Introduction: The Ministry of Corporate Affairs (MCA) has taken decisive action against Fluiconnecto India Private Limited for its non-compliance with Section 203 of the Companies Act, resulting from delayed appointments of a whole-time company secretary. This violation has led to a substantial penalty of ₹35 lakhs. In this article, we delve into the details of the case, the legal provisions in question, and the potential consequences.
1. Appointment of Adjudicating Officer: MCA appointed an Adjudicating Officer in accordance with Section 454 of the Companies Act, 2013, tasked with the authority to adjudicate penalties, particularly under Companies (Adjudication of Penalties) Rules, 2014.
2. Company Background: Fluiconnecto India Private Limited, established on 08.08.2007, is presently under the jurisdiction of the Registrar of Companies, Karnataka. Its registered office is located at No. 156, 5th Main, Peenya Industrial Suburb-II Stage, Bengaluru, Karnataka – 560058.
3. Reason for Penalty: The company took the initiative to report its own violation on 16.03.2023. This violation pertained to Section 203 of the Companies Act, which requires the appointment of a whole-time company secretary once the paid-up capital crosses certain thresholds. Fluiconnecto India Private Limited failed to appoint a company secretary for two distinct periods: from 02.06.2015 to 30.11.2018 and then from 01.12.2019 to 30.06.2022 after the incumbent secretary resigned.
4. Legal Provisions: As per Section 203(1) of the Act, certain companies are mandated to have whole-time key managerial personnel, including a company secretary. Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, further specifies that companies with a paid-up share capital of ₹5 crores or more are obliged to have a whole-time company secretary. This threshold was later increased to ₹10 crores or more, applicable for financial years commencing on or after 01.04.2020.
5. Filling Vacancies: Section 203(4) of the Act dictates that if a whole-time key managerial personnel position becomes vacant, the Board must fill the vacancy within six months from the date of the vacancy.
6. Adjudication Process: Following the adjudication application submitted by the company, a notice of hearing was issued on 15.05.2023, leading to a physical hearing on 24.05.2023. Representatives from the company, practicing company secretaries Mr. Shripad G Bhat and Ms. Sangeetha H N, and the directors Mr. Chandra Pratap, Mr. Jayaramachandra Giridhar, Mr. Giuseppe Bucci, Mr. Luca Pozzi, and Mr. Prashanth Shanbag attended the hearing. Mr. Michael Peter Wallwork, the former director, did not send a representation. The company subsequently provided written submissions, detailing its capital structure and changes.
7. Duration of Default: The company and its directors violated Section 203(4) of the Act, resulting in the following periods of default:
7.1 No. Particulars Default 1 Default 2 Total period of default
7.2 Company 02.06.2015 to 30.11.2018 (1278 days) 01.12.2019 to 30.06.2022 (943 days) 2221 days
7.3 Chandra Pratap 02.06.2015 to 30.11.2018 (1278 days) 01.12.2019 to 30.06.2022 (943 days) 2221 days
7.4 Jayaramachandra Giridhar 02.06.2015 to 30.11.2018 (1278 days) – 1278 days
7.5 Giuseppe Bucci 06.07.2015 to 30.11.2018 (1244 days) – 1244 days
7.6 Michael Peter Wallwork 28.09.2015 to 28.07.2017 (670 days) – 670 days
7.7 Luca Pozzi 24.10.2017 to 30.11.2018 (403 days) 01.12.2019 to 30.06.2022 (943 days) 1346 days
7.8 Prashant Sadanand Shanbhag – 01.12.2019 to 30.06.2022 (943 days) 943 days
8. Penalties: Section 203(5) of the Act prescribes penalties for defaults in complying with the section. The company, its directors, and key managerial personnel in default are liable for penalties. For Fluiconnecto India Private Limited, the penalties were calculated as follows:
- Company: ₹5,00,000
- Chandra Pratap: ₹5,00,000
- Jayaramachandra Giridhar: ₹5,00,000
- Giuseppe Bucci: ₹5,00,000
- Michael Peter Wallwork: ₹5,00,000
- Luca Pozzi: ₹5,00,000
- Prashant Sadanand Shanbhag: ₹5,00,000
9. Payment and Appeals: The company and its directors/key managerial personnel in default are directed to pay the penalties within 90 days of receiving the order. Payment should be made through the MCA website, specifying the order details and the name of the payer.
Appeals against this order can be filed with the Regional Director (South Region), Hyderabad, within 60 days of receiving the order, using Form ADJ. The appeal should be accompanied by a certified copy of the order.
10. Non-Compliance Consequences: Section 454(8) of the Companies Act, 2013, stipulates that in case of non-compliance with this order, penal actions will be initiated without further notice.
11. Serving the Order: The company is obligated to provide a copy of this order to the directors/officers-in-default as per Section 20 of the Companies Act, 2013.
Conclusion: The Ministry of Corporate Affairs’ penalty of ₹35 lakhs against Fluiconnecto India Private Limited serves as a stark reminder of the importance of complying with key regulatory provisions, particularly when it comes to the appointment of whole-time company secretaries.
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Registrar of Companies, Karnataka
Kendriya Sadan, 2nd Floor, ‘E’ Wing,
Koramangala, Bengaluru – 560 034
Phone : 080-25537449/25633105
E-mail ID: roc.bangalorc@ma.gov.in
File No. ROC(8)/Adj-Ord454-203/Fluiconnecto/Co.No.111072/2023/ Date: 09.08.2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIFS (ADJUDICATION OF PENALITESI RULES 7014 FOR VIOLATION OF PROVISIONS OF SECTION 701 OF THE COMPANIES ACT, 2013 READ FRAMED THEREIN JFIDIA PRIVATE LIMITFD
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.032015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter referred to as Act) read with Companies (Adjudication Of Penalties) Rules, 2014 for adjudging penalties under the provisions of the Companies Act, 2013.
2. The company, Fluiconnocto India Private Limited (hereinafter referred to as Company) was incorporated on 08.08.2007 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka with its registered office situated at No. 156, 5th Main, Peenya Industrial Suburb-II Stage Bengaluru, Karnataka — 560058.
3. The company has filed a suo-motu application on 16.03.2023 regarding non-appointment of whole-time company secretary i.e. violation of section 203 of the Act. The company has submitted that its paid-up capital crossed the required threshold of Rs. 5 crores on 02.06.2015 and it was required to appoint a company secretary from this date, but it has failed to appoint a company secretary for the period starting from 02.06.2015 to 30.11.2018 and again from 01.12.2019 to 30.06.2022 after the resignation of the incumbent company secretary.
4. As per section 203(1) of the Act, every company belonging to such class or classes of companies as may be prescribed shall have whole-time key managerial personnel including company secretary and as per Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules. 2014, every company other than a company covered under rule 8 which has a paid-up sham capital of Rs. 5 crore or more shall have a whole-time company secretary and this threshold was further increased to Rs. 10 crore or more applicable in respect of financial years commencing on or after 01.04.2020
5. Further, as per section 203(4) of the Act, if the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be fills-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.
6. Pursuant to the adjudication application filed by the company, Notice of hearing was sent on 15.05.2023 and physical hearing was held on 24.052023. It was attended by Mr. Shripad G Bhat and Ms. Sangeetha H N, practicing company secretaries and authorised representatives of the company and the directors viz. Mr. Chandra Pratap, Mr. Jayaramachandra Giridhar, Mr. Giuseppe Bucci, Mc Luca Pozzi and Mr. Prashanth Shanbag. However, no representation from Mr. Michael Peter Wa work the erstwhile director, was received. The company thereafter made a written submission dated 30.05.2023 providing the details of its capital structure and changes made thereto.
7. The company and its directors have violated the provisions of section 203(4) of the Act mentioned above and the default period is as provided below:
| S. No. | Particulars | Default 1 | Default 2 | Total period of default |
| 1. | Company | 02.06.2015 to 30.112018 1278 days | 01.122019 to 30.06.2022 943 days | 2221 days |
| 2. | Chandra Pratap |
02.06.2015 to 30.112018 1278 days | 01.122019 to 3006.2022 943 days | 2221 days |
| 3. | Jayaramachan dran Giridhar | 02.062015 to 30.112018 1278 days | – | 1278 days |
| 4. | Giuseppe Bucci | 06.072015 to 30.112018 1244 days | – | 1244 days |
| 5. | Michael Peter Wallwork | 28.09.2015 to 28.072017 670 days | – | 670 days |
| 6. | Luca Pozzi | 24.102017 to 30.112018 403 days | 01.12.2019 to 3006.2022 943 days | 1346 days |
| 7. | Prasham Sadanand Shanbhag |
– | 01.12.2019 to 30.06.2022 943 days | 943 days |
8. As per section 203(5) of the Act if any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of five lath rupees and every director and key managerial personnel of the company who Is In default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.
9. It is seen that the company is a subsidiary of a foreign company and does not fall under the definition of a small company as per the provisions of section 2(85) of the Companies Act. 2013. Therefore, the provisions of imposing lesser penalty as per the section 4468 of the Act shall not be applicable in this case.
10. Therefore, having considered the facts and circumstances of the case and the submissions made by the company and present / past directors through their authorised representatives, in view of the above said violations of non-appointment of company secretary under the provisions of section 203 of the Act read with corresponding rules, in exercise of the powers vested under section 454(3)(a) of the Companies Act 2013, I do hereby impose penalty in the following manner on the company and the directors / officers who were in default of the offence committed:
| S. No. | Particulars | Period of default |
Maximum penalty | Penalty imposed |
| 1 | Company | 2221 days | Rs. 5,00,000 | Rs. 5.00.000 |
| 2. | Chandra Pratap | 2221 days | Rs. 5.00.000 | Rs. 5,00,000 |
| 3. | Jayaramachandran Giridhar | 1278 days | Rs. 5,00,000 | Rs. 5,00,000 |
| 4. | Giuseppe Bucci | 1244 days | Rs. 5,00.000 | Rs. 5.00,000 |
| 5. | Michael Peter Walhvork | 670 days | Rs. 5,00,000 | Rs. 5,00,000 |
| 6. | Luca Pozzi | 1346 days | Rs. 5,00,000 | Rs. 5,00,000 |
| 7. | Prashant Sadanand Shanbhag | 943 days | Rs. 5.00000 | Rs. 5,00,000 |
11. The company and its directors / key managerial personnel who are in default are hereby directed to pay the penalty amount as tabulated above, within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website mca.gov.in (Miscellaneous head) specifying the details of this Order and the name of the noticee who is paying the penalty.
12. Appeal, if any, against this Order may be filed with the Regional Director (South Fart Region). Hyderabad within a period of 60 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.
13. Your attention is also invited to section 454(8) of the Companies Act 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under section 454(8)60 and 454(8)(0) of the Companies Act. 2013 against the company and directors / key managerial personnel who are in default without further notice in the matter.
14. The company is required to serve a copy of this Order on the director(s)/ officer(s)-in- default mentioned above ‘in terms of provisions of section 20 of the Companies Act. 2013.
(Sanjay Sood)
Registrar of Companies, Karnataka
and Adjudicating Officer
