V.L.S FINANCE LTD. versus UNION OF INDIA & ORS.

Citation: [2013] 8 S.C.R. 849 · Decided: 10-05-2013 · Supreme Court of India · Bench: C.K. PRASAD · Disposal: Dismissed
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Judgment (excerpt)

[2013] 8 S.C.R. 849 
V.L.S. FINANCE LTD. 
v. 
UNION OF INDIA & ORS. 
(Civil Appeal No .. 2102 of 2004) 
MAY 10, 2013· 
[CHANDRAMAULI KR. PRASAD AND 
V. GOPALA GOWDA, JJ.] 
Companies Act, 1956 - ss. 621A(1) and (7) and 211(7) 
A 
B 
- Complaint for offence punishable u/s. 211 (7) pending before 
C 
criminal court - Compounding of the offence by Company Law 
Board - Permissibility - Held: In view of the nature of the 
offence, it can be compounded by Company Law Board 
before as well as after institution of prosecution - Company 
Law Board was not obliged to take permission of the Court D 
before compounding the offence. 
Interpretation of Statutes - Rules of interpretation - When 
the language of a provision is clear, it should be interpreted 
in its ordinary sense - Addition or alteration of words or 
E 
expressions to be resorted to only in exceptional 
circumstances to achieve the purpose of the statute. 
Practice and Procedure - New plea - Raising of- Before 
Supreme Court - Permissibility - Held: If the facts of the case 
give rise to pure question of law going to the root of the matter, 
F 
Supreme Court has discretion to go into the new plea. 
The questions for consideration in the present appeal 
was whether the Company Law Board had power to 
compound the offence punishable uls. 211 (7) of G 
Companies Act, complaint whereof was pending for 
consideration before the criminal court; whether the 
Board was required to seek permission of the Court in 
seisin of the matter, before compounding the offence; and 
849 
H 
850 
SUPREME COURT REPORTS 
[2013] 8 S.C.R. 
A whether such plea having been raised for the first time 
before this Court, is maintainable o 
Dismissing the appeal, the Court 
HELD: 1. In a case in which the facts pleaded give 
B rise to a pure question of law going to the root of the 
matter, this Court possesses discretion to go into that. 
In the present case, it is an admitted position that the 
allegation made, exposed the Company and its Managing 
Director for punishment under Section 211 (7) of the 
C Companies Act which provides for imprisonment or fine 
or with both. In the face of the same, no fact needs to be 
adjudicated and the point being a pure question of law 
going to the root of the matter, same can be permitted to 
be raised before this Court for the first time. (Paras 10 
D and 11] [856-E, F-H] 
2.1. It is evident from the provisions of s. 621A(1) of 
Companies Act that any offence punishable under the 
Act, not being an offence punishable with imprisonment 
E only or with imprisonment and also with fine, may be 
compounded either before or after the institution of the 
prosecution by the Company Law Board and in case, the 
minimum amount of fine which may be imposed for such 
offence does not exceed Rs. 5000/-, by the Regional 
F Director on payment of certain fine. The penal provisions 
of the Act provide for different kinds of punishments for 
variety of offences and can be categorised as (i) offences 
punishable with fine only; (ii) offences punishable with 
imprisonment only; (iii) offences punishable with fine and 
imprisonment,(iv) offences punishable with fine or 
G imprisonment and (v) offences punishable with fine or 
imprisonment or both. [Para 12] [589-8-E] 
2.2. Section 211 (7) of the Act provides for 
punishment with imprisonment for a term which may 
H extend to six months or with fine or with both. Therefore, 
V.L.S. FINANCE LTD. v. UNION OF INDIA & ORS. 
851 
an accused charged with the offence under Section 
A 
211 (7) of the Act has not necessarily to be visited with 
imprisonment or imprisonment and also fine but can be 
let off by imposition of fine only. Section 621A(1) excludes 
such offences which are punishable with imprisonment 
only or with imprisonment and also with fine. The nature 
B 
of offence for which the accused has been charged, 
necessarily does not invite imprisonment or 
imprisonment and also fine. Hence, the nature of the 
offence is such that it was possible to be compounded 
by the Company Law Board. [Para 13] [859-F-H; 860-A] 
C 
2.3. An offence committed by an accused under the 
Act, not being an offence punishable with imprisonment 
only or imprisonment and also with fine, is permissible 
to be compounded by the Company Law Board either 
before or after the institution of any prosecution. In view 
D 
of sub-section (7) of Section 621A, the criminal court also 
possesses similar power to compound an offence after 
institution of the pro
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