Director Compounded for Exceeding Company Limit, Leniency for First Offence

The National Company Law Tribunal, Kolkata, ordered the compounding of the offence under section 165(1) read with 165(3) of the Companies Act, 2013, against the offender/director for holding directorship in multiple companies beyond the permissible limit and failing to timely resign. The Tribunal considered the delay in resignation intimation as a valid ground for leniency, noting it as the offender's first offence. The compounding was subject to the payment of fees amounting to Rs. 50,000 within two weeks from the order date, with the Company Petition being disposed of accordingly.

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Issues: Compounding of an offence under section 165(1) read with section 165(3) of the Companies Act, 2013.

Analysis:
The judgment by the National Company Law Tribunal, Kolkata, involved a proposal for compounding an offence under section 165(1) read with section 165(3) of the Companies Act, 2013. The case revolved around the offender/director who held directorship in more than twenty private limited companies simultaneously, which was a violation of the Companies Act. The offender tendered his resignation from one of the companies on 19.12.2015, but the intimation was sent to the Registrar of Companies on 10.02.2016, resulting in a delay of 272 days. The Registrar issued a show cause notice, and the offender admitted the guilt, seeking compounding under section 441(1) of the Companies Act. The Tribunal considered the submissions and evidence presented, including the offender's admission of guilt and the delay in resignation intimation.

The Tribunal noted the provisions of section 165(1) read with 165(3) of the Companies Act, which prohibit a person from acting as a Director in more than the specified number of companies after the resignation or after a year from the Act's commencement, whichever is earlier. The punishment for contravention includes a fine ranging from Rs. 5,000 to Rs. 25,000 for each day of contravention. The offender admitted to holding directorship in multiple companies beyond the permissible limit and failing to resign within the stipulated time frame. The Tribunal considered the offender's plea for leniency, citing it as his first offence, and evaluated the circumstances leading to the delay in resignation intimation.

Based on the facts presented, the Tribunal found that the delay in forwarding the resignation to the Registrar was a valid ground to consider leniency. Consequently, the Tribunal ordered the compounding of the offence under section 165(1) read with 165(3) of the Companies Act, 2013, against the offender/director, subject to the payment of compounding fees amounting to Rs. 50,000 within two weeks from the date of the order. The Company Petition was disposed of accordingly, with a directive to forward a copy of the order to the Registrar of Companies, West Bengal.

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