In this case company was required to convene it’s fourth board meeting for the calendar year 2020 on or before 31.12.2020. However, company held its next board meeting on 01.02.2021 with delay of 31 day (i.e., From 01.01.2021 to 01.02.2021). Hence, the company has not complied the provision of the section 173(1) of the Companies Act, 2013.
The Applicant Company and its officers who have made the default in conducting Fourth Board Meeting with delay of 31 day (i.e., From 01.01.2021 to 01.02.2021) are now liable for penalties under section under section 450 of the Act, 2013 and accordingly penalty is been imposed.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS,
OFFICE OF REGISTRAR OF
COMPANIES,
NCT OF DELHI & HARYANA
4TH FLOOR, IFCI TOWER, 61, NEHRU
PLACE, NEW DELHI -110019
Order for Penalty for Violation of Section 173 of the Companies Act, 2013
IN THE MATTER OF
ETSYSTORE PRIVATE LIMITED
(U74999HR2018FTC073946)
Adjudication in respect of violation of Companies Act, 2013.
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 (See SO 831(E), dated 24.03.2015) appointed Registrar of Companies, NCT of Delhi & Haryana as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company:
ETSYSTORE PRIVATE LIMITED (herein after known as ‘company’) is a registered company with this office under the provisions of section 7 of the Companies Act, 2013 having its registered office as per MCA21 Registry at address Second Floor, Plot No 37, Saraswati Kunj, Sector 54 Golf Course Road, Urban Estate Gurgaon HR 122001 IN. The financial & other details of the subject company for F.Y. 2021-22 as available on MCA-21 portal is stated as under:
| S. No. | Particulars | Details |
| 1. | Paid up capital
(As per Master Data) |
Rs. 11000000/- |
| 2. | Turnover
a. Revenue from operation |
Rs. 29,02,91,000/- |
| b. Other Income | Rs. 1,28,000/- | |
| 3. | Holding Company | Yes
(Etsy UK limited) |
| 4. | Subsidiary Company | No |
| 5. | Whether company registered under Section 8 of the Act? | No |
| 6. | Whether company registered under any other special Act? | No |
3. Facts about the Case:
I. The company had suo-moto filed application vide e-form GNL-1 (SRN T92611755 Dated 06.04.2022 for adjudication of penalty under the provisions of section 454 of the Act and rules thereunder and stated therein inter alia that: –
a. Whereas company has conducted its Board Meeting for the calendar year 2020 as under:
|
Serial no. of the Board meeting of the F.Y.2020-21 |
Date of Board Meeting | Gap from the last meeting Held |
| First | 10.03.2020 | 84 Days |
| Second | 06.07.2020 | 119 Days |
| Third | 06.10.2020 | 93 Days |
| Fourth | 01.02.2021 | 119Days |
b. It appears that from the above table, the third Board meeting for the calendar year 2020 was held on 06.10.2020. Therefore, the company was required to convene it’s fourth board meeting for the calendar year 2020 on or before 31.12.2020. However, company held its next board meeting on 01.02.2021 with delay of 31 day (i.e., From 01.01.2021 to 01.02.2021). Hence, the company has not complied the provision of the section 173(1) of the Companies Act, 2013.
II. In terms of the provisions of section 173(1) r/w 454 of the Companies Act, 2013, this office had issued Show Cause Notices (SCN) vide ROC/D/Adj/2022/Section173/ETSYSTORE/817-821 dated 20.02.2023 to the Company and officers in default.
III. In response to the SCN, the subject company submitted its reply through email dated 03.03.2023 and has inter alia stated that-
a. That the offence may kindly be adjudicated.
b. That the offences may be jointly adjudicated for the company and applicants.
c. Pass such order as the Hon’ble Registrar of Companies (ROC) may deem fit and proper, in the benefit of the Company, other applicants and stakeholders of the company.
4. The relevant provisions of Sections 173 are reproduced as under Section 173 (Meetings of Board)
(1) “Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board:-
Provided that the Central Government may, by notification, direct that the provisions of this sub-section shall not apply in relation to any class or description of companies or shall apply subject to such exceptions, modifications or conditions as may be specified in the notification.”
The relevant provision of 450 sections as on date of default are as under:
“If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.”
5. Adjudication of penalty: –
a. The Applicant Company and its officers who have made the default in conducting Fourth Board Meeting with delay of 31 day (i.e., From 01.01.2021 to 01.02.2021) are now liable for penalties under section under section 450 of the Act, 2013.
b. The subject company is the subsidiary of its foreign holding company namely Etsy UK limited, which holds 100% of shares in the subject company. Therefore, the subject company does not get covered under the purview of Small Company as defined u/s 2(85) of the Companies Act, 2013. Hence, the benefit of section 446B of Companies Act, 2013 would not be applicable on the company.
c. Now in exercise of the powers conferred on the undersigned vide Notification dated 24th March 2015 and having considered the reply submitted by the noticee(s) in response to the notice issued vide No ROC/D/Adj/2022/Section 173/ETSYSTORE/817-821 dated 20.02.2023, hereby impose penalty on the company and its officers in default for violation of section 173(1) r/w section 450 of the Companies Act, 2013 which are as follows: –
| Violation section |
Penalty imposed on company/ Officers |
No. of days of default |
Calculation for penalty amount (in Rs.) |
Maximum penalty can be imposed u/s 450 of the Act, 2013 (in Rs.) |
| A | B | C | D | E |
| Under section 173 of the companies Act, 2013
|
Etsystore Private Limited | 31 | 10,000+1000*31 =41,000 | 41,000/- |
| Sameer Mittal (Director) | 31 | 10,000+1000*31 =41,000 | 41,000/- | |
| Ronan Davy | 31 | 10,000+1000*31 | 41,000/- | |
| (Director) | =41,000 | |||
| Janet Mahon Joan | 31 | 10,000+1000*31 | 41,000/- | |
| (Director) | =41,000 | |||
| Dennis Richard Price | 31 | 10,000+1000*31 | 41,000/- | |
| (Director) | =41,000 |
*No. of days have been calculated from 01.01.2021 to 01.02.2021.
5. Order:
a. Names of party as mentioned in table above are hereby directed to pay the penalty amount as per column no. ‘E’ of above Table. In case of parties other than company such amount is required to be paid out of their own funds.
b. The said amount of penalty shall be paid through online by using the website mca.gov.in (Misc. head) in favor of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days of receipt of this order and intimate this office with proof of penalty paid.
c. Appeal against this order may be filed with the Regional Director (NR), Ministry of Corporate Affairs, B-2 Wing, 2nd Floor, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi-110003 within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website mca.govin] setting forth the grounds of appeal and shall be accompanied by a certified copy of the order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].
d. Your attention is also invited to section 454(8) of the Act in the event of noncompliance of this order.
Place: New Delhi.
(Pranay Chaturvedi)
(Adjudicating Officer)
Registrar of Companies,
NCT of Delhi & Haryana
No. ROC/D/Adj/2022/Section 173/ETSYSTORE/1467-1472
Date: 05/04/2023
