2016 (12) TMI 186 - Tri - Companies Law

Compounding for violation of provisions of section 299 of the Companies Act, 1956 - Held that - Considering the documents filed, report of the Registrar of Companies, Karnataka. Bengaluru and submissions made by the Practicing Company Secretary we are of the opinion that violation can be compounded by levying the compounding fee . As in pursuant to our Order dated 17/09/2016 mentioned herein above, the Applicants have paid the compounding fee by depositing Demand Draft for ₹ 1,13,400/- (Rupees One lakh thirteen thousand four hundred only) of City Bank, Bangalore drawn on 23/09/2016 in favour of Pay and Accounts Officer, Ministry of Corporate Affairs, payable at par . As the compounding fee has been remitted by the Applicants, the offence stated in the petition is compounded. A copy of this Order be sent to Registrar of Companies, Karnataka. Bengaluru for appropriate action.

Summary

Issues:
Violation of provisions of section 299 of the Companies Act, 1956 for compounding, transfer of case to National Company Law Tribunal, Bengaluru, non-compliance of disclosure requirements by Directors, compounding application for violation, compounding fee calculation and payment, decision on compounding by the Tribunal.

Transfer of Case and Background:
The case was originally filed before the Company Law Board, Southern Region, Chennai, under Section 621A of the Companies Act, 1956 for compounding due to the violation of section 299 of the Companies Act, 1956. After the establishment of the National Company Law Tribunal Bench at Bengaluru, the case was transferred and renumbered as T.P 134/2016.

Non-Compliance of Disclosure Requirements:
The petition detailed the company's registration and the directors' general notice of disclosures for the financial years 2012-13 and 2013-14. However, due to the inability to convene board meetings during the specified periods, the disclosures could not be considered, leading to non-compliance with section 299(3) of the Companies Act, 1956.

Compounding Application and Submissions:
The Board of Directors passed a resolution for a suo motu application for compounding the violation, emphasizing that the default was unintentional, non-prejudicial, non-wilful, and did not affect public interest. The Practicing Company Secretary presented documents, including disclosures statements, a sworn affidavit, and relevant company orders, supporting the request for compounding and highlighting the inability to convene board meetings.

Tribunal's Decision and Analysis:
After reviewing the documents, Registrar of Companies' report, and submissions, the Tribunal found a violation of section 299(3) of the Companies Act, 1956. The compounding fee was calculated and levied on each applicant, totaling Rs. 1,13,400. Upon the payment of the compounding fee by the applicants, the Tribunal compounded the offense, directing the Registrar of Companies, Karnataka, Bengaluru, to take appropriate action.

This detailed analysis covers the case's transfer, non-compliance issues, compounding application process, fee calculation, payment details, and the final decision by the Tribunal, providing a comprehensive overview of the judgment.