SHAW WALLACE AND CO LTD Vs. STATE

JUDGEMENT

(1.) THIS is a compounding application under Section 621A of the Companies Act, 1956, filed by M/s. Shaw Wallace and Co. Ltd. ("the company")- As per return of deposits, as on March 31, 1995, the company had accepted public deposits in excess of the prescribed limit to the tune of Rs. 26,02,750. As per Rule 3(2)(ii) of the Companies (Acceptance of Deposits) Rules, 1975 See [1975] 45 Comp Cas (St.) 120, the company could have accepted only Rs. 18,69,57,250 as against which it had accepted Rs. 18,95,60,000. The company had also accepted/renewed certain deposits aggregating to Rs. 2.60 lakhs without advertisement in the newspapers. The company had neither filed a copy of advertisement inviting deposits nor a statement in lieu of the advertisement containing all the required particulars with the Registrar of Companies, West Bengal ("RoC, West Bengal"), as required under Rule 4/4A of the said Deposit Rules. In view of the violation under Section 58A(6) of the Companies Act, 1956, read with Rule 3(2)(ii) and also Rule 4/4A of the Companies (Acceptance of Deposits) Rules, 1975, the Registrar of Companies, West Bengal, has initiated separate prosecution proceedings against the company and other officers in default. The company has filed this application seeking for compounding of these offences. The company has submitted that the excess deposits accepted was based on the net worth as on March 31, 1994 and the excess limit continued with the company only for a short period of less than six months and total deposits come within the prescribed limit thereafter. The company has further submitted that all the depositors have already been repaid and no amount is due to any of the depositors and as such, sought for compounding the offences. Similarly, in regard to acceptance of deposits of Rs. 2.60 lakhs, the company has submitted that it has been done inadvertently and as such, the offence be compounded.

(2.) In course of hearing held before this Bench on September 24, 2008, Shri M.R. Gopinath, practising company secretary and authorised representative, appearing for the applicant-company has submitted that the aforesaid offences may be compounded by imposing a minimum composition amount on the applicant.

(3.) TAKING into consideration that the excess amount of deposits collected was just about 1.38 per cent, of the total deposits and that too for a short period of less than six months, I am inclined to take a lenient view of the violation and compound the offence directing the company to pay a sum of Rs. 5,00,000 (rupees five lakhs only), as compounding amount, for the offence under Section 58A(6) of the Companies Act, 1956, read with Rule 3(2)(ii) of the Companies (Acceptance of Deposits) Rules, 1975. Similarly, in so far as the acceptance/renewal of deposits of Rs. 2.60 lakhs without advertisement in the newspapers or without filing the statement in lieu of the advertisement containing all the required particulars with the Registrar of Companies, West Bengal, is concerned, the amount being insignificant and had been done inadvertently, I compound the offence by directing the company to pay a sum of Rs. 25,000 (rupees twenty-five thousand only), as compounding amount, for the offence under Section 58A(6) of the Companies Act, 1956, read with Rule 4/4A of the Companies (Acceptance of Deposit) Rules, 1975.