GLS University

Faculty of Law

Semester IV
Company Law

Course Code:
UNIT-IV

Unit IV: Winding Up, Adjudicatory Mechanism & CSR

A. Winding Up of Companies: Modes: Voluntary & Compulsory
B. Grounds & Procedures for Winding Up
C. Adjudicatory Bodies: NCLT & NCLAT : Constitution, Powers, Jurisdication,
Procedure & Judicial Review
D. Corporate Social Responsibility: Introduction, Need; Companies (Corporate Social
Responsibility Policy) Rules 2014
E. New Horizons of Corporate Governance: A Critical Comparison

Winding Up of Companies: Modes: Voluntary & Compulsory

Introduction
Winding Up of a Company means to bring an end to the life of the company. A distinct feature
of a company is Perpetual Succession which means that the longevity of the company does not
depend on its members or their financial status. Even if all the members of the company go
bankrupt or all of them die, the company will not dissolve on its own unless it is made to
dissolve on grounds which are laid out in the act. This article will go over how the operations of
a Company are shut according to the provisions of the Companies Act.

Types of Winding Up
According to Section 425 of the Companies Act, 2013, there are 2 kinds of Winding Up. They
are:

1. Compulsory Winding Up under the order of the Court

2. Voluntary Winding Up, which itself is of two kinds:
i. Members’ Voluntary Winding Up
ii. Creditor’s Voluntary Winding Up
Winding Up by Court
A company may be wound up at an order of the Court. This is also called Compulsory Winding
Up. The cases in which a company may be wound up are given in Section 433. They are as
follows:

Special Resolution

In the event that the organization has, by unique goals, settled that it be ended up by the court.
The court is, be that as it may, not bound to request Winding Up essentially in light of the fact
that the organization has so settled. The power is optional and may not be practised where
twisting up would be against the general population or the organization’s advantages.

Default in Holding Statutory Meeting

On the off chance that an organization has made a default in conveying the statutory report to the
Registrar or in holding the statutory gathering, it might be requested to be Wound Up.

Failure to Commence Business or Suspension of Business

In the event that an organization does not initiate its business within a year from its joining or has
suspended its business for an entire year, it might be requested to be twisted up. Here again, the
power is optional and will be practised just when there is a reasonable sign that there is no aim to
carry on business. In the event that the suspension is acceptably represented and has all the
earmarks of being because of brief causes, the request might be declined.

Reduction in Membership

On the off chance that the quantity of individuals is decreased, on account of an open
organization, underneath seven, and on account of a privately owned business, beneath two, the
organization might be requested to be twisted up.

Inability to Pay Debts

An organization might be requested to be twisted up on the off chance that it is unfit to pay its
obligations. Failure to pay obligations is clarified in Section 434. As indicated by this area, an
organization will be esteemed to be unfit to pay its obligations in the accompanying three cases:

1. Statutory Notice
2. Decreed Debt
3. Commercial Insolvency
Just and equitable
The final ground on which the court can arrange the ending up of an organization is the point at
which “the court is of the assessment that the organization ought to be twisted up.” This gives the
court a wide optional capacity to request twisting up at whatever point it seems, by all accounts,
to be attractive. The court may give due weight to the enthusiasm of the organization, its
representatives, loan bosses and investors and overall population ought to likewise be
considered. The conditions wherein the courts have in the past broken down organizations on
this ground can be settled into general classifications as pursues:

Deadlock
Firstly, when there is a deadlock in the management of the company, it is just and equitable to
order winding up. The well-known illustration is Yenidje Tobacco Co Ltd. The facts of the case
are laid out as follows:

W and R who exchanged independently as cigarette makers consented to amalgamate their

business and shaped a private limited organization of which they were investors and the main
chiefs. They had an equivalent casting of ballot rights and, in this manner, the articles gave that
any contest would be settled by discretion, however, one of them disagreed from the honour.
Both at that point turned out to be hostile to the point that neither of them would address the
other aside from through the secretary.

Therefore there was a finished stop and thus the organization was requested to be twisted up in
spite of the fact that its business was thriving. It must be noticed that the ‘Fair and Equitable’
statement ought not to be conjured in situations where the main trouble is the distinction of view
between the greater part directorate and those speaking to the minority.

Loss of Substratum
Also, it is simply and evenhanded to wrap up an organization when its fundamental article has
neglected to appear or it has lost its substratum. A decent delineation is German Date Coffee Co.
The realities of the case are spread out as pursues:

An organization was shaped to make espresso from dates under a patent which was to be
conceded by the Government of Germany and furthermore for working different licenses of
comparable kind. The German patent was never allowed and the organization set out upon
different licenses. Yet, on the request of an investor, it was held that “the substratum of the
organization had fizzled, and it was difficult to do the items for which it was framed; and,
subsequently, it was simple and fair that the organization ought to be twisted up.

Losses
Thirdly, it is viewed as just and fair to wrap up an organization when it can’t carry on business
with the exception of at misfortunes. It will be unnecessary, in reality, for an organization to
carry on business when there is no desire for accomplishing the object of exchanging at a benefit.
Yet, simple anxiety with respect to certain investors that the benefits of the organization will be
squandered and that misfortune rather than increase will result has been held to be no ground.

Oppression of Minority
It is simple and even-handed to wrap up an organization where the vital investors have embraced
a forceful or onerous or pressing approach towards the minority. The choice of the Madras High
Court in R. Sabapathi Rao v Sabapathi Press Ltd, is a representation in point. The court saw that
where the executives of an organization had the option to practice an overwhelming effect on the
administration of the organization and the overseeing chief had the option to outvote the minority
of the investors and hold the benefits of the business between individuals from the family and
there were a few objections that the investors did not get a duplicate of the asset report, nor was
the inspector’s report perused at the general gathering, profits were not consistently paid and the
rate was lessening, that established adequate ground for twisting up.

Fraudulent Purpose
It is simple and fair to wrap up an organization on the off chance that it has been imagined and
delivered in misrepresentation or for an illicit reason.

Incorporated or Quasi Partnership

It has been seen that there is little in like manner between the goliath organization and the family
or the one individual organization. To apply the equivalent legitimate prerequisites to such
various associations is profitable of bother and bad form. So as to maintain a strategic distance
from such “burden and unfairness” the Act treats them distinctively in a few regards. In any case,
even in issues in which the Act treats them alike, the courts have needed to recognize them.

Voluntary Winding Up
A company may be wound up voluntarily in the following two ways, as discussed below:

By Ordinary Resolution

An organization might be twisted up willfully by passing an ordinary resolution when the period,
assuming any, fixed for the span of the organization by the articles, has lapsed. Also, when the
occasion, assuming any, has happened, on the event of which the articles give that the
organization is to be broken down, the organization may, by passing a normal goal with that
impact, start its willful twisting up.

By Special Resolution

A company may at any time pass a special resolution providing that the company be wound up
voluntarily. Winding Up commences at the time when the resolution is passed. Within fourteen
days of the passing of the resolution, the company shall give notice of the resolution by
advertisement in the Official Gazette and also in some newspaper circulating in the district of the
registered office of the company. The corporate state and powers of the company shall continue
until the company is dissolved, but it shall stop its business, except so far as may be necessary
for beneficial winding up.

As discussed earlier in the article, Voluntary Winding Up is of two kinds:

1. Members’ Voluntary Winding Up;

2. Creditor’s Voluntary Winding Up
If a Declaration of Solvency is made in accordance with the provisions of the Act, it will be a
Members’ Voluntary Winding Up and if it is not made, it becomes the Creditors’ Voluntary
Winding Up. The declaration has to be made by a majority of the directors at the meeting of the
board and verified by an affidavit. They have to declare that they have made a full inquiry into
the affairs of the company and have formed the opinion that the company has no debts or that it
will be able to pay its debts in full within a certain period, not exceeding three years, from the
commencement of winding up.

The declaration, to be effective, must be made within the five weeks immediately before the date
of the resolution and should be delivered to the Registrar for registration before that date. It
should also be accompanied by a copy of the report of the auditors on the profit and loss account
and the balance sheet of the company prepared up to the date of the declaration and should
embody a statement of the company’s assets and liabilities as at that date.

There is a penalty for making the declarations without having reasonable grounds for the opinion
that the company will be able to pay its debts within the specified period. If the company fails to
pay the debts within that period, it will be presumed that reasonable grounds for making the
declaration did not exist. The liquidator should forthwith call a meeting of the creditors because
the winding up has then to proceed as if it were Creditors’ Winding Up.

Final Meeting and Dissolution

When the affairs of the company are fully wound up, the liquidator makes an account of the
winding up showing how the winding up has been conducted and the property of the company
disposed of. He then calls a general meeting of the company for the purpose of laying before it
the accounts of winding up. The meeting is to be called by advertisement in the Official Gazette
and a local newspaper specifying the time, place and object of the meeting. Within a week after
the meeting, the liquidator sends a copy of the accounts and a return of the meeting to the
Registrar and the Official Liquidator.

If no quorum was present at the meeting, he makes a return stating the fact. The Registrar, on
receipt of the accounts and the return, registers the documents. The Official Liquidator, to whom
also a copy of the accounts and return is sent, is required to make a scrutiny of the books and
papers of the company. The liquidator of the company and it’s past and present officers are under
a duty to give the Official Liquidator all reasonable facility for the purpose.
The Official Liquidator reports to the Tribunal, the result of his scrutiny. If the report shows that
the affairs of the company were not conducted in a manner prejudicial to the interest of its
members or to the public interest, then from the date of the submission of the report to the
Tribunal, the company shall be deemed to be dissolved. If the report reveals that the affairs were
conducted in a manner prejudicial to the interests of the members or to the public interest, the
court shall direct the Official Liquidator to make further investigations into the affairs of the
company. The court may invest him with such powers as may be necessary for the purpose.
When the court receives the report on further investigation, it may declare that the company
stands dissolved or make such order as the circumstances discovered by the report may warrant.

Conclusion
A company can be wound up for a lot of reasons but Winding Up of a Company is not as simple
as closing the shutters of its headquarters or not turning up to work. Winding Up is an even more
cumbersome process than the Incorporation itself.

National Company Law Tribunal

The National Company Law Tribunal was setup by the Central Government in 2016 under
Section 408 of the Companies Act, 2013. The National Company Law Tribunal has been setup
as a quasi-judicial body to govern the companies registered in India and is a successor to the
Company Law Board. In this article, we look at the National Company Law Tribunal, its
functions and powers in detail.

Scope of National Company Law Tribunal

The National Company Law Tribunal (NCLT) consolidates the corporate jurisdiction of the
Company Law Board, Board for Industrial and Financial Reconstruction (BIFR), The Appellate
Authority for Industrial and Financial Reconstruction (AAIFR) and the powers relating
to winding up or restructuring and other provisions, vested in High Courts. Hence, the National
Company Law Tribunal will consolidate all powers to govern the companies registered in India.
With the establishment of the NCLT and NCLAT, the Company Law Board under the
Companies Act, 1956 has now been dissolved.

Advantages for National Company Law Tribunal

 NCLT is a specialized court only for Corporates, i.e., companies registered in India.
 This will be no more than a Tribunal for the Corporate Members.
 NCLT will reduce the multiplicity of litigation before different forums and courts.
 NCLT has multiple branches and is able to provide justice at a close range.
 NCLT consists of both judicial and technical members while deciding on matters.
 The time taken to windup a company is reduced.
 Speedy disposal of cases will help reduce the number of cases.
 NCLT & NCLAT have exclusive jurisdiction.
Jurisdiction of National Company Law Tribunal
The following are the National Company Law Tribunal benches and its respective jurisdictions:
NCLT, Principal Bench and NCLT, New Delhi Bench
Address: NCLT, New Delhi Bench. Block No. 3, Ground Floor, 6th,7th & 8th Floor, CGO
Complex, Lodhi Road, New Delhi-110003
Jurisdiction: Union Territory of Delhi, State of Rajasthan, State of Haryana

NCLT, Ahmedabad Bench

Address: Anand House, Ground Floor, 1st & 2nd Floor, SG Highway, Thaltej, Ahmedabad-
380054
Jurisdiction: State of Gujarat, State of Madhya Pradesh, Union Territory of Dadra and Nagar
Haveli, Union Territory of Daman and Diu

NCLT, Allahabad Bench

Address: 9th Floor, Sangam Place, Civil Lines Allahbad – 211001
Jurisdiction: State of Uttar Pradesh, State of Uttrakhand

NCLT, Bengaluru Bench

Address: Corporate Bhawan, 12th Floor, Raheja Towers, M.G., Road, Benguluru – 160019
Jurisdiction: State of Karnataka

NCLT, Chandigarh Bench

Address: Ground Floor, Corporate Bhawan, Sector-27 B, Madhya Marg, Chandigarh-160019
Jurisdiction: State of Himachal Pradesh, State of Jammu and Kashmir, State of Punjab, Union
Territory of Chandigarh

NCLT, Chennai Bench

Address: Corporate Bhawan (UTI Building), 3rd Floor, No. 29 Rajaji Salai, Chennai-600001
Jurisdiction: State of Kerala, State of Tamil Nadu, Union Territory of Lakshadweep, Union
Territory of Puducherry

NCLT Guahati Bench

Address: 4th Floor, Prithvi Planet Behind Hanuman Mandir, G.S. Road, Guahati-781007
Jurisdiction: State of Arunchal Pradesh, State of Assam, State of Manipur, State of Mizoram,
State of Meghalaya, State of Nagaland, State of Sikkim, State of Tripura

NCLT Hyderabad Bench

Address: Corporate Bhawan, Bandlaguda Tattiannaram Village, Hayatnagar Mandal,
Rangareddy District, Hyderabad-500068
Jurisdiction: State of Andhra Pradesh, State of Telangana
NCLT Kolkata Bench
Address: 5, Esplanade Row (West), Town Hall Ground and 1st Floor Kolkata-700001
Jurisdiction: State of Bihar, State of Jharkhand, State of Odisha, State of West Bengal, Union
Territory of Andaman and Nicobar Island

NCLT Mumbai Bench

Address: 6th Floor, Fountain Telecom Building No.1, Near Central Telegraph, M.G. Road,
Mumbai – 400001
Jurisdiction: State of Chhattisgarh, State of Maharashtra, State of Goa

Powers of National Company Law Tribunal (NCLT)

The Tribunal and the Appellate Tribunal is bound by the rules laid down in the Code of Civil
Procedure and is guided by the principles of natural justice, subject to the other provisions of this
Act and of any rules that are made by the Central Government. The Tribunal and the Appellate
Tribunal has the power to control its own procedure.

Further, no civil court has the jurisdiction to consider any suit or proceeding with reference to
any matter which the Tribunal or the Appellate Tribunal is empowered to decide.

National Company Law Tribunal enjoys a wide range of powers. Its powers include:

 Power to seek assistance of Chief Metropolitan Magistrate.

 De-registration of Companies.
 Declare the liability of members unlimited.
 De-registration of companies in certain circumstances when there is registration of
companies is obtained in an illegal or wrongful manner.
 Remedy of oppression and mismanagement.
 Power to hear grievance of refusal of companies to transfer securities and rectification of
register of members.
 Protection of the interest of various stakeholders, especially non-promoter shareholders
and depositors.
 Power to provide relief to the investors against a large set of wrongful actions committed
by the company management or other consultants and advisors who are associated with
the company.
 Aggrieved depositors have the remedy of class actions for seeking redressal for the
acts/omissions of the company which hurt their rights as depositors.
 Powers to direct the company to reopen its accounts or allow the company to revise its
financial statement but do not permit reopening of accounts. The company can itself also
approach the Tribunal through its director for revision of its financial statement.
 Power to investigate or for initiating investigation proceedings. An investigation can be
conducted even abroad. Provisions are provided to assist investigation agencies and
courts of other countries with respect to investigation proceedings.
 Power to investigate into the ownership of the company.
  Power to freeze assets of the company.
 Power to impose restriction on any securities of the company.
 Conversion of public limited company into private limited company.
 If the company cannot or has not held an Annual General Meeting as required under the
Companies Act or a required Extraordinary General Meeting, then the Tribunal has
powers to call for a General Meetings.
 Power to alter the financial year of a company registered in India.
National Company Law Appellate Tribunal (NCLAT)
Appeal from order of Tribunal can be raised to the National Company Law Appellate Tribunal
(NCLAT). Appeals can be made by any person aggrieved by an order or decision of the NCLT,
within a period of 45 days from the date on which a copy of the order or decision of the Tribunal.

On the receipt of an appeal from an aggrieved person, the Appellate Tribunal would pass such
orders, after giving an opportunity of being heard, as it considers fit, confirming, changing or
setting aside the order that is appealed against.The Appellate Tribunal is required to dispose the
appeal within a period of six months from the date of the receipt of the appeal.

Corporate Social Responsibility

INTRODUCTION & BACKGROUND

Corporate Social Responsibility is not a new concept in India, however, the Ministry of

Corporate Affairs, Government of India has recently notified the Section 135 of the

Companies Act, 2013 along with Companies (Corporate Social Responsibility Policy)

Rules, 2014 "hereinafter CSR Rules" and other notifications related thereto which

makes it mandatory (with effect from 1st April, 2014) for certain companies who fulfill

the criteria as mentioned under Sub-Section (1) of Section 135 to comply with the

provisions relevant to Corporate Social Responsibility. As mentioned by United Nations

Industrial Development Organization (UNIDO), CSR is generally understood as being

the way through which a company achieves a balance of economic, environmental and

social imperatives ("Triple Bottom-Line-Approach"), while at the same time addressing

the expectations of shareholders and stakeholders.

WHAT IS CSR?

The term "Corporate Social Responsibility (CSR)" can be referred as corporate initiative

to assess and take responsibility for the Company's effects on the environment and

impact on social welfare. The term generally applies to companies’ efforts that go

beyond what may be required by regulators or environmental protection groups.

Corporate social responsibility may also be referred to as "corporate citizenship" and

can involve incurring short-term costs that do not provide an immediate financial

benefit to the company, but instead promote positive social and environmental change.

Moreover, while proposing the Corporate Social Responsibility Rules under Section 135

of the Companies Act, 2013, the Chairman of the CSR Committee mentioned the

Guiding Principle as follows: "CSR is the process by which an organization thinks about

and evolves its relationships with stakeholders for the common good, and

demonstrates its commitment in this regard by adoption of appropriate business

processes and strategies. Thus CSR is not charity or mere donations. CSR is a way of

conducting business, by which corporate entities visibly contribute to the social good.

Socially responsible companies do not limit themselves to using resources to engage in

activities that increase only their profits. They use CSR to integrate economic,

environmental and social objectives with the company's operations and growth."
FOR WHOM IT IS APPLICABLE?

The companies on whom the provisions of the CSR shall be applicable are contained in

Sub-Section (1) of Section 135 of the Companies Act, 2013. As per the said section,

the companies having Net worth of Rs. 500 crore or more; or Turnover of Rs. 1000

crore or more; or Net Profit of Rs. 5 crore or more during any financial year shall be

required to constitute a Corporate Social Responsibility Committee of the Board

"hereinafter CSR Committee" with effect from 1st April, 2014.

The provisions governing ‘Corporate Social Responsibility’ are ruled by the provisions of

Sec.135 of the Companies Act 2013 and the Companies (Corporate Social

Responsibility) Rules 2014.

WHAT TO DO WHEN CSR IS APPLICABLE?

Once a company is covered under the ambit of the CSR, it shall be required to comply

with the provisions of the CSR. The companies covered under the Sub section 1 of

Section 135 shall be required to do the following activities:

1. As provided under Section 135(1) itself, the companies shall be required to

Constitute Corporate Social Responsibility Committee of the Board (hereinafter referred

to as ‘CSR Committee’). The CSR Committee shall be comprised of minimum 3

directors, out of which at least one director shall be an independent director.

2. The Board's report shall disclose the compositions of the CSR Committee.

3. All such companies shall spend, in every financial year, at least two per cent of the
average net profits of the Company made during the three immediately preceding

financial years, in pursuance of the Corporate Social Responsibility Policy. It has been

clarified that the average net profits shall be calculated in accordance with the

provisions of Section 198 of the Companies Act, 2013. Also, proviso to the Rule provide

3(1) of the CSR Rules that the net worth, turnover or net profit of a foreign company of

the Act shall be computed in accordance with balance sheet and profit and loss account

of such company prepared in accordance with the provisions of clause (a) of subsection (1) of
section 381 and section 198 of the Companies Act, 2013.

REPORTING FOR CSR

Rule 8 of the CSR Rules provides that the companies, upon which the CSR Rules are

applicable on or after 1st April, 2014 shall be required to incorporate in its Board's

report an annual report on CSR containing the following particulars:

 A brief outline of the Company's CSR Policy, including overview of projects or

programs proposed to be undertaken and a reference to the web-link to the CSR

policy and projects or programs;

 The composition of the CSR Committee;

 Average net profit of the Company for last three financial years;

 Prescribed CSR Expenditure (2% of the amount of the net profit for the last 3

financial years);
 Details of CSR Spent during the financial year;

 In case the Company has failed to spend the 2% of the average net profit of the

last three financial years, reasons thereof;

ROLE OF CSR COMMITTEE

The CSR Committee constituted in pursuance of Section 135 of the Companies Act,

2013 shall be required to carry out the following activities:

a) Formulate and recommend to the Board, a Corporate Social Responsibility Policy

which shall indicate the activities to be undertaken by the company as specified

in Schedule VII;

b) Recommend the amount of expenditure to be incurred on the activities referred

to in clause (a); and

c) Monitor the Corporate Social Responsibility Policy of the company from time to

time.

WHAT IF A COMPANY CEASES TO BE COVERED UNDER SECTION 135?

Rule 3(2) of the Corporate Social Responsibility Rules, 2014 provides that a company

which ceases to be a company covered under section 135(1) of the Act for three

consecutive financial years, shall not be required to:

a. constitute a CSR Committee; and

b. comply with the provisions contained in subsection (2) to (5) of the said section

till such time it meets the criteria specified in sub section (1) of Section 135.
Accordingly, if a company, for 3 consecutive years, ceases to be covered under the

ambit of section 135(1), it shall not be required to fulfil the conditions relating to the

constitution of CSR Committee and other related provisions.

1. THE OBJECTIVES OF THE POLICY

This Policy shall be read in line with Section l35 of the Companies Act 20l3, Companies

(Corporate Social Responsibility Policy) Rules, 2014 and such other rules, regulations,

circulars, and notifications (collectively referred hereinafter as 'Regulations') as may be

applicable and as amended from time to time and will, inter-alia, provide for the

followings:

• Establishing a guideline for compliance with the provisions of Regulations to dedicate

a percentage of Company's profits for social projects.

• Ensuring the implementation of CSR initiatives in letter and spirit through appropriate

procedures and reporting

• Creating opportunities for employees to participate in socially responsible initiatives.

2. DEFINITIONS

(1) In this Policy, unless the context otherwise requires:

(a) "Act" means the Companies Act, 2013;

(b) "Annexure" means the Annexure appended to these rules;

(c) "Corporate Social Responsibility (CSR)" means and includes but is not limited to

(i) Projects or programs relating to activities specified in Schedule VII to the Act or
(ii) Projects or programs relating to activities undertaken by the board of directors

of a company (Board) in pursuance of recommendations of the CSR Committee

of the Board as Per declared CSR Policy of the company subject to the condition

that such policy will cover subjects enumerated in Schedule Vll of the Act.

(d) "CSR Committee" means the ‘Corporate Social Responsibility Committee’ of the

Board referred to in Section 135 of the Act

(e) "CSR Policy" relates to the activities to be undertaken by the company as specified

in Schedule VII to the Act and the expenditure thereon, excluding activities undertaken

in pursuance of normal course of business of a company.

(f) "Net profit" means the net profit of a company as per its financial statement

prepared in accordance with the applicable provisions of the Act, but shall not include

the following, namely:-

(i) Any profit arising from any overseas branch or branches of the company'

whether operated as a separate company or otherwise;

(ii) Any dividend received from other companies in India, which are covered under

and complying with the provisions of section l35 of the Act:

Provided that net profit in respect of a financial year for which the relevant

financial

(2) Words and expressions used and not defined in these rules but defined in the Act

shall have the same meanings respectively assigned to them in the Act.
3. CSR ACTIVITIES

The Policy recognizes that corporate social responsibility is not merely compliance; it is

a commitment to support initiatives that measurably improve the lives of

underprivileged by one or more of the following focus areas as notified under Section

135 of the Companies Act 2013 and Companies (Corporate Social Responsibility Policy)

Rules 2014:

i. Eradicating hunger, poverty & malnutrition, promoting preventive health care &

sanitation & making available safe drinking water;

ii. Promoting education, including special education & employment enhancing vocation

skills especially among children, women, elderly & the differently unable & livelihood

enhancement projects;

iii. Promoting gender equality, empowering women, setting up homes & hostels for

women & orphans, setting up old age homes, day care centers & such other facilities

for senior citizens & measures for reducing inequalities faced by socially & economically

backward groups;

iv. Ensuring environmental sustainability, ecological balance, protection of flora &

fauna, animal welfare, agro forestry, conservation of natural resources & maintaining

quality of soil, air & water including contribution to the Clean Ganga Fund setup by the

Central Government for rejuvenation of river Ganga;

v. Protection of national heritage, art & culture including restoration of buildings & sites
of historical importance & works of art; setting up public libraries; promotion &

development of traditional arts & handicrafts;

vi. Measures for the benefit of armed forces veterans, war widows & their dependents;

vii. Training to promote rural sports, nationally recognized sports, sports & Olympic

sports;

viii. Contribution to the Prime Minister's National Relief Fund or any other fund set up

by the Central Government for socio-economic development & relief & welfare of the

Scheduled Castes, the Scheduled Tribes, other backward classes, minorities & women;

ix. Contributions or funds provided to technology incubators located within academic

institutions, which are approved by the Central Government;

x. Rural development projects, etc

xi. Slum area development [Explanation: For the purposes of this item, the term 'slum

area' shall mean any area declared as such by the Central Government or any State

Government or any other competent authority under any law for the time being in

force."]

All activities under the CSR activities should be environment friendly and socially

acceptable to the local people and Society. Contribution towards CM Relief Fund shall

be a part of CSR activities above 2% of Net profit other than the activities mentioned

above.

4. SCOPE & THE GEOGRAPHIC REACH

The Act provides that the Company shall give preference to the local area and areas

around it where it operates, for spending the amount earmarked for Corporate Social

Responsibility. The Company will thus give preference to conducting CSR activities in

the State of Maharashtra herein the Company has/will have its operations. However,

the Committee may identify such areas other than stated above, as it may deem fit,

and recommend it to the Board for undertaking CSR activities.

5. ANNUAL SPENDS/ALLOCATION OF FUNDS ANNUAL SPENDS/ALLOCATION

OF FUNDS

1. The Company would spend not less than 2% of the average Net Profits of the

Company made during the three immediately preceding financial years. The surplus

arising out of the CSR activity will not be part of business profits of the Company. The

Corpus would thus include the 2% of average net profits, as aforesaid, any income

arising there from and surplus arising out of CSR activities.

2. The Company may build CSR capacities of its personnel and/or those of its

implementing agencies through Institutions with established track records of at least

three financial years but such expenditure shall not exceed five percent of total CSR

expenditure of the Company in one financial year

3. However if the Company ceases to be covered under sub-section (1) of Section 135

of the Act for three financial years, then it shall not be required to, comply with the

provisions laid down under sub-section (2) to (5) of the said section, till such time it
meets the criteria specified in sub-section (1) of the Act.

6. CSR COMMITTEE

The CSR Committee will consist of at least three Directors, who shall meet at least

twice in a year to discuss and review the CSR activities and policy. The quorum shall be

two members are required to be present for the proceeding to take place. The

Chairman and members of the Committee are as follows:

1. Shri K Raghuraman, Chairman

2. Shri RN Syndolia, Member

3. Shri RL Wadhwa, Member

7. SCOPE AND FUNCTIONS OF CSR COMMITTEE

The CSR Committee will recommend a formal CSR Policy, this document and will

recommend particular CSR activities, set forth a budget, describe how the Company

will implement the project, and establish a transparent means to monitor progress.

8. ADMINISTRATION OF CSR PROJECTS

The Corporation can meet its CSR obligations by funnelling its activities on its own or

through a third party, such as a society, trust, foundation or Section 8 company (i.e., a

company with charitable purposes) that has an established record of at least five years

in CSR-like activities. The Company may also collaborate and pool their resources,

which could be especially useful for small and medium-sized enterprises. Managing

Director will have the power to sanction any project for CSR up to a limit of Rs.5.00
lakhs, above which Board's approval will be required to sanction the amount.

9. IMPLEMENTATION

a) The investment in CSR should be project based and for every project time framed

periodic mile stones should be finalized at the outset.

b) Project activities identified under CSR are to be implemented by Specialized

Agencies and generally NOT by staff of the organization. Specialized Agencies could

be made to work singly or in tandem with other agencies.

c) Such specialized agencies would include:

i) Community based organization whether formal or informal.

ii) Elected local bodies such as Panchayats

iii) Voluntary Agencies (NGOs)

iv) Institutes/Academic Organizations

v) Trusts, Mission etc.

vi) Self-help groups

vii) Government, Semi Government and autonomous Organizations.

viii) Standing Conference of Public Enterprises (SCOPE)

ix) Mahila Mondals/Samitis and the like Contracted agencies for civil works

Professional Consultancy Organization etc.

10. FUNDING

As per the regulations the company will set aside, for annual CSR activities, an amount
equal to 2% of the average net profits of the Company made during the three

immediately preceding financial years. Any unutilized CSR allocation fund of a

particular year, will be carried forward to the next financial year i.e. the CSR budget

will be non-lapsable in nature.

11. BUDGET

I. The Company Board of Directors shall ensure that in each financial year the

Company spends at least 2% of the average Net Profit made during the three

immediate preceding financial years.

II. As per section 135 of the Companies Act, the Company will report reasons for

under spending of the allocated CSR budget of the current financial year in the

template provided by the Ministry of Corporate Affairs. This reporting will be done

Annual Report and signed off by the Board of Directors.

III. In case of any surplus arising out of CSR projects the same shall not form part of

business profits of the Company.

IV. The Company may collaborate or pool resources with other companies to

undertake CSR activities, through any non-profit organization, if required.

12. AMENDMENITS TO THE POLICY

The Board of Directors on its own and/or on the recommendation of CSR Committee,

can amend its Policy as and when required deemed fit. Any or all provisions of CSR

Policy would be subjected to revision/amendment in accordance with the regulations

on the subject as may be issued from relevant statutory authorities, from time to time.