2018 (3) TMI 26 - Tri - Companies Law

Compounding of alleged offence for violation of Sections 96 and 99 of the Companies Act, 2013 - Held that - This court possesses necessary jurisdiction to grant permission for compounding of such offence in those cases wherein no punishment of imprisonment or punishment with fine alone. Which is not the case of present petitioner as the contravention of the provision of Sections 96 and 99 of the Companies Act are not attracting punishment of imprisonment and imprisonment with fine. It is a is statutory violation in technical nature attracting penalty of fine simplicitor. The ground made for and submission put forth before us for compounding the alleged offence of contravention of Sections 96 and 99 of the Companies Act, 2013 appears to be reasonable and the court in exercise of its power conferred under section 441 of the Companies Act, 2013 can grant permission for compounding. The present application deserves to be allowed. However, the permission for compounding such offence is granted with such condition, that the petitioner Company shall make payment of fine of ₹ 20,000/- (Rs. Twenty Thousand) and further individual Directors/Applicants shall have to pay fine of Rs. l0000/- (Rs. Ten Thousand). Such amount of fine shall be payable to Central Govt. through the office of the RoC, from the account of petitioner company and or individually by its the then Director, which may be practicable for implementation of this courts direction. The petitioner company make payment of additional fine of ₹ 100 per day for causing delay in convening of its AGM to regularise the delay cause in convening of the AGM for 2016.

Summary

Issues Involved:
1. Violation of Sections 96 and 99 of the Companies Act, 2013.
2. Compounding of the alleged offence under Section 441 of the Companies Act, 2013.
3. Determination of penalties and fines for the default.

Detailed Analysis:

1. Violation of Sections 96 and 99 of the Companies Act, 2013:
The petitioner company, a non-profit entity incorporated under Section 25 of the Companies Act, 1956, failed to hold its Annual General Meeting (AGM) for the financial year ending 31st March, 2015, within the stipulated time frame, thus violating Section 96 of the Companies Act, 2013. This failure attracts criminal liability under Section 99 of the Companies Act, 2013, which prescribes fines for such defaults. The company admitted its default and explained that the delay was due to the negligence of the previous consultant and other official responsibilities of the directors, who are government officers.

2. Compounding of the alleged offence under Section 441 of the Companies Act, 2013:
The petitioner company sought relief under Section 441 of the Companies Act, 2013, which allows for the compounding of offences punishable with fines. The company argued that the delay was not deliberate but a bona fide omission and requested the Tribunal to regularize the default by compounding the offence. The Tribunal noted that it has the jurisdiction to compound such offences, as they do not involve imprisonment but only fines.

3. Determination of penalties and fines for the default:
The Tribunal considered the submissions and explanations provided by the petitioner company and its directors. It acknowledged the company's proactive steps in filing the petition and taking corrective measures. The Tribunal decided to grant permission for compounding the offence with the following conditions:
- The petitioner company shall pay a fine of ?20,000.
- Each individual director shall pay a fine of ?10,000.
- An additional fine of ?100 per day for the delay in convening the AGM for 2016.
These fines are to be paid to the Central Government through the office of the Registrar of Companies (RoC), Kanpur, within six weeks from the date of receipt of the order.

Conclusion:
The Tribunal allowed the petition conditionally, directing the petitioner company and its directors to pay the specified fines to regularize the delay in holding the AGM. The decision emphasized the Tribunal's power to compound offences involving fines under the Companies Act, 2013, and highlighted the importance of compliance with statutory provisions to avoid such defaults.