Salil Gulati vs Registrar Of Companies Nct Of Delhi And ...

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.

2. 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) 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 Relevant Period of of Cessation days as applicable to Applicant No.6 30th September, 24 th September, 724 days 2013 2015 31st December, 29th September, 638 days 2014 2016 30th September, 29th September, 730 days 2015 2017 30th September, 28th September, 2016 2018 (date of AGM)/ 12th December, 2017 (date of 440 days cessation) 26th September 2018 (date of appointment) 30th September, 16th July, 2019 (date 2017 of AGM)/ 4

12th December, 2017 (date of cessation) 196 days 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) 12th September, 2019 (date of AGM)/ 30th September, 2018 26th September, 2018 (date of 177 days 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) 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:

5 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).

6

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 Minimum Fine Maximum fine applicants Connaught Plaza - Rs.50,000+ Rs.18,10,000 Restaurants (2500 Fine Per day * 724 Private Ltd days)=Rs.18,60,000 Ms Aysel Melbye - Rs.50,000+ Rs.18,10,000 (2500 Fine Per day * 724 days)=Rs.18,60,000 Mr. Robert Dale - Rs.50,000+ Rs.18,10,000 Larson (2500 Fine Per day * 724 days)=Rs.18,60,000 Ms Vikram - Rs.50,000+ Rs.18,10,000 Bakshi (2500 Fine Per day * 724 days)=Rs.18,60,000 Ms Madhurima - Rs.50,000+ Rs.18,10,000 Bakshi (2500 Fine Per day * 724 days)=Rs.18,60,000 Mr Salil Gulati - Rs.50,000+ Rs.18,10,000 (2500 Fine Per day * 724 days)=Rs.18,60,000 Mr Devinder - Rs.50,000+ Rs.18,10,000 Kumar Jain (2500 Fine Per day * 724 days)=Rs.18,60,000 7

For F.Y. 2013-14 Name of Minimum Fine Maximum fine applicants Connaught Plaza - Rs.1,00,000+ Rs.31,90,000 Restaurants (Rs 5000 Fine Per day * 638 Private Ltd 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 - Rs.1,00,000+ Rs.31,90,000 Larson (Rs 5000 Fine Per day * 638 days)=Rs.32,90,000 Ms Vikram - Rs.1,00,000+ Rs.31,90,000 Bakshi (Rs 5000 Fine Per day * 638 days)=Rs.32,90,000 Ms Madhurima - Rs.1,00,000+ Rs.31,90,000 Bakshi (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 - Rs.1,00,000+ Kumar Jain Rs.31,90,000 (Rs 5000 Fine Per day * 638 days)=Rs.32,90,000

For F.Y. 2014-15

Name of Minimum Fine Maximum fine applicants Connaught Plaza - Rs.1,00,000+ Rs.36,50,000 Restaurants (Rs 5000 Fine Per day * 730 Private Ltd 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 - Rs.1,00,000+ Rs.36,50,000 Larson (Rs 5000 Fine Per day * 730 days)=Rs.37,50,000 Ms Vikram - Rs.1,00,000+ Rs.36,50,000 Bakshi (Rs 5000 Fine Per day * 730 days)=Rs.37,50,000 Ms Madhurima - Rs.1,00,000+ Rs.36,50,000 Bakshi (Rs 5000 Fine Per day * 730 days)=Rs.37,50,000 8

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 Minimum Fine Maximum fine applicants Connaught Plaza - Rs.1,00,000+ Rs.36,40,000 Restaurants (Rs 5000 Fine Per day * 728 Private Ltd 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 - Rs.1,00,000+ Rs.36,40,000 Larson (Rs 5000 Fine Per day * 728 days)=Rs.37,40,000 Ms Vikram - Rs.1,00,000+ Rs.36,40,000 Bakshi (Rs 5000 Fine Per day * 728 days)=Rs.37,40,000 Ms Madhurima - Rs.1,00,000+ Rs.36,40,000 Bakshi (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 - Rs.1,00,000+ Kumar Jain Rs.36,40,000 (Rs 5000 Fine Per day * 728 days)=Rs.37,40,000

For F.Y. 2016-17

Name of Minimum Fine Maximum fine applicants Connaught Plaza - Rs.1,00,000+ Rs.32,70,000 Restaurants (Rs 5000 Fine Per day * 654 Private Ltd 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 9

Mr. Robert Dale - Rs.1,00,000+ Rs.32,70,000 Larson (Rs 5000 Fine Per day * 654 days)=Rs.33,70,000 Ms Vikram - Rs.1,00,000+ Rs.32,70,000 Bakshi (Rs 5000 Fine Per day * 654 days)=Rs.33,70,000 Ms Madhurima - Rs.1,00,000+ Rs.32,70,000 Bakshi (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 - Rs.1,00,000+ Kumar Jain Rs.32,70,000 (Rs 5000 Fine Per day * 654 days)=Rs.33,70,000

For F.Y. 2017-18

Name of Minimum Fine Maximum fine applicants Connaught Plaza - Rs.1,00,000+ Rs.17,35,000 Restaurants (Rs 5000 Fine Per day * 347 Private Ltd 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 - Rs.1,00,000+ Rs.17,35,000 Larson (Rs 5000 Fine Per day * 347 days)=Rs.18,35,000 Ms Vikram - Rs.1,00,000+ Rs.17,35,000 Bakshi (Rs 5000 Fine Per day * 347 days)=Rs.18,35,000 Ms Madhurima - Rs.1,00,000+ Rs.17,35,000 Bakshi (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 - Rs.1,00,000+ Kumar Jain Rs.17,35,000 (Rs 5000 Fine Per day * 347 days)=Rs.18,35,000 10

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 11

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:-

96. 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:

12 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.

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.

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 13 Companies Act, 1956. Section 166 and Section 168 of Companies

Act are reproduced hereinbelow:-

Section 166 in The Companies Act, 1956

166. Annual general meeting. 1 (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

168. 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 14

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 15

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.

(Justice Rakesh Kumar) Member (Judicial)

(Dr. Alok Srivastava) Member (Technical) Bm