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TMI Blog2020 (9) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... panies Act, 1956 (section 441 of the Companies Act, 2013). This petition was filed before the Registrar of Companies, Kochi (hereinafter referred to as the Registrar of Companies) and the same has been forwarded to this Tribunal along with the Registrar of Companies report. The learned Registrar of Companies has informed that, this application was filed because the company has violated the provisions of section 42(1) of the Companies Act, 1956 (section 19 of the Companies Act, 2013) (hereinafter referred to as Act) by allotting 1,00,000 equity shares to its subsidiary company DBFS Derivatives and Commodities Ltd. 2. It is further stated that the company has made allotment of shares to its subsidiary company DBFS Derivatives and Commodities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or before becoming a subsidiary of the holding company, but, except in the cases referred to in sub-section (2), the subsidiary shall have no right to vote at meetings of the holding company or of any class of members thereof. (4) Subject to sub-section (2), sub-sections (1) and (3) shall apply in relation to a nominee for a body corporate which is a subsidiary, as if references in the said sub- sections (1) and (3) to such a body corporate included references to a nominee for it. (5) In relation to a holding company which is either a company limited by guarantee or an unlimited company, the reference in this section to shares shall, whether or not the company has a share capital, be construed as including a reference to the interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sections 111A, 397 and 398 of the Companies Act, 1956 vide C. P. No. 103 of 2007 and the said matter was disposed of in favour of the petitioner. Subsequently, the petitioners in C. P. No. 103 of 2007 filed an appeal before the hon'ble High Court of Kerala and the appeal was dismissed by the hon'ble High Court observing that 100,000 shares allotted by the company on April 21, 2007 to its subsidiary company, DBFS Derivatives and Commodities Ltd., was hit by section 42(1) of the Companies Act, 1956. 7. Counsel for the petitioner submitted that the board of directors of the petitioner-company has disclosed the observation of the hon'ble High Court of Kerala on violation of the provisions of section 42(1) of the Act in the direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which may extend to five hundred rupees for every day after the first during which the contravention continues." 9. On examination of the circumstances as discussed above, it can be seen that the allotment of 1,00,000 equity shares made to its subsidiary company DBFS Derivatives and Commodities Ltd., on April 21, 2007 is hit by section 42(1) of the Companies Act, 1956. Therefore, by each officer in default as members of the board of directors is subjected to a fine of Rs. 5,000 (rupees five thousand only), that too as a deterrent for not repeating the impugned default in future. The imposed remittance shall be made by the petitioner in favour of "Pay and Accounts Officer, Ministry of Corporate Affairs, Chennai" within three weeks from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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