TMI Blog2017 (10) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... nment, the Tribunal is empowered to compound the offence only with the permission of the Special Court. In absence of investigation or pendency of any case before any court of law for alleged violation of Section (s) 92, 137,96 and 129 of the Companies Act, 2013, we hold that there is no requirement for the Tribunal to seek any permission from Special Court for the purpose of compounding any of such offence. It is well within the jurisdiction of the Tribunal to compound the offence where alternative punishment of fine is prescribed in place of imprisonment and where no case is pending before the Special Court. We further hold that the Tribunal is also empowered to compound such offence (s) under section (s) 92, 137 and 129 etc., where the alternative punishment of fine in place of imprisonment has been prescribed even where case (s) are pending before the Special Court, but in such cases, permission of the Special Court is required to be obtained prior to compounding the offence. In view of the position of law and facts of the case, we are of the view that the Tribunal was not correct in returning the file to the Appellants to move application before the Special Court constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Companies Act, 2013 for compounding the offences. 4. The Tribunal dismissed the application by impugned order dated 7th March 2017 with following observation and direction: - 3. The provisions of Companies Act, 2013 mandate that offence which is punishable with imprisonment even in the alternative of fine, should be dealt with by the Special Court constituted for violation of the Companies Act. This application is therefore being returned to the applicant to file it before the proper forum i.e., in the Special Court constituted at Dwarka, New Delhi which is the Court of ASJ- 3. 4. The RoC may be intimated to file their report in the concerned Court. 5. One of the ground taken by the Appellants to assail the impugned order is that no case is pending against the company or its officers before any Special Judge for punishment under any of the provisions as referred to above or for alleged violation of any provision of the Companies Act. 6. The question involved in this appeal is whether the Tribunal had jurisdiction to compound the offences under Section 441 for the alleged violation of Section (s) 92, 137, 96 and 129 of the Companies Act, 2013. For vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with fine of one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees, and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both. 9. From the aforesaid sub-section (s) of Section 137, again it is clear that while the company is punishable with fine of one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees but the Managing Director and CFO of the company, if any, and in absence of Managing Director and CFO, any other director who is in-charge are: punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than fifty thousand rupees but which may extend to five lakh rupees, or with both. From the aforesaid provision, it would be evident that if the financial statement do not reflect the true and fair view of the state of affairs of the company or do not comply with the accounting standard as notified under Section 133 of the Companies Act, 2013, are not filed in the prescribed form, the Managing Director, whole- time Director in-charge of finance, CFO or any other person charged by the Board with the duty of complying with the requirement for the said Section and in the absence of any officers, all the directors are punishable with imprisonment for a term, which may extend to one year or with fine which shall not be less than fifty thousand rupees which may extend to five lakh rupees or with both. 13. From the provisions, as referred to above, while we find that except for violation of Section 96, where no imprisonment has been prescribed, for violation of other provisions as referred to, imprisonment or fine or both have been prescribed. Therefore, it is open to the Tribunal to compound the offences under Section 96 by imposing fine in terms of Section 99 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No offence specified in this section shall be compounded except under and in accordance with the provisions of this section. 15. Prior to Section 441 of the Companies Act, 2013, Company Law Board (now National Company Law Tribunal) was empowered under Section 621A of the Companies Act, 1956 to compound certain offences as stood at the relevant time which reads as follows:- 621 A. 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 offence punishable with imprisonment only, or with imprisonment and also with fine, may, either before or after the institution of any prosecution, be compounded by- (a) the Company Law Board; or (b) where the maximum amount of fine which may be imposed for such offence does not exceed five thousand rupees, by the Regional Director, on payment or credit, by the company or the officer, as the case may be, to the Central Government of such sum as that Board or the Regional Director, as the case may be, may specify: Provided that the sum so specified s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fine or imprisonment or both. 12. Section 211(7) of the Act provides for punishment with imprisonment for a term which may extend to six months or with fine or with both. Therefore, an accused charged with the offence under Section 211(7) of the Act has not necessarily to be visited with imprisonment or imprisonment and 12 Page 13 also fine but can be let off by imposition of fine only. Therefore, the punishment provided under Section 211(7) of the Act comes under category (v) aforesaid. Section 621A (1) excludes such offences which are punishable with imprisonment only or with imprisonment and also with fine. As we have observed above, the nature of offence for which the accused has been charged necessarily does not invite imprisonment or imprisonment and also fine. Hence, we are of the opinion that the nature of the offence is such that it was possible to be compounded by the Company Law Board. 15. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities mentioned therein and prior permission of Court is not necessary for compounding the offence, when power of compounding is exercised by the Company Law Board. In view of what we have observed above, the order impugned does not require any interference by this Court. 18. Thus we find that if an offence is punishable under the Act with imprisonment only or with imprisonment and also with fine cannot be compounded by Tribunal in view of clause (b) of sub- section (6) of section 441. 19. However, if any offence which is punishable under the Act with imprisonment or fine or with imprisonment or fine or with both can be compounded by the Tribunal but only with the permission of the Special Court in accordance with the procedure laid down by the Act for compounding of offences as prescribed in clause (a) of sub- section (6) of Section 441. 20. In the present case, we find that apart from violation of Section 96, where punishment fine has been prescribed, for violation of Section (s) 92, 137 and 129 of the Companies Act, 2013, alternative punishment of imprisonment or fine or imprisonment with fine, have been prescribed. In view of such provision we hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd no investigation is pending. 24. The Registrar of Companies referred to the decision of this Appellate Tribunal in Subhinder Singh Prem v. UOI in C.A. (AT) Nos. 101 to 105 of 2017 wherein this Appellate Tribunal by order dated 17th May 2017 held :- Sub-section (1) of Section 621 prohibits compounding when an offence punishable with imprisonment only or with imprisonment also with fine. Where fine is alternative to the imprisonment or where there are no provision of punishment is well within the jurisdiction of the Tribunal to compound the offence. Sub-section (6) of Section 621 A further makes it clear that any offence which is punishable under Act with imprisonment or with fine, or with both, the case is liable to be compounded. 25. The Register of Companies has requested this Appellate Tribunal to pass appropriate order on merit of the case. However, as no report has been submitted by the Registrar of Companies as to what is maximum fine payable by Appellants for the alleged offences, as noticed above and the period of such offences etc., have not been detailed, we are not expressing any opinion about fine, if any, to be imposed on the company or one or other Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
