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TMI Blog2016 (12) TMI 1426X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Hyderabad Bench of NCLT. Hence, we have taken the case on records of NCLT, Hyderabad Bench and deciding the case. 2. This is an Application filed under Section 297 read with Section 621A of the Companies Act, 1956 by seeking a direction to permit the Applicants to compound the offence committed under the said Act and also praying to take a lenient view of the technical contravention occurred by them. 3. The brief facts of the case as averred in the application and are material to decide the issue in question are as follows: a. Sreepathi Pharmaceuticals Limited was incorporated on 29.12.1983 vide CIN: U24239AP1983PLC004356 as a private limited company under the Companies Act, 1956 and later converted into limited company on 13th M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,072 White Star Industries Common Management 4 2011-12 Purchases 5,68,772 White Star Industries Common Management 5 2011-12 Commission 2,47,82,576 Sreepathi Life Sciences Common Management 6 2012-13 Purchases 5,69,825 White Star Industries Common Management 7 2012-13 Commission 2,61,59,242 Sreepathi Life Sciences Common Management 8 2012-13 Interest on unsecured loans 17,65,534 Loan from Directors Srinivas Isola 9 2013-14 Purchases 5,94,600 White Star Industries Common Management 10 2013-14 Commission 1,73,80,839 Sreepathi Life Sciences Common Management 11 2013-14 Interest on unsecured loans 25,36,785 Loan from Director Srinivas Isola f. As per Section 297 of the Companies Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which, exceeds five thousand rupees in the aggregate in any year comprised in the period of the contract or contracts; c. in the case of a banking or insurance company any transaction in the ordinary course of business of such company with any director, relative, firm, partner or private company as aforesaid. 3. Notwithstanding anything contained in sub- sections (1) and (2), a director, relative, firm, partner or private company as aforesaid may, in circumstances of urgent necessity, enter, without obtaining the consent of the Board, into any contract with the company for the sale, purchase or supply of any goods, materials or services even if the value of such goods or cost of such services exceeds five thousand rupees in the aggregate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant Company or its members. i. It is further submitted that though it is a public limited Company but majority shareholding are with the promoters of the Company, therefore such act of the Company have not caused any harm neither to the members nor to the public at large. j. The Applicant Company submits that the Application is filed suo-motu under Section 621 A of the Act for the compounding of default committed under Section 297 of the Companies Act, 1956. 4. When the case was first called for hearing on 04.08.2016, none appeared for the Applicants. The Tribunal served a notice to Applicants to appear on the next listed date, i.e. 18.08.2016. On 18.08.2016, we have heard Ms. Shilpi Gupta, learned Counsel for Applicants and also pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Section 297 of the Companies Act, 1956 by the Applicants from financial years 2009-2014. Upon perusal of the related party transactions as provided in the Application from the Financial Years 2009 to 2014, we have identified certain transactions having huge financial implications. The total amount of Purchases made through the Financial Years 2009-14 is approximately Rs. 27.61 lakhs while the total Commission paid amounts approximately to Rs. 6.8 Crores and the Interest on Unsecured loans is approximately Rs. 43.75 lakhs. From the above, it can be clearly understood that the total amount of Commission paid is multiple times higher than the actual purchase value. 9. We are of the view that prior approval sought to be obtained at vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h contracts as per Section 297 of the Companies Act, 1956. There is also no approval obtained from the Central Government for any of the related party transactions during the Financial Years 2009 - 14 which is mandatorily required as per the law. Further the application does not have any facts on number of transactions carried out in a year within the meaning of related party transaction as per Section 297 of the Companies Act, 1956. 11. In the light of aforesaid facts and circumstances of the case and in the interest of justice, the prayer as sought by the applicants is premature and cannot be considered at this stage. Therefore, the applicants are directed to approach the Board and the Central Government for approval of each of the relat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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