TaxTMI 
TaxTMI 
2017 (10) TMI 1130
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....er sections 92(5), 137(3), 99 and 129(7) of the Companies Act, 2013 were attracted, the Appellants preferred an application under Section 441 of the Companies Act, 2013 for compounding the offences. 4. The Tribunal dismissed the application by impugned order dated 7th March 2017 with following observation and direction: - "3. The provisions of Companies Act, 2013 mandate that offence which is punishable with imprisonment even in the alternative of fine, should be dealt with by the Special Court constituted for violation of the Companies Act. This application is therefore being returned to the applicant to file it before the proper forum i.e., in the Special Court constituted at Dwarka, New Delhi which is the Court of ASJ- 3. 4. The RoC may be intimated to file their report in the concerned Court." 5. One of the ground taken by the Appellants to assail the impugned order is that no case is pending against the company or its officers before any Special Judge for punishment under any of the provisions as referred to above or for alleged violation of any provision of the Companies Act. 6. The question involved in this appeal is whether the Tribunal had jurisd....
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....ils to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the period specified in section 403, the company shall be punishable with fine of one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees, and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both." 9. From the aforesaid sub-section (s) of Section 137, again it is clear that while the company is punishable with fine of one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees but the Managing Director and CFO of the company, if any, and in absence....
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....r, the whole-time director in charge of finance, the Chief Financial Officer or any other person charged by the Board with the duty of complying with the requirements of this section and in the absence of any of the officers mentioned above, all the directors shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both." From the aforesaid provision, it would be evident that if the 'financial statement' do not reflect the true and fair view of the state of affairs of the company or do not comply with the 'accounting standard' as notified under Section 133 of the Companies Act, 2013, are not filed in the prescribed form, the Managing Director, whole- time Director in-charge of finance, CFO or any other person charged by the Board with the duty of complying with the requirement for the said Section and in the absence of any officers, all the directors are "punishable with imprisonment for a term, which may extend to one year or with fine which shall not be less than fifty thousand rupees which may extend to five lakh rupees or with both." 13. F....
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....hing contained in the Code of Criminal Procedure, 1973 (2 of 1974), - (a) any offence which is punishable under this Act, with imprisonment or fine, or with imprisonment or fine or with both, shall be compoundable with the permission of the Special Court, in accordance with the procedure laid down in that Act for compounding of offences; 221 (b) any offence which is punishable under this Act with imprisonment only or with imprisonment and also with fine shall not be compoundable. (7) No offence specified in this section shall be compounded except under and in accordance with the provisions of this section." 15. Prior to Section 441 of the Companies Act, 2013, Company Law Board (now National Company Law Tribunal) was empowered under Section 621A of the Companies Act, 1956 to compound certain offences as stood at the relevant time which reads as follows:- "621 A. Composition of certain offences.- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether committed by a company or any officer thereof), not being an offence punishable with imprisonment only, or with imprisonmen....
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.... Board and in case, the minimum amount of fine which may be imposed for such offence does not exceed Rs. 5000/-, by the Regional Director on payment of certain fine. The penal provisions of the Act provide for different kinds of punishments for variety of offences and can be categorised as follows: (i) offences punishable with fine only, (ii) offences punishable with imprisonment only, (iii) offences punishable with fine and imprisonment, (iv) offences punishable with fine or imprisonment, (v) offences punishable with fine or imprisonment or both. 12. Section 211(7) of the Act provides for punishment with imprisonment for a term which may extend to six months or with fine or with both. Therefore, an accused charged with the offence under Section 211(7) of the Act has not necessarily to be visited with imprisonment or imprisonment and 12 Page 13 also fine but can be let off by imposition of fine only. Therefore, the punishment provided under Section 211(7) of the Act comes under category (v) aforesaid. Section 621A (1) excludes such offences which are punishable with imprisonment only or with imprisonment and also with fine. As w....
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....before the institution of the proceeding. The legislature in its wisdom has not put the rider of prior permission of the court before compounding the offence by the Company Law Board and in case the contention of the appellant is accepted, same would amount to addition of the words "with the 17 Page 18 prior permission of the court" in the Act, which is not permissible. 19. From what we have observed above, we are of the opinion that the power under sub-section (1) and 18 Page 19 sub-section (7) of Section 621A are parallel powers to be exercised by the Company Law Board or the authorities mentioned therein and prior permission of Court is not necessary for compounding the offence, when power of compounding is exercised by the Company Law Board. In view of what we have observed above, the order impugned does not require any interference by this Court." 18. Thus we find that if an offence is punishable under the Act with imprisonment only or with imprisonment and also with fine cannot be compounded by Tribunal in view of clause (b) of sub- section (6) of section 441. 19. However, if any offence which is punishable under the Act "with imprisonment or fine or with impri....
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.... had jurisdiction to direct the Registrar of Companies to file their report in the concerned Special Court. In the facts and circumstances of the case, the Tribunal, was required to decide as to whether alternative punishment of line can be imposed on the company and/or the Managing Director, Director (s), CFO or any officer, after taking into consideration the report, called for from the Registrar of Companies. 23. The Registrar of Companies has filed its reply but as noticed, has not denied the fact that no case has been lodged against the Appellants before the Special Court and no investigation is pending. 24. The Registrar of Companies referred to the decision of this Appellate Tribunal in "Subhinder Singh Prem v. UOI" in C.A. (AT) Nos. 101 to 105 of 2017 wherein this Appellate Tribunal by order dated 17th May 2017 held :- "Sub-section (1) of Section 621 prohibits compounding when an offence punishable with imprisonment only or with imprisonment also with fine. Where fine is alternative to the imprisonment or where there are no provision of punishment is well within the jurisdiction of the Tribunal to compound the offence. Sub-section (6) of Section 621 A further....