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2020 (12) TMI 1136 - Tri - Companies LawRequired expenditure for CSR not made - Wilful Default or not - reason for not spending the CSR amount have not been disclosed in Board Report of Financial Year 2014-15 - violation of section 134 (3) (o) r/w Section 135 (5) of the Companies Act, 2013 - HELD THAT - It is noticed that the Company had made the default good by opening a Foundation in the name of Anil Arjun Foundation and has also transferred an amount of ₹ 30, 43,162/- to the Bank Account of the Trust - It is also noticed that the Trust Anil Salgaocar Foundation has donated a sum of ₹ 75,000/- to Dadapir G. Chauri Trust for Handicapped. The Trust has also donated a sum of ₹ 25, 00,000/- to Bahujan Hitay for Construction of Girls Hostel in Mapusa, Goa. The said receipts of proof are on record. After considering the submissions made, a Compounding Fee of ₹ 50,000/- by the Company and ₹ 50,000/- by the 2 Directors herein i.e. ₹ 1,50,000/- in total shall be sufficient as a deterrent for not repeating the impugned default in future. The imposed remittance shall be paid by way of Demand Draft drawn in favour of RoC Mumbai within 30 days from the receipt of this order - Compounding application disposed off.
Issues:
Violation of CSR provisions under Companies Act, 2013. Analysis: The Compounding Application was filed against the Registrar of Company, Goa for non-compliance with CSR expenditure requirements as per Section 134(3)(o) read with Section 135(5) of the Companies Act, 2013. The Company failed to disclose reasons for not spending the CSR amount in the Board Report for the Financial Year 2014-15. The Directors of the Company were serious about CSR compliance and constituted a CSR committee. The Company decided to carry out CSR activities through a Trust named Anil Salgaocar Foundation. An amount of ?30,43,162 was transferred to the Trust's Bank Account to fulfill the CSR obligations, rectifying the default. The Registrar of Companies issued a Show Cause Notice to the Company for the violation. The Directors' Report for the relevant year did not contain reasons for non-disclosure, prompting the need for the compounding application. After examining the submissions and circumstances, the Tribunal imposed a Compounding Fee of ?50,000 by the Company and ?50,000 each by the two Directors, totaling ?1,50,000. This fee was deemed sufficient as a deterrent to prevent future non-compliance. The amount was to be paid to the RoC Mumbai within 30 days from the order's receipt. The Trust established by the Company made donations to charitable causes, further demonstrating the Company's commitment to CSR activities. The Tribunal found the actions taken by the Company and Directors to rectify the default satisfactory, leading to the decision to impose the Compounding Fee as a penalty for the violation. The judgment concluded by disposing of the Compounding Application, subject to the remittance of the imposed fee, and directed the RoC to take consequential action. Compliance with the order was required, and a compliance report was to be submitted for record-keeping purposes.
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