Introduction: The Ministry of Corporate Affairs, Government of India, has taken strict regulatory action against First Data (India) Private Limited, a company registered under the Companies Act, 1956. This action pertains to a prolonged delay in the appointment of a Company Secretary, a violation of Section 203 of the Companies Act, 2013. The company has been fined a substantial penalty of Rs. 21,00,000 due to the 548-day delay. The penalty was imposed by the Adjudicating Officer, Benudhar Mishra, ICLS, ROC, Mumbai, Maharashtra.
Detailed Analysis: The case involves First Data (India) Private Limited, a company with its registered address at 74, Kalpataru Square, Off Andheri Kurla Road, Kondivita Lane, Andheri (East), Mumbai City, Mumbai, Maharashtra, 400 059, India.
The company filed a suo-moto application for adjudication, acknowledging a violation of the provisions of Section 203 of the Companies Act, 2013, read with Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. This violation was related to the delay in appointing a Company Secretary. The delay amounted to 548 days and was attributed to the company’s difficulty in finding a suitable candidate.
Sections 203(1), 203(4), and 203(5) of the Companies Act, 2013 are relevant to this case. Section 203(1) mandates specific key managerial personnel for certain classes of companies, including a company secretary. Section 203(4) requires that if the office of any whole-time key managerial personnel is vacated, the vacancy must be filled by the Board within six months from the date of the vacancy. Section 203(5) outlines penalties for non-compliance, including a penalty of five lakh rupees for the company and fifty thousand rupees for every director and key managerial personnel in default. Additionally, for continuing defaults, there is a further penalty of one thousand rupees for each day after the first day during which the default continues, not exceeding five lakh rupees.
After considering the period of default and applicable amendments to the Companies Act, the Adjudicating Officer, Benudhar Mishra, decided not to consider the period from 24.10.2014 to 01.11.2018 for adjudication as it was considered compoundable under the Companies Act. However, the period from 02.11.2018 to 03.05.2020 was taken up for adjudication, resulting in a penalty for the company and certain directors.
The penalty imposed on the company and its directors is as follows:
- First Data (India) Private Limited: Rs. 10,48,000
- Rajan Verma, Director: Rs. 5,98,000
- Sumit Chopra, Director: Rs. 5,98,000
The total penalty amounts to Rs. 21,00,000.
Conclusion: The Ministry of Corporate Affairs has taken strict regulatory action against First Data (India) Private Limited for the delayed appointment of a Company Secretary. This action aligns with the provisions of the Companies Act, 2013, and underscores the importance of adhering to key managerial personnel requirements. The substantial penalty of Rs. 21,00,000 serves as a reminder to companies and their directors to comply with regulatory requirements to avoid financial repercussions.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES
100, “EVEREST”, MARINE DRIVE,
MUMBAI – 400 002
Website : www.mca.gov.in
e-Mail ID : roc.mumbai@mca.gov.in
No. ROC(M)/ADJ-ORDER/162543/4611-4613
Date: 16 OCT 2023
IN THE MATTER OF FIRST DATA (INDIA) PRIVATE LIMITED
(CIN: U64203MH2006PTC162543).
Adjudicating Officer: – Benudhar Mishra, ICLS, ROC, Mumbai, Maharashtra.
Presenting Officer: – Sai Sankar Landa, ICLS Dy. ROC, Mumbai, Maharashtra.
Authorized person on behalf of Company: – Denzil Rodrigues
1. Appointment of Adjudicating Officer: –
Ministry of Corporate Affairs vide its Gazette Notification No.A-42011/112/2014-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.
2. Company: –
Whereas the Company FIRST DATA (INDIA) PRIVATE LIMITED [herein after known as Company] is registered with this office under the provisions of Companies Act, 1956 having its registered address at 74, Kalpataru Square, Off Andheri Kurla Road, Kondivita Lane, Andheri (East), Mumbai City, Mumbai, Maharashtra, 400 059, India as per the MCA portal.
3. Facts about the Case: –
The Company has filed suo-moto application for adjudication of violation of the provisions of Section 203 of the Companies Act, 2013 read with Rule 8A of Companies (Appointment Company Secretary on 04.05.2020, due to the difficulty in finding a suitable candidate which led to delay of 66 months and 10 days.
4. Sections 203(1), 203(4) and 203(5) of the Companies Act, 2013 are reproduced as under: –
Section 203 — Appointment of Key Managerial Personnel
Section 203 (1) Every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel, -(i) managing director, or chief executive o wer or manager and in their absence, a whole-time director; (ii) company secretary; and(iii) Chief Financial Officer.
Section 203 (4) If the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be filled-up by the Board at a sorting of the Board within a period of six months from the date of such vacancy.
Section 203 (5) If any company makes any default in complying with the provisions of this section such company shall be liable to a penalty of five lakh 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 continuing one with further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.
5. Factors to be taken into account by the Adjudicating Officer: –
While adjudging quantum of penalty under Section 203(5) 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 quantify the unfair advantage made by the Noticee or the loss caused to the investors in a default of this nature.
6. Hearing: –
The undersigned in exercise of power conferred under sub-Section 3 of Section 454 of the Companies Act, 2013 had issued hearing notice dated 10.05.2023 to the Company and Officers in default for giving an opportunity to be heard and for submissions in the matter, if any. In response to the hearing notice, representative of the Company, Denzil Rodrigues appeared and gave consent to adjudicate and pass necessary orders for adjudicating the penalty as per the provisions of the Companies Act, 2013.
The representatives of the Company stated that the company was required to appoint Whole time Company Secretary w.e.f. 24.10.2014. However, the Company appointed the Whole-time Company Secretary on 04.05.2020 only. Hence, there is a violation of provisions of Section 383A of Companies Act, 1956 and Section 203 of the Companies Act, 2013.
Delay in filing up the casual vacancy in the office of whole time key managerial personnel was caused due to the difficulty in finding a suitable candidate. Further, the authorized representative submitted that there was no mens rea and default was committed due to unavoidable circumstances, having no mala fide intention and the default is not of such a nature as to prejudice the interest of members or creditors or others dealing with the Applicant Company. It was committed due to unavoidable circumstances. Application is being filed suo moto by the Applicant Company and its officers in default to rectify the non-compliances pertaining to Section 203 of the Companies Act, 2013.
However, the presenting officer referring to the Companies (Amendment) Ordinance, 2019 dated 12.01.2019 which came into effect from 02.11.2018 stated that the period of default from 24.10.2014 to 01.11.2018 is compoundable in nature, henceforth such period shall not be made part of adjudication and the same need to be compounded accordingly with the appropriate authority u/s 441 of the Companies Act, 2013.
Thus, the presenting officer is of the opinion that the period from 2.11.2018 to 03.05.2020 for non-compliance of provisions of section 203 of the Companies Act, 2013 shall be taken up
7. Nature of default: –
a) The period of default for non-compliance of provision of section 203 of the Companies Act, 2013 from 24.10.2014 to 1.11.2018 is compoundable and accordingly it is not taken up for adjudication.
b) The period from 2.11.2018 to 03.05.2020 for non-compliance of provisions of section 203 of the Companies Act, 2013 is taken up for adjudication in terms of provisions of section 203 read with section 454 of the Companies Act, 2013.
8. Order: –
a. Having considered the facts and circumstances of the including representations made by the company, officers in default and the presenting officer, I hereby impose penalty on the company and every director and key managerial personnel of the company who is in default as per the table below for violation of provisions of Section 203 of the Companies Act, 2013 for delay of 548 days. I am of this opinion that, the penalty is commensurate with the aforesaid failure committed by the Noticee.
| Sr. No | Penalty imposed on the Company / Director(s) | Period of default | No of days of default |
First Default Penalty (in Rs) | Continuing Default Penalty (In Rs) | Total Penalty (In Rs) |
Maximum Penalty (In Rs) |
| 1. | FIRST DATA (INDIA) PRIVATE LIMITED | 02.11.2018 to 03.05.2020 | 548 | 5,00,000 | 548 X 1000 | 10,48,000 | 10,00,000 |
| 2. | RAJAN VERMA, Director | 02.11.2018 to 03.05.2020 | 548 | 50,000 | 548 X 1000 | 5,98,000 | 5,50,000 |
| 3. | SUMIT CHOPRA, Director | 02.11.2018 to 03.05.2020 | 548 | 50,000 | 548 X 1000 | 5,98,000 | 5,50,000 |
| TOTAL PENALTY | 21,00,000 | ||||||
b. As per the signatory details available on MCA 21 Portal, the above-mentioned individual(s) were officer in default during the period of violation Region) 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.
e. Your attention is also invited to Section 454(8)(ii) of the Companies Act, 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 be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. Regarding consequences of non-payment 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 or 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)(i) and (ii) of the Companies Act, 2013 at your own costs without any further notice.
(Benudhar Mishra)
Registrar of Companies and Adjudicating
Officer, Maharashtra, Mumbai.
