TMI Blog2016 (12) TMI 1426X X X X Extracts X X X X X X X X Extracts X X X X ..... approach this Tribunal subsequently in accordance with law. In terms of above, the present Company Application is disposed off accordingly. - C.A NO. 311(CB) OF 2015 T.P. NO. 144 (HBD) OF 2016 - - - Dated:- 19-9-2016 - RAVIKUMAR DURAISAMY AND RAJESWARA RAO VITTANALA, JJ. For The Appellant : Ms. Shilpi Gupta, Practising Company Secretary ORDER Ravikumar Duraisamy, Technical Member :- The Application was initially filed before Hon'ble Company Law Board, Chennai Bench, Chennai. Since the National Company Law Tribunal (NCLT), Hyderabad Bench has been constituted for the cases pertaining to the states of Andhra Pradesh and Telangana, the case is transferred to the Hyderabad Bench of NCLT. Hence, we have taken the case on records of NCLT, Hyderabad Bench and deciding the case. 2. This is an Application filed under Section 297 read with Section 621A of the Companies Act, 1956 by seeking a direction to permit the Applicants to compound the offence committed under the said Act and also praying to take a lenient view of the technical contravention occurred by them. 3. The brief facts of the case as averred in the application and are material to decide the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission 2,47,82,576 Sreepathi Life Sciences Common Management 6 2012-13 Purchases 5,69,825 White Star Industries Common Management 7 2012-13 Commission 2,61,59,242 Sreepathi Life Sciences Common Management 8 2012-13 Interest on unsecured loans 17,65,534 Loan from Directors Srinivas Isola 9 2013-14 Purchases 5,94,600 White Star Industries Common Management 10 2013-14 Commission 1,73,80,839 Sreepathi Life Sciences Common Management 11 2013-14 Interest on unsecured loans 25,36,785 Loan from Director Srinivas Isola f. As per Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be obtained at a meeting within three months of the date on which the contract was entered into. 4. Every consent of the Board required under this section shall be accorded by a resolution passed at a meeting of the Board and not otherwise; and the consent of the Board required under sub- section (1) shall not be deemed to have been given within the meaning of that sub- section unless the consent is accorded before the contract is entered into within three months of the date on which it was entered into. 5. If consent is not accorded to any contract under this section, anything done in pursuance of the contract shall be voidable at the option of the Board. 6. Nothing in this section shall apply to any case where the consent has been accorded to the contract before the commencement of the Companies Amendment Act 1960. g. It is stated that the Applicant Company did not obtain the necessary prior approval of the Central Government for carrying out the above- mentioned transactions with the related parties, which is in contravention to Section 297 of the Companies Act, 1956 in respect of such transactions. h. It is submitted that though the Directors were interested in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, it is not in dispute that there is a continuous violation of Section 297 of the Companies Act, 1956 by the Applicants from financial years 2009-2014. Upon perusal of the related party transactions as provided in the Application from the Financial Years 2009 to 2014, we have identified certain transactions having huge financial implications. The total amount of Purchases made through the Financial Years 2009-14 is approximately ₹ 27.61 lakhs while the total Commission paid amounts approximately to ₹ 6.8 Crores and the Interest on Unsecured loans is approximately ₹ 43.75 lakhs. From the above, it can be clearly understood that the total amount of Commission paid is multiple times higher than the actual purchase value. 9. We are of the view that prior approval sought to be obtained at various stages or authorities is interalia with an object to safeguard the interest of various stakeholders viz shareholders, creditors, suppliers, etc and also to bring in transparency in the corporate dealings with respect to related party transactions. Section 297 of the Companies Act, 1956 embodies the principles of good faith and fiduciary relationship of a director ..... X X X X Extracts X X X X X X X X Extracts X X X X
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