One company defaults the provision of Section 297 last 3 years back. There is total 10 Director out of which 5 director whole time. Now company go for approval of CG u/s 297 and compounding u/s 621A. There is five associate concerns from which company are doing transaction covered u/s 297 last 3 years. Now my question is that how much maximum penalty can be levied by RD/CLB ? Please reply
If a contract, which requires consent in advance or subsequently, is entered into without taking the consent, the contract is voidable at the option of the Board.
The section does not provide any penalty for non-compliance. The penalty would therefore, be as per the provisions of section 629A. (Section 629A indicates penalty for such sections of the Companies Act, 1956 for which no penalty has been specifically provided).
Accordingly, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend up to Rs. 500 for every day after the first day during which the contravention continues.
In the case of First Leasing Company of India Ltd. v Additional Registrar of Companies (1997) 89 Comp Cas 635 (Mad) it was held that the period of limitation began from the date on which the directors submitted their explanation and not from the date of the inspection report. The Court agreed that prima facie limitation begins on the date on which a document is filed with the Registrar of Companies.
21 July 2013
Section 297(1) does not apply to the employment as managing director/whole-time director: The Department has clarified vide Circular No. 13 of 1975, dated 5-6-1975 that 'supply of service' is not the same as 'rendering of service' as managing/whole-time director and that there are specific provisions regarding the matter. Hence the proviso to section 297(1) does not apply to the above appointments.
Whether case of compounding will be referred to CLB or RD ? As mentioned above what is role of period of limitation in our case ? Whether application for filing of approval & compounding will be made separate ?
Whether case of compounding will be referred to CLB or RD ? As mentioned above what is role of period of limitation in our case ? Whether application for filing of approval & compounding will be made separate ?
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