NCLT Ahmedabad Allows Ex-Adani Power Director To Compound Companies Act Offences On ₹9.75 Lakh Payment

The Ahmedabad bench of the National Company Law Tribunal (NCLT) has allowed former Adani Power Whole Time Director Vneet S. Jain to compound allegations that included failure to disclose related-party transactions and other accounting irregularities in Adani Power's financial statements.

“The material on record does not indicate any direct prejudice to the interests of the shareholders, creditors or the public,” the tribunal observed.

Judicial Member Shammi Khan and Technical Member Sanjeev Sharma passed the order on Jain's application seeking compounding under Section 441 of the Companies Act for alleged violations of Sections 129 and 133 arising from Adani Power's financial statements and related disclosures between 2015-16 and 2019-20.

The Registrar of Companies had alleged multiple violations relating to the accounting treatment of the Mundra plant merger with APMUL, non-disclosure of related party transactions, diversion of funds, incorrect depiction of borrowings and charges in financial statements, and non-provision of fuel cost and stock purchase disclosures.

Jain told the tribunal that the company had consistently responded to notices issued by the Registrar of Companies and furnished detailed explanations and supporting documents addressing the allegations.

He also said the delay in filing the compounding application was due to a bona fide belief that the issues had been resolved after the company submitted detailed replies and received no further communication for a considerable period.

The Registrar of Companies told the tribunal that prosecution had already been sanctioned against the company and its officers for the alleged violations.

The tribunal noted that the alleged offences were compoundable since they were punishable with imprisonment or fine or both.

“The offences are punishable with imprisonment or fine or both and are thus compoundable,” the tribunal said.

While considering the application, the tribunal examined factors including the gravity of the alleged offences, whether the defaults were intentional, the company's financial condition, whether similar offences had previously been compounded, and whether the defaults were continuous or one-time in nature.

The tribunal noted that Jain had relied on disclosures approved under an NCLT-sanctioned scheme of arrangement, along with certifications issued by an independent chartered accountant.

It also observed that the alleged defaults spanned multiple financial years and that the application had been filed after initiation of prosecution.

“Considering that (i) the defaults span multiple financial years, (ii) the application has been filed post initiation of prosecution, (iii) the violations pertain to financial disclosures, and (iv) the need to ensure deterrence while balancing proportionality, this Tribunal deems it appropriate to impose compounding fees at 150% of the minimum prescribed penalty,” the tribunal said.

The bench imposed a compounding fee of ₹9.75 lakh.

It directed Jain to deposit the amount within two weeks, following which no further prosecution would be initiated in respect of the compounded offences, while the Registrar of Companies was directed to bring the compounding order to the notice of the court where prosecution is pending.