I-94 expired for more than 365 days,have valid Visa and I-797

I have H1B valid until 09/30/3017, visa stamped until 30 Sep 2017, Drivers license is valid until sept 2017, I went to India on Sept 2014 came back on sept 28 2014, when we came back I-94 was issued until Mar16, 2016 PP validity, my passport expired on Mar 2016, we have renewed the passport in Jan 2016 and we totally forgotten about I-94.After Renewing the passport I did not travel outside the country now realized my I-94 is expired for more than a year, when I checked with CBP office, they said " You can make a formal entry into the United States by Land, Sea, or Air. That would give you a new I-94 or you can file an I 539 with USCIS. If you depart the U.S. you could do it on the same day" , if go out will I be imposed a 10 yr ban as I was out of status for more than a year, what are my options ?

Did you apply for any extension of status after Sept 28 2014 and did you receive any new I-94 with it ?

If you did, the latest amongst the both is your current one.

we did not apply for extension of status, my passport got expired last year , I have renewed the passport and did not do anything about I-94 as I was not aware, I have I-797 and visa approved until sept 2017

Well you may be out of status if you have not done anything after your Sep 28th 2014 entry into USA.

While your H-1b is approved through Sep, 2017, it is the I-94 that governs the time you are allowed to stay in the United States. This means you need to recapture the time between Mar 2016 and Sep 2017 or synchronize the I-94 and your visa

Usually after you extend your passport, you have a choice: you can either travel abroad with a new passport and your current approval notice so that your I-94 will be validated upon your return for the remainder of time on your visa or we must ask for an extension from USCIS. Whatever step is chosen, action must have been taken before March 2016.

So I would advise you contact your company’s immigration attorney and take action immediately. I believe they would suggest that you exit and re-enter.

Did you get resolved this and able to stay in USA after this issue.