2017 (1) TMI 684 - Tri - Companies Law

Compounding of offence under section 441 of the Companies Act - delay in filing annual return - Held that - We feel that the delay caused in filing of annual return (by the company) due to certain procedural formalities to be completed for obtaining DIN No. and those was a prerequisite for filing the Annual Return. Such procedural aspect took certain time resulting in delay in filing of the same. Hence, it cannot be assumed that the company was having deliberate intention for causing delay in filing of Annual Return and made violation of statutory provision of section 92 of the Companies Act. Moreover, the company has filed its Annual Return along with the late fee, on 26 February 2015 i.e 109 days. The statutory provision Section 403 of the Companies Act, 2013 permits for filing belated return up to two hundred and seventeen days Thus considering the fact and circumstances of the present case and supreme court case in VLS. Finance Ltd. Versus Union of India and others 2013 (5) TMI 348 - SUPREME COURT , we are of the view the reason explained by the petitioner company appears to be reasonable, plausible and are sufficient to grant leave for compounding of offence under section 441 of the Companies Act. Therefore, present CP is allowed and leave is granted as prayed for therein.

Summary

Issues:
- Compounding alleged default/offences under Section 92 of the Companies Act, 2013 for failure to file statutory returns within the prescribed period.
- Consideration of reasons for delay in filing annual return and payment of late fees.
- Examination of company's status as a non-profit organization and its management structure.
- Analysis of legal provisions allowing for compounding of offenses under the Companies Act, 2013.
- Application of the Supreme Court judgment on compounding offenses by the Company Law Board.

Analysis:

The case involved a petition seeking to compound alleged default/offenses under Section 92 of the Companies Act, 2013, due to the company's failure to file its annual return within the prescribed period. The petitioner cited reasons for the delay, including the procedural formalities required for obtaining DIN numbers for the elected members of the Committee of Administration. The delay was explained to be unintentional and due to the time-consuming process of obtaining DIN numbers, which led to a delay of 109 days in filing the annual return.

The tribunal considered the nature of the petitioner company as a non-profit organization governed by a Committee of Administration and the unique circumstances surrounding the delay in filing the annual return. The company's structure, where members were not equity holders and did not share profits or losses, was taken into account. The tribunal acknowledged the reasons provided for the delay and the steps taken by the company to rectify the situation, including the payment of late fees as required under Section 403 of the Companies Act, 2013.

In its analysis, the tribunal referred to legal provisions allowing for the compounding of offenses under the Companies Act, 2013, specifically Section 441. The tribunal also referenced a Supreme Court judgment highlighting the powers of the Company Law Board to compound offenses without the prior permission of a criminal court. The judgment emphasized that the Company Law Board could exercise its power to compound offenses either before or after the institution of any prosecution, without the need for prior court permission.

Based on the legal position established by the Supreme Court judgment and considering the circumstances of the case, the tribunal granted leave for compounding the offense under Section 441 of the Companies Act. The tribunal allowed the petition and directed the Registrar of Companies to take necessary action as per the order. The decision was communicated to the company's registered office for information and further actions, if required, bringing the case to a close.