Prem Jain Vs Union of lndia (Telangana High Court)
The Telangana High Court allowed a writ petition seeking limited interference with an order dated 22.08.2023 passed by the Regional Director, South-East Region, Hyderabad, concerning compounding of offences under the Companies Act, 2013. The petitioner, a former director of a company, challenged the order on the ground that it wrongly recorded that the petitioner had paid the compounding fee, whereas the payment had in fact been made by another individual. The petitioner contended that this was contrary to Section 441(1) of the Companies Act, which requires the defaulting officer himself to pay the compounding amount.
The Court noted that proceedings were initiated against the company and its directors for failure to comply with statutory requirements relating to board meetings. After the Registrar of Companies rejected a compounding application filed by the company, the petitioner independently applied for compounding. However, the compounding fee was paid by a third party, creating a discrepancy in the official records and on the MCA portal. The petitioner apprehended adverse consequences, including future liability under Section 441(5), if the error was not rectified.
The Court held that the petitioner’s stand was consistent with Section 441(1) and the impugned order itself, which stated that the compounding fee was to be paid from the petitioner’s own sources. Since the petitioner was identified as the “officer in default” and the compounding fee was levied on him, the Court directed the Regional Director to accept the compounding fee from the petitioner, return the amount paid by the third party, and correct the records. Directions were also issued to remove the impugned order and related reports from the MCA portal within specified timelines. The writ petition was accordingly allowed, with no order as to costs.
