Introduction: In a recent development, the Ministry of Corporate Affairs (MCA) has issued a penalty of ₹21.96 Lakh against MA Kalyaneshwari Holdings Private Limited for non-compliance with the Companies Act, 2013. The adjudication order, dated 20th September 2023, sheds light on the violations and the consequential penalties imposed.
Detailed Analysis: The adjudication order, issued by A. K. Sethi, the Adjudicating Officer and Registrar of Companies, West Bengal, outlines the case against MA Kalyaneshwari Holdings. The company, incorporated in 1985, was found to be in violation of Section 203(1) of the Companies Act, 2013, concerning the mandatory appointment of whole-time key managerial personnel, including a company secretary.
The facts of the case reveal that the company, being unlisted, failed to appoint a Company Secretary from 07.04.2022 to 16.04.2023, contravening the rules outlined in Section 203(1) of the Act. Despite receiving a notice of hearing under Section 454, the company and its officers provided no adequate reply to contest the allegations.
During the hearing on 15th September 2023, Shri Madan Kumar Moroti, CA, appeared as the authorized representative and acknowledged the non-appointment of a Company Secretary. The company rectified the non-compliance by appointing a Company Secretary on 17.04.2023. The adjudication officer took note of the suo-motu application for adjudication of the offense under Section 203(5) for the default period.
Conclusion: The Adjudicating Officer, exercising powers conferred by the Companies (Amendment) Ordinance, 2019, imposed a total penalty of ₹21,96,000. This includes ₹5,00,000 on the company and ₹4,24,000 on each of its four officers-in-default. The order emphasizes the violations under Section 203(1) and the subsequent penalties, providing a clear directive on the consequences of non-compliance.
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GOVERNMENT Of INDIA
Ministry of Corporate Affairs
Office of the Registrar of Companies (West Bengal)
Nizam Palace, 2, M. S. 0. Building, 2nd Floor
234/4, Acharya Jagadish Chandra Bose Road
KOLKATA – 700 020
Order No. ROC/LEGAL/ADJ/039654/388/2023/6819-6826 Dated: 20-09-2023
ADJUDICATION ORDER FOR PENALTY U/S 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 3(2) OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 AS AMENDED BY THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2019 IN MATTER OF NONCOMPLIANCE OF THE PROVISIONS OF SECTION 203( 1) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014
MA KALYANESHWARI HOLDINGS PRIVATE LIMITED
(CIN: L51909W81977PLC031225)
Appointment of Adjudicating Officer: –
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014- Ad.II dated 24.03.2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by Section 454(1) read with Section 454(3) of the Companies Act. 2013 [herein otter known as Act] read with the Companies (Adjudication of Penalties) Rules, 2014 for adjudicating penalties under the provisions of this Act. The undersigned vide the Companies (Amendment) Ordinance, 2019 is entrusted to adjudicate penalties under Section 203 of the Companies Act, 2013 with effect from 02.11.2018.
2. Company: –
MA KALYANESHWARI HOLDINGS PRIVATE LIMITED [herein after known as Company] is a registered company with this office incorporated on 17/10/1985 under the provisions of the Companies Act, 1956 having its registered office as per MCA21 Registry at address 4TH, FLOOR, 9 AJC BOSE ROAD KOLKATA-700017, WEST BENGAL INDIA
3. Facts about the Case: –
1) The provisions of Section 203(1) of the Act, provides inter alia that:
“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 Officer or manager and in their absence, a whole-time director;
ii) Company secretary: and
iii) Chief of Financial Office?’
Rule 8 of the Companies (Appointment and Remuneration of managerial Personnel) Rules 2014 (herein after referred to as ‘the Rules’) provides inter alia that:
Every listed company and every other public company having a paid-up-share capital n crores rupees or more shall have whole-time key managerial personnel.”
Section 203(5) of the Act provides inter alia that: 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 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”.
2) As per the record available with this office, it has been found that the Company is an unlisted Company. Further, it has also been observed that the Company has not oppointed Company Secretary from 07.04.2022 to 16.04.2023. Hence, the Company and every director and key managerial personnel of the company who is in default has contravened the provisions of Section 203 of the Companies Act, 2013.
3) Accordingly, the adjudication officer has issued notice of hearing under Section 454 read with Rule 3(2) of Companies (Adjudication of Penalties) Rules. 2014 as amended upto date for contravention of section 203(1) of the Companies Act, 2013. to the company and its officers in default for the violation of the provisions of the act as mentioned in para “1 & above giving an opportunity to submit a reply as to why the penalty should not be imposed under the provisions of 203(5) of the Act against the Company and its officers in default for the above stated violations, vide letter no. ROC/LEGAL/A DJ/039654/388/2023/5902A-5906 doted: 05.09.2023
4) No adequate reply to the adjudication notice as mentioned above in para 3 have been received from the noticee(s) i.e. the company and its concerned officers in default as to why penalty shall not be imposed.
5) Further, Shri Madan Kumar Moroti, CA, appeared as the authorized representative on 15’n September, 2023 on behalf of the Company and directors for non-appointment of CS from 07.04.2022 to 16.04.2023. And the CS was appointed on 17.04.2023 vide DIR-12, SRN-AA2213656. The Company has made Suo-molo application for adjudication of offence under section 203(5) for the default period.
ORDER
1. The applicant company and its officers, who hove defaulted the provisions of section 203(1) of the Companies Act, 2013 for non-appointment of Whole- Time Company Secretary are liable for penalties under section 203(5) of the Companies Act, 2013.
2. In exercise of the powers conferred vide Companies (Amendment) Ordinance, 2019. the undersigned is entrusted to adjudicate penalties under section 203 of the Companies Act, 2013 with effect from 02.11.2018. I do hereby impose the penalty of Total Rs. 21,96,000/- (Rupees Twenty One Laths Ninety Six Thousand only) i.e.. Rs. 5 00 000/- (Rupees Five Lath only) on the Company and Rs. 4,24,000/- (Rupees Four Laths Twenty Four Thousand only) on each of its 4 (Four) officers-in-default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, 2014 and the proviso of the said Rule and Rule 3(13) of Companies (Adjudication Of Penalties) Rules, 2014 r/w General Circular No. 1/2020 dated 02.03.2020; as per table below for violation of section 203(1) r/w 203(4) r/w 203(5) of the Act:
|
Name of the Applicant Company/ Director |
No of Days in Default | First Default (in Rs.) | Continuing Default (in Rs.) | Total Maximum Penalty (in Rs.) |
| MA KALYANESHWARI HOLDINGS PRIVATE LIMITED (Period of default from 07.04.2022 to 16.04.2023) | – | 5,00,000/- | – | 5,00,000/- |
| SUBHAS CHANDRA AGARWALLA (Director) (Period of default from 07.04.2022 to 16.04.2023) | 374 | 50,000/- | 371*1000= 3,74,000 | 4,24,000/- |
| SUBODH AGARWALLA (Director) (Period of default from 07.04.2022 to 16.04.2023) | 374 | 50,000/- | 371*1000= 3,74,000 | 4,24,000/- |
| SHANKAR LAL AGARWALLA (Director) (Period of default from 7.04.2022 to 16.04.2023) | 374 | 50,000/- | 371*1000= 3,74,000 | 4,24,000/- |
| RAMESH KUMAR JHUNJHUNWALA (Director) (Period of default from 07.04.2022 to 16.04.2023) | 374 | 50,000/- | 371*1000= 3,74,000 | 4,24,000/- |
3. The noticee(s) shall pay the said amount of penalty individually for the company and its directors (out of own pocket) by way o’ e-payment [available on Ministry website www.mca.govini under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 days of receipt of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this Office Address.
4. Appeal against this order may be filed in writirg with the Regional Director (ER), Ministry of Corporate Affairs, Kolkata located at Nizam Palace, 2nd M. S. 0. Building, 3rd Floor, 234/4, A.J.C. Bose Road, Kolkata-700020, West Bengal within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website [www.mca.gov.in] setting forth the grounds of appeal and shall be
accompanied by a certified copy of the this order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014).
5. Your attention is also invited to Section 454(8 (i) and (ii) of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order.
6. 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 M/S. MA Kalyoneshwari Holdings Private Limited and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Eastern Region) and Ministry of Corporate Affairs at New Delhi.
7. Date of hearing: 15th September, 2023
Date of Pronouncement: 20th September, 2023
[A. K. Sethi, ICLS]
Adjudicating Officer 8.Registrar of Companies,
West Bengal
