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TMI BlogDEFAULT IN HOLDING THE ANNUAL GENERAL MEETINGX X X X Extracts X X X X X X X X Extracts X X X X ..... DEFAULT IN HOLDING THE ANNUAL GENERAL MEETING - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 19-6-2023 - - Annual General Meeting Section 166 of the Companies Act, 1956 ( 1956 Act for short) provides for the conduct of Annual General Meeting of a company registered under the 1956 Act within 6 months from the end of the Financial year. If the same could not be conducted due to whatsoever reasons the Company may apply to Registrar of Companies for the extension of Annual General Meeting to be conducted for its company. The Registrar of Companies may extend the same for 3 months. Therefore the Annual General Meeting shall be conducted on or before 31 st December of the year. Section 96 of the Compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act, 2013 ( Act for short) provides for the conduct of Annual General Meeting as that of the provisions in 1956 Act. Punishment Section 168 of the 1956 Act provides for punishment for non compliance of the provisions of Section 166 of the 1956 Act. The Company and every officers of the company shall be punishable with fine which may extend to Rs.5000/- and in case of continuing default with a further fine which may extend to Rs.2500/- for every day after the first which such default continues. Section 99 of the Act provides punishment for default in complying with provisions of sections 96 to 98 . The company and every officer of the company who is in default shall be punishable with fine which may extend to Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 lakh and in the case of a continuing default, with a further fine which may extend to Rs.5000/- for every day during which such default continues. Compounding of offences Section 441 of the Act provides for compounding of offences. The said section provides that 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- the National Company Law Tribunal; the Regional Director or any Officer authorized by the Central Government where the maximum amount of fine which may be imposed for such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence does not exceed Rs.25 lakhs . In MR. SALIL GULATI, ALTERNATE DIRECTOR TO MR. ROBERT DALE LARSON/ MS AYSEL MELBYE, S/O LATE MR. SURESH CHANDER GULATI VERSUS REGISTRAR OF COMPANIES, NCT OF DELHI AND HARYANA, NEW DELHI - 2023 (6) TMI 71 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI the petitioner company failed to conduct the Annual General Meeting within the prescribed period for 2013, 2014, 2015, 2016, 2017, 2018 and conducted the same after a lapse of 724 days, 638 days, 730 days, 440 days, 196 days, 177 days respectively and totaling 2905 days. The appellant along with the Company and five others were held guilty under Section 96 / 99 of the Act. A joint application was filed before the N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CLT under Section 441 of the Act for compounding of offence for non-compliance of Section 166 / 96 of the Companies Act, 1956 / 2013 . The said application was filed before the NCLT by the company and six others which include the appellant herein. The following reliefs were sought by the applicants before the NCLT- That the offence of non-compliance with the provisions of Section 166 / 96 of Companies Act, 1956 / 2013 , by the Applicants for the period herein before mentioned may kindly be compounded; That as the contravention had taken place due to the facts and circumstances explained above which were outside the control of the Applicants. Hence, it is humbly submitted to waive off or levy a small/token compound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing fee as deemed fit by National Company Law Tribunal/Regional Director, Northern Region, Bench New Delhi; That the applicants be relieved of all the legal consequences upon the deposit of the compounding fee/amount, if any by the Applicants with the Central Government; That the offence of non-compliance with the provisions of Section 166 / 96 of Companies Act, 1956 / 2013 may be compounded for all the Applicants jointly i.e. for Company and on behalf of all the officers-in-default (Applicants); That such other or further order(s) is passed, and directions are given as the National Company Law Tribunal/Regional Director, Northern Region/Special Court may deem fit and proper in the facts of the case. The NCLT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called for a report from the Registrar of Companies who submitted a report above the default of the applicants and the maximum penalty that can be levied from the following applicants- Connaught Plaza Restaurants Private Ltd; Aysel Melbye; Robert Dale Larson; Vikram Bakshi; Madhurima Bakshi; Salil Gulati; Devinder Kumar Jain. The penalty the can be levied on the above applicants as detailed below- 2012 - 13 - Rs.18,60,000/-; 2013 - 14 - Rs.32,90,000/-; 2014 - 15 - Rs.37,40,000/-; 2015 - 16 - Rs.33,70,000/-; 2017 - 18 - Rs.18,35,000/-; After examining the application and report of the ROC, NCLT has passed the impugned order wherein after compounding the offences, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed the fine to the extent of 1/5th of maximum fine and appellant herein was imposed fine of Rs.26,53,000/-. The appellant, who is arrayed as 6 th applicant in the petition filed before NCLT challenged the decision of NCLT before NCLAT, New Delhi. The appellant held office of alternate director to Mr. Robert Dale Larson (applicant No.3) during the relevant period from 12.08.2013 till 12.12.2017 and was further appointed alternate director to Mr. Robert Dale Larson from 26.09.2018 till 02.01.2019 and thereafter again re-appointed as an Alternate Director to Mr. Robert Dale Larson from 06.05.2019 till 10.05.2019. Thereafter the appellant was appointed as Alternate Director to Ms. Aysel Melbye since 25.062019. The appellant further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted that he may be deemed to be officer in default for the contravention of the provision of Section 166 / 96 of the Companies Act, 1956 / 2013 for a total period of 2905 days. The appellant submitted the following before the NCLAT- The NCLT has committed error in imposing fine. The appellant was only an Alternate Director and as such he was not required to be imposed any fine. The excessive fine has been imposed by the NCLT which requires to be interfered with. The Registrar of Companies opposed the appeal and submitted that there is no apparent error in the impugned order and appeal is fit to be rejected. The NCLAT analyzed the entire case and the provisions of Sections relating to conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of AGM and penalty that may be imposed in case default on the company and on officers-in-default. The NCLAT observed that appellant himself has admitted default and this was the reason that he was also a joint applicant before the NCLT. Once the appellant has admitted his default and thereafter approached the NCLT for compounding the offence there was no ground for the appellant to assail the order of the compounding passed by the NCLT. The NCLT virtually has allowed the compounding application and as per legal position reduced the penalty. It is evident that as per calculation chart/report of the ROC the maximum fine was to be imposed on the appellant was to the extent of Rs.1,32,65,000/-. However, the NCLT has reduced the said fine to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1/5th of maximum fine and appellant has been imposed fine of Rs.26,53,000/. It is further clear from the impugned order that the NCLT has taken consistent stand in respect of other defaulting members. The NCLT has taken same stand while reducing the fine i.e. 1/5th of maximum fine in respect of all the seven applicants before the NCLT. It is evident that the NCLT has allowed the compounding application filed jointly by the appellant and other and reduced the fine and as such there was no reason for the appellant to assail the said order. The NCLAT dismissed the appeal. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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