Company Law: NCLT Allows Compounding for Delay in Woman Director Appointment

The case was transferred to NCLT Hyderabad Bench from Company Law Board, Chennai Bench. An application under Companies Act 2013 sought compounding of an offence by the company for delay in appointing a woman director. The company admitted the offence due to unavoidable circumstances. The Tribunal allowed compounding for all four directors, directing payment of a compounding fee of Rs. 50,000 each within three weeks. The Registrar of Companies will proceed upon fee receipt. The case highlights the responsibility of companies and directors under the Companies Act 2013 regarding the appointment of a woman director.

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Issues:
Transfer of case to NCLT Hyderabad Bench, Application under Companies Act 2013 for compounding offence, Delay in appointing woman director, Liability of company and directors, Composition of offence for all directors, Payment of compounding fee.

Transfer of Case to NCLT Hyderabad Bench:
The case was initially filed before the Company Law Board, Chennai Bench but was transferred to NCLT, Hyderabad Bench due to jurisdictional reasons. The NCLT, Hyderabad Bench took the case on record and proceeded with the decision.

Application under Companies Act 2013 for Compounding Offence:
The application was filed under Section 149 of the Companies Act, 2013 seeking compounding of an offence committed by the company regarding the appointment of a woman director. The company admitted the offence, citing unavoidable circumstances and lack of deliberate intent to harm any stakeholders.

Delay in Appointing Woman Director:
The company, Jalpower Corporation Limited, appointed a woman director after a delay of six months from the prescribed date. The delay was justified based on the company's registration date and the introduction of the provision mandating a woman director in the Companies Act 2013.

Liability of Company and Directors:
As per the Companies Act 2013, the responsibility for appointing a woman director lies with the company and its Board of Directors. The Registrar of Companies rightly issued a show-cause notice to the company and all its directors for non-compliance with the provision.

Composition of Offence for All Directors:
Considering the offence was committed by the company and all its four directors, the Tribunal permitted the composition of the offence for the two directors not initially included in the application. The Tribunal waived the formal impleading of these directors to expedite the process.

Payment of Compounding Fee:
The Tribunal directed all applicants and the additional two directors to pay a compounding fee of Rs. 50,000 each within three weeks. It also instructed the company to file the required form promptly. Once the compounding fee is received, the Registrar of Companies will inform the Special Judge for Economic Offences for further action.

This detailed analysis of the judgment covers the issues involved in the case, the legal provisions under the Companies Act, and the Tribunal's decision regarding the compounding of the offence committed by the company and its directors.

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