Tribunal compounds Companies Act offence for late filing, permits compounding without court permission The Tribunal compounded the offence under Section 233B of the Companies Act, 1956 for the Financial Year 2013-14, allowing the company and its directors ...
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Tribunal compounds Companies Act offence for late filing, permits compounding without court permission
The Tribunal compounded the offence under Section 233B of the Companies Act, 1956 for the Financial Year 2013-14, allowing the company and its directors to pay a compounding fee to resolve the delay in filing the Cost Audit Report. The Tribunal exercised its power to compound the offence, emphasizing that compounding was permissible even with pending prosecution and without seeking permission from the Criminal Court. The Applicants were directed to remit the compounding fee to the Ministry of Corporate Affairs within a specified timeframe, leading to the disposal of the Petition.
Issues: Application for compounding of offence under Section 233B of the Companies Act, 1956 read with the Companies (Cost Audit Report) Rules, 2011.
Analysis: The case involved an Application for compounding of offence under Section 233B of the Companies Act, 1956 read with the Companies (Cost Audit Report) Rules, 2011. The Applicants, a company and its directors, sought compounding of the offence related to the delay in filing the Cost Audit Report for the Financial Year 2013-14. The Registrar of Companies filed a Complaint against the Applicants for non-compliance with Section 233B of the Companies Act, 2013. The Applicants admitted the default and filed the compounding application, stating that the default was unintentional and due to technical reasons beyond their control.
The Registrar's report highlighted the penal consequences for non-compliance with Section 233B of the Companies Act, 1956, which included fines and possible imprisonment for officers of the company. The Registrar mentioned that the prosecution against the Applicants was at the stage of summoning of the accused. The Applicants argued that the offence was compoundable under Section 441 of the Companies Act, 2013, as it was not an offence punishable with imprisonment only.
The Applicants relied on a judgment by the NCLAT, which clarified that the Tribunal had the power to compound offences without a pecuniary limit, unlike the Regional Director. The Tribunal had jurisdiction to compound the offence, including fines exceeding twenty-five lakh rupees. The judgment also confirmed that a joint application by the company and its officers in default was maintainable.
The Applicants contended that the Tribunal could compound the offence even with pending prosecution and without the Special Court's permission, citing judgments from the NCLAT. The Tribunal had full powers to allow compounding of offences subject to the payment of compounding fee, except in cases punishable with imprisonment. Section 441(6) of the Companies Act, 2013, empowered the Tribunal to compound offences irrespective of prosecution without seeking permission from the Criminal Court.
Ultimately, the Tribunal compounded the offence under Section 233B of the Companies Act, 1956 for the Financial Year 2013-14, imposing a compounding fee on the Applicants. The Applicants were directed to remit the compounding fee to the Ministry of Corporate Affairs within a specified timeline. The Petition was disposed of accordingly.
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