IN RE Vs. NEWGEN SOFTWARE TECHNOLOGIES LIMITED

JUDGEMENT

(1.) This petition has been filed u/s 441 of the Companies Act, 1956 praying for compounding of the offence u/s 177 of the Companies Act, 2013 read with Rule 6 of the Companies rules, 2014. The said petition which has been routed through the office of the RoC along with their comments, prays for compounding the offence as the company failed to obtain approval of the Audit Committee for appointment of Ms. Shubhi Nigam as Manager Projects and Solution in the Company and in its Wholly Owned Subsidaiy w.e.f 01.12.2014 and 28.04.2017 respectively. The Applicants Company is a listed company and was required to adhere to the provisions of Section 177 of the Companies Act, 2013, which came into effect on 1st April 2014. As per the said provisions, it is mandated that the Board of Directors of every listed company and such other class or classes of companies, as specified under rule 6 of the Companies (Meetings of Board and its Power) Rules, 2014, shall constitute an Audit Committee. Subclause 4 of Section 177 of the Act provides that every Audit Committee shall act in accordance with the terms of reference specified in writing by the Board which shall inter alia include approval or any subsequent modification of transactions of the company with related parties.

(2.) The petitioner's offence relates to Financial Year 2014-2015, 2015-2016 and 2016-2017, upon the appointment of Ms. Shubhi Nigam in the petitioner company and in its wholly owned subsidiary on 28th April, 2017 without passing any resolution for execution of a related party transaction. The default has since been made good vide a resolution approving and ratifying her appointment in the Company and its wholly owned subsidiary Newgen Software Inc. It is also submitted that the Act does not envisage a prior approval of the Board.

(3.) The aforesaid offence is punishable u/s 178(8) of the Companies Act, 2013. Accordingly, RoC has recommended the imposition of a compounding fee of Rs. 10,00,000/- on the company and Rs. 2,00,000/- other applicants for the Financial Year 2014-2015 and Rs. 1,00,000/- on Mr. Aman Mourya for the Financial Year 2016-2017.