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2017 (7) TMI 222 - Tri - Companies LawCompounding the offence under Section 211(1) of the Companies Act, 1956 - "True & Fair view” is not depicted in the Balance Sheet - Held that:- Upon scrutiny of the Balance Sheets for both the financial years, there is no mention about the reduction of share capital from approx. ₹ 106.41 Crores to approx. ₹ 84.41 Crores (approx.. ₹ 22.00 crores is the capital reduction). Balance sheet of a Company is an important / basic Financial Statement used by stakeholders for various purposes. Generally, Audited Balance Sheet will depict correct /factual amount under various heads and especially there cannot be any factual error with reference to Authorised, Issued and Subscribed Capital of any Company. Therefore, the Balance Sheet as at 31.03.2009 is not in accordance with Section 211(1) of Companies Act 1956 in as much as “True & Fair view” is not depicted in the Balance Sheet, thereby resulting in disclosing false particulars of issued capital. Further, the applicants have also failed to exercise / exhibit due regard and failed to take reasonable steps while preparing the Balance Sheet for the year 2008-09. Therefore, the applicants submission that by inadvertent, default has not caused any prejudice to Members (or) Creditors, not to affect public interest, no harm is caused to public interest etc. does not hold good in the instant facts of the case as discussed supra. Generally the decrease in paid up capital can occur in various ways viz buyback of shares, forfeiture of shares, reduction of share capital etc., However the current balance sheet does not have any of these events / information. Considering the fact that different/contradictory amount is shown in different documents produced before this Bench as discussed above, we are of considered view that the instant case is not fit case for compounding the alleged offence as prayed for and liable to be dismissed.
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