2016 (10) TMI 558 - Tri - Companies Law

Application filed suo-moto for compounding - Held that - We have heard the Practicing Company Secretary who urged before us that due to some unavoidable circumstances, the accounts were not finalized and hence Annual General Meeting could not be held on time. The Practicing Company Secretary further contended that Annual General Meeting was held subsequently on 27/11/2014 and accounts were approved by the share holders of the company. The Practicing Company Secretary further stated that applicants voluntarily filed this suo-moto application accepting violation of provision of section 96 of Companies Act, 2013. The Practicing Company Secretary has further stated that violation is punishable under section 168 of companies Act, 1956. The Practicing Company Secretary further contended a lenient view may be taken as company has subsequently held Annual General Meeting with delay of 57 days. We have looked into the documents filed in support of the Petition. The petitioners relied on the extract of the Board Resolution dated 15/03/2016. The Resolution reads that the Board of Directors agreed to file suo-moto applications for compounding. Petitioners also filed photo-stat copy of statement of Profit & Loss A/c for the year ending 31/03/2014 and also financial statement for the year ending 31/3/2014. We have received report from the Registrar of Companies, Bengaluru who stated that violation can be compounded by levying compounding fee on the Applicants. The compounding fee levied shall be paid by the Applicants within 15 days from the date of this order.

Summary

Issues:
- Transfer of case from Company Law Board to National Company Law Tribunal, Bengaluru
- Violation of section 96 of Companies Act, 2013 and compounding of offence under section 168 of Companies Act, 1956
- Delay in holding Annual General Meeting
- Submission of documents and Board Resolution for compounding
- Compounding fee levied on the Applicants

Transfer of Case:
The judgment details the transfer of the case from the Company Law Board, Southern Region, Chennai to the National Company Law Tribunal, Bengaluru upon the establishment of the Tribunal. The petition, filed under section 621A of the Companies Act, 1956, sought compounding of an offence for violating section 96 of the Companies Act, 2013, punishable under section 168 of the Companies Act, 1956.

Violation of Companies Act:
The petition explained that due to a server crash at the registered office in India, linked to the main server in the US, the company could not hold its Annual General Meeting by the specified date. The meeting was delayed by 57 days but was eventually held on 27/11/2014. The financial statements were approved, and the balance sheet and annual return were filed with the Registrar of Companies, Bengaluru on 14/01/2015. The violation was deemed unintentional and occurred inadvertently during the normal course of business, leading to the suo-moto application for compounding.

Submission of Documents:
The Practicing Company Secretary representing the petitioners argued that the delay was due to unavoidable circumstances, and the violation was acknowledged voluntarily by the applicants. The Board Resolution dated 15/03/2016 supported the application for compounding, along with financial statements and other relevant documents. The Registrar of Companies, Bengaluru confirmed that the violation could be compounded by imposing a compounding fee on the Applicants.

Compounding Fee:
After reviewing the submissions and documents, the Tribunal directed the Applicants to pay a compounding fee within 15 days. A detailed table in the judgment outlined the specific amounts to be paid by each Applicant, totaling to Rs. 1,94,000. The judgment emphasized the leniency shown due to the subsequent holding of the Annual General Meeting and the voluntary nature of the application for compounding.

In conclusion, the judgment from the National Company Law Tribunal, Bengaluru addressed the transfer of the case, the violation of the Companies Act, the reasons for delay in holding the Annual General Meeting, the submission of supporting documents, and the imposition of a compounding fee on the Applicants for the offence.