Quinn Logistics India Pvt. Ltd. & Ors vs The Registrar Of Companies, Hyderabad

1. Quinn Logistics India Private Limited Having its registered office address at: Q City, 6th Floor, Block-A, Sy No: 109, 110 & 111/2, Nanakramguda Village, Serilingampally Mandal, Hyderabad, Rangareddy District, Telangana- 500032 .....Appellant No. 1

2. Mr. Robert Philip Dix, Director Resident of: 72 Thormanby Road, Howth, County Dublin ..... Appellant No. 2

3. Mr. Paul Mcgowan, Director Resident of: Clifton Terrace, Monkstown, Dublin. ..... Appellant No. 3

4. Mr. Bryan O'Neill Resident of: 1 Beechwood Grove, Dun Laoghaire, Co. Dublin, Ireland ....Appellant No. 4

Vs

1. Registrar of Companies, Hyderabad Having its office at: 2nd Floor, Corporate Bhawan, GSI Post, Tattiannaram, Bandlaguda, Nagole, Hyderabad, Telangana 500068 .... Respondent

Present: For Appellants: Mr. Krishnendu Datta, Mr. Swapnil Gupta, Ms. Shivaamika Sinha, Advocates For Respondents: Mr. Sanjib K. Mohanty, Sr. Panel Central Govt. counsel with Mr. Amit Acharya, Advocates. -2-

[12th June, 2020]

Justice Jarat Kumar Jain.

The Appellant Quinn Logistics India Pvt. Ltd. and its three Directors filed

this Appeal against the order dated 19.07.2019 whereby National Company

Law Tribunal, Hyderabad allowed the Compounding Application subject to pay

the Penalty of Rs. 27,09,000/- by each appellant total Rs. 1,08,36,000/-.

2. The Appellant Company was incorporated on 15th March, 2007 as a Pvt.

Ltd. Company under the provisions of Companies Act, 1956 in the State of

Telangana (Formerly State of Andhra Pradesh). The Appellant No. 1 Company

is subsidiary of Quinn Logistics Sweden AB. The Sweden Quinn Logistics

Company was placed in bankruptcy due to debts owed to Irish government

owned Bank Irish Bank Resolution Corporation on 6th July, 2011. Pursuant to

the appointment of the receiver Mr. Leif Baecklund on 6th July, 2011, Quinn

Logistics Sweden AB took steps to requisition an Extraordinary General

Meeting of the Appellant Company on 18th February, 2012 in which the

receiver replaced the Board and appointed his nominees on the Board being

the Appellant nos. 2 to 4. The Appellant Company could not comply the

applicable compliances under the Companies Act for the year 2012, 2013,

2014 and 2015 including holding its Annual General Meetings. After taking

bank account statements, the Company prepared the accounts and got the

same audited and then conducted the Annual General Meeting on 10,07.2017.

Company Appeal (AT) No. 238 of 2019 -3-

National Company Law Tribunal, Hyderabad Bench vide its order dated

11.08.2017, inter-alia, directed the Company to apply for compounding of the

non-compliances/delay in making compliances. In compliance of the

directions, the Appellants filed compounding applications under Section 166

read with Section 621 (A) of Companies Act, 1956 (Presently Section 96 read

with Section 441 of the Companies Act, 2013.) These applications have been

numbered C.A No. 118/441/HDB/2019 (For the year 2012), C.A No.

114/441/HDB/2019 (For the year 2013), C.A No. 120/441/HDB/2019 (For

the year 2014) and C.A No. 116/441/HDB/2019 (For the year 2015). The

Registrar of Companies (RoC) along with his report dated 03.12.2018 has

forwarded these applications to the Registry of the National Company Law

Tribunal, Hyderabad Bench.

3. Ld. Tribunal held that the Appellant Company and its directors are liable

to be penalized under Section 168 of Companies Act, 1956 for the violation of

Section 166 of the Companies Act, 1956 the violation continued up to

31.03.2014 thereafter, they are liable to be penalized under Section 99 of

Companies Act 2013 for violation of the Sub-Section (1) Section 96 of the

Companies Act, 2013 with effect from 01.04.2014. Ld. Tribunal after hearing

the parties allowed the Compounding Applications subject to pay the penalty

as indicated above. Being aggrieved with this order, Appellants filed this

Appeal.

4. Learned Counsel for the Appellants submitted that Appellant Nos. 2 to 4

appointed as Directors at the instance of bankruptcy receiver. Therefore, the

Company Appeal (AT) No. 238 of 2019 -4-

erstwhile directors who were all removed by the receiver did not cooperate with

the new directors i.e. Appellant Nos. 2 to 4 and they took active steps to

prevent Appellants from getting control of the Appellant Company. The

Appointment of Appellant Nos. 2 to 4 has been challenged in a Civil Suit and

Civil Court has granted injunction against the appointment of Appellants as

directors. However, subsequently the injunction vacated in Appeal by the High

Court of Delhi. Appellants wrote to the RoC on 08th November, 2012 explaining

that due to requirement of signature of an ex-director, the Appellants could not

register their appointment with the RoC. Hence, they are unable to take further

steps necessary to comply the compliances of the Appellant Company.

5. It is further submitted by the Learned Counsel for the Appellants that in

December, 2012 RN Marwaha & Company filed Company Petition against the

Appellant No. 1 for winding up. However, subsequently Hon'ble High Court of

Andhra Pradesh was pleased to recall the order of winding up on 13th August,

2013. The Receiver and the new management wrote letters dated 29.11.2012,

25.07.2016, 07.11.2016 and 01.12.2016 to the RoC, Hyderabad on the basis of

representation and persistent follow ups on 27th January, 2017. RoC,

Hyderabad (Respondent No. 1) finally permitted the registration of the

name of one director with MCA portal. Then, the Appellant Company filed Form

DIR-12 on 08.02.2017.

6. The name of new directors were not on the MCA Website, therefore,

directors were not able to get the Bank Statement to prepare the accounts as

they were not signatory of the bank accounts. In these circumstances, the

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Appellants could not comply the compliances under the Companies Act

including holding its Annual General Meeting.

7. Learned Counsel for the Appellant submits that, it is evident that the

delay in compliances was neither intentional nor due to any ignorance of the

management of the Company but due to factors beyond its control.

8. It is further submitted that the Appellant nos. 2 to 4 are professional,

have no personal interest in the appellant company, they are appointed as

nominees of the Swedish receiver. Learned Counsel for the Appellant further

submits that while imposing the exorbitant fine on the directors, the National

Company Law Tribunal failed to consider the mitigating factors due to which it

was impossible for the directors to comply with the mandate of law in relevant

period. Ld. National Company Law Tribunal has imposed the Penalty on

appellants total Rs. 1,08,36,000/- which is unreasonable and disproportionate

to the default. Particularly, when the default has already been made good.

Hence, considering the extreme circumstances that existed in the present case,

penalty amount may be reduced.

9. On the other hand, Learned Senior Panel Counsel, Central Government

submits that as per the calculation, every appellant is liable to pay Penalty

total Rs. 2,35,90,000/- whereas the Tribunal has taken a very lenient view and

imposed only Penalty of Rs. 27,09,000/- on each Appellant. In such

circumstances, it cannot be said that Tribunal has not considered the

mitigating circumstances and imposed an exorbitant fine.

Company Appeal (AT) No. 238 of 2019 -6-

10. After hearing learned Counsel for the parties, we have gone through the

record.

11. Admittedly, the Appellant Nos. 2 to 4 did not hold Annual General

Meeting of the Company for the years 2012, 2013, 2014 and 2015 and thus

violated the Provisions under Section 166 of Companies Act which is

punishable under Section 168 of the Companies Act, 1956 till 31.03.2014.

Thereafter, violated the Provisions under sub-section (1) of Section 96 of

Companies Act, 2013 which is punishable under Section 99 of Companies Act,

2013. The Act came into force on 01.04.2014. Hence, the period of violation is

01.04.2014 to 09.07.2017. RoC in his Report has mentioned the total amount

of Penalty to be imposed on each Appellant which is 2,35,90,000/- however,

the Ld. Tribunal has imposed Penalty on each Appellant 27,09,000/-

12. This Tribunal in the case of Company Appeal (AT) No. 49, 50, 51, 52 and

53 of 2016 decided on 28th February, 2017 held as under:

"11. We agree with the submissions made on behalf of the

appellant(s) that while compounding any offence the Tribunal is

required to notice different factors, such as grounds taken by

the applications, nature of offence, etc. There should be

consistence in compounding similar offence, if the defaulters are

similarly situated and the grounds taken are similar. Lesser

amount cannot be imposed in one case and higher amount in

another, for same offence, if similar ground is taken. Different

Bench of Tribunal are required to be consistent in passing order

Company Appeal (AT) No. 238 of 2019 -7-

compounding any offence and are required to notice the

precedence, i.e. earlier order if any passed in one or other case

for similar offence.

12. Depending on nature of offence and its gravity and if it is

pleaded by the applicant or reported by Registrar of Companies,

the Tribunal is required to notice the relevant factors while

compounding any offence, such as:-

(i) The gravity of offence;

(ii) The act is intentional or unintentional;

(iii) The maximum punishment prescribed for such

offence, such as fine or imprisonment or both

fine and imprisonment.

(iv) The report of the Registrar of Companies.

(v) The period of default.

(vi) Whether petition for compounding is suo moto

before or after notice from Registrar of

Companies or after imposition of the

punishment or during the pendency of a

proceeding.

(vii) The defaulter has made good of the default.

(viii) Financial condition of the company and other

defaulters.

(ix) Offence is continuous or one time.

Company Appeal (AT) No. 238 of 2019 -8-

(x) Similar offence earlier committed or not.

(xi) The act of defaulters is prejudicial to the interest

of the member(s) or company of public interest

or not.

(xii) Share value of the company, etc.

Company Appeal No. 49 of 2016

13. xxxxxxxx

15. xxxxxxxx

15. xxxxxxxx

Company Appeal No. 50 of 2016

16. In this appeal the allegation relates to contravention of

Section 166 of Act 1956. The annual General Meetings of the

company were not held regularly. The maximum fine for the

period from 1st January, 2011 to 30th November, 2015 was

calculated as per Section 168 of Act 1956 which stipulates Rs.

2500/- per day fine rate and fixed fine of Rs. 50,000/-. The

total comes to Rs. 54,72,500/- to be paid by each three

defaulters.

17. In this case the Tribunal has deemed it sufficient to

impose a fine of Rs. 10 lakhs on each of the defaulting parties

which is less than 1/5th of maximum amount.

18. In this appeal, as we find that the appellants have

only taken plea that the violation occurred due to inadvertence

Company Appeal (AT) No. 238 of 2019 -9-

and without intention and not prejudicial to the interest of any

member or creditors or others dealing with the company and

nor did affect public interest, we are of the view that the

Tribunal rightly brought down the penalty which is less than

1/5th of the maximum amount. In this background no

interference is called for against the impugned order."

13. In this appeal, the same grounds are taken for reducing the amount

which were taken in the Company Appeal No. 50 of 2016.

14. Ld. Tribunal to maintain the consistency has to impose Penalty which is

as per calculation maximum fine Rs. 2,35,90,000/-. 1/5th of the maximum

amount is Rs. 47, 18,000/-. However, Ld. Tribunal has imposed Penalty Rs.

27, 09,000/- which is less than 1/5th of the Maximum amount. Therefore, we

are of the view that Ld. Tribunal has undertaken a lenient view in imposing

Penalty.

We found no ground to interfere in the impugned order. Hence, the

Appeal is hereby dismissed. No cost.

(Justice Jarat Kumar Jain) Member (Judicial)

(Mr. Balvinder Singh) Member (Technical)

(Dr. Ashok Kumar Mishra) Member (Technical)

New Delhi Basant B.

Company Appeal (AT) No. 238 of 2019