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2019 (1) TMI 1826 - Tri - Companies LawCompounding Application suo-moto for violation of Section 137(2) of the Companies Act, 2013 - HELD THAT - A Compounding Fee of ₹ 2,94,000/- for Company ₹ 1,00,000/- each for 2 Directors, which works out to ₹ 4,94,000/- in total by applicant/defaulters herein, stated in the Defaulters list, shall be sufficient as a deterrent for not repeating the impugned default in future. The imposed remittance shall be paid by way of Demand Draft drawn in favour of Pay and Accounts Officer, Ministry of Corporate Affairs. Mumbai within 30 days from the receipt of this order. This Compounding is, therefore, disposed of.
Issues:
Violation of Section 137(2) of the Companies Act, 2013 - Compounding Application for the offense - Determination of Compounding Fee. Analysis: The Compounding Application was filed due to a violation of Section 137(2) of the Companies Act, 2013, where the annual general meeting was not held, and financial statements were not filed as required. The Registrar of Companies reported that the default was rectified by filing the necessary documents. The Applicants claimed that the Compounding Application was filed to resolve the matter. The Applicants' representative submitted that the contravention was unintentional and without malicious intent, attributing it to inadvertent non-compliance by the Company and its Officers. After reviewing the case facts and submissions, it was concluded that the Applicants had indeed violated Section 137(2) of the Act. The relevant punishment under Section 137(3) includes fines and potential imprisonment for non-compliance. The Bench found merit in the Compounding Application for the offense. A Compounding Fee of ?2,94,000 for the Company and ?1,00,000 each for two Directors, totaling ?4,94,000, was imposed as a deterrent against future violations. The fee was to be paid via Demand Draft to the "Pay and Accounts Officer, Ministry of Corporate Affairs, Mumbai" within 30 days of the order receipt. The Compounding Application (No. 1723 of 2018) was disposed of based on the directed terms. The offense would be compounded upon payment of the Compounding Fee, with a compliance report to be submitted. Subsequent actions by the Registrar of Companies were to be taken only after the compliance report was filed. In conclusion, the judgment resolved the violation issue by imposing a Compounding Fee, emphasizing deterrence against future non-compliance, and ensuring that the offense was compounded upon fee payment and compliance report submission.
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