2018 (4) TMI 1815 - Tri - Companies Law

Compounding of Offence - allegation against the offender/director are that he was the Director of more than twenty private limited companies till 31st March, 2015 - section 165(1) read with section 165(3) of the Companies Act, 2013 - HELD THAT - The offender/director was holding the post as a Director in more than 20 companies at once till 31 03 2015. He tendered his resignation as a Director by one of such companies on 19.122015. However, its intimation was sent to the Registrar in Form DIR-12 on 10 02 2016 Thus, there was a delay of 272 days in tendering resignation, meaning thereby the offender/director was the Director in more than 20 private limited companies for a period of 272 days - As per section 165(6) of the Act, punishment for violation of provisions of section 165(1) read with section 165(3) of the Companies Act is fine which shall not be less than ₹ 5,000/- but which may extend to ₹ 25,000/- for every day after the first during which the contravention continues. It is seen from the bare perusal of the facts that on 31.03.2015, the offender director vacated office of the directorship of the company I.e. Fabius Private Ltd. However, his resignation was forwarded to Registrar of Companies on 10.02.2016. It appears to us that the delay was caused in onward transmission of the resignation to ROC, this is a proper and adequate ground for us to consider prayer of leniency in directing to pay compounding fees. Petition disposed off.

Summary

Issues: Compounding of an offence under section 165(1) read with section 165(3) of the Companies Act, 2013.

Analysis:
The judgment by the National Company Law Tribunal, Kolkata, involved a proposal for compounding an offence under section 165(1) read with section 165(3) of the Companies Act, 2013. The case revolved around the offender/director who held directorship in more than twenty private limited companies simultaneously, which was a violation of the Companies Act. The offender tendered his resignation from one of the companies on 19.12.2015, but the intimation was sent to the Registrar of Companies on 10.02.2016, resulting in a delay of 272 days. The Registrar issued a show cause notice, and the offender admitted the guilt, seeking compounding under section 441(1) of the Companies Act. The Tribunal considered the submissions and evidence presented, including the offender's admission of guilt and the delay in resignation intimation.

The Tribunal noted the provisions of section 165(1) read with 165(3) of the Companies Act, which prohibit a person from acting as a Director in more than the specified number of companies after the resignation or after a year from the Act's commencement, whichever is earlier. The punishment for contravention includes a fine ranging from ?5,000 to ?25,000 for each day of contravention. The offender admitted to holding directorship in multiple companies beyond the permissible limit and failing to resign within the stipulated time frame. The Tribunal considered the offender's plea for leniency, citing it as his first offence, and evaluated the circumstances leading to the delay in resignation intimation.

Based on the facts presented, the Tribunal found that the delay in forwarding the resignation to the Registrar was a valid ground to consider leniency. Consequently, the Tribunal ordered the compounding of the offence under section 165(1) read with 165(3) of the Companies Act, 2013, against the offender/director, subject to the payment of compounding fees amounting to ?50,000 within two weeks from the date of the order. The Company Petition was disposed of accordingly, with a directive to forward a copy of the order to the Registrar of Companies, West Bengal.