Managing Director fined for late filing under Companies Act, compounding fee paid promptly

The National Company Law Tribunal, Bengaluru, considered a compounding application for a delay in filing the Return of Allotment under Section 75 of the Companies Act, 1956. The Managing Director of the company was levied a compounding fee of Rs. 2,33,600 for the violation, which was paid promptly. The Tribunal accepted the fee, compounding the offence and directed the order to be sent to the Registrar of Companies, Karnataka, Bengaluru for further action, emphasizing the importance of timely compliance with statutory requirements to avoid penalties.

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Issues:
Violation of provisions of Section 75 of the Companies Act, 1956 - Compounding application for delay in filing Return of Allotment.

Analysis:
The case involved a petition filed before the National Company Law Tribunal, Bengaluru, under Section 621A of the Companies Act, 1956, regarding the compounding for violation of provisions of Section 75 of the Companies Act, 1956. The Managing Director of the company sought compounding for a delay in filing the Return of Allotment, which led to a violation of Clause (a) of Sub-section (1) of Section 75. The company was incorporated as a Private Limited Company in 1993 and became a Public Limited Company in 2007, with specific objectives related to various services in the field of drug discovery, biotechnology, pharmaceuticals, and more.

The petition detailed that the company conducted an Extra Ordinary General Meeting in 2011 to issue Bonus Shares, but due to an inadvertent error in filing Form 2 for allotment of bonus shares, a defective list of allottees was attached. This error led to a delay of 1168 days in filing the Return of Allotment, resulting in a violation of Section 75. The Practicing Company Secretary representing the company explained that the default in filing was beyond the company's control, and the subsequent corrected filing was done with the intention to rectify the mistake.

The Tribunal considered the submissions, reviewed relevant documents including Board Resolutions, Balance Sheets, and the corrected Return of Allotment. After assessing the case, the Tribunal levied a compounding fee on the Managing Director for the violation. The compounding fee was calculated based on the number of days of delay and the specified amount per day, resulting in a total fee of Rs. 2,33,600. The Managing Director complied with the order by paying the compounding fee through a Demand Draft, leading to the compounding of the offence as per the Tribunal's decision.

In conclusion, the Tribunal accepted the compounding fee payment and directed that a copy of the order be sent to the Registrar of Companies, Karnataka, Bengaluru for necessary action. The case highlighted the importance of timely compliance with statutory requirements under the Companies Act, emphasizing the need for diligence in filing necessary documents to avoid violations and subsequent penalties.

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