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TMI Blog2022 (8) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, the nature of offence which the company has charged does not invite with imprisonment or imprisonment and fine, but the penalty imposed is punishable with fine, which may extend upto five thousand rupees and where the contravention is continuing one, with a further fine, which may extend to five hundred rupees for everyday thereafter. Thus, the nature of offence is such that it is compoundable, and the same is just and proper. Whether the compounding of the offence by the Board under Section 266C read with Section 621A is justified without seeking prior permission from the Court? - HELD THAT:- The appellant sought to contend that prior permission of the Court needs to be accorded for compounding of offence is contrary to the intention of the legislature for enacting the provision under Section 621A as the powers under Section 266C are concurrent/parallel powers to be exercised by the Company Law Board/other Authorities or Court in seisin of the matter with a difference that a Company Law Board can proceed to compound such offence either before or after the institution of any prosecution whereas criminal Court possesses similar power to compound such offence only after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered and a report was submitted by the Registrar of Companies, Bangalore. The Registrar of Companies, Bangalore under Section 243(6) of the Act scrutinized the balance sheet of the company and on scrutiny, found that there is violation of Sections 295, 211(3A) read with Sections 211(3C), 211, 299/301, 628, 269(2), 159, 166, 210, 220 and 58A of the Act. The Central Government, after considering the report of the Registrar of Companies ordered an investigation into the affairs of the company Under Section 235 of the Act. The SFIO conducted investigation and submitted the report to the Central Government concluding that there were various inconsistency and fraud committed by the company and its Directors while dealing with the affairs of the company and during investigation, the company Directors were summoned and in terms of Section 240 of the Act, the Directors deposed and the investigation by SFIO concluded holding that the company has obtained three Directors Identification Numbers ( DINs ) in violation of Section 266G of the Act as the three DINs were obtained by cheating impersonation and by false evidence and hence, recommended for prosecution under Sections 177, 420 and 416 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offences under the IPC. 7. The Board on hearing and considering the material on record and the objections to the application filed by the SFIO exercising its discretionary powers as envisaged under Section 621A of the Act, compounded the offences by specifying compounding fee payable by the applicants. However, the compounding of offence committed under Section 266C of the Act was held to be without prejudice to the case pending before the I Addl. Chief Metropolitan Magistrate, Bangalore, under Sections 177, 420 and 416 of the IPC. 8. It is this order, which is in challenge by the SFIO in this company appeal. 9. Heard learned counsel for the parties to the lis. 10. Smt. Anupama Hegde, learned Central Government Standing Counsel would contend that the order of the Board in compounding the offence under Section 621A of the Act is contrary and the order is passed in violation of the Act as the violations sought to be compounded by the company are serious in nature and the Board exercising the discretionary power under Section 621A of the Act is unwarranted. It is contended that the Board has failed to consider the directions of this Court in Crl.P.No.3393/2012, whereby, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The penalty for contravention of provision of Section 266C is as mentioned in Section 266G which reads as under: 266G. Penalty for contravention of provisions of Section 266A or Section 266C or Section 266D or Section 266E.-If any individual or director, referred to in Section 266A or Section 266C or Section 266D or a company referred to in Section 266E, contravenes any of the provisions of those sections, every such individual or director or the company, as the case may be, who or which, is in default, shall be punishable with fine which may extend to five thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which the contravention continues. (underlining by us) Section 621A (d) (6) states the composition of certain offences which reads as under: 621A. Composition of certain offences.- (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 with imprisonm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich read as under: 11. From a plain reading of Section 621-A(1) it is evident that any offence punishable under the Act, not being an offence punishable with imprisonment only or with imprisonment and also with fine, may be compounded either before or after the institution of the prosecution by the Company Law Board and in case, the minimum amount of fine which may be imposed for such offence does not exceed Rs.5,000/, by the Regional Director on payment of certain fine. The penal provisions of the Act provide for different kinds of punishments for a variety of offences and can be categorised as follows: (i) offences punishable with fine only, (ii) offences punishable with imprisonment only, (ii) offences punishable with fine and imprisonment, (iv) offences punishable with fine or imprisonment, (v) offences punishable with fine or imprisonment or both. 12. Section 211(7) of the Act provides for punishment with imprisonment for a term which may extend to six months or with fine or with both. Therefore, an accused charged with the offence under Section 211(7) of the Act has not necessarily to be visited with imprisonment or imprisonment and also f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex Court held in the case of V.L.S. Finance Limited stated supra at paragraph Nos.17 and 18 which read as under: 17. Ordinarily, the offence is compounded under the provisions of the Code of Criminal Procedure and the power to accord permission is conferred on the court excepting those offences for which the permission is not required. However, in view of the non-obstante clause, the power of composition can be exercised by the court or the Company Law Board. The legislature has conferred the same power to the Company Law Board which can exercise its power either before or after the institution of any prosecution whereas the criminal court has no power to accord permission for composition of an offence before the institution of the proceeding. The legislature in its wisdom has not put the rider of prior permission of the court before compounding the offence by the Company Law Board and in case the contention of the appellant is accepted, same would amount to addition of the words with the prior permission of the court in the Act, which is not permissible. 18. As is well settled, while interpreting the provisions of a statute, the court avoids rejection or addition of wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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