2017 (10) TMI 1130 - AT - Companies Law

Compounding of offences - Appellants failed to file its Annual Return for the financial year ended 31st March 2013 within 60 days of holding the Annual General Meeting resulting in non-compliance of statutory requirement under Section (s) 92, 137,96 and 129 of the Companies Act, 2013 - penal action under sections 92(5), 137(3), 99 and 129(7) of the Companies Act, 2013 invoked - whether the Tribunal had jurisdiction to compound the offences under Section 441 for the alleged violation of Section (s) 92, 137, 96 and 129 of the Companies Act, 2013? - Held that - In the present case, we find that apart from violation of Section 96, where punishment fine has been prescribed, for violation of Section (s) 92, 137 and 129 of the Companies Act, 2013, alternative punishment of imprisonment or fine or imprisonment with fine, have been prescribed. In view of such provision we hold that for offences under Section (s) 92, 137 and 129 etc., where alternative punishment of fine has been prescribed, apart from imprisonment, the Tribunal is empowered to compound the offence only with the permission of the Special Court. In absence of investigation or pendency of any case before any court of law for alleged violation of Section (s) 92, 137,96 and 129 of the Companies Act, 2013, we hold that there is no requirement for the Tribunal to seek any permission from Special Court for the purpose of compounding any of such offence. It is well within the jurisdiction of the Tribunal to compound the offence where alternative punishment of fine is prescribed in place of imprisonment and where no case is pending before the Special Court. We further hold that the Tribunal is also empowered to compound such offence (s) under section (s) 92, 137 and 129 etc., where the alternative punishment of fine in place of imprisonment has been prescribed even where case (s) are pending before the Special Court, but in such cases, permission of the Special Court is required to be obtained prior to compounding the offence. In view of the position of law and facts of the case, we are of the view that the Tribunal was not correct in returning the file to the Appellants to move application before the Special Court constituted at Dwarka, New Delhi nor it had jurisdiction to direct the Registrar of Companies to file their report in the concerned Special Court. In the facts and circumstances of the case, the Tribunal, was required to decide as to whether alternative punishment of line can be imposed on the company and/or the Managing Director, Director (s), CFO or any officer, after taking into consideration the report, called for from the Registrar of Companies. The Register of Companies has requested this Appellate Tribunal to pass appropriate order on merit of the case. However, as no report has been submitted by the Registrar of Companies as to what is maximum fine payable by Appellants for the alleged offences, as noticed above and the period of such offences etc., have not been detailed, we are not expressing any opinion about fine, if any, to be imposed on the company or one or other Managing Director/Director or Director or CEO or officer of the company. Thus the impugned order passed by the Tribunal is set aside. The case is remitted back to the Tribunal, New Delhi Bench, to decide the quantum of penalty as may be imposed on the company and its officers like Managing Director, Director, CEO, CFO etc., for alleged violation after calling for report from the Registrar of Companies, Delhi 8B Haryana, New Delhi and notice to the parties.

Summary

Issues Involved:
1. Jurisdiction of the Tribunal to compound offences under Section 441 of the Companies Act, 2013.
2. Applicability of penal provisions under Sections 92, 137, 96, and 129 of the Companies Act, 2013.
3. Requirement of Special Court's permission for compounding offences involving imprisonment.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal to Compound Offences:
The primary issue was whether the Tribunal had the jurisdiction to compound offences under Section 441 for violations of Sections 92, 137, 96, and 129 of the Companies Act, 2013. The Tribunal dismissed the application, stating that offences punishable with imprisonment should be dealt with by the Special Court. However, the appellate tribunal clarified that for offences where the punishment is fine or imprisonment or both, the Tribunal can compound the offence with the permission of the Special Court. For violations where only a fine is prescribed, the Tribunal can compound the offence without needing permission from the Special Court.

2. Applicability of Penal Provisions:
The judgment detailed the penal provisions for violations of Sections 92, 137, 96, and 129:
- Section 92: Failure to file the annual return is punishable with a fine of ?50,000 to ?5,00,000, and officers in default may face imprisonment up to six months or a fine or both.
- Section 137: Failure to file financial statements is punishable with a daily fine up to ?10,00,000, and responsible officers may face imprisonment up to six months or a fine or both.
- Section 96: Failure to hold an Annual General Meeting is punishable with a fine up to ?1,00,000 and a daily fine for continuing default.
- Section 129: Failure to comply with financial statement requirements is punishable with imprisonment up to one year or a fine or both.

3. Requirement of Special Court's Permission:
The Tribunal's decision to return the application to be filed before the Special Court was based on the interpretation that offences involving imprisonment require the Special Court's intervention. The appellate tribunal noted that the Tribunal could compound offences involving fines without the Special Court's permission. For offences involving imprisonment or fines, the Tribunal requires the Special Court's permission to compound the offence. The appellate tribunal emphasized that no investigation or case was pending against the appellants before any Special Court, thus the Tribunal could compound the offences without needing such permission.

Conclusion:
The appellate tribunal set aside the Tribunal's order, clarifying that the Tribunal has the jurisdiction to compound offences where the punishment includes fines, even if imprisonment is an alternative, provided no case is pending before the Special Court. The Tribunal was directed to determine the quantum of penalties after obtaining a report from the Registrar of Companies and notifying the parties. The case was remitted back to the Tribunal for a decision on the penalties to be imposed on the company and its officers for the alleged violations.