TMI Blog2018 (1) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... ate with Mr. Rakesh Kumar and Mr. Dev Roy, Advocates for the appellants. Mr. Nawal Kishore Jha, Senior Panel Counsel UoI along with Mr.Rakesh Kumar Tiwari, RoC, NCT of Delhi Haryana, for Respondent. ORDER 17.05.2017- In these appeals, as common order dated 6th February, 2017 passed by the National Company Law Tribunal, New Delhi ( Tribunal for short) is under challenge, they were heard together and disposed of by this common judgment. 2. The Appellant, Mr. Subhinder Singh Prem, who was the Managing Director of the Company M/s. Reebok India Company preferred five applications before the Tribunal under section 621 A of the Companies Act, 1956 for compounding of the offences for violation of certain provisions during some of the financial years. The Tribunal by common order dated 6th February, 2017, rejected all the applications with following observations: 6. The investigations in this case have clearly revealed that non adherence to statutory compliances was deliberate and malafide as there was vast scale fabrication of documents giving rise to fraud, in conspiracy with a larger group. 7. There is merit in the arguments advanced by the Ld. Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rosecution for serious offences involving Sections 477A, 464, 471, 405 r/w 406, 418, 107, 409, 120A r/w 120B under the Indian Penal Code (r/w offences under the Companies Act, 1956). It was brought to the notice of the Tribunal that on the basis of documentary and oral evidences, a compliant case no. 38J/2014 against Appellant and 34 others was filed in the Gurgaon Court. The charge sheet has been filed under sections 420, 477A, 406 IPC r/w the relevant provisions of the Companies Act. The investigation carried out by the office of SFIO established that the sale of RIC products were grossly inflated by the Applicant in connivance with other executives of the RIC by raising fictitious invoices and booking fictitious sales and manipulating other documents. 5. Though the Registrar of Companies has sent a report quantifying the fees attracted for compounding and also bringing to the notice of the Tribunal the factum of pending Criminal Cases, the SFIO has filed a detailed report vehemently resisting any indulgence being granted to the Applicant. In view of the aforesaid objections, the Ld. Tribunal rejected all applications. 6. Ld. Senior Counsel appearing on behalf of the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Co. Appeal No. 103(AT)/2017 211 (1) read with 211 (7) 211 (1):- Every balance sheet should give a true and fair view of the state of affairs of the Company. 211(7):- If officer/director fails to do so, shall be punishable with imprisonment for a term which may extend to 6 months, or with fine which may extend to ₹ 10,000/- or both. 31.12.2008 Gain on exchange fluctuation and rent amount has been shown under the head other income and operating and other expenses , hence netting against basic spirit of provision of Schedule-VI. Imprisonment for a term which may extend to 6 months, or with fine which may extend to ₹ 10,000/- or both. Not covered by 621A(2), as no other default of Appellant, Ever compounded under the Companies Act, 1956 4. Co. Appeal No. 104(AT)/2017 and r/w 629A 255:- Not less than 2/3 of the total number of directors to retire by rotation at every Annual General Meeting of the Company. 256:-Director longest in the office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance sheet laid before a company, the amounts, if any, which it proposes to carry to any reserves in such balance sheet. The other allegation is violation of Section 211(1) where under every balance sheet has required to provide a true and fair view of the state of affairs of the company. Similarly, Section 255 stipulates that there should not be less than 2/3rd of the total number of directors to retire by rotation at every Annual General Meeting of the Company. Section 256 talks of Director longest in the office is to retire first. Similarly, Section 217(4) relates to Board s Report to be signed by the Chairman if he is authorised or by such number of directors as are required to sign. For all those violations, penalty have been provided which may be imprisonment for a term which may extend to six months or with a fine which may extend to ₹ 20,000/- or with both. With regard to the violation of Section 255 read with Section 629 A, the only penalty which can be imposed is fine which may extend to ₹ 5000/-, and where the contravention is continuing one, with a further fine which may extend to ₹ 500/- for every day during which the default continues. No punishm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny second or subsequent offence committed after the expiry of a period of three years from the date on which the offence was previously compounded, shall be deemed to be a first offence; (3) (a) Every application for the compounding of an offence shall be made to the Registrar who shall forward the same, together with his comments thereon, to the Central Government. (b) Where any offence is compounded under this section, whether before or after the institution of any prosecution, an intimation thereof shall be given by the company to the Registrar within seven days from the date on which the offence is so compounded. (c) Where any offence is compounded before the institution of any prosecution, no prosecution shall be instituted in relation to such offence, either by the Registrar or by any shareholder of the company or by any person authorised by the Central Government against the offender in relation to whom the offence is so compounded. (d) Where the composition of any offence is made after the institution of any prosecution, such composition shall be brought by the Registrar in writing, to the notice of the Court in which the prosecution is pending and on su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and held as follows: 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 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. 16. 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 the court. It is pointed out that when the prosecution has been laid, it is the criminal court which is in seisin of the matter and it is only the magistrate or the court in seisin of the matter who can accord permission to compound the offence. In any view of the matter, according to the learned Counsel, the Company Law Board has to seek permission of the court and it cannot compound the offence without such permission. This line of reasoning does not commend us. Both Sub-section (1) and Subsecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercised by the Company Law Board. 14. In view of what we have observed above and decision of the Hon ble Supreme Court, we hold that the Appellant is entitled for compounding of offence. We, accordingly, order as follows: (i). Company Appeal (AT) No.101 of 2017 - The offence committed by violating of Section 217(2AA) is compounded with fine of ₹ 20,000/-. (ii). Company Appeal (AT) No.102 of 2017 The offence committed by violating of Section 217(1) (b) is compounded with fine of ₹ 20,000/-. (iii). Company Appeal (AT) No.103 of 2017 - The offence committed by violating of Section 217(1) is compounded with fine of ₹ 10,000/-. (iv). Company Appeal (AT) No.104 of 2017- The offence committed by violating of Section 255 and Section 256 is compounded with onetime fine of ₹ 5,000/- plus fine of ₹ 300 per day for 1183 days is compounded with total fine of ₹ 3,59,900/-. (v). Company Appeal (AT) No.105 of 2017- The offence committed by violating of Section 217(4) (b) is compounded with fine of ₹ 20,000/-. _______________________ Total- ₹ 4,29,900/- _______________________ 15. The Appellant is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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