TaxTMI 
TaxTMI 
2018 (3) TMI 1292
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....25/ND/2017, Company Application No. CP-16/123/ND/2017, Company Application No. CP-16/127/ND/2017, Company Application No. CP-16/142/ND/2017, Company Application No. CP-16/141/ND/2017, Company Application No. CP-16/133/ND/2017, Company Application No. CP-16/132/ND/2017, Company Application No. CP-16/134/ND/2017 And Company Application No. CP-16/144/ND/2017 COMMON ORDER All the above listed 23 applications have been filed under section 441 of the Companies Act, 2013 for the purpose of compounding of offences arising under either the provisions of 2013 Act or 1956 Act and the same has been forwarded to this Tribunal along with the report of Registrar of Companies, NCT of Delhi & Haryana and involves one or more of the following common questions of law and hence this common order: -- i. While ascertaining the maximum amount of fine as specified under section 441(l)(b) of the Companies Act, 2013 and to see whether it exceeds the threshold limit of five lakh rupees or not, in order to determine for the limited purpose as to which of the compounding authority i.e. the Tribunal or the Regional Director to whom the Registrar is required to forward the application for compound....
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....imum amount of fine computed by Registrar under each of the relevant sections of the 2013 Act or as the case may be by the 1956 Act and the alleged non-compliance of which in the first place has given rise to the filing of these compounding applications and the necessity for computation of the maximum amount of fine and so quantified by the Registrar of Companies is given at the end of the order by way of annexures in co-relation with the respective application numbers reflected as above. Brief facts in relation to each of the applications are given below in the same seriatim as listed above. 1) Company Application No. CP-16/176/ND/2017 The applicant company along with three of its erstwhile directors have filed the above application for compounding for default in compliance with the provisions of section 92 in filing Annual Returns for the years 2013-2014 and 2014-15. The penalty in relation to the defaulting company as prescribed under section 92 is to the minimum extent of Rs. 50,000/- and the maximum fine that can be imposed is Rs. 5,00,000/-. In relation to each of the officers in default, the quantum of fine prescribed under section 92 is that prescribed for the defa....
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....n one lakh rupees but which may extend to five lakhs rupees, or with both. In view of a joint application having been filed, both in terms of offence committed for two different years as well as jointly by all the four applicants, the Registrar of Companies, NCT of Delhi & Haryana as against each of the defaulters, has sought to aggregate the maximum fine prescribed for the two years in default under the section as well as for each of the defaulters for the defaulting periods and has quantified as given in Annexure-2 of this order. 4) Company Application No. CP-16/177/ND/2017 The applicant company along with three of its erstwhile directors have filed the above application for compounding for default in compliance with the provisions of section 149 in having in its Board, at least one director who has stayed in India for not less than 182 days filing for the year 2015-16. The penalty in relation to the defaulting company as prescribed under section 172, as section 149 does not contain a penal provision and taking recourse to the said section in order ascertain the penalty for violation of section 149 of the Act it is seen that the company and every officer of the company who ....
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....13-2014 (838 days default), 2014-15 (516 days default) and 2015-16 (210 days default). As per section 162 of 1956 Act if a company fails to comply with any of the provisions contained in section 159, 160 or 161 of the said Act, the company and every officer of the company who is in default shall be punishable with fine which may extend to 500/- rupees for every day during which the default continues. In relation to contravention of section 92 of the Companies Act, 2013 the penalty in relation to the defaulting company as prescribed under section 92 is to the minimum extent of Rs. 50,000/- and the maximum fine that can be imposed is Rs. 5,00,000/-. In relation to each of the officers in default, the quantum of fine prescribed under section 92 is that prescribed for the defaulting company. In view of a joint application having been filed, both in terms of offence committed for four different years as well as jointly by all the four applicants, the Registrar of Companies, NCT of Delhi & Haryana as against each of the defaulters, has sought to aggregate the maximum fine prescribed for the four years in default under the relevant Sections as well as for each of the defaulters for the de....
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.... days default) and 2015-16 (266 days default). The penalty in relation to the defaulting company as prescribed under section 210 (5) provides that if any person, being a director of a company, fails to take all reasonable steps to comply with the provisions of this section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to Rs. l0,000/- or with both, in relation to contravention of section 129(7) of the Act, the Managing Director, whole time Director in charge of Finance and Chief Financial Officer of the company 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 which may extend to five lakh rupees or with both. In view of a joint application having been filed, both in terms of offence committed for four different years as well as jointly by all the four applicants, the Registrar of Companies, NCT of Delhi & Haryana as....
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....ch may extend to five lakh rupees, or with both. In view of a joint application having been filed, both in terms of offence committed for four different years as well as jointly by all the four applicants, the Registrar of Companies, NCT of Delhi & Haryana as against each of the defaulters, has sought to aggregate the maximum fine prescribed for the four years in default under the section as well as for each of the defaulters for the defaulting periods and has quantified as given in Annexure-7 of this order. 10) Company Application No. CP-16/121/NP/2017 The applicant company along with two of its directors have filed the above application for compounding for default in compliance with the provisions of section 217(4) of the Companies Act, 1956 wherein the Board of Directors report was required to contain details as prescribed under section 217(1)(e) of the Companies Act, 1956. The years for which the default has arisen is stated to be 2010-11, 2011-12, and 2012-13. The penalty in relation to the default arising in relation to violation of section 217(1)(e) and section 217(4) has been prescribed under section 217(5) of the Companies Act, 1956 and the maximum penalty is to the ....
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....ly with any of the provisions contained in section 159, 160 or 161, the company and every officer of the company who is in default, shall be punishable with fine which may extend to 500/- rupees per day during which the default continues. In relation to contravention of section 92 of the Companies Act,2013 the penalty in relation to the defaulting company as prescribed under section 92 is to the minimum extent of Rs. 50,000/- and the maximum fine that can be imposed is Rs. 5,00,000/-. In relation to each of the officers in default, the quantum of fine prescribed under section 92 is that prescribed for the defaulting company. In view of a joint application having been filed, both in terms of offence committed for four different years as well as jointly by all the nine applicants, the Registrar of Companies, NCT of Delhi & Haryana as against each of the defaulters, has sought to aggregate the maximum fine prescribed for the four years in default under the relevant Sections as well as for each of the defaulters for the defaulting periods and has quantified as given in Annexure-10 of this order. 13) Company Petition No. CP-16/126/ND/2017 The applicant company along with nine of i....
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....es and in case of a continuing default, with a further fine which may extend to two thousand five hundred rupees for every day after the first during which such default continues. As per section 99 of the Companies Act, 2013, if any default is made in holding a meeting of the company in accordance with section 96 or section 97 or section 98 or in complying with any directions of the Tribunal, the company and every officer of the company who is in default shall be punishable with fine which may extend to one lakh rupees and in case of a continuing default, with a further fine which may extend to five thousand rupees for every day during which such default continues. In view of a joint application having been filed both in terms of offence committed for different years as well as jointly by all the nine applicants, the Registrar of Companies, NCT of Delhi & Haryana has sought to aggregate the maximum fine prescribed for all the four years and for each of the defaulters for the defaulting period and has quantified as given in Annexure-12 of this order. 15) Company Petition No. CP-16/125/ND/2017 The applicant company along with nine of its directors have filed the above applicati....
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....ral meeting as aforesaid, there shall be filed with the Registrar within thirty days from the date on which the balance sheet and the profit and loss account were so laid, or where the annual general meeting of a company for any year has not been held, there shall be filed with the Registrar within thirty days from the latest day or before which that meeting should have been held in accordance with the provisions of this Act. In relation to contravention of section 137(3) of the Companies Act, 2013 if a company fails to file the copy of 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 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,....
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....ged 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. In view of a joint application having been filed, both in terms of offence committed for four different years as well as jointly by all the ten applicants, the Registrar of Companies, NCT of Delhi & Haryana as against each of the defaulters, has sought to aggregate the maximum fine prescribed for the four years in default under the section as well as for each of the defaulters for the defaulting periods and has quantified as given in Annexure-15 of this order. 18) Company Petition No. CP-16/142/ND/2017 The applicant company along with three of its directors have filed suo-moto the above application for compounding the violation in compliance with the provisions of section 159 of the Companies Act 1956 and under section 92 of the Companies Act, 2013 as the Company failed to file Annual Return within the period prescribed f....
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....ention of section 137(3) of the Companies Act,2013 if a company fails to file the copy of 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 a 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 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. In view of a joint application having been filed, both in terms of offence committed for two different years as well as jointly by all the eight applicants, the Registrar of Companies, NCT of Delhi & Haryana as against each of the defaulters, has sought to....
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....ial years 2012-13, 2013-14 and 2014-15. The provision and penalty in relation to the defaulting company as prescribed under section 220(1) of the Companies Act, 1956 provides that after the Balance Sheet and Profit & Loss account have been laid before a company at an annual general meeting as aforesaid, there shall be filed with the Registrar within thirty days from the date on which the Balance Sheet and Profit & Loss account were so laid, or where the annual general meeting of a company for any year has not been held, there shall be filed with the Registrar within thirty days from the latest day or before which that meeting should have been held in accordance with the provisions of this Act, In relation to contravention of section 137(3) of the Companies Act,2013 if a company fails to file the copy of 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 Company, if any, an....
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....en filed both in terms of offence committed for the particular years as well as jointly by all the six applicants, the Registrar of Companies, NCT of Delhi & Haryana has sought to aggregate the maximum fine prescribed for years 2014-15, 2015-16 and for each of the defaulters for the defaulting period. However, the ROC has not quantified in view of the fact that the applicant company as per the statement had convened the meeting for the relevant year and the same has been accepted by the ROC. 23) Company Petition No. CP-16/144/ND/2017 The applicant company along with five of its directors have filed the above application for compounding for default in compliance with the provisions of Sections 166 read with section 168 of the Companies Act, 1956 and section 96 of the Companies Act, 2013 for failing in holding its Annual General Meeting for the financial years 2014-15 and 2015-16. The penalty in relation to the defaulting company as per section 168 of the Companies Act, 1956 in holding a meeting of the company in accordance with section 166 or in complying with any directions of section 167, the company, and every officer of the company who is in default, shall be punishable wi....
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.... specified shall not, in any case, exceed the maximum amount of the fine which may be imposed for the offence so compounded: Provided further that in specifying the sum required to be paid or credited for the compounding of an offence under this sub-section, the sum, if any, paid by way of additional fee under sub-section (2) of section 403 shall be taken into account: Provided also that any offence covered under this sub-section by any company or its officer shall not be compounded if the investigation against such company has been initiated or is pending under this Act. (2) Nothing in sub-section (1) shall apply to an offence committed by a company or its officer within a period of three years from the date on which a similar offence committed by it or him was compounded under this section. Explanation.--For the purposes of this section,-- (a) any second or subsequent offence committed after the expiry of a period of three years from the date on which the offence was previously compounded, shall be deemed to be a first offence; (b) --Regional Director means a person appointed by the Central Government as a Regional Director for the pur....
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.... 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; (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. Perusal of sub section (7) of section 441 makes it amply clear that section 441 is a complete code by itself meant for the purpose of compounding of offences as sub section (7) of section 441 clearly lays down that an offence shall not to be compounded except in accordance with the provisions of the Section. However, though compounding relates to an offence, the term "offence" has not been defined either in the said provision or for that matter elsewhere in Companies Act, 2013. In the absence of definition of 'Offence' in Companies Act, 2013, recourse is had to General Clauses Act, 1....
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....ng authority, the Registrar in relation to the offence committed under the Act of which it is also required to initiate prosecution before the appropriate court having criminal jurisdiction is also put on notice of the application for compounding so that the Registrar may desist from launching prosecution and to also state in the said report/comments to be annexed along with the application to be forwarded to the compounding authority about any pending prosecution in relation to which compounding is sought for in terms of sub-section (6) of section 441 as well as clauses (c) and (d) of sub section (3) of section 441. The nature of the offence committed as well as whether any prosecution is pending before the Court and whether the said offence in the first place can itself be compounded by the Tribunal or the Regional Director in the exercise of respective power vested of compounding with them under the provisions of section 441 of the Act are required to be brought to light in the report. Thus, in relation to an application for compounding, the role of the Registrar of Companies is crucial, both, in relation to making an assessment depending on the penalty, whether it be by way ....
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....s India (P.) Ltd. v. Registrar of Companies, NCT of Delhi and Haryana, New Delhi in Company Appeal (AT) No 137 of 2017, that it is well within the jurisdiction of the Tribunal to compound the offence where the alternative punishment of fine is prescribed in place of imprisonment and where no case is pending before the Special Court and that the permission of the Special Court will be required only in relation to the said offences when prosecution is pending before the Court. In this connection it is also pertinent to note that by way of the Companies (Amendment) Act, 2017 the power of compounding has been extended in the statute itself in line with the decision of the above cited case of Cinepolis India (P.) Ltd. (supra) whereby under sub-section (1) of section 441 for the words 'with fine only' the words "not being an offence punishable with imprisonment only, or punishable with imprisonment and also with fine" has been substituted. Taking into consideration all of the above, it only reinforces the onus of the Registrar to bring forth in its report the details of prosecution, if any in relation to the offence initiated by it or other persons who are capable of initiating such pros....
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....is in default shall be punishable with imprisonment which may extend to one year or with fine which shall not be less than fifty thousand rupees but may extend to three lakh rupees, or with both. 66(11) Default in publishing the order of confirmation of the reduction of share capital by the Tribunal. 500000 2500000 - 74(3) Failure to repay the deposit or part thereof or any interest thereon within the time specified or such further time as may be allowed by the Tribunal. Rs. 1 Crore Rs. 10 Crore Officer who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but may extend to two crore rupees, or with both. 86 Punishment for contravention of provisions of Charges. 100000 1000000 In Case of Officer: Imprisonment: which may extend to 6 months or Fine: not less than 25 thousand rupees but which may extend to 1 lakh rupees or with both. 117(2) Failure in filing with the Registrar the copy of notice or agreement within stipulated time. 500000 2500000 Officer who is in default, including liquidator of the company, if any, shall be p....
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....h imprisonment which may extend to one year or with fine which shall not be less than one lakh rupees but may extend to three lakh rupees, or with both. 242(8) Contravention of the order of Tribunal relating to alterations in memorandum or articles. 100000 2500000 Officer in default shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but may extend to one lakh rupees, or with both. The above list clearly demonstrates that depending on the gravity of the offence that may be committed by a company and/or its officers, the Legislature, as a deterrent has sought to fix a higher quantum of fine or punishment wherein the maximum fine prescribed exceeds Rs. 5,00,000/- and has hence conferred jurisdiction upon the Tribunal to consider the application for compounding, as compared to offences for which a lower quantum is fixed, i.e., which does not exceed five lakh rupees and as are required to be dealt with by the Regional Director or such authority as may be prescribed by the Central Government. Further, in relation to the offences detailed in Table I above, it is also pertine....
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....n-default on the other, whether it be a director, officer, professional or any other person in relation to the same offence for computing the maximum amount of fine in order to ascertain the compounding authority to whom the application is to be forwarded, or whether in computing the maximum amount of fine, the aggregate in relation to both the defaulting company and defaulting individuals are required to be taken into consideration. The following table by way of a detailed illustration, being Table No II brings the issue into focus in which the provisions of the Act where the maximum amount of fine prescribed, for both the defaulting company and the defaulting individual with respect to the same offence and where individually it does not exceed five lakh rupees but however in the aggregate may or may not exceed the said limit is given hereunder: -- TABLE II-WHERE MAXIMUM FINE PRESCRIBED FOR THE OFFENCE COMMITTED UNDER THE RELEVANT SECTION DOES NOT EXCEED IN RELATION TO EITHER INDIVIDUALLY THE DEFAULTING COMPANY OR OTHER PERSONS IN DEFAULT IN EXCESS OF Rs. 5,00,000/- SECTION NATURE OF OFFENCE MINIMUM FINE MAXIMUM FINE REMARKS 26(9)- Contravention of provisio....
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....0000 In Case of officer: Who is in default shall be punishable with imprisonment which may extend to three years or with fine which shall not be less than two lakh rupees but which may extend to five lakh rupees or with both. 88(5)- Failure to maintain register of members/debenture-holders/other security holders as prescribed 50000 300000 In case of officer; Fine: not be less than 50 thousand rupees but which may extend to 3 lakh rupees Failure is a continuing: Further fine may extend to 1 thousand rupees for every day, after the first during which the failure continues which may extend to 5 lakh Rupees. 92(5) If a company fails to file its annual return under sub-section (4) before the expiry of period specified under section 403 with additional [fee]. 50000 500000 In Case of Officer: Who is in default shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. 102 Explanatory statement not attached to an item of special business in the notice calling general meeting -- 50000 (OR Five times the amount of benef....
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.... five thousand rupees. 147(1)- Failure of company to comply with provisions of sections 139 to 146 with regard to auditors 25000 500000 In case of officer: Shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees. or with both. 149 Constitution of board 50000 500000 Punishment as per section 172, where a company contravenes any of the provisions of this Chapter and for which no specific punishment is provided therein. 160 failures to inform members of the candidature of a person for the offence of director 50000 500000 Punishment as per section 172. where a company contravenes any of the provisions of this Chapter and for which no specific punishment is provided therein. 162 Director appointed by enbloc resolution 50000 500000 Punishment as per section 172. where a company contravenes any of the provisions of this Chapter and for which no specific punishment is provided therein. 164 Appointment of director in contravention of provision of this section 50000 500000 Punishment as per secti....
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....00000 Only director or any key managerial personnel: Shall be punishable with imprisonment which may extend to five years or with fine which shall not be less than five lakh rupees but which may extend to twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is higher, or with both. 197(15)- Contravention of the provisions of this section relating to managerial remuneration in case of absence or inadequacy of profits 100000 500000 This section is applicable only in case: If any person contravenes the provisions of this section, punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. 238(3)- Failure to register the offer of Schemes involving transfer of shares. 25000 500000 Only director is liable under this section:- The director, who issues a circular which has not been presented for registration and registered under clause (c) of sub-section (1), shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees. 243(2) Consequence of termination or modification of certain agreements.....
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....sion is applicable to: Officer or other employee of the company and they shall be punishable with imprisonment for a term which may extend to six months, or with fine not exceeding one lakh rupees, or with both. 452(1) Punishment for wrongful withholding of property 100000 500000 This provision applicable to: Officer or employee is punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. 454(8)(i) and 454(8)(ii) Failure to pay the penalty imposed by the adjudicating officer or Regional Director 25000 500000 In case of Officer section 454(8)(ii) is applicable: Officer in default shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. However, perusal of the above table save some exceptions, also brings to light the position that invariably, if the maximum amount of fine for the defaulting company and the defaulting person is aggregated, then it is seen that the maximum amount of fine exceeds five lakh rupees. Thus, the question as posed earlier resonates ....
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.... Default in filing a notice related to alteration, increase or redemption of share capital along with the altered memorandum with the Registrar. 1000 for each day 500000 The company and any officer in default shall be punishable with fine which may extend to Rs. 1000 for each day during which such default continues, or 5 lakh rupees. whichever is less. 91(2) Closing register of members or debenture holders otherwise than in compliance with the provisions of the section. 1000 for every day 100000 The company and every officer of the company in default shall be liable to a penalty of 5000 rupees for every day subject to a maximum of 1 lakh rupees during which the register is kept closed. 94(4) Refusal of inspection of register and returns. 5000 for every day 100000 The company and every officer in default shall be liable, for each such default, to a penalty of one thousand rupees for every day subject to a maximum of one lakh rupees during which the refusal or default continues. 137(3) Failure to file financial statements with the Registrar 1000 for each day 10,00000 In case of officers: Imprisonment: for a term which may exten....
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....ny and every officer in default or such other person shall be punishable with fine which may extend to 10,000 rupees and where the contravention is continuing one, with a further fine which may extend to 1000 rupees for every day after the first during which the contravention continues. (This fine is as per sec 450) 49 Calls on shares of same class not made on uniform basis. -- 10,000 (further extendable to 1000 per day in case of continuing) The company and every officer in default or such other person shall be punishable with fine which may extend to 10,000 rupees and where the contravention is continuing one, with a further fine which may extend to 1000 rupees for every day after the first during which the contravention continues. (This fine is as per sec 450) 52(1) & (2) Failure to comply with application of securities premium account or utilisation of securities premium account for purpose other than those specified in sub sec (2) -- 10.000 (further extendable to 1000 per day in case of continuing) The company and every officer in default or such other person shall be punishable with fine which may extend to 10,000 rupees and where the contraventi....
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....fficer in default shall be punishable with fine which shall not be less than fifty thousand rupees but may extend to three lakh rupees and where the failure is a continuing one, with a further fine which may extend to 1 thousand rupees for every day, after the first during which the failure continues. 89(5) Failure to file declaration not holding beneficial interest in any share by any person. -- 50,000 (further extendable to 1000 per day in case of continuing) This fine is not applicable to company. Any person in default shall be punishable with fine which may extend to fifty thousand rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues. 89(7) Failure to file return relating to beneficial interest in any share before the expiry of the time specified u/s. 403(1)(i) proviso. 500 1000 (further extendable to 1000 per day in case of continuing) The company and every officer in default shall be punishable with fine which shall not be less than five hundred rupees but which may extend to one thousand rupees and where the failure is a cont....
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....ion is continuing one, with a further fine which may extend to 1000 rupees for every day after the first during which the contravention continues. (This fine is as per sec 450) 123 Payment or declaration of dividend otherwise than out of profit. -- 10,000 (further extendable to 1000 per day in case of continuing) The company and every officer in default or such other person shall be punishable with fine which may extend to 10,000 rupees and where the contravention is continuing one, with a further fine which may extend to 1000 rupees for every day after the first during which the contravention continues. (This fine is as per sec 450) 159 Punishment for contravention of any provision of section 152, section 155 and section 156 by any individual or director of a company. -- 50000 (further extendable to 500 per day in case of continuing) This fine is not applicable to company. Any individual or director in default shall be punishable with imprisonment for a term which may extend to six months OR with fine which may extend to fifty thousand rupees and where it is continuing, further fine which may extend to five hundred rupees for every day. 165(6) A....
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....dissolution of company by tribunal within the period specified in sub-section (3) -- 5000 for every day This fine is applicable only on official Liquidator. Fine may extend to five thousand rupees for every day during which the default continues. 348(6) Contravention of the provisions of information as to pending liquidation -- 5000 for every day This fine is applicable only on company Liquidator. Company Liquidator shall be punishable with fine which may extend to five thousand rupees for every day during which the failure continues. 356(2) Failure to file certified copy of the order of Tribunal relating to dissolution of company void with the Registrar. -- 10000 for every day This fine is applicable only on company Liquidator or the person concerned. Company Liquidator or the person shall be punishable with fine which may extend to ten thousand rupees for every day during which the default continues. 391/392 Contravention of the provisions of Chapter XXII by a foreign company. 1,00,000 3,00000 (Additional fine which may extend to Rs. 50000 for every day) In case of Officer: Every officer of the foreign company shall be punisha....
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....te entities as passed by the Hon'ble Supreme Court which had been taken note of by the Committees appointed by the Central Government to go into the workings of the respective prevalent Companies Act at the said point of time and of which the respective committees were required to ponder over will be essential, which will give us a perspective to the present position and the rationale for the prescription of minimum and maximum threshold limits by the legislature in relation to the defaulting companies in clear terms. The provisions in relation to composition of offences was incorporated in the erstwhile Companies Act of 1956 only in the year 1988 by way of Companies (Amendment) Act, 1988 with effect from 31.05.1991 vide GSR dated 31.05.1991 and by way of insertion of section 621-A and the said section was subsequently substituted by the Companies (Second) Amendment 2002 (11 of 2003). Though under the 1988 amending Act, the power to compound was vested with the erstwhile Company Law Board and the Regional Director, in relation to the 2002 Amendment Act, the power of compounding was sought to be vested with the Central Government but however the same never came about. Even ....
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....fact that they involve personal malicious intent, a corporation may be subject to indictment or other criminal process, although the criminal act is committed through its agents. In as much as all criminal and quasi-criminal offences are creatures of statute, the amenability of the corporation to prosecution necessarily depends upon the terminology employed in the statute. In the case of strict liability, the terminology employed by the legislature is such as to reveal an intent that guilt shall not be predicated upon the automatic breach of the statute but on the establishment of the actus reus subject to the defence of due diligence. The law is primarily based on the terms of the statutes. In the case of absolute liability where the legislature by the clearest intendment establishes an offence where liability arises instantly upon the breach of the statutory prohibition, no particular state of mind is a prerequisite to guilt. Corporations and individual persons stand on the same footing in the face of such a statutory offence. It is a case of automatic primary responsibility. It is only in a case requiring mens rea, a question arises whether a corporation could be attrib....
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....he Committee is of the view that in tune with legal developments in the country, guided by recent pronouncements of the Apex court it would be appropriate for the law to provide a regime of penalties for companies. These would be monetary in nature since it would not be feasible to imprison an artificial person such as a company. Such penalties should also be relatable to the size of the company in addition to the nature of the offence. The J.J. Irani Committee Report further goes on to elaborate as to how to rationally structure the regime of penalties of which the following paragraphs are relevant, namely:-- 14. In the present Act penal provisions are generally contained in each section. The Committee supports the view that the company law should state clearly in relation to every rule what the consequences of violations/breach are to be. This may be possible by classifying the penalties in the form of schedules that may specify with relation to a given section, the general nature of offence, the mode of prosecution, punishment and daily default fine, where applicable. 16. Defaults that are technical in nature may be addressed with a levy of late fee, the pro....
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....5 with the mandate, inter alia, of making recommendations on issues arising from the implementation of Companies Act, 2013 and in relation to penalties and compounding the recommendations of CLC is given under Clause 28 under the caption 'Penalties' of which following clauses may be pertinent:-- PENALTIES 28.1 The Act aims to provide for a regime of offences and penalties which is commensurate to the gravity of the offence. During the public consultation, concerns were raised in respect of the punishments for certain sections under the Act being disproportionate, and thus, the Committee has attempted to resolve the anomalies by following principles of law, analysing international best practices and by also taking guidance from the previous committees on this aspect. 28.2 The Committee noted that JJ. Irani Committee Report had recommended that "the Companies Act may lay down the maximum as well as minimum quantum of penalty for a particular offence, however the Act should also provide that while levying a particular quantum of penalty, the levying authority should also take into consideration the size of company, nature of business, injury to public intere....
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....h regard to filing of prosecution before the prescribed 270 days during which filing can be done with additional fees in case of the six identified filings where section 403 is applicable, the Committee felt that fees for timely filing may be reduced to zero, additional fees may be increased to up to 10 times of the current additional fees with steep slabs after the first slab. Repeated non-compliance should result in deprival of the moratorium from prosecution as specified under section 403 and attract higher level of additional fees. 28.16 As per section 441 of the Act, any offence punishable under the Act with fine only is compoundable by the Tribunal. Other offences punishable with imprisonment or fine or both are compoundable only by the special court. Previously, in the Companies Act, 1956, offences punishable with fine as well as offences punishable with imprisonment or fine or both were compoundable by the Tribunal. The compounding provision was inserted by the Companies Amendment Act, 1988 on the recommendation of the Sachar Committee, as it was felt that leniency is required in the administration of the provisions of the Act particularly penal provisions because ....
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....echnical nature to be dealt with in-house structure, namely the Registrar of Companies and the concerned Regional Director named as the Adjudicating Authority and Appellate Authority with respect to adjudicating penalties as prescribed under section 454 of the 2013 Act read along with Companies (Adjudication of Penalties) Rules, 2014 20. It is by now trite that the question of constitutional validity of National Company Law Tribunal has been taken away from the sphere of challenge in view of the decision rendered on 14.05.2015 by the Hon'ble Supreme Court in Madras Bar Association v. Union of India 289/131 SCL 26. The Legislature keeping in view the premier status which the Tribunal has been accorded with in relation to company matters, has chosen the Tribunal as compounding authority in relation to were the maximum amount of fine exceeds five lakh rupees. In view of all the above and for the limited purpose in order to ascertain the jurisdiction in relation to the appropriate compounding authority, the Registrar is required to consider the maximum amount of penalty fixed under the relevant provision in relation to the defaulting company and not those prescribed either for....
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....ggregate fine of both the defaulting company and the officer in default, it should be only the maximum fine as prescribed for the defaulting company which is to be considered to advance the intention of the Legislature and not on the basis of fine as prescribed for the officers-in-default or based on the aggregate of both as otherwise it may lead to uncertainty. While interpreting punishment in relation to economic offences carrying both fine and imprisonment and as to how the same must be given effect to in relation to corporations in the case of M.V. Javali v. Mahajan Borewell & Co. [1998] 91 Comp. Cas. 708 (SC), the Hon'ble Supreme Court cited with approval for the purpose of interpretation of statute its earlier decision rendered in Union of India v. Filip Tiago De Gama AIR 1990 SC 981 and quoted as follows:-- "The paramount object in statutory interpretation is to discover what the legislature intended. This intention is primarily to be ascertained from the text of enactment in question. That does not mean the text to be construed merely as a piece of prose, without reference to its nature or purpose. A statute is neither a literary nor a divine revelation. 'Words are....
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....for the purpose of giving effect to the words " where the maximum amount of fine which may be imposed for such offence does not exceed five lakh rupees" as prescribed under section 441(l)(b) and in order to ascertain whether such maximum fine exceeds five lakh rupees, the Registrar is to adopt the following procedure keeping in view the provisions of Companies Act, 2013 as it presently stands and by way of answer to Issue No. 1: (a) In view of the Legislature prescribing a threshold limit under section 441(l)(b) and also providing for maximum amount of fine in relation to the defaulting company invariably in all the provisions of the 2013 Act, the jurisdiction for compounding shall be ascertained on the said criteria alone and not by aggregation of the fine of the corporate/defaulting company and the officers-in-default with a view to maintain consistency and to keep in line with the provisions of the statute; (b) In relation to Offences as are listed out in Table 1 of this order and offences of similar nature not listed and in the case of prescribed maximum fine exceeding five lakh rupees, this Tribunal shall have exclusive jurisdiction in relation to compounding....
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....intainable in view of maximum amount of fine prescribed did not exceed five lakh rupees and the recourse of remedy lies with a different forum which only reinforces the above position enunciated and the onus of the Registrar of Companies to forward the compounding application to the appropriate compounding authority based on the maximum amount of fine prescribed as well as to the parties while simultaneously filing the application for compounding. Issue No.2: 26. In relation to the question as to whether a joint application for compounding of an offence can be filed by one or more of the defaulters is concerned, it is seen that section 441 of the 2013 Act nowhere provides for such joint filing of application. Further in relation to filing of a joint application before this Tribunal, Rule 23A inserted with effect from 20.12.2016 in the National Company Law Tribunal Rules, 2016 (NCLT Rules) expressly provides as follows: -- Rule 23A: (1) The Bench may permit more than one person to join together and present a single petition if it is satisfied, having regard to the cause of action and the nature of relief prayed for, that they have a common interest in the matter. ....
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.... been part of the default committed or for that matter, part of the defaulting company at the time of default/offence, if at all when it is said to have arisen. However in relation to the Registrar of Companies being the nodal authority for forwarding the compounding application to the appropriate authority the guidelines as given under Issue No.1 supra shall be followed in computing the maximum fine as prescribed for the limited purpose of ascertaining the compounding authority and accordingly act. ISSUE N0.3: In relation to the filing of a joint application for defaults committed in relation to provisions which mandates yearly compliance on the part of companies and its officers, like filing of Annual Returns under section 92 with the Registrar of Companies or for convening Annual General Meeting under section 96 or filing of financial statements as mandated under section 137 with the Registrar of Companies, since each year's offence or default is distinct and separate and cannot be considered as part of the same cause of action, as compliance every year is mandatory, a joint application combining for more than one year militates against the provisions of Companies Act, 201....
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.... offence punishable with fine and imprisonment for repeated defaults committed within three years and makes it under the circumstances non-compoundable by this Tribunal. Despite two Companies (Amendment) Act having been passed since the enactment of the 2013 Act, section 451 as originally passed has been retained by the Legislature in its wisdom which clearly discloses the intention of the Legislature to be unforgiving in relation to repeated defaults. However, in relation to the offence being punishable only with fine, a distinction is required to be drawn as section 451 of the 2013 Act cannot be applied to such an offence. Even though in this regard Learned Counsels appearing for the applicants, as well as Regional Director vide written communication dated 04.01.2018 and the Central Government after orders were reserved, drew the attention of this Tribunal to Departmental Guidelines as to compounding of offences issued by the Department of Company Affairs in the year 1993, this Tribunal is of the view that the same cannot be made applicable to the provisions relating to the present Act, namely the 2013 Act. Regional Director in this regard has also cited the orders passed by t....
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.... Companies maintained by the Registrar and has subsequently resulted virtually in a docket explosion leading to further litigations which is also not conducive taking into consideration the limited national resources available for coping with such docket explosions. Further, the companies are not going to be prejudiced in view of mechanisms having been provided and which are in built in the provisions of 2103 Act which enables the companies, under given circumstances, even to declare itself as Dormant Company, if the companies are not able to comply with their annual filings, under section 455 of the Act. In this regard, the submissions of the Registrar of Companies merits consideration. Unlike the old dispensation of 1956 Act, the Companies Act, 2013 insists on regular compliances and while failure to comply once can be compounded, but however repeated defaulters are visited with criminal prosecution and the offence becomes non-compoundable under section 441. In the circumstances filing of joint applications in relation to more than one year is also not maintainable and this Tribunal does not have the power to compound repeated offences as detailed in section 451 of 2013 Act and a....
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.... of the 2013 Act as well as section 441 of the 2013 Act relating to compounding and to have an over view as to how the applications for compounding pans out which is brought out by the following table containing the particulars of each of the applications, together with details of the defaulted section which had given rise to filing of each of the application, along with number of applicants who have jointly filed this application, as well as the number years of default for which compounding is sought for in the said application jointly as below:- S. NO. APPLICATION NO. DEFAULTED SECTION COMPOUNDING FILED BY: NUMBER OF YEARS INVOLVED COMPANY INDIVIDUAL 1 CP-16/174/ND/2017 137 (2013 Act) 1 4 2 2 CP-16/175/ND/2017 173 (2013 Act) 1 4 3 3 CP-16/176/ND/2017 92 (2013 Act) 1 3 2 4 CP-16/177/ND/2017 149 (2013 Act) 1 3 1 5 CP-16/178/ND/2017 96 (2013 Act) 1 4 3 6 CP-16/179/ND/2017 210 (1956 Act) and 129 (2013 Act) 1 3 4 7 CP-16/180/ND/2017 220 (1956 Act) and 137 (2013 Act) 1 3 4 8 CP-16/181/ND/2017 ....
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....n view of the position as enunciated and dealt with under Issue No.4 supra. (c) In any case under the 2013 Act since the maximum amount of fine prescribed for the offence of not filing annual returns is not in excess of five lakh rupees, this Tribunal lacks the pecuniary jurisdiction to entertain the compounding applications as listed above For each of the above reasons stated CP-16/176/ND/2017, CP-16/181/ND/2017, CP-16/124/ND/2017, CP-16/126/ND/2017 and CP-16/142/ND/2017 stands dismissed but without costs. (ii) In relation to CP-16/174/ND/2017, CP-16/180/ND/2017, CP-16/127/ND/2017. CP-16/123/ND/2017, CP-16/141/ND/2017, CP-16/132/ND/2017 and CP-16/144/ND/2017 the defaulted provisions being section 137 of the Companies Act, 2013 and/or the equivalent provision under the earlier Act of 1956 since repealed as the case may be cannot be entertained in view of the following: -- (a) Since all the seven applications as listed above pertains to default in relation to filing of Financial Statements which is required to be filed for each year and the default is in relation to more than a year and as the same offence had been committed for the second or subs....
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....h rupees as evident from the computation contained in the Report of Registrar of Companies and extracted as Annexure 18 hereunder, the Registry of this Tribunal is directed to return the files to the Registrar of Companies along with its report to be suitably forwarded to the Regional Director as provided under section 441(l)(b) of the 2013 Act and the Regional Director shall dispose of the company petition in CP-16/133/ND/2017 in light of this order and in accordance to its merits. (v) In relation to CP-16/134/ND/2017 again falling under section 96 read with section 99 of the Companies Act, 2013 and being in relation to non-convening of Annual General Meeting of shareholders for a year and since the Registrar of Companies has not forwarded any specific report, the Registry of this Tribunal is directed to return the files to the Registrar of Companies for duly forwarding the report and in case it is reported that there has been no default on the part of the applicants the Registrar shall state so and forward the report along with application to the Regional Director for suitably considering and closing the application for compounding as filed by the applicants. (v....
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....avention being a continuing one attracting a further penalty which may extend to Rs. 1000/- per day after which the contravention continues and the Registrar of Companies having quantified the maximum fine imposable exceeding five lakh rupees in relation to the defaulting company as extracted as Annexure-3, this Tribunal having compounding jurisdiction takes up the petition for consideration and the said petition is dismissed as not maintainable, in view of the position that the offence relates to non-convening of Board Meeting being a yearly compliance for the relevant years as reflected against the petition in the above table and as joint petitions for repeated defaults as enunciated and answered in light of Issue No.3 in paragraphs supra cannot be entertained and hence dismissed. (ix) In relation to CP-16/121/ND/2017, the defaulted provisions being section 217(l)(e) and section 217(4) of the Companies Act, 1956 since repealed, and as the maximum amount of fine prescribed in relation to the defaulting company or in relation to the officers-in-default does not individually exceed five lakh rupees or for that matter Rs. 50,000/- under the earlier Act of 1956 as can be seen....