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Judgment
Harnam Singh Thakur, Member (Judicial)
The instant CP is filed by JSTI Transformers Pvt. Ltd. (hereinafter referred to as “Applicant No. 1/Petitioner Company”); Eric Lajus (hereinafter referred to as “Applicant No. 2”); Harve Jean Rodolphe Peyronnet (hereinafter referred to as “Applicant No. 3”); Vijay Kumar Pabby (hereinafter referred to as “Applicant No. 4”) and Anuj Tuteja (hereinafter referred to as “Applicant No. 5”) under Section 441 of the Companies Act, 2013 (Act) for compounding of offences under Section 92 of the Companies Act, 2013 for the condonation of delay in filing the Annual Returns for the Financial Year 2014-15 and 2015-16. The matter relates to JSTI Transformers Pvt. Ltd. (Petitioner Company), a company incorporated under the Companies Act, 1956 on 04/02/2009 and having its registered office at -Bhatuli Kalan, HP No. 214, Parghana Dharampur, Tehsil Nalagarh, District Solan, Himachal Pradesh. Therefore, the jurisdiction lies with this Bench of the Tribunal.
It is stated that the present authorised share capital of the Petitioner Company is ₹26,00,00,000/- (Rupees Twenty Six Crore) of ₹10/- each. The present issued, subscribed and paid-up share capital of the Petitioner Company is ₹13,51,50,890/- (Rupees Thirteen Crores Fifty-One Lakh Fifty Thousand Eight Hundred and Ninety Only) divided into 1,35,15,089 equity shares of ₹10/- each. The applicant Nos. 2 to 5 are the Directors of the Petitioner Company
It is submitted that the Petitioner Company had been regularly convening its Annual General Meeting till the Financial Year 2013-14. However, due to certain differences and disputes between the members of the Petitioner Company, no meeting of the Board of Directors could be convened after 05.05.2015. As a result, the Petitioner Company was also unable to file its Annual Statements and Annual Returns for the Financial Year 2014-15. The Petitioner Company was unable to hold its Annual General Meeting for the Financial Year 2014-15 which was required to be done by 30.09.2015. The Members of the Petitioner Company had referred their dispute to the Principal Bench of Hon’ble Company Law Board at New Delhi. As per the order dated 18.02.2016 of the Principal Bench of Hon’ble NCLT, New Delhi, the Petitioner Company convened a meeting of the Board of Directors on 28.04.2016 to approve the Agenda for the Annual General Meeting and Financial Statement. The Annual Financial Statements and Annual Returns could also not be approved in the Board Meeting dated 28.04.2016 due to the dispute and differences between the members and the Petitioner Company was unable to convene its meeting of Board of Directors afterwards. Similarly, due to the non-convening of the meeting of Board of Directors, the Petitioner Company was also unable to file its Annual Returns for the Financial Year 2015-16.
It is further submitted that the matter was finally settled between the Members of the Petitioner Company on 10.06.2017 and a Settlement Agreement was executed between the members. In the meetings of the Board of Directors which were convened on 09.08.2017 & 21.08.2017, the Board has approved the Financial Statements of the Petitioner Company for the Financial Year 2014-15 & 2015-16. The Annual General Meeting was also held on 14.08.2017 and 22.08.2017 and the Annual Returns were filed on 10.10.2017 and 18.10.2017.
It is further averred by the petitioners that as per Article 7.6 of the Articles of Association of the Company, the quorum for the meeting shall consist of at least one director should be nominated by JST Transformateurs(Shareholder of Company) and one nominated by Stesalit (Shareholder of Company) and due to the ongoing dispute between the JST Transformateurs and Stesalit. Since, the quorum could not be completed, thus the Petitioner Company was unable to carry out various corporate actions including Statutory Compliances. After the settlement between the parties on 10.06.2017, the meeting of the Board of Directors was held and subsequently, after the approval the Annual Returns were filed by filing Form No. MGT-7 on 10.10.2017.
It is further submitted that the Annual General Meeting of the Petitioner Company for the Financial Year 2014-15 and 2015-16 was convened on 14.08.2017 and 22.08.2017 i.e. with a delay of 683 days and 325 days respectively. The default under Section 96 of the Act stands rectified upon the filing of these Annual Returns. The failure to comply with the Section 96 of the Act was completely unintentional. The Petitioner Company made all the efforts to make timely compliances of various provisions of the Act and the Company has taken all reasonable steps in complying with Section 96 of the Act. The delay in convening the Annual General Meeting for the Year 2014-15 and 2015-16 does not effect the larger public interest as the Petitioner Company is a Pvt. Ltd. Company. The Director of the Petitioner Company has filed an affidavit stating that the company has not repeated the offence and has never defaulted on convening the Annual General Meeting as required by the Companies Act either before 2014-15 or after 2015-16. The Petitioner Company has also not filed any application, writ petition, suit or any legal proceeding with regard to the subject matter before any Court of law.
The relevant provisions of Sections 96 and 99 of the Act (Prior to amendment) in the Companies Act, 2013 is reiterated below:-
Section 96
“(1) Every company other than a One Person Company shall in each year hold in addition to any other meetings, a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next:
Provided that in case of the first annual general meeting, it shall be held within a period of nine months from the date of closing of the first financial year of the company and in any other case, within a period of six months, from the date of closing of the financial year :
Provided further that if a company holds its first annual general meeting as aforesaid, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation:
Provided also that the Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first annual general meeting, shall be held, by a period not exceeding three months.
(2) Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate:
Provided that annual general meeting of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance:
Provided further that the Central Government may exempt any company from the provisions of this subsection subject to such conditions as it may impose.
Provided further that the time, date and place of each annual general meeting are decided upon before-hand by the Board of Directors having regard to the directions, if any, given in this regard by the company in its general meeting.
Explanation.—For the purposes of this subsection, “National Holiday” means and includes a day declared as National Holiday by the Central Government.”
Section 99
“If any default is made in holding a meeting of the company in accordance with section 96 or section 97 or section 98 or in complying with any directions of the Tribunal , the company and every officer of the company who is in default shall be punishable with fine which may extend to one lakh rupees and in the case of a continuing default, with a further fine which may extend to five thousand rupees for every day during which such default continues.”
It is prayed that the offence under Sections 96 and 99 of Companies Act, 2013 be compounded and a lenient view is taken, and reasonable compounding fee is levied.
The report of Registrar of Companies, Himachal Pradesh dated 24.09.2019 was submitted by counsel for the petitioner vide Diary No.5154 dated 25.09.2019 stating that the Annual General Meeting of the Petitioner Company for the Financial Year 2014-15 and 2015-16 have filed on 14.08.2017 and 22.08.2017 i.e. with a delay of 683 days and 325 days respectively. The default has been made good under Sections 96 and 99 of the Act upon the convening of the Annual General Meeting. As per the report of the Registrar of Companies, Himachal Pradesh, the maximum fine calculated for FY 2014-15 is Rs. 1,75,75,000/- and for FY 2015-16 is Rs. 86,25,000/-.
We have heard and carefully considered the learned Senior Counsel for the petitioner company and perused the reports of the Registrar of Companies, Himachal Pradesh.
The provisions of Section 441 (1) and (2) of the Act (Prior to amendment) are as follows:-
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, any offence punishable under this Act (whether committed by a company or any officer thereof) not being an offence punishable with imprisonment only, or punishable with imprisonment and also with fine, may, either before or after the institution of any prosecution, be compounded by—
(a) the Tribunal; or
(b) where the maximum amount of fine which may be imposed for such offence does not exceed twenty-five lakh rupees, by the Regional Director or any officer authorised by the Central Government, on payment or credit, by the company or, as the case may be, the officer, to the Central Government of such sum as that Tribunal or the Regional Director or any officer authorised by the Central Government, as the case may be, may specify:
Provided that the sum so specified shall not, in any case, exceed the maximum amount of the fine which may be imposed for the offence so compounded:
Provided further that in specifying the sum required to be paid or credited for the compounding of an offence under this sub-section, the sum, if any, paid by way of additional fee under sub-section (2) of section 403 shall be taken into account:
Provided also that any offence covered under this sub-section by any company or its officer shall not be compounded if the investigation against such company has been initiated or is pending under this Act.
(2) Nothing in sub-section (1) shall apply to an offence committed by a company or its officer within a period of three years from the date on which a similar offence committed by it or him was compounded under this section.
Explanation.—For the purposes of this section,—
(a) any 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;
(b) “Regional Director” means a person appointed by the Central Government as a Regional Director for the purposes of this Act.
As per the provisions of Section 441(1) of the Act, compounding can be made of any offence punishable under the Act (whether committed by a company or any officer thereof) with fine only. Section 441(6) also reiterates that any offence which is punishable under the Act with imprisonment only or with imprisonment and also with a fine shall not be compounded.
The petitioner company has filed written submissions vide Diary No. 00268/12 dated 25.07.2022 wherein it has been submitted that the penalties imposed on the applicants ought to be reduced as the default has been cured by the applicants. Additionally, the quantum of penalty ought to be reduced in light of the Amendments made to the Acts vide The Companies (Amendment) Act, 2019 and The Companies (Amendment) Act, 2020. A Reliance has been placed on the judgement of Hon’ble NCLAT in the case of Viavi Solutions India Pvt. Ltd. & Ors. Vs. Registrar of Companies, NCT of Delhi and Haryana (2017) 203 CompCas 165 wherein Hon’ble NCLAT has imposed a reduced penalty equivalent to less than 20% of the maximum penalty provided under the Act.
In the present case, the default is for non-compliance of Section 96 of the Companies Act, 2013 and the penalty for the aforesaid default is provided in Section 99 of the Companies Act, 2013.
The third proviso to Section 441(1) of the Act provides for non-compounding of offence if the investigation against the company has been initiated or is pending under the Act. In the report of the RoC, it is nowhere mentioned if any complaint or inspection/investigation is pending in the present case.
It is seen from the records of the petitioner company and so admitted by the RoC in its report that the non-compliance under Section 96 of the Act has been made good. It is pertinent to note that non compliance u/s 96 of the act is unintentional. Moreover, the delay in convening annual general meetings does not adversely effect the larger public interest as the applicant is a private company.
In the present case, the company has made an application suo motu and has stated that this or similar offences have not been compounded during the last three years. Keeping in view the judgement of Hon’ble NCLAT in the case of Viavi Solutions India Pvt. Ltd. & Ors. Vs. Registrar of Companies, NCT of Delhi and Haryana (Supra) and the facts and circumstances of the present case, we consider it just, fair and reasonable to compound the offence under Section 96 of the Companies Act, 2013 in the case of JSTI Transformers Pvt. Ltd. The total amount of penalty is ₹1,75,75,000/- for FY 2014-15 and ₹86,25,000/- for FY 2014-15. However, after composition a payment of compounding fee of 20% of the Maximum fine shall be paid which is given below :-
Maximum Fine
Coumpounded Amount
FY 2014-15
FY 2015-16
FY 2014-15
FY 2015-16
Applicant no. 1/
Petitioner Company
₹35,15,000
₹17,25,000/-
₹7,03,000/-
₹3,45,000/-
Applicant No. 2
₹35,15,000
₹17,25,000/-
₹7,03,000/-
₹3,45,000/-
Applicant No. 3
₹35,15,000
₹17,25,000/-
₹7,03,000/-
₹3,45,000/-
Applicant no. 4
₹35,15,000
₹17,25,000/-
₹7,03,000/-
₹3,45,000/-
Applicant no. 5
₹35,15,000
₹17,25,000/-
₹7,03,000/-
₹3,45,000/-
TOTAL
₹1,75,75,000
₹86,25,000/-
₹35,15,000
₹17,25,000/-
The amount of the compounding fee will be deposited with the ‘Pay and Accounts Officer’ Ministry of Corporate Affairs, New Delhi within a period of one month from the date of receipt of the certified copy of the order.
The Registrar of Companies, Himachal Pradesh will ensure that before effect is given to the above compounding order, the payment of the compounding fee is duly made by the applicants.
As a result thereof, CP No.09/Chd/HP/2019 is allowed and disposed of accordingly.