9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 827 - Tri - Companies LawCompounding of offence - non-compliance with the CSR initiatives - for violation of provisions of section 134(3)(o) read with section 135 of the Companies Act, 2013 - delay in amount required to be spent for CSR Activities - HELD THAT - As per section 441(1) this Tribunal has power to compound any offence under the Companies Act, 2013 except an offence punishable with imprisonment only or punishment with imprisonment and also with fine. The present offence does not fall in the above two categories and hence the offence can be compoundable. The respondent already instituted prosecution in the Court of Special Judge for Economic Offences at Hyderabad. As per section 441(1) of the Companies Act, 2013 this Tribunal has power to compound an offence even after institution of any prosecution. Hence this offence can be compounded. I have seen the certified copy of the extract of board resolution dated January 23, 2018 of the petitioner-company wherein the board of directors resolved for filing the compounding petition. After considering the material on record and after taking into account the submissions made by counsel that lenient view may be taken, I hereby levy a compounding fee for delay in complying section 135 of the Companies Act, 2013 on the company and directors - the compounding fee levied shall be paid by the company and directors within 15 days from the date of this order. Call this matter on May 6, 2019 for compliance.
Issues:
Violation of provisions of section 134(3)(o) read with section 135 of the Companies Act, 2013 for corporate social responsibility (CSR) obligations. Analysis: The applicants filed an application under section 441 of the Companies Act, 2013 seeking compounding for non-compliance with CSR provisions. The respondent had lodged a complaint against the applicants for not adhering to section 134(3)(o) and section 135, which require disclosure of CSR initiatives and the constitution of a CSR committee. The applicants admitted the violation for the financial year 2014-15. The company had failed to spend the required amount on CSR activities due to market conditions but had utilized the unspent amount in subsequent years, as detailed in the report submitted by the Registrar of Companies, Hyderabad. The Tribunal had jurisdiction to compound the offence under section 134(3)(o) read with section 135 of the Companies Act, 2013 as the maximum fine exceeded twenty-five lakhs. The counsel for the applicants argued that the non-compliance was unintentional, citing the newness of the CSR provisions in the Act. The Registrar of Companies recommended directing the company to spend the remaining amount towards CSR activities. The Tribunal noted that the offence was compoundable under section 441(1) of the Companies Act, 2013, even after the institution of prosecution, which had already occurred in this case. After considering the submissions and evidence, the Tribunal imposed a compounding fee for the delay in complying with section 135 of the Companies Act, 2013 on the company and its directors. The compounding fee was set at a specific amount for each party involved, to be paid within 15 days from the date of the order. The matter was scheduled for compliance review on May 6, 2019. The decision was based on the company's admission of the violation, the reasons provided for non-compliance, and the steps taken to rectify the situation in subsequent financial years.
|
