Facts
G2 Rams India (P.) Ltd. and its directors filed a compounding application before the NCLT for
delays in holding Annual General Meetings (AGMs) and filing Annual Returns for the financial
years 2013, 2014, 2016, and 2017.
The delays ranged from 90 days to 1,074 days, resulting in non-compliance with Section 92 of
the Companies Act, 2013 (and Section 159 of the Companies Act, 1956).
The company attributed the defaults to management disputes, arbitration proceedings,
resignation of key managerial personnel, and operational disruptions that delayed the
preparation of financial information.
Petitioners (Company and Directors)
The defaults were unintentional and arose due to unavoidable internal management issues.
There was no fraudulent or mala fide intention to conceal information or deceive stakeholders.
The company had voluntarily approached the Tribunal for compounding and had taken steps to
regularize the defaults.
Registrar of Companies (RoC)
Confirmed that this was the first offence committed by the company under the relevant provisions. Acknowledged that the company had voluntarily disclosed the defaults
through the compounding application. Reported that there was no evidence of fraud or deliberate misconduct.
Held
The NCLT, Mumbai Bench allowed the compounding application.
The Tribunal held that the defaults were technical and procedural in nature and were neither
deliberate nor fraudulent.
Considering the mitigating circumstances and the voluntary disclosure by the company, the
Tribunal concluded that the payment of compounding fees would adequately serve the
objective of ensuring future compliance.
A total compounding fee of ₹10,87,500 was imposed on the company and its directors.
Learning
Companies can seek compounding of procedural defaults such as delays in AGMs and annual
filings where the offences are compoundable. Voluntary disclosure, first-time default, absence of fraudulent intent, and genuine reasons for non-compliance are significant mitigating factors that may persuade the Tribunal to grant relief.
Internal management disputes do not excuse statutory non-compliance, but they may be
considered while determining the quantum of compounding fees.