Rajasthan High Court - Jaipur
O.L.Of Kesari Vanaspati Product vs Vijay Seth And Ors on 7 December, 2017
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT
JAIPUR
S.B. Company Application No. 38 / 2008
O.L.Of Kesari Vanaspati Product
----Petitioner
Versus
Vijay Seth And Ors.
----Respondent
_____________________________________________________ For Petitioner(s) : Mr. U.S. Patole, OL with Ms. Sonal Singh For Respondent(s) :
_____________________________________________________ HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA Order 07/12/2017
1. The case comes upon an application moved by respondent No.3 for praying in discharge and seeking compounding of the case initiated for offence under Section 454 of the Companies Act by the Official Liquidator. It is noted that that respondent Nos. 1 & 2 have already expired. Submission of respondent No.3 is that he has an ex Director of M/s Kesri Vanaspati Products Ltd. which is the company in liquidation and was directed to wound up vide order dated 13.01.2004 in terms of recommendations of BIFR. It appears that the Directors failed to submit the statement of affairs after the winding up order was passed, however, an application was filed bearing No.149/2010 by the respondents praying for seeking exemption from filing statement of affairs and is an alternate to make available the entire record from the Official Liquidator so that they may be able to prepare statement of (2 of 5) [COAP-38/2008] affairs.
2. On the said application vide order dated 30.06.2011 this Court passed an order leaving it on Official Liquidator "to examine the application and take appropriate decision and may also permit the applicants to inspect the record for enabling them to furnish statement of affairs of the company in liquidation."
3. The Official Liquidator appears to have permitted the applicants for enabling them for furnishing statement of affairs.
They have submitted the statement of affairs thereafter, however, counsel for the OL submits that the statement of affairs is defective. The present application has been filed seeking to compound the offence in terms of Section 621-A of the Act of 1956 which reads as under:
"621A. COMPOSITION 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) 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 the Central Government on payment or credit, by the company or the officer, as the case may be, to the Central Government of such sums as that Government may prescribe : Provided that the sum prescribed 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 prescribing 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.
(2) Nothing in sub-section (1) shall apply to an offence committed by a company or its officer within a period of three years from the date on which a similar offence committed by it or him was compounded under this section. Explanation. - For the purposes of this section, any second or subsequent offence (3 of 5) [COAP-38/2008] committed after the expiry of a period of three years from the date on which the offence was previously compounded, shall be deemed to be a first offence. (3) (a) Every application for the compounding of an offence shall be made to the Registrar who shall forward the same, together with his comments thereon to the Central Government.
(b) Where any offence is compounded under this section, whether before or after the institution of any prosecution, an intimation thereof shall be given by the company to the Registrar within seven days from the date on which the offence is so compounded.
(c) Where any offence is compounded before the institution of any prosecution, no prosecution shall be instituted in relation to such offence, either by the Registrar or by any shareholder of the company or by any person authorised by the Central Government against the offender in relation to whom the offence is so compounded.
(d) Where the composition of any offence is made after the institution of any prosecution, such composition shall be brought by the Registrar in writing, to the notice of the Court in which the prosecution is pending and on such notice of the composition of the offence being given, the company or its officer in relation to whom the offence is so compounded shall be discharged.
(4) The Central Government while dealing with a proposal for the compounding of an offence for a default in compliance with any provision of this Act which requires a company or its officer to file or register with, or deliver or send to, the Registrar any return, account or other document, may, direct, by order, if it or he thinks fit to do so, any officer or other employee of the company to file or register with, or on payment of the fee, and the additional fee, required to be paid under section 611, such return, account or other document within such time as may be specified in the order.
(5) Any officer or other employee of the company who fails to comply with any order made by the Central Government under sub-section (4) shall be punishable with imprisonment for a term which may extend to six months, or with fine not exceeding (fifty thousand rupees or with both.
(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 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 ;
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(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."
4. Learned counsel for the applicant-respondent No.3 submits that in view of Section 454 (5) since the office is if proved, punishable under the Act with imprisonment or fine or with both this Court is empowered in terms of Section 621-A (6) to compound the offence. The counsel also has cited law relating to Section 621-A as laid down by Supreme Court in the case of V.L.S. Finance Ltd. Vs. Union of India; (2013) 6 SCC 278 to contend that even the Company Law Board has been empowered to take such a decision without further permission from the Court and such compounding of offence as done by Company Law Board has been upheld by Supreme Court. He further submits that the delay in filing the statement of affairs was on account of record being available only after the OL granted it and thus there were bonafide reasons and considerations. This Court while passing the order dated 30.06.2011 recognises this fact and even allowed the OL to take a decision who has thereafter made available the documents and the statement of affairs has been submitted as per the record which was made available with them.
5. Counsel for the OL as well as OL who is present in the Court do not seriously oppose the application, however, they pointed out that there has been a gross delay for which a necessary fees in the nature of compounding fees may be imposed on the respondent No.3.
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6. Taking into consideration the nature of offence as laid down in Section 454 and taking into consideration that it is mandatory for the Directors to submit statement of affairs within the time prescribed and the laxity shown by the respondents in even moving an application for showing their willingness to submit statement of affairs after a period of almost 5 years from the date of passing winding up order, but having thereafter submitted statement of affairs as soon as record was made available to them, I find it an appropriate case to compound offence in terms of Section 621-A and discharge the respondent No.3. However, the discharge would subject to depositing a sum of Rs. 50,000/-
compounding fees in the Office of the OL within period of one month from today.
7. Ordered accordingly. The application No.38/2008 stands disposed of accordingly.
(SANJEEV PRAKASH SHARMA)J. M.Meena/13