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Judgment
This Compounding Application is filed by the Applicant under Section 441 of the Companies Act, 2013 for compounding of the offence committed under Section 168 of the Companies Act, 1956 and Section 99 of the Companies Act, 2013. The Applicant Company has not held its Annual General Meeting within the time stipulated under the provisions of Section 166 of the Companies Act, 1956 for the financial years 2010-11, 2011-12, 2012-13 and Section 96 of the Companies Act, 2013 for the financial years 2015-16 and 2016-17, thereby committing an offence punishable under Section 168 of the Companies Act, 1956 and Section 99 of the Companies Act, 2013.
The Applicant Company was incorporated on 20.04.2007 under the provisions of the Companies Act, 1956 vide CIN: U45201MH2007PTC 170177 as a private company limited by shares within the jurisdiction of the Registrar of Companies, Maharashtra, Mumbai. The Authorized Share Capital of Rs. 2,50,00,000/- divided into 25,00,000 Equity shares of Rs. 10/- each. The Issued, Subscribed and Paid up Share Capital is Rs. 1,98,99,900/- (Rupees One Crore, Ninety-Eight Lakhs, Ninety-Nine Thousand and Nine Hundred Only) divided into 19,89,990 equity shares of Rs. 10/- each, fully paid-up. The Applicant Company is engaged in the business of Township and Infrastructure development.
The copies of the Minutes of the Annual General Meetings, and Challans in respect of the Financial Statements and Annual Returns, filed for the Financial Years ending as on 31st March 2011, 31st March 2012, 31st March 2013, 31st March 2016 and 31st March 2017 have been annexed to the petition. The Company has also filed its accounts and annual returns for the financial year ending as on 31.03.2022. Thus, the Company is regular in filing its Annual Accounts with the Registrar of Companies (RoC) till the date of filing this Petition.
The main object of the Applicant Company is briefly stated as follows: -
a. To carry out in India or elsewhere the business of builders, contractors, designers, architects, decorators, consultants, constructors, financers and brokers of all types of building and structures including houses, flat, apartments, complexes, townships, megacities, offices godowns, warehouses, shops, factories, sheds, hospitals, hotels, holiday resorts, shopping cum residential complexes and to develop, erect, install, alter, improve, add, establish, renovate, condition, protect, participate, enlarge, repair, demolish, remove, replace, maintain, manage, buy sell. deal lease let on hire, commercialize, turn to account, fabricate, deal in all types of immovable properties including land, buildings and various types of structures for development, investment, or for resale, engaging in creating infrastructure for various sector like power exchange, manufacturing industries.
The Applicant/Defaulters herein have filed Form GNL-1 vide SRN No. T91897033 on 29.03.2022 thereby admitting the violations Section 166 of the Companies Act, 1956 and Section 96 of the Companies Act, 2013.
The RoC, Mumbai issued a Show Cause Notice bearing No. C/RC201/861/2019/96/16-17 dated 04.11.2019 and 28.11.2019 to the Company and its Directors for violation of Section 166 of the Companies Act, 1956 and Section 96 of the Companies Act, 2013.
As the offence is punishable with fine only, the RoC has not lodged any prosecution against the Applicant Company and its directors.
The Applicant/defaulters admit their default in conducting the AGM for the financial years 2010-11, 2011-12, 2012-13, 2015-16 and 2016-17. The Applicant Company submits that the Annual General Meetings for the above financial years could not be held in time because the financial statements of the Applicant Company were not audited within the prescribed time. The Applicant Company further submits that the defaults committed by the Applicant Company have not caused any harm or injury or loss to any person including the Applicant Company, its Directors and investors. The Applicant Company declares that they have not filed any application, suit or application regarding the matter in respect of which this application is made. The Applicant Company further declares that they have not made any application for compounding of the offences relating to these sections in the last three years. Further, the Counsel for the Applicant submits that the default was not intentional, but for the circumstances beyond the control of the Applicant. Hence, the Ld. Counsel for the Applicant submits that it is a fit case for grant of relief by compounding the offence.
The RoC Mumbai have filed their report/comments. According to the RoC report, the Company and its Directors are found to have violated the provisions of Section 166 of the erstwhile Companies Act, 1956 and Section 96 of the Companies Act, 2013. The RoC report further states that the Applicant Company committed its first default in the FY 2010-11 and thereafter, it was subsequently repeated in financial years 2011-12, 2012-13, 2015-16 and 2016-17. The RoC report further states that Mr. Kirti Dhanpal Bhawsar, Ex-Additional Director from 03.08.2015 till 18.07.2016, was not a director during the period of offence and hence is not liable to punishment. However, he has applied for compounding of offence in the application in GNL-1 under the same SRN. The RoC report also states that the offences and defaults in compliances have been made good by the Applicant Company as the AGM for F.Y. 2010-11, 2011-12, 2012-13, 2015-16 and 2016-17 was duly held on 28.01.2013, 05.08.2013, 19.02.2014, 20.11.2017 and 21.06.2018 respectively. The RoC report also states that the offences u/s 96 of the 2013 Act and Section 166 of the 1956 Act are compoundable by the Hon’ble NCLT.
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.”
Section 451 of the Companies Act, 2013 applicable w.e.f. 12.09.2013
“451- If a company or an officer of a company commits an offence punishable either with fine or with imprisonment and where the same offence is committed for the second or subsequent occasions within a period of three years, then, that company and every officer thereof who is in default shall be punishable with twice the amount of fine for such offence in addition to any imprisonment provided for that offence.”
Hence, the penalty u/s 168/99 of the 1956/2013 Act for the defaulters in respect of the default occurring in the financial years 2010-11, 2011-12, 2012-13, 2015-16 and 2016-17 is computed in the table hereinbelow:
Applicant No. 01: Valuable Build-Tech Private Limited
Financial Year
Applicable Section
Period of Default
Maximum Penalty
2010-11
Sec. 168
Companies 1956.
of
the Act,
486 days 30.09.2011 28.01.2013)
(from
to
For one-time default- Rs. 50,000/- And
For Continuing Default- Rs. 2,500/- per day for 486 days
amounting to Rs. 12,15,000/-
Maximum-Rs.12,65,000/-
2011-12
Sec. 168
Companies 1956.
of
the Act,
309 days 30.09.2012 05.08.2013)
(from
to
For one-time default- Rs. 50,000/- And
For Continuing Default- Rs. 2,500/- per day for 309 days
amounting to Rs. 7,72,500/-
Maximum-Rs.8,22,500/-
2012-13
Sec. 168
Companies 1956.
of
the Act,
142 days 30.09.2013 19.02.2014)
(from
to
For one-time default- Rs. 50,000/- And
For Continuing Default- Rs. 2,500/- per day for 142 days
amounting to Rs. 3,55,000/-
Maximum-Rs.4,05,000/-
Sec.99 of
the
416
days
(from
For one-time 1,00,000/-
And
default-
Rs.
2015-16
Companies
Act,
30.09.2016
to
2013
20.11.2017)
For Continuing Default- Rs. 5,000/- per day for 416 days amounting to Rs. 20,80,000/- Maximum-Rs.21,80,000/-
2016-17
Sec.99 of the
Companies Act, 2013 read with Section 451 of the Companies Act, 2013
264 days (from 30.09.2017 to 21.06.2018)
For one-time default- Rs. 2,00,000/-
And
For Continuing Default- Rs. 10,000/- per day for 264 days amounting to Rs. 26,40,000/- Maximum-Rs.28,40,000/-
GROSS TOTAL
Maximum Rs. 75,12,500/-
Applicant No.03: Arrel Herald Furtado (Director from 18.07.2016 till date)
Financial Year
Applicable Section
Period of Default
Maximum Penalty
2015-16
Sec.99 of the
Companies Act, 2013
416 days (from 30.09.2016 to 20.11.2017)
For one-time default- Rs. 1,00,000/-
And
For Continuing Default- Rs. 5,000/- per day for 416 days amounting to Rs. 20,80,000/- Maximum-Rs.21,80,000/-
2016-17
Sec.99 of the
Companies Act, 2013 read with Section 451 of the Companies Act, 2013
264 days (from 30.09.2017 to 21.06.2018)
For one-time default- Rs. 2,00,000/-
And
For Continuing Default- Rs. 10,000/- per day for 264 days
amounting to Rs. 26,40,000/-
Maximum-Rs.28,40,000/-
GROSS TOTAL
Maximum Rs. 50,20,000/-
The Applicant Company is no turnover as it is yet to start its business operations. The Company does not have any property, plant or equipment or any physical inventory. The Applicant Company has incurred a loss of Rs. 1,05,200 for the financial year 2020-21 and the net worth of the Applicant Company is Rs. 1,63,69,833 as on 31.03.2021. Since the Applicant No. 02 named Mr. Kirti Dhanpal Bhawsar, Ex-Additional Director from 03.08.2015 till 18.07.2016, was not a director during the period in which the offence was committed, he is not liable to any penalty or punishment and therefore, we are not imposing any fine upon him, though he has preferred an application for compounding the offence. Considering the circumstances, as stated hereinabove, we are of the considered view that the Compounding Fee should be calculated as mentioned in the table below:
Applicant No. 01
Financial
Year
Reference to the
Provision of Law
Period of
Default
Compounding Fee
2010-11
Section 168 of the Companies Act, 1956.
486 days (from
30.09.2011 to
28.01.2013)
One-time default- Rs.10,000/- and for continuing default- Rs. 500/- per day for 486 days amounting to Rs. 2,43,000/- Total- Rs. 2,53,000/-
2011-12
Section 168 of the Companies Act, 1956.
309 days (from
30.09.2012 to
05.08.2013)
One-time default- Rs.10,000/- and for
continuing default- Rs. 500/- per day for 309 days amounting to Rs. 1,54,500/- Total- Rs. 1,64,500/-
2012-13
Section 168 of the Companies Act, 1956.
142 days (from
30.09.2013 to
19.02.2014)
One-time default- Rs.10,000/- and for continuing default- Rs. 500/- per day for 142 days amounting to Rs. 71,000/- Total- Rs. 81,000/-
2015-16
Sec.99 of the Companies Act, 2013
416 days (from
30.09.2016 to
20.11.2017)
One-time default- Rs.20,000/- and for continuing default- Rs. 750/- per day for 416 days amounting to Rs. 3,12,000/- Total- Rs. 3,32,000/-
2016-17
Sec.99 read with Section
451 of the Companies Act, 2013
264 days (from
30.09.2017 to
21.06.2018)
One-time default- Rs.40,000/- and for continuing default- Rs. 750/- per day for 264 days amounting to Rs. 1,98,000/- Total- Rs. 2,38,000/-
TOTAL
Rs. 10,68,500/-
For the Applicant No. 03- Mr. Arrel Herald Furtado (Director from 18.07.2016 till date)
Financial
Year
Provision of Law
Period of
Default
Compounding Fee
2015-16
Sec.99 of the Companies Act, 2013
416 days (from
30.09.2016 to
20.11.2017)
One-time default- Rs.20,000/- and for continuing default- Rs. 500/- per day for 416 days amounting to Rs. 2,08,000/-
Total- Rs. 2,28,000/-
2016-17
Sec.99 read with Section
451 of the Companies Act, 2013
264 days (from
30.09.2012 to
05.08.2013)
One-time default- Rs.40,000/- and for continuing default- Rs. 750/- per day for 264 days amounting to Rs. 1,98,000/-
Total- Rs. 2,38,000/-
TOTAL
Rs. 4,66,000/-
On examination of the facts and circumstances of this case and in view of the findings, as discussed above, this Tribunal is of the view that a Compounding Fee of INR 10,68,500/- (Rupees Ten Lakhs, Sixty-Eight Thousand and Five Hundred Only) by the Applicant Company and a fee of INR 4,66,000/- (Rupees Four Lakhs and Sixty-Six Thousand Only) by the Director named hereinabove, thus, the Compounding Fee totalling to INR 15,34,500/- (Rupees Fifteen Lakhs, Thirty Four Thousand and Five Hundred 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. 103/441/NCLT/MB/MAH/2023 is, therefore, 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.