AI Structured Summary
Not yet generated for this judgment
Judgment
This is a Company Petition filed on 04.01.2023 under section 441 of the Companies Act, 2013 for compounding of the offence committed under section 168 of the erstwhile Companies Act, 1956 which corresponds to section 99 of the Companies Act, 2013 (hereinafter referred to as ‘the Act’); by Apex Power Tools India Private Limited.
Apex Power Tools India Private Limited having CIN No: U29255MH2011FTC223599 was incorporated on 03.11.2011 under Companies Act, 1956 as a private company limited by shares having its registered office at No: 1302, Tower 3, One International Center, Senapati Bapat Marg, Elphinstone Road, Mumbai- 400013 (‘the Company’) which is a 100% subsidiary of Apex Tool group, LLC. The Authorised Share Capital of the Company is INR 100,00,000/- (Rupees One Crore Only) and the Paid-up Share Capital of the Company is Rs. 45,16,660/- (Rupees Fourty-Five Lakhs, Sixteen Thousand, Six Hundred and Sixty Only).
The copies of audited financial statements and e-forms 23AC, 23ACA and 20B for the financial years 2012-13, 2013-14 along with e-Form AOC-4 and MGT-7 for the Financial Year 2014-15 along with payment challans have been annexed to the petition to show that the Company is regular in its filings. As per the latest Company Master Data, the Company has last filed its accounts for FY 2022-23 and held its last AGM on 29/09/2023. Thus, but for the years of default, the Company otherwise appears to be regular in filing the financial statements and holding annual general meeting.
The main object of the Company is to carry on the business of manufacture, purchase, sale, export, import and to design, fabricate, assemble, construct, repair and act as agents and wholesale dealers in machine tools, hand-tools, professional electronic tools, land tools etc. and other power driven and hand driven tools, attachments, devices and facilities relating thereto in all types of industries.
The Applicant/Defaulters herein have filed Form GNL-1 vide SRN No. F51840056 on 06.12.2022 thereby admitting the violations of Section 168 of the Companies Act, 1956 and Section 96 of the Companies Act, 2013. The Company has suo-moto applied for compounding the offences without waiting to receive any notice from the RoC/MCA.
As per section 96 of the Companies Act, 2013 read with section 166 of the Companies Act, 1956, the Company was required to lay its financial statements every year at the Annual General Meeting and the Company had defaulted in laying the financial Statements for the financial year ended March 31st, 2013, for the financial year ended March 31st 2014 and for the financial year ended March 31st, 2015 on or before September 30th of the corresponding year. The financial statement for the financial year 2012-13 was placed before Annual General Meeting on 22.10.2014 with a delay of 387 days; for the financial year 2013-14 on 10.02.2016 with a delay of 498 days; and for the financial year 2014-15 on 05.09.2016 with a delay of 341 days.
Petitioners submitted that laying of financial statements before the AGM was delayed due to skeletal staff in the Company and the time taken in addressing audit queries in connection with the finalization of accounts of the Company. The petitioners further submitted that the delay was not intentional and for reasons beyond the control of the petitioners.
No prosecution has been initiated against the petitioners for the aforesaid default and an application was filed with the Registrar of Companies, Mumbai who referred to NCLT in view of the pecuniary limits prescribed for compounding of such offense. Hence the present application.
Analysis
This Bench has gone through the pleadings on record and the submissions made by the Representative for the Applicants / Defaulters herein and is accordingly of the considered view that, the Applicants/Defaulters herein have violated Section 166 of the Companies Act, 1956 and Section 96 of the Companies Act, 2013 and for the said violation, the punishment is provided Section 168 of the Companies Act, 1956 and Section 99 of the Companies Act, 2013. The extracts of the Sections which are relevant in this case are as follows:
Section 168 of the Companies Act, 1956 -
Sec.168- If default is made in holding a meeting of the company in accordance with section 166, or in complying with any directions of the Tribunal or the Central Government, as the case may be under sub-section (1) of section 167, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty thousand rupees and in the case of a continuing default, with a further fine which may extend to two thousand five hundred rupees for every day after the first during which such default continues.
Section 99 of the Companies Act, 2013 applicable w.e.f. 01.06.2016
“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.”
Hence, the maximum penalty u/s 168/99 of the 1956/2013 Act for the defaulters in respect of the default occurring in the financial years 2012-13, 2013-14 and 2014-15 is computed in the table hereinbelow:
Applicant No.01- Apex Power Tools India Private Limited and Applicant No.02- Mr. Ajay Sethi, Director:
Financial Year
Applicable Section
Period of Default
Maximum Penalty
2012-13
Sec. 168
Companies 1956.
of
the Act,
387 days 30.09.2013 22.10.2014)
(from
to
For one-time default- Rs. 50,000/- And
For Continuing Default- Rs. 2,500/- per day for 387 days amounting to Rs. 9,67,500/-
Maximum-Rs.10,17,500/-
2013-14
Sec. 168
Companies 1956.
of
the Act,
498 days 30.09.2014 10.02.2016)
(from
to
For one-time default- Rs. 50,000/- And
For Continuing Default- Rs. 2,500/- per day for 498 days amounting to Rs. 12,45,000/-
Maximum-Rs.12,95,000/-
2014-15
Sec. 168 of the Companies Act, 1956 read with Sec.99 of the
Companies Act,
2013 w.e.f.
01.06.2016.
341 days (from 30.09.2015 to 05.09.2016)
Upto 31.05.2016 u/s 168 of the 1956 Act
For one-time default- Rs. 50,000/- And
For Continuing Default- Rs. 2,500/- per day for 245 days amounting to Rs. 6,12,500/- Maximum-Rs.6,62,500/-
From 01.06.2016 to 05.09.2016
u/s 99 of the 2013 Act
For one-time default- Rs. 1,00,000/-
And
For Continuing Default- Rs. 5,000/- per day for 96 days amounting to Rs. 4,80,000/- Maximum-Rs.5,80,000/-
Gross Maximum- Rs. 12,42,500/-
GROSS TOTAL
Maximum Rs. 35,55,000/- each
It is further observed that the Company was incorporated with an authorized capital of Rs. 1 crore and paid up capital of Rs 45,16,660/- 99.99% of the shares were subscribed by Apex Tools LLC and the 0.01% of shares held by Aegean Hong Kong Limited. The Reserves & Surplus of the Company, as per the financial statements as on 31.03.2013 annexed by it, are Rs. 46,35,744/- (Rupees Fourty Six Lakhs, Thirty-Five Thousand, Seven Hundred and Fourty Four Only). Further, the RoC Report states that the turnover of the Applicant Company for 31.03.2022 is Rs. 21,59,05,582/- (Rupees Twenty-One Crores, Fifty-Nine Lakhs, Five Thousand, Five Hundred and Eighty-Two Only). Thus, we see that the Company is in a sound financial position.
The Company has complied with the provisions of section 96 of the 2013 Act and section 168 of the 1956 Act, though with a delay. As per the financial statements submitted by the petitioners, the company is yet to make refund of excess shares application money received from the shareholders amounting to Rs 200020/- and is in the process of filing an application with the Reserve Bank of India for granting condonation for the delay in the refund in terms of notification dated 13/11/2007 under Foreign Exchange Management (Transfer on Issue of Security by a person resident outside
India) (3rd Amendment) Regulations 2007. In another matter, an appeal to the Customs, Excise and Service Tax Appellate Tribunal, Mumbai is pending in respect of payment of service tax for the service provided to the group company of petitioner No.1 is pending. Apart from the afore-mentioned matters, no enquiry, investigation, inspection or prosecution is ordered on finding against the Company under the provisions of the Companies Act, 2013 or any other Act.
The Petitioner No. 3 is a director since 03.11.2011. However, Petitioner No. 2 is a director on the board of the Company only from 18.05.2018. Therefore, Petitioner No. 2 was not a director during the period of default.
The Registrar of Companies, Mumbai forwarded its Report dated July 13, 2023 on the petition filed by the Applicant. As per the submissions made in the report of the Registrar of Companies, Mumbai and from the submissions made in the Petition, it is observed that the Company has violated the Section
96 of the Companies Act with regard to laying/presenting of audited financial statement of the Company at the AGM for continuously for three financial years from 31.03.2013 to 31.03.2015.
On perusal of the report, we have noticed that the offence of the Company has been made good by adopting financial statements with delay.
Not placing the audited accounts of the Company before the AGM is generally a serious offence. However, it is observed that in the present case, the Company is a 100% subsidiary of Apex Tools Group LLC and the business of the Company is generally with the group companies. Hence the delay would not have caused prejudice to the shareholder.
Having considered the facts and circumstances of the case of default by the company, we consider it appropriate to compound the office by imposing penalty as under:
Applicant No.01- Apex Power Tools India Private Limited and Applicant No.02- Mr. Ajay Sethi, Director
Financial Year
Applicable Section
Period of Default
Maximum Penalty
2012-13
Sec. 168 of the Companies Act, 1956.
387 days (from 30.09.2013 to 22.10.2014)
For one-time default- Rs. 10,000/-
And
For Continuing Default- Rs. 500/- per day for
387 days amounting to Rs. 1,93,500/-
Maximum-Rs.2,03,500/-
2013-14
Sec. 168 of the Companies Act, 1956.
498 days (from 30.09.2014 to
10.02.2016)
For one-time default- Rs. 10,000/-
And
For Continuing Default- Rs. 500/- per day for
498 days amounting to Rs. 2,49,000/-
Maximum-Rs.2,59,000/-
2014-15
Sec. 168 of the Companies Act, 1956 read with Sec.99 of the
Companies Act,
2013 w.e.f.
01.06.2016.
341 days (from 30.09.2015 to 05.09.2016)
Upto 31.05.2016 u/s 168 of the 1956 Act
For one-time default- Rs. 10,000/-
And
For Continuing Default- Rs. 500/- per day for
245 days amounting to Rs. 1,22,500/-
Maximum-Rs.1,32,500/-
From 01.06.2016 to 05.09.2016 u/s 99 of the 2013 Act
For one-time default- Rs. 20,000/-
And
For Continuing Default- Rs. 1,000/- per day for 96 days amounting to Rs. 96,000/- Maximum-Rs.1,16,000/-
Gross Maximum- Rs. 2,48,500/-
GROSS TOTAL
Maximum Rs. 7,11,000/- each
Thus, a Compounding Fee of INR 7,11,00/- (Rupees Seven Lakhs and Eleven Thousand Only) each by the Applicant Company and its Director named hereinabove, thus, the Compounding Fee totaling to INR 14,22,000/- (Rupees Fourteen Lakhs and Twenty-Two Thousand Only) shall be sufficient as a deterrent for not repeating the alleged and admitted default in future. The imposed remittance shall be paid by way of Demand Draft drawn in favour of “Pay and Accounts Officer, Ministry of Corporate Affairs, Mumbai” within 30 days from the receipt of this order.
This Compounding Application vide Company Petition No. 25/441/NCLT/MB/MAH/2023 is, therefore, allowed and disposed of on the terms directed above. Needless to mention, the offence shall stand compounded subject to the remittance of the Compounding Fee imposed. A compliance report, therefore, shall be placed on record.
Registry shall send a copy of this order to the Registrar of Companies, Mumbai, Maharashtra.
Ordered accordingly. File be consigned to Records.