2023 (6) TMI 71 - AT - Companies Law

Compounding of offences - default in holding Annual General Meeting the company - non-compliance of Section 166/96 of the Companies Act, 1956/2013 - HELD THAT - The fact remains that it was a joint application filed by the applicant alongwith other six persons including the company in question under Section 441 of the Companies Act, 2013. Section 441 of the Companies Act, 2013 deals with the compounding of offences. From the materials on record particularly the application filed before the NCLT which was number as CP 155/441/ND/2020 it is evident that the appellant has admitted default and days of default to the extent of 2905 days was admitted by the appellant. At this juncture it would be apt to reproduce Section 96 of the Companies Act, 2013 which mandate annual general meeting by the company and also consequences for non-compliance of provisions contained in Section 96 or 97 or 98 of the Act. It is also admitted case of the appellant that the appellant has committed default under Section 166 of the Companies Act, 1956 and for such default penalty is prescribed under Section 168 of the Companies Act, 1956. If there is default in holding Annual General Meeting the company and every officer of the company in default shall be punishable with fine. The appellant in the present case himself has admitted default and this was the reason that he was also a joint applicant before the NCLT. Once the appellant has admitted his default and thereafter approached the Tribunal for compounding the offence there was no ground for the appellant to assail the order of the compounding passed by the NCLT. Learned NCLT virtually has allowed the compounding application and as per legal position reduced the penalty. It is evident that as per calculation chart/report of the ROC the maximum fine was to be imposed on the appellant was to the extent of Rs.1,32,65,000/-. However, the Learned NCLT has reduced the said fine to the 1/5th of maximum fine and appellant has been imposed fine of Rs.26,53,000/-. It is further clear from the impugned order that the learned NCLT has taken consistent stand in respect of other defaulting members. No interference required in the impugned order - there is no merits in the appeal - appeal dismissed.

Summary

Issues Involved:
1. Compounding of offences under Section 441 of the Companies Act, 2013.
2. Imposition of fine for non-compliance with Section 166/96 of the Companies Act, 1956/2013.
3. Appellant's argument against the imposed fine.

Summary:

Compounding of Offences:
The appeal was filed under Section 421 of the Companies Act against an order by the NCLT, New Delhi, which compounded offences under Section 441 of the Companies Act, 2013. The NCLT directed the appellant to pay a fine of Rs. 26,53,000/- for non-compliance with Section 166/96 of the Companies Act, 1956/2013. The joint application for compounding was filed by seven applicants, including the company.

Imposition of Fine:
The appellant, along with the company and five others, admitted guilt under Section 96/99 of the Act. The NCLT, after examining the ROC's detailed report on defaults for various financial years, imposed fines based on the number of default days. The maximum fine calculated was Rs. 1,32,65,000/-, but the NCLT reduced it to 1/5th, imposing a fine of Rs. 26,53,000/- on the appellant.

Appellant's Argument:
The appellant argued that the NCLT erred in imposing the fine and incorrectly relied on a previous judgment. The appellant, being an Alternate Director, contended that he should not have been fined. The counsel for the ROC opposed the appeal, stating no apparent error in the NCLT's order.

Judgment:
The Tribunal found no merit in the appeal, emphasizing that the appellant admitted the default and sought compounding. The NCLT had already reduced the fine significantly. The appeal was dismissed without any cost imposed.