M/S. Cinepolis India Pvt Ltd. & Ors vs Registrar Of Companies, Nct Of Delhi & ...

(arising out of order dated order dated 711, March, 2017 passed by the National Company Law Tribunal, New Delhi Bench, New Delhi in Company Petition No. 16/147/2016). In the matter of:

M/s. Cinepolis India Pvt Ltd. & Ors. .. :.Appellants Vs Registrar of Companies, Delhi & Haryana, New Delhi Responden

Present: -

For Appellant: - Mr Vishwas Panjiar, Chartered

sponden t: - Mr Rajiv Kumar, Advocate.

JUDGMENT.

SUDHANSU JYOTI MUKHOPADHAYA, J.

This appeal has been preferred by Appellants under Section

421 of the Companies Act, 2013 against impugned order dated 7th

March, 2017 passed by the National Company Law Tribunal

1 (hereinafter referred to as Tribunal), New Delhi Bench, New Delhi in

Company Petition No. 16/147/2016.

2. The Appellants failed to file its Annual Return for the financial

year ended 31st March 2013 within 60 days of holding the Annual

General Meeting resulting in non-compliance of statutory

requirement under Section (s) 92, 137,96 and 129 of the Companies

Act, 2013.

3. In view of the alleged failure action under section

92(5), 137 (3), 99 and 129 es Act, 2013 were

attracted, the Appellants preferred an app er Section 441

of the Companies Act, 2013 for compounding the offences.

4. The Tribunal dismissed the application by impugned order

dated 7th March 2017 wit: servation and direction: -

"3. The provisions of Companies Act, 2013 mandate that offence which is punishable with imprisonment even in the alternative of fine, should be dealt with by the Special Court constituted for violation of the Companies Act This application is therefore being returned- to the applicant to file it before the proper forum i.e., in the Special Court constituted at Dwarka, New Delhi which is the Court of ASJ-

3..

4. The RoC may be intimated to file their report in the concerned Court."

2 5. One of the ground taken by the Appellants to assail the

impugned order is that no case is pending against the company or its

officers before any Special Judge for punishment under any of the

provisions as referred to above or for alleged violation of any

provision of the Companies Act.

6. The question involved in this appeal is whether the Tribunal

had jurisdiction to compound the offences under Section 441 for

the alleged violation of Section (s) 92, 137,96 and 129 of the

Companies Act, 2013.

For violation of Section 92", of the Ac is prescribed

under sub-section (5) Section 92 as qLlotc low: -

92. Annual Return any shall prepare a return (hereinafter referred to as I turn) in the prescribed form containing the particulars as t 11 the close of the financial year regard

(a)

to

(k)

(4) Every company shall file with the Registrar a copy of the annual return, within sixty days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within sixty days from the date on which the annual general meeting should have been held (5) If a company fails to file its annual return under sub-section (4), before the expiry of the period specified under section 403 with additional fees, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five

3 lakhs rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to sic months or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both."

7. From the aforesaid sub-section (5), it is clear that while the

company is punishable with fine of not less than fifty thousand

rupees which may extend to five lakh rupees, every officer of the

company who is in default is "punishable with imprisonment' for a

term which may extend to 6 months or.,-

r ne which shall not be less

than fifty thousand rupee t which may extend to rupees,

or with both."

8. For violation of sec rescribed under

sub-section (3)

"137. atement to be filed with Registrar.-- (1) A copy tements, including consolidated financial - statement, the documents which are required to be or attached to ements under this Act, duly adopted at the annual genera meeting of the company, shall be filed with the Registrar within 't days of the date of annual general meeting

(3) If a company fails to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the period specified in section 403, the company shall be punishable with fine of one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees, and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both."

9. From the aforesaid sub-section (s) of Section 137, again it is

clear that while the company is punishable with fine of one thousand

rupees for every day during which the failure continues but which

shall not be more than ten lakh rupees hut the Managing Director

and CFO of the company, if any, and in absence of Managing

Director and CFO, any other director who is in-charge are

"punishable with imp risoninent for a term which may extend to six

months or with fine which shall not be less

which may extend to five;,", ,,"lakh rupees or Wi

10. Section 99 is a provision for violation of Section 96. If

more than 15 months and

there is a gap of hol nnual General Meeting to that extent

between the earlier date and the next, Section. 99 prescribes the

following punishment:

"99. 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."

5 11. From Section 99, it is clear that the company and every

officer of the company who are in default are "punishable with fine

which may extent to one lakh rupees and in case of continuing default,

with further fine which may extend to five thousand rupees for every

day during which such default continues." No punishment of

imprisonment or imprisonment with fine has been prescribed

therein.

12. Similarly, for violation of Sec enal provision has

been prescribed under sub-section 29 thereto which

reads as follows: -

129. Financial statement. --(1) The fin.ancial statements shall give a true and fair view the state of affairs of the company or companies. comphi wit he accounting standards notified under section 133 and s brm or forms as may be provided for different class or classes o nies in Schedule HI:

Provided that the i. ained in such financial statements shall be in accordance wit unting standards:

x-wx

(7) If a company contravenes the provisions of this section, the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person charged by the Board with the duty of complying with the requirements of this section and in the absence of any of the officers mentioned above, all the directors shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both."

From the aforesaid provision, it would be evident that if

the 'financial statement' do not reflect the true and fair view of the

state of affairs of the company or do not comply with the 'accounting

standard' as notified under Section 133 of the Companies Act, 2013,

are not filed in the prescribed'form, the Managing Director, whole-

time Director in-charge of finance, CFO 'y other person charged

by the Board with the duty of complying witfrthe requirement for

the said Section and in the absence of any officer 1 the directors

are "punishable with irn Tmentfbr a term, which m dto

one year or with fine which sh t be less

rupees which may extend t ees or with both."

13. From the ovisions, as referred to a We, while we find that

except for violation of Section 96, where no imprisonment has been

prescribcd. for violation of other provisions as referred to,

imprisonment or finc or both have been prescribed. Therefore, it is

open to the Tribunal to compound the offences under Section 96 by

imposing fine in terms of Section 99 of the Companies Act, 2013 and

for that no permission of Special Judge is required.

14. Section 441 while empowers the Tribunal to compound certain

offences, in following circumstances compounding can either be done

with the permission of the Special Court, in accordance with the

7 procedure laid down in the Act and/or in some cases there is a

prohibition to compound offences, as apparent from sub-section (1)

and (6) of Section 441 and quoted below: -

11441. Compounding of certain offences.-- (1) Notwithstanding

anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether committed by a company or any officer thereof) with firi.e only, 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 five lakh rupees, by the Regional Director or any officer authorised by the Central Government, 220 on payment or credit, by th.e company or, as the case may be, the offic&yi to the Centr merit of such sum as that Tribunal or the Regional Director or a cer authorised by the Central Government, d&_the casemay be pecfy: Provided that the sum so specified shall not, in. case, exceed the maximum amount of the fine which may b osed for the offence so compounded: Provided further that in s ing the sum required to be paid or credited for the compoun.din. ènce under this sub-section, the sum if any paid by way o additional fee under sub-section (2) of' section 403 shall be taken into account: Provided also that any o/]ènce 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.

xxx xioc xxx

(6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973(2)of 1974),-- (a) any offence which is punishable under this Act, with--Imprisonment or fine, or with imprisonment or fine or with both, shall be compoundable with the permission of the Special Court, in accordance with the procedure laid down in that Act for compounding of offences; 221 (b) any offence which is punishable under this Act with imprisonment only or with imprisonment and also with fine shall not be compoundable.

(7) No offence specified in this section shall be compounded except under and in accordance with the provisions of this section."

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15. Prior to Section 441 of the Companies Act, 2013, Company

Law Board (now National Company Law Tribunal) was empowered

under Section 62 1A of the Companies Act, 1956 to compound certain

offences as stood at the relevant time which reads as follows:-

"621A. Composition of certain offences.- (j) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974 ), any offence punishable under this Act (whether committed by a company or any officer thereof), not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may, either before or after the institution of any prosecution, be compounded by-

(a) the Company Law Board; or

(b) where the maximum amount offine which may be imposed for such offence does not exceed five thousand rupees, by the Regional Director, on payment or credit, by the company or the officer, as the case may be, to the Central Government of such sum as that Board or the Regional Director, 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 611 shall be taken into account.

(6) Any officer or other employee of the company who fails to comply with any order made by the Company Law Board or the Regional Director under sub- section (5) shall be punishable with imprisonment for a term which may extend to sic months, or with fine not exceeding five thousand rupees, or with both.

(7) Notwithstanding anything contained in the Code of Criminal Procedure, 1973(2 of 1974),-

(a) any offence which is punishable under this Act with imprisonment or with fine, or with both, shall be compoundable with the permission of the Court, in accordance with the procedure laid down in that Act for compounding of offences;

j) any offence which is punishable under this Act with imprisonment only or with imprisonment and also with fine shall not be compoundable."

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16. From the aforesaid provision it is clear that sub-section (6) of

Section 441 of the Companies Act, 2013 is para-materia same. No

change has been made therein.

17. Similar provision fell for consideration before the Hon'ble

Supreme Court in"VLS Finance vs Union of India & Ors" (2013) SCC

278. Having noticed the provision, the Hon'ble Suprcme Court held

"11. From a plain re ding of Section 621A(1) it is evident that any offence punishable er the Act, not being an offence punishable with imprison mei only or with imprisonment aI also with fine, may be compounde either before or after the institution of the prosecution by the Coinpa n.y Law 11 Page 12 Board and in case, the minimum amount of fine u ch may be imposed for such offence does not ecced Rs 5000/ by the Regional Director on payment of e am fine The penal piovtsions of the Act provide for different kin punishments for variety oJ offences and can be ctorised as tows:

ènces punishable with fine only, nces punishable with. imprisonment only, nces punishable with fine and imprisonment, • ON ènces punishable with fine or imprisonment,

(v) ènces punishable with fine or imprisonment or both.

12. Section of the Act provides for punishment with imprisonment for a term which may extend to six months or with fine or with both. Therefore, an accused charged with the offence under Section 211(7) of the Act has not necessarily to be visited with imprisonment or imprisonment and 12 Page 13 also fine but can be let off by imposition of fine only. Therefore, the punishment provided under Section 211(7) of the Act comes under category (v) aforesaid. Section 621A (1) excludes such offences which are punishable with imprisonment only or with imprisonment and also with fine. As we have observed above, the nature of offence for which the accused has been charged necessarily does not invite imprisonment or imprisonment and also fine. Hence, we are of the

10 opinion that the nature of the offence is such that it was possible to be compounded by the Company Law Board.

is. From the conspectus of what we have observed above, it is more than clear that an offence committed by an accused under the Act, not being an offence punishable with imprisonment only or imprisonment and also with fine, is permissible to be compounded by the Company Law Board either before or after the institution of any prosecution. In view of sub-section (7) of Section 621A, the 15 Page 16 criminal court also possesses similar power to compound an offence after institution of the prosecution.

16. Now the question is whether in the aforesaid circumstances the Company Law Board can compound offence punishable with fine or imprisonment or both without permissn so qf the court. It is pointed out that when the prosecution has been laid, it is the criminal court which is in seisin of the matter and it is only the magistrate or the court in seisin of the molter who can accord permission to compound the offence. In any vieu' of the matter. according to the learned counsel, the Company Law Board has to seek permission of the court and it cannot compound the offence without such permission. This line of reasoning does n.ot commend us. Both sub-section (1.) and sub-section (7 of Section 62 JA of the Act start with a non-obstante clause. As is well

known, a nonobstantlgiiaause is used as a legislative device to give the enacting part of th&IRsection, in case 16 Page 17 of conflict, an overriding effect over the provisions of the Act mentioned in the non- obstante clause.

17. Ordinarilzj. the offence is coñnded under the provisions of the Code of Criminal Procedure and the power to accord permission is conferred on the court excepting those offences for which the permission is not required. However, in view of the non-obstante clause, the power of composition can be exercised by the court or the Company Law Board. The legislature has conferred the same power to the Company Law Board which can exercise its power either before or after the institution of any prosecution whereas the criminal court has no power to accord permission for composition of an offence before the institution of the proceeding. The legislature in its wisdom has not put the rider of prior permission of the court before compounding the offence by the Company Law Board and in case the contention of the appellant is accepted, same would amount to addition of the words "with the 17 Page 18 prior permission of the court" in the Act, which is not permissible.

19. From what we have observed above, we are of the opinion that the power under sub-section (1) and 18 Page 19 sub-section (7)

11 of Section 621A are parallel powers to be exercised by the Company Law Board or the authorities mentioned therein and prior permission of Court is not necessary for compounding the offence, when power of compounding is exercised by the Company Law Board. In view of what. we have observed above, the order impugned does not require any interference by this Court."

18. Thus we find that if an offence is punishable under the Act

with imprisonment only or with imprisonment and also with fine

cannot be compounded by Tribunal in view of clause (b) of sub-

section (6) of Section 441.

19. However, if any offence which is punishable under the Act

"with imprisonment or me 'or with both"

can be compounded by the Tn permission of

the Special Court in accordance with laid down by the

of offences as prescri ed in clause (a) of sub-

section of Section

20.In the present case, we find that apart from violation of

Section 96, where punishment fine has been prescribed, for

violation of Section (s) 92, 137 and 129 of the Companies Act,

2013, alternative punishment of imprisonment or fine or

imprisonment with fine, have been prescribed. In view of such

provision we hold that for offences under Section (s) 92, 137

and 129 etc., where alternative punishment of fine has been

12 prescribed, apart from imprisonment, the Tribunal is

empowered to compound the offence only with the permission

of the Special Court.

21. The Appellants have specifically pleaded that no case for

alleged violation is under investigation or pending before any Special

Court. This fact has not been disputed by the Registrar of

Companies, NCT of Delhi & Haryana. It is also clear from paragraph

4 of the impugned order dated 7th March 2017 he rein the Tribunal

has directed the Registrar b

concerned court (Special Court). In such""a situation, in absence of

investigation or pendency of any case before any court of law for

alleged violation of Section (s) 92, 137,96 and 129 of the Companies

Act, 2 uirement for the Tribunal to

seek any Special Court for the purpose of

compounding an such offence. It is well within the jurisdiction of

the Tribunal to corn 'ound the offence where alternative punishment

of fine is prescribed in place of imprisonment and where no case is

pending before the Special Court. We further hold that the Tribunal

is also empowered to compound such offence (s) under section (s) 92,

137 and 129 etc., where the alternative punishment of fine in place

of imprisonment has been prescribed even where case (s) are pending

13 before the Special Court, but in such cases, permission of the Special

Court is required to be obtained prior to compounding the offence.

22. In view of the position of law and facts of the case, we are of

the view that the Tribunal was not correct in returning the file to the

Appellants to move application before the Special Court constituted

at Dwarka, New Delhi nor it had jurisdiction, urisdiction to direct the Registrar of

Companies to file their report in the concerned Special Court. In the

facts and circumstances of the case, the Tribunal, was required to

decide as to whether alternative punishment of line can be imposed

on the company and/or the Managing Director, pt or (s), CFO or

any officer, after taking o consideration Irt, called for from

the Registrar of' , ompanie

18. The Re- filed its reply but as noticed,

has not'denied the fact that no case has been lodged against the

Appellants before the Special court and no investigation is pending

23. The Registrar of Companies referred to the decision of this

Appellate Tribunal in "Subhinder Singh Prem vs UoI' in C.A. (AT) No.

101 to 105 of 2017 wherein this Appellate Tribunal by order dated

17th May 2017 held :-

"Sub-section (1) of Section 621 prohibits compounding when an offence punishable with imprisonment only or with

14 imprisonment also with fine. Where fine is alternative to the imprisonment or where there are no provision of punishment is well within the jurisdiction of the Tribunal to compound the offence. Sub-section (6) of Section 621 A further makes it clear that any offence which is punishable under Act with imprisonment or with fine, or with both, the case is liable to be compounded."

25. The Register of Companies has requested this Appellate

Tribunal to pass appropriate order on merit of the case. However, as

no report has been submitted by the Registrar of Companies as to

what is maximum fine payable by Appellants for the alleged offences,

as noticed above and the period of such offences etc., have not been

detailed, we are not expressing any opinion about fine, if any, to be

imposed on the company irec tor/ Director

or Director or CEO or of

26. he impugned order dated 7-

March 2017 passed /2016 by the Tribunal is set

aside. The case is remitted back to the Tribunal, New Delhi Bench,

to decide the quantum of penalty as may be imposed on the company

and its officers like Managing Director, Director, CEO, CFO etc., for

alleged violation after calling for report from the Registrar of

Companies, Delhi & Haryana, New Delhi and notice to the parties.

27. The Appellants are directed to bring this Judgment to the

notice of the Tribunal with a request to implead the Registrar of

15 Companies, NCT of Delhi & Haryana, New Delhi, - if not yet

impleaded. The impugned order is set aside with aforesaid

observations. However, in the facts and circumstances, there shall

be no order as to cost.

(Mr. Balvinder Singh) (Justice S.J. Mukhopadhaya) Member (Technical) Chairperson

NEW DELHI

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