2017 (5) TMI 1225 - Tri - Companies Law

Compounding of offence under Section 621A of the Companies Act, 1956 - violation of Section 307(1) of the Companies Act, 1956 punishable under Section 307(8) - Held that - The offence relates to the period from 2001 to 2008. The petitioners filed the petition on 20th April, 2010. Therefore, the violation under Section 307(1) was committed before the Companies Act, 2013 came into force. Therefore, this Tribunal has to follow the procedure as laid down under Section 621A of Companies Act, 1956. The Ministry of Corporate Affairs, by of notification No. SO 1936E dated 01.06.2016 declared that the matters transferred from Company Law Board to NCLT shall be disposed of in accordance with the provisions of Act 18 of 2013 or Companies Act, 1956. Since Section 441 of the Act has not come into force by the date of violation and by the date of filing of this petition, this Tribunal has to follow the procedure laid down under Section 621A of the Companies Act, 1956. Considering violation of Section 307(1) and also considering the long duration of violation, this Tribunal is directing the petitioners 1 to 6 are directed to pay ₹ 50,000/- each for the violation of Section 307(1) of the Act. The violation continues for eight years, i.e. 2920 days. Therefore, each of the petitioners is directed to pay ₹ 100/- for each day of violation. The total amount comes to ₹ 20,52000/- (Rupees twenty lakh fifty-two thousand). Therefore, the compounding amount that would be payable by each of the petitioners comes to ₹ 3,42,000/-. Hence, the violation of Section 307(1) committed by the petitioners is compounded on payment of ₹ 3,42,000/- each by way of Demand Draft drawn on any nationalised bank in favour of Pay and Accounts Office, Ministry of Corporate Affairs, Mumbai within three weeks and to file the original Demand Draft before the Registry of this Tribunal on or before 12th April, 2017.

Issues:
Compounding of offence under Section 621A of the Companies Act, 1956 for the violation of Section 307(1) of the Companies Act, 1956.

Analysis:
The petition was filed seeking compounding of the offence under Section 621A of the Companies Act, 1956 for the violation of Section 307(1) of the Act. The violation pertained to the Register of directors' shareholding not disclosing complete particulars as required under Section 307 of the Act for the years 2001 to 2008. The petitioners admitted the violation and filed an application before the Registrar of Companies, which was subsequently transferred to the Company Law Board and then to the Tribunal as T.P. No. 149 of 2016. The Registrar of Companies provided reports indicating the violation and forwarded additional information to the Tribunal. The offence attracted a fine as per Section 307(8) of the Act.

The Tribunal noted that the violation occurred before the Companies Act, 2013 came into force, thus requiring adherence to the procedure under Section 621A of the Companies Act, 1956. The Ministry of Corporate Affairs' notification specified that matters transferred to NCLT from the Company Law Board should be disposed of in accordance with the provisions of the relevant Acts. Since Section 441 of the Act was not in force during the violation period or the petition filing, the Tribunal followed the procedure under Section 621A of the Companies Act, 1956.

Considering the facts, duration of violation, and fine amount under Section 307(1) of the Act, the Tribunal directed the petitioners to pay specific amounts. Each of the petitioners was directed to pay a set fine amount for the violation period, resulting in a total compounding amount. The petitioners were instructed to pay the specified amount via Demand Draft to the Ministry of Corporate Affairs within a given timeline. Failure to comply would lead to appropriate action by the Registrar of Companies, Gujarat, including prosecution of the petitioners as per the law, under intimation to the Tribunal. The petition was disposed of with instructions for compliance and further proceedings.

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