IN RE Vs. VAISHNAVI ADVISORY SERVICES PVT LTD

JUDGEMENT

(1.) The petitioners have filed this application u/s. 621A of the Companies Act, 1956 praying for compounding of the offence u/s. 297 (1) of the Companies Act. The said petition has been routed through the office of the RoC along with their comments. The charges against the company are of not obtaining approval of the Board of Directors and from the Central Government for carrying out Related Party transactions with the group companies for the between 01.09.2010 to 31.08.2013 thereby violating the provisions of Section 297(1) of the Companies Act 1956. At the relevant time, three of the Directors of the Related Party were also Directors of the petitioner company.

(2.) The aforesaid omission was rectified vide a Resolution passed on 20.05.2014. The period of default was therefore over four financial years.

(3.) The aforesaid offence is punishable u/s. 629A of the Companies Act, 1956 whereby the Company and every officer who is in default is punishable with a tine which may extend to Rs. 5000/- and where the contravention is a continuing one, with a further fine which may extend to Rs. 500 for every day after the first during which the contravention continues. The RoC has therefore recommended the imposition of the maximum fine in terms of Section 629A of the Companies Act, 1956 which tantamounts to Rs. 5,63,000/- on the Company and on each of the three petitioner Directors involved.