1. This is an application filed under section 621A of the Companies Act, 1956 (hereinafter referred to as 'the Act') by Shri A Sivasailam, Chairman- cum-Managing Director of Tractors & Farm Equipment ('the Company') for compounding the offence alleged to have been committed by him under section 283(2A) read with section 283(1)(i) and section 299 of the Act.

2. The facts of the case are that during the course of inspection of the company under section 209A of the Act, the Inspecting Officer authorised under section 209A, noticed that vide Board Resolution passed on 19-12- 1990, Ms. Mallika Srinivasan, daughter of the applicant herein, was approved for appointment as Vice-President with effect from 1-4-1990 on certain terms and conditions as mentioned in the Resolution. The Registrar of Companies, Tamil Nadu at Madras, issued a show-cause notice which was received by the applicant on 13-12-1993 inviting the attention of the applicant to the provisions of section 299(1) of the Act pointing out that the applicant herein had not disclosed his interest in the appointment of the said Vice-President being his relative and also asked the applicant to show cause as to how he participated in passing the Resolution for the said appointment in contravention of section 300(1). He was also asked how he, having automatically vacated the office for violation of the provisions of section 299 of the Act, continued to act as a director in violation of section 283(1)(i) read with section 283(2A). In the meanwhile, the Registrar of Companies had also filed prosecution against the applicant on the above charges on 9-12-1993. On receipt of the prosecution notice, the Applicant herein desired to avail the compound- ing provision under section 621A of the Act and accordingly has filed this application.

3. The issues that arise for consideration are :

(a)Whether the applicant has violated the provisions of section 299 ?

(b)If so, whether he has vacated the office under section 283(1)(i) ? and

(c)If so, whether his continuing in office would attract the provisions of section 283(2A) and, therefore, compoundable ?

4. The vacation of office as per section 283(1)(i) of the Act arises on account of violation of provisions of section 299 which requires disclo- sure of interest. Therefore, the issue for consideration is whether the Applicant had actually violated the provisions of section 299. It was stated during the hearing that separate prosecutions were filed for violation of provisions of section 299; section 300 and section 283(2A). The Regional Director, Department of Company Affairs, Madras, has already compound- ed the of fences under section 299 and under section 300. In other words, the Applicant had already admitted to have violated the provisions of section 299 and the cause of action in the present application is the outcome of the violation of section 299.

5. It was urged during the hearing that the applicant made an application for compounding the alleged offence under section 299 only because prosecution has been launched and to mitigate the difficulties arising therefrom the compounding application was preferred. The fact of having compounded this offence, it was further urged, should not stand in the way of my having a relook at the alleged violation of section 299, especially when full facts relating to the same are placed before me.

6. I have perused the Board Resolution dated 19-12-1990. Vide paragraph 10.4 of the Board Resolution, Ms. Mallika Srinivasan was appointed as Vice-President. It is seen that here is no mention regarding disclosure of interest by the applicant nor there is any indication that he abstained from voting on this resolution. In regard to violation of section 300, the offence has already been compounded. As far as non-disclosure is concerned, it is seen from the Resolution that this appointment as Vice-President and consequential terms of appointment were in modification of the earlier Resolution passed by the Board on 3