TMI Blog2013 (5) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... by the CLB 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 CLB. Thus, the impugned order cannot be interfered. - Civil Appeal No. 2102 of 2004 - - - Dated:- 10-5-2013 - Chandramauli Kr. Prasad And V. Gopala Gowda,JJ. JUDGMENT Chandramauli Kr. Prasad,J. This appeal by special leave arises out of an order dated 5th of November, 2003 passed by the Company Judge, Delhi High Court in Company Appeal (B) No. 1 of 2001 whereby it has dismissed the appeal assailing the order of the Company Law Board allowing the compounding of offence under Section 211(7) of the Companies Act. Short facts giving rise to the present appeal are that the Registrar of Companies, NCT of Delhi and Haryana laid complaint in the Court of Chief Metropolitan Magistrate, Tis Hazari, inter alia alleging that during the course of inspection it was noticed in the balance sheet of 1995-96 Schedule of the fixed assets included land worth Rs. 21 crores. According to the complaint, M/s. Sunair Hotels Ltd., for short the Company , had taken this land from New Delhi Municipal Corporation on licence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both shall be compoundable with the permission of the Court and for such compounding the procedure laid down under the Criminal Procedure Code is to be followed in that regard provided the prosecution is pending in that Court. I also hold the Company Law Board can compound an offence of the nature prescribed under sub-section (1) either before the institution of the criminal proceeding or even after institution of the criminal proceeding and the said power is not subject to the provisions of sub-section (7). Both are parallel powers to be exercised by the prescribed authorities who have been empowered under the statute and one power is not dependent on the other Accordingly, the Company Judge dismissed the appeal. That is how the appellant is before us. We have heard Mr. R. Shankaranarayanan, for the appellant, Ms. Binu Tamta, for the respondent-Union of India and Mr. Jayant Bhushan, Senior Advocate for the Company and its Managing Director. It is an admitted position that the allegations made exposed the accused to an offence punishable under Section 211(7) of the Act. The same reads as under: 1. 211. Form and contents of balance-sheet and profit and loss account. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the allegation made exposed the Company and its Managing Director for punishment under Section 211(7) of the Act which provides for imprisonment or fine or with both. In the face of the same, no fact needs to be adjudicated and the point being a pure question of law going to the root of the matter, same can be permitted to be raised before this Court for the first time. But that does not help the appellant as we are inclined to accept the submission of Mr. Bhushan on merit. Section 621A was inserted by the Companies Amendment Act, 1988 on the recommendation of the Sachar Committee. It was felt that leniency is required in the administration of the provisions of the Act particularly penalty provisions because a large number of defaults are of technical nature and arise out of ignorance on account of bewildering complexity of the provisions. Section 621A of the Act; as stood at the relevant time and relevant for our purpose reads as follows: 621A. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (8) No offence specified in this section shall be compounded except under and in accordance with the provisions of this section. From a plain reading of Section 621A(1) it is evident that any offence punishable under the Act, not being an offence punishable with imprisonment only or with imprisonment and also with fine, may be compounded either before or after the institution of the prosecution by the Company Law 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, ii) offences punishable with fine and imprisonment, (iv) offences punishable with fine or imprisonment, (v) offences punishable with fine or imprisonment or both. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prosecution, an intimation thereof shall be given by the Company to the Registrar within 7 days from the date on which the offence is compounded. Section 621A(4)d) mandates that where the composition of any offence is made after the institution of any prosecution, such composition would be brought by the Registrar in writing to the notice of the court in which the prosecution is pending and on such notice of the composition of the offence being given, the accused in relation to whom the offence is so compounded shall be discharged. From the conspectus of what we have observed above, it is more than clear that an offence committed by an accused under the Act, not being an offence punishable with imprisonment only or imprisonment and also with fine, is permissible to be compounded by the Company Law Board either before or after the institution of any prosecution. In view of sub-section (7) of Section 621A, the criminal court also possesses similar power to compound an offence after institution of the prosecution. Now the question is whether in the aforesaid circumstances the Company Law Board can compound offence punishable with fine or imprisonment or both without permission of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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