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Judgment
Madhu Sinha, Member (Technical)
This present Company Petition has been filed by the ORBLANCHE HOLDINGS PRIVATE LIMITED (hereinafter referred as “Petitioner”) under Section 441 of the Companies Act, 2013 (hereinafter referred as “Act”) for compounding the offence pertaining to failure in holding the Annual General Meeting in accordance with the Section 96 of the Companies Act, 2013 from the financial year 2011-12 to 2016-17.
The Applicant before us:
i) Orblanche Holdings Private Limited.
ii) Mr. Shripadraj Upadhyaya (The Director)
iii) Ms. Deepa Shripadraj Upadhyaya (The Director)
As per web portal of Ministry of Corporate Affairs following have been shown as Directors of the Applicant No. 1
Sr.
No.
Name of
the Director
DIN
Begin Date
End Date
Designation
1.
Shripadraj
Upadhyaya
00015926
20-11-2017
-
Director
2.
Vinod
Shridhar Shanbhag
00555709
26-05-2008
03-10-2011
Director
3.
Deepa Shripadraj
Upadhyaya
07980727
20-11-2017
-
Director
The Applicant No. 1 was a closely held company as the Directors and Shareholders were family members i.e. Mr. Shripadraj Upadhyaya is the son of Mr. Shivabettu Somashekara Upadhyaya i.e. the Founder/ the Director/ the Shareholder of the Applicant No. 1.
It is submitted that due to some reasons Mr. Shripadraj Upadhyaya, shareholder and Director of the Applicant No. 1 resigned as Director w.e.f. May 26, 2008 and therefore Mr. Vinod Shridhar Shanbhag was appointed as Additional Director of Applicant No.1 w.e.f. May 26, 2008 to fill the casual vacancy caused by the resignation of Mr. Shripadraj Upadhyaya. Further, Mr. Shripadraj Upadhyaya continued to remain as a shareholder of the Applicant No. 1.
It is further submitted that Mr. Vinod Shridhar Shanbhag was a close friend of Mr. Shivabettu Somashekara Upadhyaya and considering his long-term acquaintance with Mr. Shivabettu Somashekara Upadhyaya, Mr. Vinod Shridhar Shanbhag was inducted on the Board of Director of the Applicant No. 1. Further, on May 26, 2008, Mr. Vinod Shridhar Shanbhag was appointed as Additional Director. Wherein on September 29, 2008, the shareholders in the Annual General Meeting of the Applicant No. 1 confirmed the appointment of Mr. Vinod Shridhar Shanbhag as the Director of Applicant No. 1.
It is submitted that with effect from October 03, 2011, Mr. Vinod Shridhar Shanbhag resigned as a Director of the Applicant No. 1 thereby leaving only one Director i.e. Mr. Shivabettu Somashekara Upadhyaya on the Board of the Applicant No. 1.
Thereafter, the sole Director of the Applicant No. 1, Mr. Shivabettu Somashekara Upadhyaya passed away on November 08, 2011. Subsequently, there was no Director on the Board of the Applicant No. 1 but had only one-member i.e. Mr. Shripadraj Upadhyaya being the Applicant No. 2. Since there was no Director on the Board of the Applicant No. 1, the accounts for the financial year 2011-2012 to 2016-2017 were not finalized and audited and hence Annual General Meeting for the financial year 2011-2012 to 2016-2017 could not be held within the statutory timelines.
Further, the Applicant No. 2, being the promoter/ only member of the Applicant No. 1, after joining the company in 2017 became aware about the default under the Companies Act, 2013 with respect to non-convening of Annual General Meeting and filing of Annual returns, had immediately initiated the actions to rectify the defaults so that the Applicant No. 1 complies with the applicable relevant provisions of the Companies Act, 2013 and rules and regulations thereunder.
Pursuant to above, being the only member of the Applicant No.1, the Applicant No. 2, made an application dated 20.11.2017 to the Registrar of Companies, Mumbai under Section 167(3) to appoint himself and his wife Ms. Deepa Shripadraj Upadhyaya (Applicant No. 3), as the Directors on the Board of the Applicant No. 1 through back-end process as made available by the Registrar of Companies, Mumbai.
The case of the Petitioner further is that the new Board of Directors i.e. the Applicant No. 2 and Applicant No. 3 convened the Annual General Meetings for financial years commencing from 2011-12 to 2016-17 on 01.03.2018, 03.03.2018, 05.03.2018, 07.03.2018, 09.03.2018, and 12.03.2018 for the Financial years 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17 respectively and adopted the financial statements for the said years. Thereafter the filing of financial statements and annual returns with MCA was carried out and was completed on April 27, 2018 except for Filing of Form 20B which could not be filed due to technical problems/ errors, being “DIN is not associated to CIN of the Company” i.e. Applicant No. 1.
In view of the same, numerous Service-Related Complaints/Tickets were raised by the Applicant Nos. 2 and 3 bearing ticket Nos.SR794983, SR776317, SR775733, and SR756718 with Ministry of Corporate Affairs, However the technical problems/ errors, being “DIN is not associated to CIN of the Company” i.e. Applicant No. 1 it was not resolved by the Ministry of Corporate Affairs.
As the Ministry of Corporate Affairs failed to resolve the issue, hence the applicants were left with no other option but to bring the issue to the notice of PMO. The Applicants were sent a response from PMO with the remarks stating that “on perusal of your complaint you are requested to file necessary papers with the office of concerned ROC, where the company is situated”. Accordingly, the Applicants filed the aforesaid Form 20B in physical form with Registrar of Companies, Mumbai, as the Registrar of Companies, Mumbai refused to accept the hard copies.
Thereafter the Applicants came to know that the E-Forms are prepared in such a way that it does not accept the fact that there were no Directors during the period 2011-2017. However, even after the repeated efforts the applicants were unable to file the E-forms with the ROC due to the said technical difficulty.
In pursuant thereof the Applicant No. 1 received a Show Cause Notice dated November 04, 2019 bearing Ref. No. D/RC201/4979/2019/96/16-17 under the provisions of Section 96(1) and 204 of the Companies Act,2013 from Registrar of Companies, Mumbai stating that the Applicant No. 1 has not complied with the provisions of Section 96(1) of the Companies Act, 2013 regarding Annual General Meeting. The Section 96 of the Companies Act, 2013 states that, 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. Therefore, it was stated in the show cause notice that company and every officer in default of the company as the case maybe, are called upon to show cause as to why penal action under the provision of Section 99 of the Companies Act, 2013 should not be taken against them.
On 15th November 2019, the Applicant No.1 replied to the notice dated 04th November 2019, issued by the Registrar of Companies, Mumbai stating that Mr. Shivabettu Upadhyay expired on 8.11.2011 and leaving only one-member Mr. Vinod Shridhar Shanbhag and he resigned on 03.10.2011 with no Director on the Board of the Company and there was no director until 2017 when Mr. Shripadraj Upadhyayay and Deepa Shripadraj Upadhyaya were appointed as Directors on the Board of Companies; Once they became aware of the default, the Board of Directors and members convened the Annual General Meetings for Financial years commencing from 2011-12 to 2016-17 and adopted the financial statements for the said years and requested the ROC to not initiate penal actions against Company and its officers ensuring that they will be taking adequate steps to Compound the offence by applying with appropriate authority.
The case of the petitioner is that they never had any intention to commit any default in complying with the provisions of the Companies Act, 2013. From the time the Petitioner (Applicant no. 2 and 3) became Directors of the Company, they started ensuring all the compliance are being filed within the stipulated time including but not limited to convening the Annual General Meeting on time and filing all the returns on time. Hence any lapse on their part deserve to be compounded.
In response, the Registrar of Companies, Mumbai has filled its report bearing serial no. Compd-441-96/166/Orblanche/06/2023 dated 28th June 2023 stating that the offence is a continuing Violation and the nature of default of the company is that it failed to hold the Annual General Meetings for the financial year ended 2011-12, 2012-13. 2013-14, 2014-15 under the Companies Act, 1956 and financial year ended 2015-16, 2016-17, respectively, within prescribed period under Section 166/96 under the Companies Act 1956/2013.
On Perusal of report, it is observed that Company has failed to hold the Annual General Meetings for the Financial years ending 2011-12, 2012-13, 2013-14, 2014-15 under the Companies Act, 1956, within the prescribed period under Section 166/96 of the Companies Act 1956/2013. Further as per serial no 14 of the report of ROC, the Ld. Registrar of Companies has recommended the Compounding of the offence.
We have gone through the Petition and the report submitted by the Ld. Registrar of Companies, Mumbai and also the submissions made by the Ld. Counsel at the time of hearing. We are of the considered opinion that the petition made by the petitioner for compounding of offence committed under Section 92, 96 & 137 of the Companies Act, 2013, merits consideration.
Further, Section 99 of the Companies Act, 2013 deserve to be taken note of. The said section states as under; "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 default continues.”
Having regard to the facts and circumstances of the case, the offence committed under Section 96 of the Companies Act, 2013, as stated and explained above, the offence/offences are compounded against the applicant no.1 on payment an amount of Rs. 25,000/- for each financial year from 2011-12 to 2016-17. Since, Applicant Nos: 2 and 3 were not directors during the period the offence was committed by Applicant No.1. Thus, this Bench does not consider it appropriate to prescribe any fine against Applicant No. 2 and 3.
The remittance shall be made to the "Bharatkhosh" account in favour of "Pay and Accounts Officer, Ministry of Corporate Affairs, Mumbai". The directors should pay the penalty from their respective personal accounts . The Registrar of Companies, Mumbai is hereby directed to take further action as provided under Section 621A(3)(c)(d) of the Companies Act, 1956 read with Section 441 (3)(c) (d) of the Companies Act, 2013. The RoC shall give effect to this Order only after perusal of the Compliance report with the cost imposed.
Accordingly, the Company Petition bearing No. 288/NCLT/MB/2022 is hereby 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 and the case be posted for compliance on 15.11.2023.