2019 (7) TMI 1145 - AT - Companies Law

Tribunal upholds penalties for non-disclosure of Director's Report & CSR Policy under Companies Act

Peregrine Guarding Pvt. Ltd. & Ors. Versus Registrar of Companies

The Tribunal upheld the imposition of compounding fees and penalties on the appellant Company and its Directors for non-disclosure of the Director's ... Compounding of offences u/s 134(3)(o) r.w.s 135(2) - violation of disclosure of Director’s Report and the details of the CSR Policy developed and implemented - Application u/s 441 of the Companies Act, 1956 - HELD THAT:- The Tribunal on hearing the parties and taking into consideration the fact that the provision of law being newly introduced under 2013 Act and that the appellants had not much clarity on it and the default had been subsequently made good, deemed it fit, just and equitable to impose the fine for compounding the offence for three years If the total amount is calculated, we find that penal amount is less than 33% of the total maximum penal amount payable. The Tribunal having taken lenient view on the ground that new Act has been introduced, we are not inclined to accept the same though we are of the view that the provisions of Act of 2013 are practically similar to the provisions as were there already in Companies Act, 1956. Hence, we find no merit in the appeal. The appeal is dismissed. No cost. Issues:1. Compounding of offence under Sections 134(3)(o) and 135(2) of the Companies Act, 2013 for non-disclosure of Director's Report and CSR Policy.2. Imposition of compounding fees by the Registrar of Companies for the default in adhering to statutory requirements.3. Assessment of penalties for various individuals under Sections 134(3)(o) and 135(5) of the Companies Act, 2013.4. Consideration of leniency due to the newly introduced law and clarity issues regarding the statutory provisions.Issue 1: Compounding of Offence under Sections 134(3)(o) and 135(2)The appellant Company and its Directors filed a petition under Section 441 of the Companies Act, 1956 seeking compounding of offence under Sections 134(3)(o) and 135(2) of the Companies Act, 2013. The default pertained to non-disclosure of the Director's Report and CSR Policy for the Financial Years 2014-15, 2015-16, and 2016-17. The Board of Directors rectified the defects in a meeting held on 16th April, 2018, bringing the company in compliance with the statutory requirements.Issue 2: Imposition of Compounding FeesThe Registrar of Companies recommended compounding fees for the default under Sections 134(3)(o) and 135(2) for various financial years. The compounding fees were specified for each year, totaling significant amounts for each individual involved, including the company and its Directors. The Tribunal considered the recommendations and imposed fines based on the Registrar's suggestions.Issue 3: Assessment of PenaltiesThe Tribunal assessed penalties for individuals involved, such as M/s. Peregrine Guarding P. Ltd., Rajan Oberoi, Shashi Vir Singh, Bodh Raj Sharma, and Kartar Singh, under Sections 134(3)(o) and 135(5) for different financial years. The penalties were calculated based on the duration of the default and the specific provisions of the Companies Act, 2013. The Tribunal considered factors like the clarity of the law, the rectification of defects, and the individual's role in the default before determining the penalties.Issue 4: Consideration of Leniency and Clarity IssuesThe Tribunal acknowledged the introduction of the new law under the Companies Act, 2013 and the lack of clarity among the appellants regarding the statutory provisions. Despite considering the leniency due to the new law, the Tribunal found no merit in the appeal. It noted that the provisions of the new Act were similar to those in the Companies Act, 1956. The Tribunal dismissed the appeal, emphasizing that the penalties imposed were justified, even with the typographical errors in the Registrar's recommendations.