NCLT CHENNAI COMPOUNDS AGM DELAYS BY SEAL INFOTECH PRIVATE LIMITED, IMPOSED ₹17.61 LAKH PENALTY ON COMPANY& DIRECTORS NCLT CHENNAI VS SEAL INFOTECH PRIVATE LIMITED

 

NCLT CHENNAI COMPOUNDS AGM DELAYS BY SEAL INFOTECH PRIVATE LIMITED, IMPOSED ₹17.61 LAKH PENALTY ON COMPANY& DIRECTORS

NCLT CHENNAI VS SEAL INFOTECH PRIVATE LIMITED

FAILURE TO HOLD ANNUAL GENERAL MEETING WITHIN DEADLINE

KEY FACTS

The tribunal was dealing with three petitions filed by the company and its directors seeking compounding of offences for failure to hold Annual General Meetings within the prescribed timelines under the Companies Act, 2013.

The company failed to convene AGMs for the financial years 2019–20, 2020–21 and 2021–22, resulting in delays of 56 days, 587 days and 246 days, respectively.

Application for compounding of offence was made before NCLT.

REASONS FOR THE DELAY

·      Company could not finalize the accounts for the financial year 2019-20 due to COVID-19 pandemic.

·      Further, delay in conducting AGM for the Financial Year 2021-22 was due to be delay in finalization of books of accounts due to discussions between management, auditors and the preference shareholders of the Company"

·      The company had also cited migration to SAP accounting software and reconciliation issues as reasons for delay in finalizing accounts for subsequent years.

·      The company further submitted that it had ceased operations since April 2021, had no revenue, and intended to close down its operations, while stating that the defaults were unintentional and beyond its control.

VIAVI SOLUTIONS INDIA PVT. LTD. V. REGISTRAR OF COMPANIES

Applying the factors laid down by the NCLAT in Viavi Solutions India Pvt. Ltd. v. Registrar of Companies, the Tribunal found that the default was unintentional, caused no prejudice to public interest, and stood rectified with the eventual conduct of the AGMs.

KEY TAKEAWAYS

This order reinforces that AGM compliance is a governance cornerstone, not a procedural formality. Even in compounding proceedings, tribunals are increasingly quantifying penalties to reflect seriousness of delay, especially post stricter enforcement trends.

NCLT taking a lenient approach on the officers of the Company, Tribunal directs the applicants to pay the fine as prescribed hereunder to the RoC, Chennai.”

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,