General Circular No: 6/2002
Government of India
Ministry of Law, Justice & Company Affairs
Department of Company Affairs
5th floor, `A’ Wing, Shastri Bhavan,
Dr. R.P. Road, New Delhi.
All Regional Directors
All Registrar of Companies
Subject:- Compounding of offence under Section 621A of the Companies Act, 1956 – companies under liquidation – clarification.
A point has been raised in one of the inspection follow-up files as to whether the offences committed by Directors of a company can be compounded under Section 621A of the Companies Act, 1956, when the company in which they were Directors is under liquidation without obtaining the leave of the Company Court under Section 446 of the Companies Act, 1956.
2. The issue has been examined in the Department in consultation with the Ministry of Law and it is hereby clarified that in the light of the provisions of Section 446 read with Section 621A of the Companies Act, there is no legal bar for composition of an offence under Section 621A of the Act, provided the conditions specified in the Section and guidelines, if any, are fulfilled. It is also further clarified that the provisions of Section 446 of the Companies Act, 1956, does not bar criminal proceedings against the Directors of the company for any offences committed under the Companies Act and the offences are compoundable under Section 621A of the Act.
3. Where the penal provisions provide for proceedings against the companies also and if the offences are compoundable under Section 621A of the Companies Act, 1956, compounding will not be permissible against the company in view of the provisions of Section 446 of the Companies Act.
Under Secretary to the Govt. of India