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TMI Blog2017 (2) TMI 1566X X X X Extracts X X X X X X X X Extracts X X X X ..... complaint against the company and there is no default earlier. In the present case, the learned Tribunal referring to provision of Section 383-A observed that the Bench deemed it sufficient to impose a fine of 2 lacs on each of the defaulting parties. That means less than 1/5th of the maximum penalty, as could have been imposed has been imposed, which is less than 100/- per day. As we find that no specific grounds have been shown to reduce the amount, no interference is called for against the impugned order. Contravention of Section 166 of Act 1956 - Held that:- As we find that the appellants have only taken plea that the violation occurred due to inadvertence and without intention 25,000/- each, as ordered by Company Law Board in the other case. It is also noted that non-filing of Annual Returns for any continuous period of three Financial Years is also a disqualification for appointment as Director under Section 164(2)(a) of Companies Act 2013, thus making it a serious offence. However, to be consistent with the orders passed by Tribunal in analogous case, which is approximately 175th of the maximum fine, we modify the impugned order of Tribunal and to compound the offence on pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 onwards for about four to five years, the appellants contravened different provisions of Companies Act 1956, which attracted punishment of fine etc. In regard to separate five contraventions of different periods, the appellants preferred five separate applications under Section 621-A of the Companies Act 1956, (equivalent to Section 441 of the Companies Act 2013) for compounding offence(s). By separate order(s) and judgement(s), the National Company Law Tribunal (hereinafter referred to as the "Tribunal"), New Delhi Bench compounded the offences and imposed fine on each of the defaulting parties. The appellants being not satisfied have challenged the impugned orders in these appeals. 3. The appellants have assailed the impugned orders on following grounds:- (i) The Tribunal failed to appreciate the objective of Section 621A of the Companies Act 1956 as the same is not punitive and, therefore, no harsh and burdensome punitive order can be passed. (ii) The Tribunal failed to consider that for the similar contraventions, the then Company Law Board had taken lenient view and less fine have been imposed. (iii) The Tribunal failed to consider that the delay in complia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether committed by a company or any officer thereof) with fine only, may, either before or after the institution of any prosecution, be compounded by- (a) the Tribunal; or (b) where the maximum amount of fine which may be imposed for such offence does not exceed five lakh rupees, by the Regional Director or any officer authorised by the Central Government, on payment or credit, by the company or, as the case may be, the officer, to the Central Government of such sum as that Tribunal or the Regional Director or any officer authorised by the Central Government, as the case may be, may specify: Provided that the sum so specified shall not, in any case, exceed the maximum amount of the fine which may be imposed for the offence so compounded: Provided further that in specifying the sum required to be paid or credited for the compounding of an offence under this sub-section, the sum, if any, paid by way of additional fee under sub-section (2) of section 403 shall be taken into account: Provided also that any offence covered under this sub-section by any company or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to do so, any officer or other employee of the company to file or register with, or on payment of the fee, and the additional fee, required to be paid under section 403, such return, account or other document within such time as may be specified in the order. (5) Any officer or other employee of the company who fails to comply with any order made by the Tribunal or the Regional Director or any officer authorised by the Central Government under sub- section (4) shall be punishable with imprisonment for a term which may extend to six months, or with fine not exceeding one lakh rupees, or with both. (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), - (a) any offence which is punishable under this Act, with imprisonment or fine, or with imprisonment or fine or with both, shall be compoundable with the permission of the Special Court, in accordance with the procedure laid down in that Act for compounding of offences; (b) any offence which is punishable under this Act with imprisonment only or with imprisonment and also with fine shall not be compoundable. (7) No offence specified in this section shall be compounded except under and in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order compounding any offence and are required to notice the precedence, i.e. earlier order if any passed in one or other case for similar offence. 12. Depending on nature of offence and its gravity and if it is pleaded by the applicant or reported by Registrar of Companies, the Tribunal is required to notice the relevant factors while compounding any offence, such as:- (i) The gravity of offence; (ii) The act is intentional or unintentional; (iii) The maximum punishment prescribed for such offence, such as fine or imprisonment or both fine and imprisonment. (iv) The report of the Registrar of Companies. (v) The period of default. (vi) Whether petition for compounding is suo moto before or after notice from Registrar of Companies or after imposition of the punishment or during the pendency of a proceeding. (vii) The defaulter has made good of the default. (vii) Financial condition of the company and other defaulters. (viii) Offence is continuous or one-time. (ix) Similar offence earlier committed or not. (x) The act of defaulters is prejudicial to the interest of the member(s) or company or public interest or not. (xi) Share value of the company, etc. Company Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect public interest, we are of the view that the Tribunal rightly brought down the penalty which is less than 1/5th of the maximum amount. In this background no interference is called for against the impugned order. Company Appeal No.51/2016 19. In this case the appellants contravened section(s) 220 of the Act, 1956 during the period 1st November, 2011 to 25th February, 2016. Copies of the Balance Sheet etc. for the year ending 31st March, 2011 to 31st March, 2015 were not filed within time and in majority cases they were filed after two years of each financial year ending. That means the appellants are in the habit of filing the annual return after long delay and all the time filed them after two years of each year ending. The maximum fine payable under section 162 of Act 1956 was calculated by Registrar of the Companies at ₹ 10,74,500/- to be paid by each of the defaulters. However, the Tribunal compounded the offence at ₹ 5 lakhs payable by each of the appellants i.e. the Company and the two Directors. 20. From the impugned judgement, we find that the Tribunal imposed 50% of the maximum amount, though similar ground has been taken, as were taken in the earlier ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, after adjusting the amount, if any already deposited by appellants. Subject to the remittance of the fine as ordered above, the offence stand compounded. The Registrar of Companies will ensure compliance of the order. This appeal stands disposed of with aforesaid observations. Company Appeal No. 52 of 2016 23. This case relates to contravention of Section 159 of the Act 1956 for not filing the Annual Return during the period from 29th November 2013 to 25th February 2016. As per Registrar of the Companies the maximum fine provided under Section 162 of the Act 1956 for non-compliance of Section 159 of the Act 1956, the appellants are liable to pay a sum of ₹ 9,58,000/- each. Admittedly, the appellants had filed the Annual Return after more than two years for each year ending. Similar plea has been taken by the appellants as were taken in the earlier case. 24. The Appellate Tribunal, on hearing the parties deemed it fit and proper to impose a fine of ₹ 4 lacs each on the defaulting parties for the entire period of default i.e. total 12 lacs. In this case also the fine amount is about 42% of the maximum amount though in other cases, for similar ground and almost simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person in respect of an offence under this section, it shall be a defence to prove that a competent and reliable person was charged with the duty of seeing that the provisions of this section were complied with and was in a position to discharge that duty: Provided further that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully." For contravention of offence since 1st April 2014, the penalty has been prescribed under sub-section (7) of Section 129 of Companies Act 2013 which reads as follows: - "129. Financial statement.- (7) If a company contravenes the provisions of this section, the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person charged by the Board with the duty of complying with the requirements of this section and in the absence of any of the officers mentioned above, all the directors shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. Explanation. - For the purposes of this section, except where the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40,000/-, the Tribunal without noticing the provision of Section 129 compounded the offence at ₹ 50,000/-, ignoring the fine payable for the four years ending 31st March 2014. 35. From the impugned order it is manifest and clear that the Tribunal failed to notice the minimum fine prescribed under sub-section (7) of Section 129 of Companies Act 2013 which is applicable for the year ending 31st March 2015, also failed to notice that a fine up to ₹ 10,000/- is payable by appellants under Sub Section (5) of Section 210 of Companies Act 1956 for each of the year ending 31st March 2011, 31st March 2012, 31st March 2013 and 31st March 2014. 36. In view of the error apparent in the impugned order dated 6th October 2016 passed by Tribunal in CP.No.16/130/16, the said order cannot be upheld. It is accordingly set aside. 37. Now the question arises as to what amount the defaulter company and two directors are liable to pay for contravention of Section 210 of Companies Act for the year ending, as noticed above, payable under sub-section (5) of Section 210 and Section 129 for the year ending 31st March 2015 payable under sub-section (7) of Section 129. 38. The allegation can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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