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2017 (8) TMI 508 - Tri - Companies LawCompounding of offence - Compounding of the violation of Section 177(1) of the Companies Act, 2013 - Held that - In the case on hand, the punishment provided for the Petitioner Company under section 178(8) is fine only, which shall not be less than one lakh rupees but which may extend to five lakh rupees. In the case of officers of the Company, i.e., Petitioner Nos. 2 and 3, Section 178(8) provides, imprisonment for a term which may extend to one year or with fine which shall not be less than twenty five thousand rupees but which may extend to one lakh rupees or with both. Therefore, in view of section 441(1) of the Act, this Tribunal has got power to compound the violation of Section 177(1) of the Act, only in respect of the Company, but not to its Officers, i.e., Petitioner Nos. 2 and 3. The Petitioner Company has constituted an Audit Committee and therefore the requirement is complied with after the due date. It is stated in the Report of the Registrar of Companies that the Company is not included in the list of vanishing companies and no similar offence under Section 177(1) of the Act was compounded by the Company during the last three years. Considering the minimum amount of fine provided, this Tribunal is of the considered view that the first Petitioner can be permitted to compound the violation under Section 177(1) of the Act by paying a compounding fee of ₹ 1,00,000 (One Lakh). This Tribunal further order, that it has no power to compound the offence under section 177(1) of the Act punishable under section 178(8) of the Act in respect of Petitioner No. 2 and Petitioner No. 3. Petitioner No. 1 Company is directed to deposit the sum of ₹ 1,00,000/- One Lakh by way of Demand Draft drawn on Nationalised Bank in favour of Pay and Accounts Officer, Ministry of Corporate Affairs, Mumbai, within three weeks from the date of this order and file the original Demand Draft before the Registry of this Tribunal on or before 5th May, 2017.
Issues:
Violation of Section 177(1) of the Companies Act, 2013 - Compounding of offense. Analysis: Issue 1: Violation of Section 177(1) of the Companies Act, 2013 The petition was filed by M/s. Shruti Power Projects Private Limited, its Managing Director, and Director for compounding the violation of Section 177(1) of the Companies Act, 2013. The company was required to constitute an Audit Committee as per the provisions of the Act. The company admitted the violation and later constituted the Audit Committee after the prescribed time. The Registrar of Companies forwarded the application to the Tribunal for further action. Issue 2: Compounding of Offense The Act provides for punishment for contravention of sections 177 and 178, including fines and imprisonment. Section 441 of the Act allows for compounding of offenses with fines only, not exceeding five lakh rupees. In this case, the Tribunal had the power to compound the violation of Section 177(1) only in respect of the company, not its officers. The company was directed to pay a compounding fee of one lakh rupees for the violation. However, the Tribunal had no power to compound the offense in respect of the individual petitioners. Conclusion The Tribunal ordered the company to pay the compounding fee within a specified time frame. Failure to comply would result in appropriate action by the Registrar of Companies, including prosecution. The petition was dismissed concerning the individual petitioners. The Tribunal directed the company to comply with the order and listed the matter for further review.
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