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Judgment
Rakesh Kumar, Member (Judicial)
The present appeal has been preferred under Section 421 of the Companies Act, against an order dated 13.03.2023 passed in CP/155/441/2020 by the National Company Law Tribunal, New Delhi Bench V (hereinafter referred as ‘NCLT’). By the said order learned NCLT on a joint application filed under Section 441 of the Companies Act, 2013(hereinafter referred to as the ‘Act’) i.e. for compounding offences, passed the order for compounding the offence and directed the appellant to pay fine of Rs.26,53,000/-. By the said order the joint compounding application was disposed off. It is clarified that the joint application was filed by 7 applicants before the learned NCLT which included the company i.e. Connaught Plaza Restaurants Pvt Ltd.
The short fact of the case is that, as evident from the record, the appellant alongwith the Company and five others were held guilty under Section 96/99 of the Act. A joint application was filed before the Learned NCLT under Section 441 of the Act for compounding of offence for non-compliance of Section 166/96 of the Companies Act, 1956/2013. The said application was filed before the Learned NCLT by the company and six others which includes the appellant herein. In the application before the Learned NCLT the appellant was arrayed as Applicant No.6. The appellant stated before the learned NCLT that he held office of alternate director to Mr. Robert Dale Larson (applicant No.3) during the relevant period from 12th August, 2013 till 12th December, 2017 and was further appointed alternate director to Mr Robert Dale Larson from 26th September, 2018 till 2nd January, 2019 and thereafter again re-appointed as an Alternate Director to Mr Robert Dale Larson from 6th May, 2019 till 10th May, 2019. Thereafter the appellant was appointed as Alternate Director to Ms Aysel Melbye since 25th June, 2019. The appellant further admitted that he may be deemed to be officer in default for the contravention of the provision of Section 166/96 of the Companies Act, 1956/2013 for a total period of 2905 days and details of the default was enumerated as follows:-
Due Date of AGM
Date of AGM/Date of Cessation
Relevant Period of days as applicable to Applicant No.6
30th September, 2013
24th September, 2015
724 days
31st December, 2014
29th September, 2016
638 days
30th September, 2015
29th September, 2017
730 days
30th September, 2016
28th September, 2018 (date of AGM)/ 12th December, 2017 (date of cessation)
26th September 2018 (date of appointment)
440 days
30th September, 2017
16th July, 2019 (date of AGM)/ 12th December, 2017 (date of cessation)
26th September, 2018 (date of appointment) to 2nd January, 2019 (date of cessation)
6th May, 2019 to 10th May, 2019 (period of office)
25th June, 2019 Onwards (date of appointment)
196 days
30th September, 2018
12th September, 2019 (date of AGM)/
26th September, 2018 (date of appointment) to 2nd January, 2019 (date of cessation)
6th May, 2019 to 10th May, 2019 (period of office)
25th June, 2019 onwards (date of appointment)
177 days
Total
2905 days
Similarly in application days of default in respect of other applicant was mentioned. Before the NCLT in its application i.e. Company Application No.CP(CA) 155/441/ND/2020 the following reliefs were sought for:
i) That the offence of non-compliance with the provisions of Section 166/96 of Companies Act, 1956/2013, by the Applicants for the period herein before mentioned may kindly be compounded.
ii) That as the contravention had taken place due to the facts and circumstances explained above which were outside the control of the Applicants. Hence, it is humbly submitted to waive off or levy a small/token compounding fee as deemed fit by Hon’ble National Company Law Tribunal/Regional Director, Northern Region, Bench New Delhi.
iii) That the applicants be relieved of all the legal consequences upon the deposit of the compounding fee/amount, if any by the Applicants with the Central Government.
iv) That the offence of non-compliance with the provisions of Section 166/96 of Companies Act, 1956/2013 may be compounded for all the Applicants jointly i.e. for Company and on behalf of all the officers-in-default (Applicants).
v) That such other or further order(s) be passed, and directions be given as the Hon’ble National Company Law Tribunal/Regional Director, Northern Region/Special Court may deem fit and proper in the facts of the case.
After filing of the said application, in view of provisions contained in the Act, the Learned NCLT called for a report from the ROC and ROC submitted a detailed report in respect of default for the financial year 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18 in respect of all the applicants which are as follows:-
For F.Y. 2012-13
Name of applicants
Minimum Fine
Maximum fine
Connaught Plaza Restaurants
Private Ltd
-
Rs.50,000+ Rs.18,10,000
(2500 Fine Per day *
days)=Rs.18,60,000
724
Ms Aysel Melbye
-
Rs.50,000+ Rs.18,10,000
(2500 Fine Per day *
days)=Rs.18,60,000
724
Mr. Robert Dale Larson
-
Rs.50,000+ Rs.18,10,000
(2500 Fine Per day * days)=Rs.18,60,000
724
Ms Vikram Bakshi
-
Rs.50,000+ Rs.18,10,000
(2500 Fine Per day *
days)=Rs.18,60,000
724
Ms Madhurima Bakshi
-
Rs.50,000+ Rs.18,10,000
(2500 Fine Per day *
days)=Rs.18,60,000
724
Mr Salil Gulati
-
Rs.50,000+ Rs.18,10,000
(2500 Fine Per day * days)=Rs.18,60,000
724
Mr Devinder Kumar Jain
-
Rs.50,000+ Rs.18,10,000
(2500 Fine Per day * days)=Rs.18,60,000
724
For F.Y. 2013-14
Name of applicants
Minimum Fine
Maximum fine
Connaught Plaza
Restaurants Private Ltd
-
Rs.1,00,000+ Rs.31,90,000
(Rs 5000 Fine Per day * 638 days)=Rs.32,90,000
Ms Aysel Melbye
-
Rs.1,00,000+ Rs.31,90,000
(Rs 5000 Fine Per day * 638
days)=Rs.32,90,000
Mr. Robert Dale Larson
-
Rs.1,00,000+ Rs.31,90,000
(Rs 5000 Fine Per day * 638
days)=Rs.32,90,000
Ms Vikram Bakshi
-
Rs.1,00,000+ Rs.31,90,000
(Rs 5000 Fine Per day * 638 days)=Rs.32,90,000
Ms Madhurima Bakshi
-
Rs.1,00,000+ Rs.31,90,000
(Rs 5000 Fine Per day * 638 days)=Rs.32,90,000
Mr Salil Gulati
-
Rs.1,00,000+ Rs.31,90,000
(Rs 5000 Fine Per day * 638
days)=Rs.32,90,000
Mr Devinder Kumar Jain
-
Rs.1,00,000+
Rs.31,90,000
(Rs 5000 Fine Per day *
638 days)=Rs.32,90,000
For F.Y. 2014-15
Name of applicants
Minimum Fine
Maximum fine
Connaught Plaza
Restaurants Private Ltd
-
Rs.1,00,000+ Rs.36,50,000
(Rs 5000 Fine Per day * 730 days)=Rs.37,50,000
Ms Aysel Melbye
-
Rs.1,00,000+ Rs.36,50,000
(Rs 5000 Fine Per day * 730 days)=Rs.37,50,000
Mr. Robert Dale Larson
-
Rs.1,00,000+ Rs.36,50,000
(Rs 5000 Fine Per day * 730
days)=Rs.37,50,000
Ms Vikram Bakshi
-
Rs.1,00,000+ Rs.36,50,000
(Rs 5000 Fine Per day * 730 days)=Rs.37,50,000
Ms Madhurima Bakshi
-
Rs.1,00,000+ Rs.36,50,000
(Rs 5000 Fine Per day * 730 days)=Rs.37,50,000
Mr Salil Gulati
-
Rs.1,00,000+ Rs.36,50,000
(Rs 5000 Fine Per day * 730 days)=Rs.37,50,000
Mr Devinder
-
Rs.1,00,000+
Kumar Jain
Rs.36,50,000
(Rs 5000 Fine Per day
*730
days)=Rs.37,50,000
For F.Y. 2015-16
Name of applicants
Minimum Fine
Maximum fine
Connaught Plaza
Restaurants Private Ltd
-
Rs.1,00,000+ Rs.36,40,000
(Rs 5000 Fine Per day * 728 days)=Rs.37,40,000
Ms Aysel Melbye
-
Rs.1,00,000+ Rs.36,40,000
(Rs 5000 Fine Per day * 728
days)=Rs.37,40,000
Mr. Robert Dale Larson
-
Rs.1,00,000+ Rs.36,40,000
(Rs 5000 Fine Per day * 728 days)=Rs.37,40,000
Ms Vikram Bakshi
-
Rs.1,00,000+ Rs.36,40,000
(Rs 5000 Fine Per day * 728 days)=Rs.37,40,000
Ms Madhurima Bakshi
-
Rs.1,00,000+ Rs.36,40,000
(Rs 5000 Fine Per day * 728
days)=Rs.37,40,000
Mr Salil Gulati
-
Rs.1,00,000+ Rs.36,40,000
(Rs 5000 Fine Per day * 728 days)=Rs.37,40,000
Mr Devinder Kumar Jain
-
Rs.1,00,000+
Rs.36,40,000
(Rs 5000 Fine Per day * 728 days)=Rs.37,40,000
For F.Y. 2016-17
Name of applicants
Minimum Fine
Maximum fine
Connaught Plaza Restaurants
Private Ltd
-
Rs.1,00,000+ Rs.32,70,000
(Rs 5000 Fine Per day * 654
days)=Rs.33,70,000
Ms Aysel Melbye
-
Rs.1,00,000+ Rs.32,70,000
(Rs 5000 Fine Per day * 654
days)=Rs.33,70,000
Mr. Robert Dale Larson
-
Rs.1,00,000+ Rs.32,70,000
(Rs 5000 Fine Per day * 654 days)=Rs.33,70,000
Ms Vikram Bakshi
-
Rs.1,00,000+ Rs.32,70,000
(Rs 5000 Fine Per day * 654 days)=Rs.33,70,000
Ms Madhurima Bakshi
-
Rs.1,00,000+ Rs.32,70,000
(Rs 5000 Fine Per day * 654
days)=Rs.33,70,000
Mr Salil Gulati
-
Rs.1,00,000+ Rs.32,70,000
(Rs 5000 Fine Per day * 654
days)=Rs.33,70,000
Mr Devinder Kumar Jain
-
Rs.1,00,000+
Rs.32,70,000
(Rs 5000 Fine Per day
* 654
days)=Rs.33,70,000
For F.Y. 2017-18
Name of applicants
Minimum Fine
Maximum fine
Connaught Plaza Restaurants Private Ltd
-
Rs.1,00,000+ Rs.17,35,000
(Rs 5000 Fine Per day * 347 days)=Rs.18,35,000
Ms Aysel Melbye
-
Rs.1,00,000+ Rs.17,35,000
(Rs 5000 Fine Per day * 347
days)=Rs.18,35,000
Mr. Robert Dale Larson
-
Rs.1,00,000+ Rs.17,35,000
(Rs 5000 Fine Per day * 347 days)=Rs.18,35,000
Ms Vikram Bakshi
-
Rs.1,00,000+ Rs.17,35,000
(Rs 5000 Fine Per day * 347 days)=Rs.18,35,000
Ms Madhurima Bakshi
-
Rs.1,00,000+ Rs.17,35,000
(Rs 5000 Fine Per day * 347
days)=Rs.18,35,000
Mr Salil Gulati
-
Rs.1,00,000+ Rs.17,35,000
(Rs 5000 Fine Per day * 347 days)=Rs.18,35,000
Mr Devinder Kumar Jain
-
Rs.1,00,000+
Rs.17,35,000
(Rs 5000 Fine Per day
* 347
days)=Rs.18,35,000
After examining the application and report of the ROC, learned NCLT has passed the impugned order wherein after compounding the offences, imposed the fine to the extent of 1/5th of maximum fine and appellant herein was imposed fine of Rs.26,53,000/-. The said order has been assailed in the present appeal.
Learned counsel for the appellant Mr. Munawwar Nasim, assailing the impugned order has argued that the learned NCLT has committed error in imposing fine and also has incorrectly placed reliance on judgement of this Tribunal in Viavi Solutions India Pvt Ltd & Others Vs Registrar of Companies, NCT Delhi and Haryana in Company Appeal (AT) No.49, 50, 51, 52 and 53 of 2016 which was decided on 28th February, 2017. Learned counsel for the appellant tried to persuade the Court that the Learned Tribunal has itself noticed that the appellant herein was only an Alternate Director and as such he was not required to be imposed any fine. It has further been argued that excessive fine has been imposed by the Learned Tribunal which requires to be interfered with.
Ms Shankari Mishra, learned counsel has appeared on behalf of ROC and opposed the appeal. She submits that there is no apparent error in the impugned order and appeal is fit to be rejected.
Besides hearing learned counsel for the parties we have perused the materials available on record. The fact remains that it was a joint application filed by the applicant alongwith other six persons including the company in question under Section 441 of the Companies Act, 2013. Section 441 of the Companies Act, 2013 deals with the compounding of offences. From the materials on record particularly the application filed before the NCLT which was number as CP 155/441/ND/2020 it is evident that the appellant has admitted default and days of default to the extent of 2905 days was admitted by the appellant. At this juncture it would be apt to reproduce Section 96 of the Companies Act, 2013 which mandate annual general meeting by the company and also consequences for non-compliance of provisions contained in Section 96 or 97 or 98 of the Act. The Section 99 of the Act and Section 96 prescribe punishment for default. Both Section 96 and 99 of the Act are reproduced hereinbelow:-
Annual general meeting.— (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.
Explanation.—For the purposes of this sub-section, ―National Holiday‖ means and includes a day declared as National Holiday by the Central Government.
Punishment for default in complying with provisions of sections 96 to 98.—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 also admitted case of the appellant that the appellant has committed default under Section 166 of the Companies Act, 1956 and for such default penalty is prescribed under Section 168 of the Companies Act, 1956. Section 166 and Section 168 of Companies Act are reproduced hereinbelow:-
Section 166 in The Companies Act, 1956
Annual general meeting1
(1) Every 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 a company may hold its first annual general meeting within a period of not more than eighteen months from the date of its incorporation; and if such general meeting is held within that period, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation or in the following year:
Provided further that the Registrar may, for any special reason, extend the time within which any annual general meeting (not being the first annual general meeting) shall be held, by a period not exceeding three months.]
(2) Every annual general meeting shall be called for a time during business hours, on a day that is not a public 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 the Central Government may exempt any class of companies from the provisions of this sub- section subject to such conditions as it may impose:
Provided further that-
(a) a public company or a private company which is a subsi- diary of a public company, may by its articles fix the time for its annual general meetings and may also by a resolution passed in one annual general meeting fix the time for its subsequent annual general meetings; and
(b) a private company which is not a subsidiary of a public company, may in like manner and also by a resolution agreed to by all the members thereof, fix the times as well at the place for its annual general meeting.]
Section 168 in The Companies Act, 1956
Penalty for default in complying with section 166 or 167. If default is made in holding a meeting of the company in accordance with section 166, or in complying with any directions of the Central Government 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 five thousand rupees and in the case of a continuing default, with a further fine which may extend to two thousand and five hundred rupees for every day after the first during which such default continues]
On examination of the aforesaid provisions it is clarified that if there is default in holding Annual General Meeting the company and every officer of the company in default shall be punishable with fine. The appellant in the present case himself has admitted default and this was the reason that he was also a joint applicant before the NCLT. Once the appellant has admitted his default and thereafter approached the Tribunal for compounding the offence there was no ground for the appellant to assail the order of the compounding passed by the NCLT. Learned NCLT virtually has allowed the compounding application and as per legal position reduced the penalty. It is evident that as per calculation chart/report of the ROC the maximum fine was to be imposed on the appellant was to the extent of Rs.1,32,65,000/-. However, the Learned NCLT has reduced the said fine to the 1/5th of maximum fine and appellant has been imposed fine of Rs.26,53,000/-. It is further clear from the impugned order that the learned NCLT has taken consistent stand in respect of other defaulting members. Learned Tribunal has taken same stand while reducing the fine i.e. 1/5th of maximum fine in respect of all the seven applicants before the NCLT. It is evident that the Learned Tribunal has allowed the compounding application filed jointly by the appellant and other and reduced the fine and as such there was no reason for the appellant to assail the said order.
On examination of the impugned order we donot find any error warranting interference. There is no merit in the appeal and the appeal stands dismissed. However, no cost is imposed.