2018 (7) TMI 2199 - Tri - Companies Law

Seeking to allow the compounding of the offence committed under Section 165(1) read with Section 165 (3) of the Companies Act, 2013 - Section 441 of the Companies Act, 2013 - HELD THAT - It is not in dispute that the applicant was Director in more than 10 Public Companies for a period of 21 days in contravention of the provisions of Section 165(1) of the Act. Section 441(4) of the Act confers jurisdiction on this Tribunal to accept compounding of certain offences under the Companies Act subject to fees. As far as the case at hand is concerned, the applicant resigned as a Director of 4 public companies reducing their numbers to 10. But he was Director in 14 companies for 21 days in contravention of provisions of Section 165(1) of the Act since he resigned as Director of 4 companies within 21 days of the notice. The application is allowed.

Summary

Issues:
1. Violation of Section 165(1) of the Companies Act, 2013 by holding Directorship in more than 10 Public Limited Companies.
2. Application for compounding of the offence under Section 165(1) read with Section 165(3) of the Companies Act, 2013.

Analysis:
1. The judgment deals with a petition filed under Section 441 of the Companies Act, 2013 by an individual to compound an offence committed under Section 165(1) read with Section 165(3) of the Act. The Registrar of Companies, West Bengal, reported that the applicant was a Director in a total of 14 Public Limited Companies, exceeding the limit set by Section 165(1) of the Act. This violation led to the initiation of prosecution against the applicant. The applicant subsequently resigned from Directorship in 4 companies, bringing the number down to 10, but the violation persisted for 21 days.

2. The Tribunal acknowledged that the applicant had indeed contravened the provisions of Section 165(1) of the Companies Act by holding Directorship in more than 10 Public Companies for 21 days. Section 441(4) of the Act empowers the Tribunal to accept compounding of certain offences under the Companies Act upon payment of fees. Despite the applicant's corrective action of resigning from 4 companies, the violation remained for the specified period. The Tribunal, considering the circumstances, allowed the application for compounding the offence.

3. The final order of the Tribunal allowed the compounding of the offence committed by the applicant under Section 165(1) read with Section 165(3) of the Companies Act, 2013. The applicant was directed to pay compounding fees of ?25,000 within 15 days for the offence to be compounded. Upon compliance with this condition, the proceedings would stand disposed of, and the Registrar of Company, West Bengal, would be informed about the decision.