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Tribunal upholds penalties for non-disclosure of Director's Report & CSR Policy under Companies Act The Tribunal upheld the imposition of compounding fees and penalties on the appellant Company and its Directors for non-disclosure of the Director's ...
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Tribunal upholds penalties for non-disclosure of Director's Report & CSR Policy under Companies Act
The Tribunal upheld the imposition of compounding fees and penalties on the appellant Company and its Directors for non-disclosure of the Director's Report and CSR Policy under Sections 134(3)(o) and 135(2) of the Companies Act, 2013. Despite acknowledging the introduction of the new law and clarity issues, the Tribunal found no merit in the appeal and dismissed it, emphasizing the justified nature of the penalties imposed.
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 Fees The 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 Penalties The 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 Issues The 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.
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