Tribunal Dismisses Compounding Application for Companies Act Violation

The Tribunal dismissed the compounding application by M/s. Nexans India Pvt. Ltd. and its officers for violating Section 309(5B) of the Companies Act, 1956. The Central Government's rejection of waiver applications due to non-compliance with Schedule XIII prevented the Tribunal from considering the compounding request under Section 621A. Without a formal declaration of contravention and proposed fines, the Tribunal lacked jurisdiction to entertain the application. The Registrar of Companies also deemed the application improper, leading to its dismissal without costs awarded.

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Issues:
Compounding of offence for violation of Section 309(5B) of the Companies Act, 1956.

Analysis:
The petition was filed by M/s. Nexans India Pvt. Ltd., its Managing Director, and Director under Section 621A of the Companies Act, 1956, seeking compounding of the offence for violating Section 309(5B) of the Act read with Schedule XIII. The company, a deemed public company, appointed a foreign national as Managing Director without the necessary approvals. The company paid managerial remuneration without obtaining approval from the Central Government, leading to rejection of their subsequent applications for waiver. The matter was referred to the Tribunal for decision as per Section 269(7) of the Act.

The Central Government rejected the company's applications for waiver, citing non-compliance with Section 269 read with Schedule XIII. The Tribunal was empowered under Section 269(9) to terminate appointments made in contravention of Schedule XIII and impose fines on the company and its officers. However, as no such action was initiated by the Central Government, the Tribunal could not entertain the compounding application under Section 621A.

The Tribunal held that unless a reference is made, contravention of Schedule XIII is declared, and fines are proposed, there is no cause of action for invoking Section 621A. The Registrar of Companies also found the application improper. Consequently, the petitioners were not entitled to seek compounding of the violation of Section 309(5B) before the Tribunal under Section 621A. The application was dismissed, and no costs were awarded.

This detailed analysis of the judgment highlights the key legal provisions, violations, procedural aspects, and the Tribunal's decision regarding the compounding application for the offence under Section 309(5B) of the Companies Act, 1956.

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