, the United Nations Commission on International Trade Law (UNCITRAL) adopted the UNCITRAL Model Law on International Commercial Arbitration. It also adopted the UNCITRAL Conciliation Rules in 1980. The United Nations General Assembly (UNGA) has recommended using the said Model Law and Rules in a dispute arising in international commercial relations, and if the parties seek an amicable settlement of that dispute by recourse to conciliation. India has incorporated these principles in the Arbitration and Conciliation Act, 1996.

To realize the aims of the NITI Aayog and the Arbitration and Conciliation Act, the government passed Version 3 of the MCA21 to encompass a system of e-consultation of corporate (draft) laws and amendments. The e-consultation facility allows comments on draft laws to be submitted directly on the updated MCA website. It would provide policymakers with an immediate analysis of public sentiment and feedback compared to over a month earlier. Featured by Artificial Intelligence, the process would be expedited by overcoming delays and crashes. The system would facilitate in summarising similar suggestions received on the draft policies into one and thereby speeding up the feedback process within three days. This would really be beneficial in fast- tracking the whole process. It would be characterized by a chatbot-enabled helpdesk, mobile apps and interactive user dashboards for a more user-friendly interface.

3)   Analysis of the MCA21 V3:

We need to understand how far or to what extent would the goals of version 3 of MCA21 be realised.

3.1) Benefits of the system:

The e-consultation facility becomes beneficial as people are allowed to raise any issues they have with the corporate laws or give feedback, which will directly reflect the will of the people.  The inputs from stakeholders would reflect public demands and help in mass awareness by engaging them in the law-making process. It ensures that the goals envisaged in the Right to Information (RTI) Act, 2005 of strengthening the masses and guaranteeing a functional democracy are realized by increasing accountability of lawmakers and transparency of the entire process. This would reduce the scope of arbitrarily making laws that might not serve the public interest or might cater only to the interests of a few influential groups. The system works on Artificial Intelligence and Machine Learning processes that ensure a faster mechanism of receiving suggestions and consultations from the masses, which would essentially fast-track the process. It will also provide the lawmakers with insights into what the people actually want and help the legislature determine the yardsticks on which their future policies will be based.

3.2) Shortcomings:

Despite its overwhelming facilities, one of the problems with the MCA21 was the frequent change of the service providers, which made it challenging to handle the system. Interestingly, L&T Infotech, a new service provider, will be handling the operations in the upcoming version. As a result, there is still the probability of handling problems since the corporate stakeholders are unfamiliar with this new service provider. After submission of the policy feedbacks from the public at large, they would be reviewed by a panel of corporate lawyers under the MCA Lab. However, there has been no information on the selection procedure of this panel. Therefore, the lack of clarity in the selection procedure of the panel questions the transparency this version guarantees. The previous failures in the working of tax e-filing lead us to doubt whether this version would be actually helpful. The system is designed in a way to consolidate similar suggestions. However, this can have profound implications due to the probability of valuable suggestions being deleted by the system due to its failure to grasp the objective and essence of such suggestions. Moreover, the red-tapism and delay in the helpdesk system (as experienced previously) makes us wonder whether this time it would actually be effective and user-friendly.

4)   Suggestions:

While allowing the common people to participate in the law-making process through feedback and suggestion is a welcome initiative, there are further grey areas that might take control away from the hands of the masses and make their suggestions and feedback ultimately futile. The ministry shouldn’t wash off their hands just by introducing this facility, instead, there should be complete transparency and accountability regarding the other aspects related to the MCA V3. For example, the appointment of lawyers in the panel shouldn’t be left to the MCA’s discretion. Instead, there must be online voting to elect the panel from a list of eligible lawyers, which would be formed based on the people’s votes at large. The help desk, which plays a crucial role when it comes to something new being introduced, must be made available 24*7, not only in definition but also in its functioning, in all possible languages, to make this entire online system more accessible for the technologically challenged. Further, the user interface must be made as simple and user-friendly as possible to make it easily accessible to all kinds of people. 

5)   Conclusion:

The features introduced in the new MCA V3, especially e-consultation for fast-tracking policy decisions, are indeed visionary and one of a kind. Despite its shortcomings, which can be easily addressed, this new approach taken by the ministry might become what can be one of the first little steps towards digitalizing the law-making process and the legislature. However, to make the overall initiative a success, we believe further modifications need to be incorporated, increasing its overall efficiency and adequately serving its purpose.