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TMI Blog2019 (2) TMI 1885X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentional and occurred for reasons beyond reasonable control of Applicants namely technical reasons. 4. The Cost Audit Branch, Ministry of Corporate Affairs, New Delhi issued show cause notice No. 52/20/CAB/2015/138 on 6th October, 2015 to the Applicant No. 1 Company for filing of Cost Audit Reports for the financial year 2011-12, 2012-13 and 2013-14. Applicant No. 2 on behalf of Applicant No. 1 company gave a reply dated 16th October, 2016 to the show cause notice issued by the Cost Audit Branch, Ministry of Corporate Affairs, New Delhi explaining the difficulties in filing Cost Audit Report. 5. Registrar of Companies, Uttar Pradesh filed complaint no. 1929/2017 dated 18th January, 2017 and 2388/2017 dated 19th January, 2017 for prosecution against the applicants for default in non-filing of Cost Audit Reports under Section 233 B of the Companies Act 6. The Registered Office of the company is presently situated at 123/360, Fazal Ganj (U.P Rolling Mill Compound), Kanpur- 208012 (U.P) the Authorised Share Capital of the Applicant No. 1 company is Rs. 12,50,00,000/- (Rupees Twelve Crores and fifty Lakhs only) divided into 1,25,00,000/- (One Crores and Twenty Five Lakhs) Equity sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh and other Authorities. 14. It is stated that the Applicant No. 1 company is closely held Public Limited Company and offence is not of such nature it causes prejudice to the interests of Members, Creditors and other Stakeholders dealing with the Company. 15. It is stated by the applicants that no inspection or investigation proceedings under Chapter XIV of the Companies Act, 2013 or under the corresponding provisions of Sections 235 to 251 of the Companies Act, 1956 pending against the Companies. 16. The Registrar of Companies forwarded the compounding application filed by the applicants to this Tribunal alongwith his report dated 13.11.2018. 17. The Registrar of Companies in his report stated that Section 233 B (11) of the Companies Act, 1956 provide that the company shall be punishable with fine which may extend to five thousand and every officer of the Company who is in default shall be liable to be punished with imprisonment for a term which may extend to three years or with fine which may extend to fifty thousand rupees or with both. 18. The Registrar of Companies further stated in the Report that prosecution has been launched against the applicants in the Court of Spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 its officer shall not be compounded if the investigation against such company has been initiated or is pending under this Act. (2) Nothing in sub-section 91) shall apply to an offence committed by a company or its officer within a period of three years from the date on which a similar offence committed by it or him was compounded under this section. Explanation,- For the purposes of this section,- (a) any second or subsequent offence committed after the expiry of a period of three years front the date on which the offence was previously compounded, shall be deemed to be a first offence; (b) "Regional Director" means a person appointed by the Central Government as a Regional Director for the purposes of this Act, (3) (a) Every application for the compounding of an offence shall be made to the Registrar who shall forward the same, together with his comments thereon, to the Tribunal or the Regional Director or any officer authorised by the Central Government, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 accordance with the provisions of this section. 25. Section 441 as amended with effect from 9.2.2018 by Section of 90 of ACT, 1 of 2018 as follows:- (1) Notwithstanding 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) [not being an offence punishable with imprisonment only, or punishable with imprisonment and also with fine], 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 specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whom the offence is so compounded shall be discharged. (4) The Tribunal or the Regional Director or any officer authorised by the Central Government, as the case may be, while dealing with a proposal for the compounding of an offence for a default in compliance with any provision of this Act which requires a company or its officer to file or register with, or deliver or send to, the Registrar any return, account or other document, may direct, by an order, if it or he thinks fit 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 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent offence committed after the expiry of a period of three years front the date on which the offence was previously compounded, shall be deemed to he a first offence; (b) "Regional Director" means a person appointed by the Central Government as a Regional Director for the purposes of this Act. (3) (a) Every application for the compounding of an offence shall be made to the Registrar who shall forward the same, together with his comments thereon, to the Tribunal or the Regional Director or any officer authorised by the Central government, as the case may be. (b) Where any offence is compounded under this section, whether before or after the institution of any prosecution, an intimation thereof shall be given by the company to the Registrar within seven days front the date on which the offence is so compounded. (c) Where any offence is compounded before the institution of any prosecution, no prosecution shall be instituted in relation to such offence, either by the Registrar or by any shareholder of the company or by any person authorised by the Central Government against the offender in relation to whom the offence is so compounded. (d) Where the compounding of any offen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth for every officer of the companies who is in default. 30. Therefore, Section 441 as amended with effect from 9.2.2018 gives power to this Tribunal to compound the default committed in respect of Section 233 B of the Companies Act i.e. non-filing of Cost Audit Reports by the Applicants within the given time. 31. In view of the Companies Amendment Ordinance, 2018 which came into force with effect from 2.11.2018 in case the maximum amount of fine provided for the offence does not exceed Five Lakh rupees, the Regional Director is given the power to compound the offence. However, learned counsel appearing for the applicants relied on judgment of the Hon'ble NCALT, New Delhi in Company Appeal (80/2018) Pahuja Takii Seed Ltd. & Ors. Vs. Registrar of Companies, NCT of Delhi & Haryana held as follows:- The aforesaid provision makes it clear that Section 441 only puts a restriction on the power of the 'Regional Director' and 'the authorised officers of the Central Government' permitting them to compound the offences wherein the maximum amount of fine does not exceed five lakh rupees and is punishable with 'fine only'. No such fetter has been put on powers o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of prosecution even without permission of Criminal Court. The amendment takes away the need of taking permission of Special Court. 41. In the case on hand the default is not punishable with imprisonment or with imprisonment and fine. It is only punishable with imprisonment or fine or both. Therefore, even though prosecution is pending without seeking permission from the concerned Court, this Tribunal can compound relying upon the aforesaid two judgments of the Hon'ble NCLT and the amended 441(6) of Companies Act, 2013. 42. Now coming to the quantum of compounding fee to be imposed taking into consideration that the company has appointed a cost accountant and has got prepared the cost accounting report but could not file them in time due to technical reasons and the default has been made good. But the Company is having a turn over around rupees 211 Crores. Hence no need to take lenient view in imposing compounding fee. 43. The punishment provided for the company for default in non-filing of Cost Audit Report under Section 233B (11) is maximum five thousand rupees and the punishment of fine provided for the Managing Director is fifty thousand rupees maximum. 44. Company (Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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