Company fined Rs. 865,600 for Companies Act non-compliance. Directors to pay personally. The Tribunal imposed a fine of Rs. 865,600 on the Applicant company for default in compliance with Sections 159 and 220 of the Companies Act, 1956 for not ...
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Company fined Rs. 865,600 for Companies Act non-compliance. Directors to pay personally.
The Tribunal imposed a fine of Rs. 865,600 on the Applicant company for default in compliance with Sections 159 and 220 of the Companies Act, 1956 for not filing annual return and balance sheet for the financial year 2013-14. The fine was to be paid by each director involved within three weeks from their personal accounts. Upon payment, the offense would be compounded, and the application was disposed of.
Issues: Compounding of default in compliance with Sections 159 and 220 of the Companies Act, 1956 for not filing annual return and balance sheet for the financial year 2013-14.
Analysis: The petition was taken up as per the judgment of Hon'ble NCLAT, considering the Companies (Amendment) Ordinance, 2018. The Applicants sought compounding for default under Sections 159 and 220 of the Companies Act, 1956. The maximum fine for non-compliance with these sections was outlined in the Act. The Applicants claimed the default was inadvertent, with no malice, and rectified by filing the required documents after the offense. The Registrar of Companies (RoC) reported a pending prosecution, but no previous compounding in the last 3 years. The RoC confirmed no complaints or investigations against the Applicant.
The Tribunal considered the Applicant's plea, RoC's report, and a previous NCLAT judgment on imposing fines and compounding offenses. Referring to the Companies Act, 1956, and subsequent amendments, the Tribunal found the power to compound such offenses even if a prosecution is pending. The Tribunal noted the Applicant's rectification of the default and the prescribed punishment for non-filing of annual returns and accounts.
Consequently, the Tribunal imposed a fine of Rs. 865,600 on the Applicant company for the financial year 2013-14. The fine was detailed for each director involved, with a requirement for payment within three weeks from their personal accounts. Upon payment, the offense would be compounded, and the application was disposed of.
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