9911796707
TMI Blog2017 (2) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... as Company hereinafter) was incorporated as a Private Limited Company on 28th January, 1999 under the Companies Act, 1956 with Registration No. CIN L72200AP1999PLCO30997 in the State of Telangana and, the registered office of the Company is at 04-03, Level 4, Block 1, Cyber Pearl, Hitec City, Madhapur, Hyderabad - 500 081, Telangana, India. The authorised capital of the company is Rs. 30 Crores as on 31.03.2015 divided into (3) Crores equity shares of Rs. 10/- each. The main object of the Company as per its Memorandum of Association are to set up and run electronic data processing centre and to carry on the business of data processing, word processing, software consultancy, designing , developing, manufacturing, marketing and trading in all types of computer software in all areas etc. b. Pursuant to the inspection of the books of account and other records of the Company made by the Office of the Regional Director, Southern Region, Chennai, Ministry of Corporate Affairs, under section 209A of the Companies Act, 1956, a common notice bearing No. JDI/MAS/21/2010 dated 26.07.2010 was issued to the Company by Shri Lakshmi Prasad K, Deputy Director of the RD office by pointing out vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fence is not intentional and, in any case, it will not cause any prejudice to the interest of the members or other creditors or others dealing with the Company. The Company also declared un-equivocal terms that the offence in question does not affect the public interest in any way, and no harm is caused to the public interest. It is further stated that the new Management of the company has taken actions and implemented polices designed to prevent any future default. 7. The Registrar of Companies, Hyderabad for Telangana and Andhra Pradesh, has forwarded its report on the issue, vide ROC-AP&TG/Legal/Sec217(2AA)/621A/CTEL/STACK/2016/1810 dated 01.08.2016. It is stated therein that DRR Swaroop, Whole Time Director, Stefan Hetges, M. Venkateshwar Rao Kasi, Mallipudi Anand Pattabhiramkumar and V. Ramana Reddy Company Secretary, through their power of attorney holder, have submitted an application on 24th June, 2016 u/s. 621A of the companies Act for compounding of the offence u/s. 217 (2AA) of the companies Act, 1956. It is stated that the subject Company was registered in the name of Unique Solutions (India) Private Limited with Registrar of Companies, Hyderabad, Telangana on 28th Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore; he prayed that the Tribunal can allow the present composition of offence. 11. In the light of above discussion of the case, the following two issues arise for consideration: (a) In what types of cases, the CLB/NCLT can exercise its powers under Section 621A of Companies Act, 1956, for composition of offence(s), without reference to Criminal Court. (b) Whether the present case is a fit case to allow composition of alleged offence. 12. Under the new Companies Act 2013, NCLT is empowered to compound offences leading to fine only u/s. 441. Section 441 reads as follows: "(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) with fine only, may, either before or after the institution of any prosecution, be compounded by the Tribunal or Central Government etc. So there is no ambiguity in the new Act, 2013 that Tribunal has power and jurisdiction for offence(s) liable for fine only." Whereas under Companies Act, 1956, powers of CLB are more under Section 621A, for compounding of offences. However, there are two divergent views on the exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies has already instituted a criminal case against the company and 5 of the delinquent Directors and, the same was pending before the Addl. Chief Metropolitan Magistrate, Delhi. The default u/s. 68(a), (b) attracts maximum penalty of Rs. 10,000/- or imprisonment upto 5 years or with both. When the above application was taken up by the learned Member, Northern Region Bench, CLB, he was of the view that prior permission was necessary of the Criminal Court, where prosecution was pending and thus directed the applicants to move an application before the Addl. Chief Metropolitan Magistrate for permission to compound the offence. The learned Metropolitan Magistrate stated to have rejected the application on the ground, jurisdiction of the Court would come into operation only after the parties had compounded the offence. It was also observed that the Court could not issue any direction to any of the parties to compound the offence. Since there were conflicting decisions on the issue of taking permission of the court before considering the issue of compounding of offence, the issue was referred to the Full Bench of CLB, as mentioned above. 14. The Hon'ble full Bench consisting of Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in relation to offences, which are punishable with imprisonment only or with imprisonment and fine. After considering the issues raised there, the Hon'ble High Court, after taking into consideration of various relevant provisions including that of Section 621A of the Act and, the decision of the Full Bench in Hoffland Finance Ltd. (supra) above in its judgment dated 5th November, 2003 held as follows: "Accordingly, we hold that the exercise of powers by the Company Law Board under Section 621A (1) is independent of exercise of powers by the court under sub-section (7), and all offences other than those which are punishable with imprisonment only or with imprisonment and also fine can, be compounded by the Company Law Board without any reference to Sub-Section (7), even in cases where the prosecution is pending in a criminal court. It is an accepted position that there is no decision of the High Court or of the Supreme Court on the aforesaid question except for the aforesaid decision of the Company Law Board in Hoffland Finance Limited (supra)." 16. The decision of the Hon'ble Delhi High Court in VLS Finance Ltd. vs Union of India & others was questioned before the Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the issue in question in the present case. 20. It is not in dispute that offence in question is compoundable and, the applicants have also declared unequivocally that the new management of the Company has taken appropriate actions and implemented policies/designs to prevent any future defaults. 21. It is not in dispute that the present offence is the first of its kind committed by the Company and, the Registrar of Companies also has not opposed the case and left it to the consideration of Tribunal as per merits. The Company also committed not to recur this type of the offences in future. 22. In the light of the facts and circumstances of the case and, also in the interest of Justice, we are inclined to allow the present application by exercising the powers conferred under Section 621A of the Companies Act, 1956, however, subject to payment of compounding fees for the alleged offence committed U/s. 217(2AA) of the Companies Act, 1956. Accordingly, we direct each applicants to pay Rs. 20,000/- (Rupees Twenty Thousand Only) which is the maximum penalty as prescribed under Section 217(6) of the Companies Act, 1956 within a period of three weeks from the date of the receipt of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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