AA Rightly Reduced the Fine as Appellant Admitted Default & Approached AA for Compounding of Offence u/s 96 | NCLAT

Case Details: Salil Gulati v. Registrar of Companies, NCT of Delhi and Haryana - [2023] 152 taxmann.com 477 (NCLAT-New Delhi)

Judiciary and Counsel Details

• • Rakesh Kumar, Judicial Member & Dr Alok Srivastava, Technical Member
  • Shailendra Singh Somvanshi & Munawwar Nasim, Advs. for the Appellant.
  • Ms Shankari Mishra, Ms Niharika Tanwar, Advs. & Vedant Ojha, Dy. ROC for the Respondent.

Facts of the Case

In the instant case, the appellant (i.e. director) along with the company and five others were held guilty for non-compliance with section 96 of the Companies Act, 2013 in the holding of the Annual General Meeting (AGM).

Subsequently, a joint application was filed before the Adjudicating Authority (NCLT) under section 441 for the compounding of the offence. The NCLT called for a report from the ROC in respect of default by all the applicants.

The NCLT passed an order, wherein after compounding the offences, a fine amounting to the extent of 1/5th of the maximum fine was imposed. The appellant filed an instant appeal before the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

It was submitted that the NCLT had committed an error in imposing an excessive fine which required to be interfered with. Further, it was noted that as per the report of ROC, the maximum fine to be imposed on the appellant was to the extent of Rs. 1.32 crores. However, the NCLT reduced it to 1/5th of the maximum.

Further, NCLT had taken the same stand of reducing the fine in respect of the other applicants.

NCLAT Held

The NCLAT held that since the appellant had admitted his default and approached the NCLT for compounding of offence and the NCLT had reduced the fine, the instant tribunal did not find any error warranting interference. Accordingly, the appeal was to be dismissed.

List of Cases Reviewed

• • Salil Gulati v. Registrar of Companies, NCT of Delhi and Haryana [2023] 152 taxmann.com 476 (NCLT – New Delhi) (para 11) affirmed [See Annex].

List of Cases Referred to

• • Viavi Solutions India (P.) Ltd. v. Registrar of Companies, NCT Delhi & Haryana [2017] 80 taxmann.com 8/141 SCL 243 (NCLAT – New Delhi) (para 6).