2018 (9) TMI 401 - AT - Companies Law

Rectification of the financial statement of return - Held that - Proviso to clause (2) of Section 131 show that the Tribunal is to give notice to the Central government and the Income-Tax Authority. Clause (3) therein makes it clear that the Central Government is empowered to make rules as to the application of the provisions of the Act in relation to revised financial statement or a revised director s report and making different provisions according to which previous financial statements or reports are replaced or are supplemented by the documents and to make further provisions with respect to the functions of the company s auditor. It is informed that no such Rule has been framed empowering the Regional Director, Southern Region, Chennai and decide such issue. In the present case, we find that the Tribunal not only failed to notice the aforesaid provision but on wrong presumption forfeited the right of the appellant to file the reply, which was uncalled for. We hope and trust in future the Tribunal will not act in such manner by forfeiting the right of a person to file reply. We set aside the impugned order and allow the respondent/applicant to implead the Central Government, through its Secretary, Ministry of Corporate Affairs, 5th Floor, A Wing, Shastri Bhawan, Dr. R. P. Road, New Delhi, as party-respondent in the petition. If such an application for impleadment is filed, the Tribunal will allow prayer for impleadment it and after notice to the Central Government and other necessary parties will pass appropriate order in accordance with law.

Summary

Issues:
1. Application under Section 131 of the Companies Act, 2013 for rectification of financial statement.
2. Failure to implead the Central Government as a party-respondent.
3. Authority of Regional Director, Southern Region to pass orders.
4. Interpretation of Section 131 regarding voluntary revision of financial statements.
5. Tribunal's failure to consider provisions of Section 131.
6. Forfeiture of appellant's right to file objections.
7. Setting aside the impugned order and allowing impleadment of the Central Government.

Analysis:
1. The judgment pertains to an application under Section 131 of the Companies Act, 2013 for rectification of financial statements. The Tribunal permitted the petitioner to replace the original financial statements with revised ones approved by the Board of Directors. The application was disposed of accordingly.

2. The issue arose regarding the failure to implead the Central Government as a party-respondent in the case. The appellant argued that the Regional Director, Southern Region, Ministry of Corporate Affairs, Chennai, who represented the Central Government, was not empowered to pass orders. The Tribunal acknowledged this and allowed the respondent to implead the Central Government.

3. The authority of the Regional Director, Southern Region to deal with the subject matter was questioned. The Tribunal noted that the Regional Director lacked the empowerment to pass orders on behalf of the Central Government, emphasizing the need for proper authorization in such cases.

4. Section 131 of the Companies Act, 2013 allows for the voluntary revision of financial statements. The section outlines the procedure for preparing revised financial statements with the approval of the Tribunal. Provisions include giving notice to the Central Government and Income Tax authorities before passing any order.

5. The Tribunal's failure to consider the provisions of Section 131, which require notice to relevant authorities before passing orders, was highlighted. The judgment emphasized the importance of adhering to statutory requirements and ensuring all necessary parties are involved in such proceedings.

6. The appellant's right to file objections was forfeited due to the failure of the Regional Director, Registrar of Companies, and IT Authorities to file objections despite opportunities provided. The judgment criticized this conduct and emphasized the need for all concerned parties to actively participate in legal proceedings.

7. Ultimately, the impugned order was set aside, and the impleadment of the Central Government was allowed. The Tribunal clarified that the decision did not delve into the merits of the case, leaving it to be decided by the Tribunal in due course. The appeal was allowed with directions for further proceedings.