NCLT Chennai Compounds AGM Delays By Seal Infotech, Imposes ₹17.61 Lakh Penalty On Company, Directors

The National Company Law Tribunal (NCLT) at Chennai has recently compounded delays of up to 587 days in holding Annual General Meetings by Seal Infotech Private Limited, taking a lenient view and imposing penalties aggregating to Rs 17.61 lakh.

A coram of Judicial Member Sanjiv Jain and Technical Member Venkataraman Subramaniam passed the order.

The tribunal was dealing with three petitions filed by the company and its directors seeking compounding of offences for failure to hold Annual General Meetings within the prescribed timelines under the Companies Act, 2013.

The company failed to convene AGMs for the financial years 2019–20, 2020–21 and 2021–22, resulting in delays of 56 days, 587 days and 246 days, respectively.

Explaining the defaults, the Tribunal noted the submissions that:

“The reasons for default in conducting the AGM for the financial year 2019-20 are that, the Company could not finalise the accounts for the financial year 2019-20 due to COVID-19 pandemic. Further, delay in conducting AGM for the Financial Year 2021-22 was due to be delay in finalisation of books of accounts due to discussions between management, auditors and the preference shareholders of the Company"

The company had also cited migration to SAP accounting software and reconciliation issues as reasons for delay in finalising accounts for subsequent years.

The company further submitted that it had ceased operations since April 2021, had no revenue, and intended to close down its operations, while stating that the defaults were unintentional and beyond its control.

The Registrar of Companies did not oppose the plea for compounding and sought a direction to file e-Form INC-28 upon passing of the order.

Setting out the statutory position, the Tribunal observed:

"The Section 441 of Companies Act, 2013 provides that, for any offence punishable under the Companies Act, where such offence is not punishable with imprisonment or punishable with imprisonment and also with fine, be compounded by the Tribunal. The extract of Section 441 of Companies Act, 2013 is as follows.”

Applying the factors laid down by the NCLAT in Viavi Solutions India Pvt. Ltd. v. Registrar of Companies, the Tribunal found that the default was unintentional, caused no prejudice to public interest, and stood rectified with the eventual conduct of the AGMs.

It also revisited the computation of delay. For FY 2020–21, the default period was held to begin from November 30, 2021, taking into account the extension granted by the Ministry. In respect of FY 2021–22, the Tribunal fixed December 31, 2022 as the starting point, in light of the extension granted by the Registrar of Companies.

“Considering the submissions, taking a lenient approach on the officers of the Company, this Tribunal directs the applicants to pay the fine as prescribed hereunder to the RoC, Chennai.”

With this, the Tribunal disposed of the petitions and directed the company along with its directors to pay the respective penalties to the Registrar of Companies, Chennai within three weeks.

For Petitioners: Ganapathi Bhatt, PCS

For RoC: Advocate Avinash Krishnan Ravi