The Ministry of Corporate Affairs has imposed a penalty on L&T Employees Welfare Foundation Private Limited (CIN: U74999MH2004PTC146428) for violating Section 118 of the Companies Act, 2013. The violation pertains to the improper numbering of pages in the Minutes Books, which is in contravention of the provisions of the Act.
Details of the Case: The case involves the violation of Section 118(1) of the Companies Act, 2013, which mandates that companies must prepare and sign minutes of general meetings, resolutions passed by postal ballot, and meetings of the Board of Directors or committees of the Board in a prescribed manner. Additionally, these minutes must be kept in books with consecutively numbered pages within thirty days of the conclusion of the respective meetings.
Penalty Imposed: The penalty has been imposed on both the company and its officers in default. The company, L&T Employees Welfare Foundation Private Limited, is found to have violated the provisions of Section 118(1) by not consecutively numbering the pages of its Minutes Books. The penalty has been imposed under Section 118(11) of the Companies Act, 2013.
Factors Considered: While determining the quantum of penalty, the Adjudicating Officer considered factors such as disproportionate gain or unfair advantage resulting from the default and the loss caused to investors. However, due to the procedural nature of the violation, it was difficult to quantify these factors.
Appeal Process: The company has the right to appeal against the order within sixty days from the date of receipt of the order. The appeal should be filed in writing with the Regional Director (Western Region) and accompanied by the grounds of appeal along with a certified copy of the order.
Consequences of Non-Payment: If the penalty is not paid within ninety days from the receipt of the order, the company and the officer(s) in default may face prosecution under Section 454(8)(i) and (ii) of the Companies Act, 2013. The company may also be liable to a fine ranging from twenty-five thousand to five lakh rupees.
Conclusion: The penalty imposed on L&T Employees Welfare Foundation Private Limited serves as a reminder of the importance of adhering to the provisions of the Companies Act, 2013. The violation of procedural requirements, such as consecutively numbering pages in Minutes Books, can result in financial penalties and potential legal consequences for both the company and its officers in default. It underscores the necessity for companies to diligently comply with the regulatory framework to avoid such penalties and uphold their corporate governance standards.
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Ministry of Corporate Affairs
Office of the Registrar of Companies
100, “Everest” Marine Drive, Mumbai- 400002
Website: www.mca.gov.in
Email ID: [email protected]
Order No. ROC(M)/SSL/ADJ-ORDER/RD-12 3578 to 3584 Dated: 09 August 2023
Order for Penalty under Section 454 for violation of Section 118 of the Companies Act, 2013
IN THE MATTER OF L&T EMPLOYEES WELFARE FOUNDATION PRIVATE LIMITED
(CIN: U74999MH2004PTC146428)
Appointment of Adiudicating Officer: –
Ministry of Corporate Affairs vide its Gazette Notification No. A-4201 1/112/2014-Ad. II dated 24.03.2015 appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 [herein after known as Act’ read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
1. Company: –
Whereas the Company L&T EMPLOYEES WELFARE FOUNDATION PRIVATE LIMITED | herein after known as Company) is a registered company with this office under the provisions of Companies Act, 1956 having its registered address — L & T House Ballard Estate, Mumbai M1l 400001, India, as per the MCA portal.
2. Facts about the Case: –
The company has filed application for adjudication for violation of provision of Section 118 (1) of the Act. Whereas, it has been observed from the application made by the applicants, that pages of Minutes Books were not consecutively numbered. Howevcr, pursuant to the provisions of section 118(1) of the Companies Act, 2013 (hereinafter referred to as ‘the Act’), every company shall cause minutes of the proccedings of every general meeting or any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or Of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered. It is resulted in violation of provisions of Section UK (I) of the Act.
3. Section 118 (1) of the Companies Act, 2013 arc reproduced as under: –
Section 118 (I) eery company shall cause minutes °like proceedings of every general meeting of an class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee °fine Board, to he prepared and signed in such MC11717er as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned. or passing of resolution by postal ballot in hooks kept fin. that purpose with their pages consecutively numbered .
Penal Section reproduced as under: –
118 (11) if any default is made in complying with the provisions of this section in respect of any meeting. the company shall he liable to a penalty of twenty-five thousand rupees and every ‘flitter ()jibe company who is in delimit shall he liable to a penalty of five thousand rupees.
4. Factor to be considered by the Adjudicating Officer: –
While adjudging quantum of penalty under Section 118(1) of the Act, the Adjudicating Officer shall have due regard to the following factors, namely:
a. The amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of default.
b. The amount of loss caused to an investor or group of investors as a result of the default.
c. The repetitive nature of defauit.
With regard to the above factors to be considered while determining the quantum of penalty, it is noted that the disproportionate gain or unfair advantage made by the Noticee. or loss caused to the investor as a result of the delay on the part of the Noticce to redress the investor grievance are not available on record. Further, it may also be added that it is difficult to quantify the unfair advantage made by the Notices or the cuss caused to the investors in a default of this nature.
5. Hearing:
The hearing of this matter was kept in office of the adjudicating authority on 19/6/2022 wherein neither any one present on behalf of the company and officers in defaults nor any response was received from them in this regard. Therefore, the matter was taken up on the basis of information/documents on record.
6. Finding:-
The Applicants in their petition has submitted in their application that pages of Minutes Books were not consecutively numbered due to inadvertence, The Applicant Company is a private limited company and the said contravention of the pages of Minutes Books being not consecutively numbered, has not adversely affected the material interest of the stakeholders and the lapse being procedural in nature. The contention of the company and applicants are as not tenable. Accordingly, penalty under section 118 (11) of the Act to be imposed on the company and officer(s) in default:
7. ORDER: –
a) Having considered the facts and circumstances of the case and after considering the factors above, I hereby impose penalty on the Company and every officer(s) in default of the company, as per table below for violation of provisions of section 118 of the Companies Act, 2013. I am of this opinion that, the penalty is commensurate with the aforesaid failure committed by the Noticee
b) The Notices shall pay the said amount of penalty through “Ministry of Corporate Affairs” portal and proof of payment be produced for verification within 90 days of receipt of this order.
c) Appeal against this order may be filed in writing with the Regional Director (Western Region) within a period of sixty days from the date of receipt of this order in Form ADJ setting forth the grounds of appeal and shall be accompanied by a certified copy of this order. !Section 454 of the Act read With Cori–Tanks (Adjudication of Penalties) Rules, 2014 as emended by Companies (Adjudication of Penalties) Amendment Rules, 2019].
d) In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to all the applicants to the adjudication application and also to Office of the Regional Director, Western Region, Ministry of Corporate Affairs.
e) Your attention is also invited to section 454 (8) (ii) of the Companies Am 2013, where an officer of a company -who is in default does not pay the penalty within a period of ninety days from the date of the receipt of the copy of the order, such officer shall be punishable with imprisonment which may extend to six months or with fine which shall not he less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. Regarding consequences of nonpayment of penalty within the prescribed time limit of ninety days from the date of receipt of this order in terms of the provisions of Section 454(8) (i) of the Companies Act 2013, where Company does not pay the penalty imposed by the adjudicating officer or the Regional Director within a period of ninety days from the date of the receipt of the copy of the order, the company shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to five lakh rupees.
f) Therefore, in case of default in payment of penalty, prosecution will be filed under Section 454(8)0) and (ii) of the Companies Act, 2013 at your own costs without any further notice.
(Benudhar Alishra)
Registrar of Companies and Adjudicating Officer,
Maharashtra. Mumbai.
