National Company Law Tribunal: A Bench comprising of Ashok Kumar Mishra, Technical Member and Ratakonda Murli, Judicial Member, while addressing an application filed under Section 441 of The Companies Act, 2013 (New Act), corresponding to Section 621A of the Companies Act, 1956 (Old Act), held that the compounding fees be levied on the concerned parties since they have admitted to their default of non-compliance with Section 211(3A) of the ‘Old Act’ of 1956.
The brief facts being, that a company named GMR Sports Private Limited erred in their financial statement of the year 2008-2009, soon after its incorporation in 2008 and the aforementioned default was pointed out by the Registrar of Companies with a subsequent issue of show cause notice on 11/12/2015 to the company.
The practicing company secretary on behalf of the applicants argued that the default is not intentional and is not of such nature as could prejudice the interests of the members or creditors or others dealing with the company, further stating that it would not affect the public interest in any way and no such harm has been done and subsequently prayed to condone and compound the non-compliance of Section 211(3A) of the Companies Act, 1956.
The Tribunal appreciated the lenient view put forward by the company secretary, in this matter, and further cited a general circular issued by Ministry of Corporate Affairs bearing No. 08/2014 dated 4-4-2014 which clarified that the financial statements, auditors report, board’s report in respect of financial years, that have commenced earlier than 1-4-2014, shall be governed by the ’Old Act’ of 1956’ and financial statements commencing after that period shall be governed by the ’New Act’ of 2013. The Tribunal further compounded the directors of the company for non-compliance under Section 211(3A) of the ‘Old Act’. [GMR Sports Private Limited case, 2017 SCC OnLine NCLT 5442, decided on 19.12.2017]