Compounding of offence under Section 621A of the Companies Act, 1956 - companies under liquidation - clarification. - Companies Law - 06/2002

General Circular No: 06/2002 No. 2/6/2002-CL-V No.23/75/96-CL.II Government of India Ministry of Law, Justice Company Affairs Department of Company Affairs 5th floor, `A' Wing, Shastri Bhavan, Dr. R.P. Road, New Delhi. Dated: 6.3.2002 To All Regional Directors All Registrar of Companies Subject:- Compounding of offence under Section 621A of the Companies Act, 1956 - companies under liquidation - clarification. Sir, A point has been raised in one of the inspection follow-up files as to whether the offences committed by Directors of a company can be compounded under Section 621A of the Companies Act, 1956, when the company in which they were Directors is under liquidation without obtaining the leave of the Company Court under Section 446 of the Companies Act, 1956. 2. The issue has been examined in the Department in consultation with the Ministry of Law and it is hereby clarified that in the light of the provisions of Section 446 read with Section 621A of the Companies Act, there is no legal bar for composition of an offence under Section 621A of the Act, provided the conditions specified in the Section and guidelines, if any, are fulfilled. It is also further clarified that the provisions of Section 446 of the Companies Act, 1956, does not bar criminal proceedings against the Directors of the company for any offences committed under the Companies Act and the offences are compoundable under Section 621A of the Act. 3. Where the penal provisions provide for proceedings against the companies also and if the offences are compoundable under Section 621A of the Companies Act, 1956, compounding will not be permissible against the company in view of the provisions of Section 446 of the Companies Act. Yours faithfully, (Thakur Sharan) Under Secretary to the Govt. of India