ORDER
Defaulters Herein:
1) Intermarket India Private Limited
2) Shri Rakshit Mahendrabhai Shah - Director
3) Shri Kirit Dahyabhai Patel - Director
4) Shri Rajnikant Dahyabhai Patel - Director
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5) Shri Nirav Dilipkumar Shah - Company Secretary Section Violated:
Section 134(3)(o) read with Section 135 of the Companies Act, 2013 Punishment Provided Under:
Section 134(8) Companies Act, 2013
1. This Compounding Application was filed before the Registrar of Companies Mumbai on 26.05.2017 and the same has been forwarded along with the RoC Report to NCLT, Mumbai Bench. The Ld. Registrar of Companies intimated that the Applicant Company has filed the aforementioned Compounding Application after receiving a show cause notice dated 03.05.2017 from Ministry of Corporate Affairs for not making the required expenditure for CSR and the reason for not spending the CSR amount have not been disclosed in Board Report of Financial Year 2014-15.
2. The Learned RoC has informed that, this application was filed because the company has violated the provisions of Section 134(3)(o) of the Companies Act, 2013 (hereinafter as Act) wherein as per Section 135(5) of the Act, the board of every company liable for CSR under Section 135(1) shall ensure that the company spends, in every financial year, at least two percent (2%) of the average net profit of the company during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility policy, provided that if company fails to spend such amount, the board shall, in its report made under clause (o) of sub-section (3) of Section 134 of the Act, specify the reasons for not spending the amount.
3. The Company has not mentioned the applicability of CSR provisions, disclosure regarding CSR Committee and the details of CSR spending in its Director's Report for Financial Year 2014-15 as required under Section 134(3)(o) read with Section 135.
4. The Company realised the non-compliance of Section 134(3)(o) for Financial Year 2014-15 and filed this application after receiving show cause notice from Registrar of Companies, Mumbai vide notice no.
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ROC/CSR/830/134/2017/4476 dated 03.05.2017 for compounding of offence u/s 134(3)(o) of the Companies Act, 2013.
5. It is submitted by the Professional appearing for the Petitioners that the Company firmly believed that the CSR provisions were not applicable to the Company for the Financial Year 2014-15 considering the financials for the three previous financial years 2012-13, 2013-14 and 2014-15. However, in spite of firm belief of the Company regarding non-applicability of CSR provisions for the Financial Year 2014-15, the Company suomoto contributed ₹22,00,000/- in aggregate during the Financial Year 2014-15 by way of donations and towards the well being of the Society.
6. The Board of Directors of Company at their meeting held on 26.06.2017, authorized Mr. Rakshit Mahendrabhai Shah, Director of the Company for filing an application for compounding of offence under Section 134(3) for Financial Year 2014-15.
7. The Company informed vide their letter dated 04.08.2017 that the default has been made good in the financial year 2015-16 by consulting CSR Committee in the Board Meeting dated 10.09.2015 and had complied with the provisions of Section 134(3)(o) read with Section 135 by mentioning the applicability of CSR, disclosure regarding CSR Committee and details of CSR spending in its Director's report for the financial year 2015-16. The audited financial statements of the company for Financial Year 2015-16 were filed with this office on 04.10.2016. The company further informed that in spite of firm belief of the company regarding non-applicability of CSR provisions for financial year 2014-15, the company suomoto contributed a sun of ₹22,00,000/- in aggregate during the financial year 2014-15 by way of donations and towards the wellbeing of the society as per the details given in the Petition, which could have qualified under the category of CSR in compliance under Section 135 of the Act. Submissions:
8. The Learned Representative for the Applicants/Defaulters herein, submitted that, the contravention of the said provisions of the Act was bona fide
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and without any mala fide intention. The Company and its Officers inadvertently have not complied with the said provisions of the Act.
Findings:
9. Accordingly, by going through the facts of the case and the submissions made by the Learned Representative for the Applicants/Defaulters herein, the conclusion can be drawn that, the Applicants/Defaulters herein had violated the provision of Section 134(3)(o) of the Act and for the said violation, the punishment is provided under Section 134(8) of the Act, which is relevant in this Case, is as follows:-
"Section 134(8): If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less that fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both."
10. This Bench has gone through the Application of the Applicants/Defaulters herein and the Report submitted by the RoC and also the submissions made by the Learned Representative at the time of hearing and noted that Application made by the Applicants/Defaulters herein for compounding of offence committed under Section 134(3)(o) of the Companies Act, 2013, merits consideration.
11. On examination of the circumstances as discussed above, a Compounding Fee of ₹5,00,000/- for Company (P1) & ₹75,000/- for each Director (P2 to P5) (i.e. ₹3,00,000/-), that is, ₹8,00,000/- in total by applicant/defaulters herein, stated in the Defaulters list, shall be sufficient as a deterrent for not repeating the impugned default in future. Accordingly, the Company & its Directors paid the fee through "bharatkosh- Government of India Receipt Portal" on 10.01.2020 and 11.01.2020 and they have also produced the receipt for ₹8,00,000/-.
12. This Compounding Application No. 547/441/NCLT/MB/MAH/2017 is, therefore, disposed of on the terms directed above. Needless to mention, the
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offence shall stand compounded subject to the remittance of the Compounding Fee imposed. A compliance report, therefore, shall be placed on record. Only thereafter the Learned RoC shall give effect of this Order.
13. Ordered accordingly. Consigned to records. SD/- SD/-
V. Nallasenapathy Suchitra Kanuparthi Member (T) Member (J)
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