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2016 (10) TMI 436 - Tri - Companies LawCompounding of offence - delay in appointing a Woman Director - Company Law Board/NCLT jurisdiction and power to compound offences - Held that - The Tribunal can exercise its jurisdiction under Section 621A of Companies Act, 1956 or its corresponding Section 441 of Companies Act, 2013. Though the applicant has filed the Application under Section 621A of the Companies Act, 1956, later he has mentioned Section 441 of the Companies Act, 2013 in their Affidavit dated 16th August, 2016. Hence, we are considering the merits of the present case. It is not in dispute that the Applicant Company has violated provisions of Section 149 of the Companies Act, 2013 with respect to the appointment of Woman Director as one of the Board of Directors. Subsequently, the Company has appointed a Woman Director namely Ms. Keerti Chetan Desai at the Board meeting held on 01.03.2016. It has also filed form DIR- 12 with RoC on 02.3.2016 i.e., with the delay of 14 (fourteen) months. The applicants have replied only on 26.09.2015 to the show cause issued to them by RoC vide Ref No. RAP&TG/TBR/009561/2015/SCN/l 054, dated 10.08.2015. The Company has requested the RoC to exonerate them as the financial position of Company was not in good state. The Applicants have filed this application for compounding of offence in question after initiating prosecution. We are satisfied with the reasons furnished by applicants for 14 (fourteen) months delay in complying with the provision of Companies Act for appointing a Woman Director. Hence, we are inclined to permit the applicants to compound the offence in question by taking a lenient view as prayed by the applicants. Accordingly, we dispose off the application by directing first applicant to pay a compounding fee of ₹ 1,00,000/- (Rupees One Lakh Only) and Applicants No. 2 to 4 ₹ 50,000/- (Rupees Fifty Thousand Only) each and deposit the same with the authorities within three weeks. After the receipt of compounding fee, the Registrar of Companies is directed to bring about the compounding of offence to the notice of the Learned Special Judge for Economic offences-cum-VIII AMSJ Court, Hyderabad for passing appropriate orders.
Issues:
1. Jurisdiction and power of NCLT to compound offences under Section 621A of Companies Act, 1956 and Section 441 of Companies Act, 2013. 2. Violation of Section 149 of Companies Act, 2013 regarding the appointment of a Woman Director. 3. Delay in compliance with the provision of appointing a Woman Director. 4. Application for compounding of offence after initiating prosecution. Issue 1: Jurisdiction and power of NCLT to compound offences: The Tribunal, in the case at hand, deliberated on its authority to allow compounding of offences under Section 621A of Companies Act, 1956 and its corresponding Section 441 of Companies Act, 2013, especially when prosecution was already initiated. Reference was made to previous judgments, including a decision by the Company Law Board, which established that the Board could compound offences independently, even when prosecution was ongoing. The Tribunal concluded that it holds the jurisdiction to compound offences, irrespective of the stage of prosecution, as per the provisions of the Acts. Issue 2: Violation of Section 149 of Companies Act, 2013: The case involved a violation of Section 149 of Companies Act, 2013, which mandates the appointment of a Woman Director on the Board of Directors for certain classes of companies. The Applicant Company failed to comply with this provision, leading to a show-cause notice and subsequent prosecution. However, the Company later appointed a Woman Director, albeit with a delay of fourteen months. The Tribunal noted the violation and subsequent compliance, considering the reasons provided by the applicants for the delay. Issue 3: Delay in compliance with the provision of appointing a Woman Director: The Applicant Company justified the delay in appointing a Woman Director by citing financial difficulties and lack of commercial activities since 1999-2000. Despite the delayed compliance, the Company eventually appointed a Woman Director and submitted the necessary documentation. The Tribunal, after reviewing the circumstances, accepted the reasons provided for the delay and decided to permit compounding of the offence. Issue 4: Application for compounding of offence after initiating prosecution: The Applicants filed an application for compounding the offence after the initiation of prosecution. The Registrar of Companies reiterated the violation and the maximum fine applicable under the Companies Act, 2013. However, considering the circumstances, the Tribunal decided to allow the compounding of the offence upon payment of specified compounding fees by the applicants. The order directed the payment of fines and subsequent notification to the Special Judge for Economic Offences for appropriate action. In conclusion, the Tribunal, exercising its jurisdiction, permitted the compounding of the offence related to the violation of appointing a Woman Director, considering the reasons for delay and the subsequent compliance by the Applicant Company. The detailed analysis of each issue emphasized the legal framework, previous judgments, and the specific circumstances of the case, leading to the final order for compounding with specified fines.
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