THE HON’BLE JUSTICE MOUSHUMI BHATTACHARYA WRIT PETITION No.30273 of 2024 Mr. Vadeendra Joshi, learned counsel for the petitioner.

Ms. N.V.R.Rajya Lakshmi, learned counsel representing Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India for the respondent Nos.1 to 3.

ORDER:

The writ petition has been filed for setting aside an order dated 22.08.2023 passed by the respondent No.2/The Regional Director, South-East Region, Hyderabad to the limited extent for permitting the petitioner to pay the compounding fee as recorded in the impugned order. The petitioner’s case, as submitted by learned counsel, is that the order dated 22.08.2023 contains a wrong recording to the extent of naming the person who has paid the compounding fee who admittedly is not the petitioner.

2. The petitioner has also prayed for a direction on the respondent No.2 for removal of the impugned order from the portal of the MCA. Both the aforesaid documents record the name of the petitioner as having paid the compounding fee whereas in reality, the compounding fee was paid by the respondent No.7.

3. The relevant dates insofar as the issue is concerned are as follows.

The petitioner was the Director of the respondent No.17-

Company for the period from 05.12.2019 to 29.12.2020. The proceedings were initiated against the respondent No.17- Company in 2020 and its Directors including the petitioner for failure to comply with Section 173 (1) read with Section 118 of the Companies Act, 2013 (for short, ‘the Act’) that is failure to hold minimum number of Board Meetings and a gap of more than 120 days between 2 consecutive Board Meetings. The respondent No.17 filed an Original Application on behalf of itself and its Directors seeking compounding of the offence which was rejected on 09.06.2022 by the respondent No.3/The Registrar of Companies on the ground that the compounding Applications were only maintainable by the Directors themselves. The petitioner accordingly preferred an Application under Section 441 of the Act seeking compounding of the offence. The petitioner however was surprised to find that the compounding fee was paid by the respondent No.7/Pratiksha Ambelkar on

09.08.2023.

4. Counsel appearing for the petitioner submits that payment of the compounding fee by any other person apart from the petitioner is contrary to Section 441(1) of the Act which clearly requires that the Regional Director or any officer authorized by the Central Government has to pay/credit to the Central Government such sum as the Tribunal or the Regional Director or any other officer authorized by the Central Government may specify. This statutory provision is reflected and reiterated in paragraph No.4 of the impugned order itself which mentions the name of the petitioner and clearly states that the compounding fee amounting to Rs.9,000/- each will be paid “from their own sources”. The petitioner apprehends that unless the petitioner rectifies the position and pays the compounding fee himself, the petitioner may be liable for future proceedings against the petitioner including under Section 441(5) of the Act which sets out the consequence of failure on the part of the defaulting party and for further liability in terms of fine and penalty.

5. In any event, the stand taken by the petitioner is in accordance with Section 441 (1) of the Act and there cannot be any reason to disallow the prayer in the writ petition. This is also due to the fact that the fifth Annual Report of the respondent No.17-Company for 2022-2023 specifically names the petitioner “as the Officer in default” and the fact that the compounding fee was levied on the petitioner. Therefore, it is crucial that appropriate directions are given on the respondent No.2 to accept the compounding fee from the petitioner and return the fees already received from the respondent No.7 to the State respondent. The respondent No.2 is directed to correct the error in the impugned order regarding the fact of payment made by the resp