Nizam Deccan Sugars Limited Vs. The Registrar of Companies, Andhra Pradesh and Telangana:

FACTS:

The Company was incorporated in State of Andhra Pradesh on 17th June, 2002. As per Section 149 of the Companies Act, 2013 and Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014 (which came into force with effect from 1.04.2014), every company shall have a Board of Directors consisting of individuals as directors and shall have—(a) a minimum number of three directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company; and (b) a maximum of fifteen directors:

• Provided that a company may appoint more than fifteen directors after passing a special resolution.
• Provided further that such class or classes of companies as may be prescribed, shall have at least one woman director.

Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014 specifies that the following class of companies shall appoint at least one woman director:

1. every listed company
2. Every other public company having-(a) paid-up share capital of one hundred crore rupees or more; or (b) turnover of three hundred crore rupees or more:

Provided that a company, which has been incorporated under the Act and is covered under provisions of second proviso to sub-Section (1) of section 149 shall comply with such provisions within a period of six months from the date of its incorporation

As per the said provision, the Company is required to appoint atleast one Woman Director in its Board of Directors. However, it could not appoint a Woman Director from First April, 2015 to 29th March, 2016. But the Company appointed Woman Director namely Mrs. Vani Gokaraju at the 63rd Board meeting held on 30th March, 2016.

Since the Company has failed to comply with the above provision within stipulated time, show causes notice dated 18.09.2015, under Section 149 of the Companies Act, 2013 read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, was issued by the Registrar of Companies, to the Company and its 5 MD, Directors Nominee Directors, the applicants herein, by seeking them to show cause as to why the penal action, shall not be initiated against them for not appointing a woman director on the Board of Directors of Company. And ROC has also filed a Complaint before the Hon'ble Court of Special Judge for Economic Offence-cum-VIII, AMSJ Court, Nampally, Hyderabad and the case was stated to be pending before the Court for examination of accused U/s. 313 of Cr. PC.

The RoC has not opposed the prayer of the applicants in his report. He has further stated Section 172 of the Companies Act, 2013 is applicable herein and the Company and every Officer in default shall be punishable with fine not less than fifty thousand rupees but which may extend to five lakh rupees.

HELD:

By taking into consideration that violation has been made good by the Company by appointing a Woman Director and it is also first offence committed by the Company and no prejudice would cause to anybody if composition of offence in question is allowed, we are inclined to allow this application subject to the following terms and conditions:

1. We direct the Applicant Company to pay a compounding fee of Rs. 75,000/- and Rs. 50,000/- by the Applicant No. 2, who is the Managing Director of the Applicant Company.
2. The fine to be paid within a period of 3 weeks from the date of receipt of copy of the order and report compliance of the same.
3. After the receipt of compounding fine, the RoC is directed to bring about the compounding of offence to the notice of the Learned Special Judge for Economic offences-cum-VIII AMSJ Court, Hyderabad for passing appropriate orders.

Thus, the Company Application is disposed off.