The Ministry of Corporate Affairs (MCA), in its recent adjudication order dated December 20, 2023, has penalized Calderys Steelcasting India Private Limited for non-compliance with Section 205 of the Companies Act, 2013. The violation pertains to the digital signing of Form MGT-7 for the financial years 2018-19 and 2019-20 without completing the statutory audit. The penalty order, issued by the Adjudicating Officer and Registrar of Companies (West Bengal), sheds light on the procedural aspects and consequences of the breach.
Background: Calderys Steelcasting India Private Limited, a registered company incorporated in 1999, faced inspection under Section 206(5) of the Companies Act, 2013. The violation was pointed out by the Regional Director (ER), alleging that the company secretary digitally signed MGT-7 without completing the statutory audit, contravening Section 205 of the Companies Act, 2013.
Legal Appointments: The Ministry of Corporate Affairs appointed the Adjudicating Officer through a Gazette Notification, empowering them to adjudicate penalties under Section 454(3) of the Companies Act, 2013. The officer, in this case, was entrusted to adjudicate penalties under Section 205 of the Companies Act from November 2, 2018, as per the Companies (Amendment) Ordinance, 2019.
Violation and Proactive Measures: The violation involved the Company Secretary’s failure to comply with Section 205(1) of the Companies Act, which outlines the functions of the company secretary, including reporting compliance to the Board and ensuring adherence to applicable secretarial standards.
The Company Secretary took proactive measures by filing a compounding application on September 2, 2023, to address and rectify the identified issues. However, due to the decriminalization of the offense under Section 205, the compounding application was withdrawn.
Adjudication Process: The Adjudicating Officer issued a hearing notice to the Company Secretary, providing an opportunity to explain why penalties should not be imposed under Section 205 of the Act. The Company Secretary submitted a reply, acknowledging the unintentional lapse in due diligence during the digital signing of MGT-7.
At the hearing, the Authorized Representative of the company explained the unintentional nature of the lapse and informed about the filing of revised MGT-7 for the respective financial years.
Adjudication Order: The Adjudicating Officer, after considering the submissions, held the Company Secretary liable for a penalty of Rs. 20,000 under Section 450 of the Companies Act, 2013. The penalty was imposed for the violation of Section 205(1) for the financial years 2018-19 and 2019-20.
The Company Secretary was instructed to pay the penalty individually through e-payment within 90 days of receiving the order. Non-payment within the prescribed time may attract consequences as per Section 454(8)(ii) of the Act.
Appeal Process: The order outlines the appeal process, allowing the Company Secretary to file an appeal within sixty days of receiving the order. The appeal should be submitted to the Regional Director (ER), Ministry of Corporate Affairs, Kolkata, accompanied by a certified copy of the order.
Conclusion: The penalization of Calderys Steelcasting India Private Limited serves as a reminder of the importance of compliance with statutory provisions. The case highlights the MCA’s commitment to enforcing corporate governance and ensuring accountability, even as it adapts to changes in legislation. Company secretaries and entities are urged to exercise due diligence to avoid such penalties and legal consequences in the future.
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GOVERNMENT OF INDIA
Ministry of Corporate Affairs
office of the Registrar of Companies (West Bengal)
Nizam Palace, 2nd M.S. O. Building , 2nd Floor
234/4, Acharya Jagadish Chandra Bose Road
Kolkata -700 020
No. ROC/LEGAL/ADJ/353/089855/2023/penalty order/ 9657-9662
Dated: 20-12-2023
ADJUDICATION ORDER FOR PENALTY U/S 454(3) OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 AS AMENDED BY THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2019 IN MATTER OF NON COMPLIANCE OF THE PROVISIONS OF SECTION 205 OF THE COMPANIES ACT, 2013
In respect of: CALDERYS STEELCASTING INDIA PRIVATE LIMITED
(CIN: U74999W81999PTC089855)
1. Appointment of Adjudicating Officer:-
1. 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 after 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 205 of the Companies Act, 2013 with effect from 02.11.2018.
2. Company:-
CALDERYS STEELCASTING INDIA PRIVATE LIMITED [herein after known as Company] is a registered company with this office incorporated on 15.07.1999 under the provisions of the Companies Act. 1956 having its registered office as per MCA21 Registry at address Adventz Infinity @ 5, 5th Moor, Unit 512 A Block – BN, Plot No. 5, Sector-V, Bidhannagar, Bidhan Nagar CK Market, North 24 Parganas, Saltlake, West Bengal, India, 700091.
3. Facts about the Case:-
The company is under inspection under section 206(5) of the Companies Act, 2013 where the violation has been pointed out by the office of the Regional Director (ER). that the Applicant has digitally signed the form MGT-7 for the FY 2018-19 and 2019-20 knowing the fact that the Statutory Audit of the Company has not been done during such period and the violation of section 205 of the Companies Act, 2013 hos been made by him. Further the company has filed an application on 02.09.2023 for compounding of offence for violation under section 205 of the Companies Act, 2013 as a proactive measure to address and rectify the identified issues. Since the violation of offence under section 205 of the Companies Act, 2013 has been decriminalized and is required to be adjudicated as per the provisions under the Companies Act, 2013.Hence the compounding offence has been withdrawn.
1) The provisions of Section 205 of the Act, provides inter alio that:
(1) The functions of the company secretary shall include, —
(a) to report to the Board about compliance with the provisions of this Act, the rules made thereunder and other laws applicable to the company:
(b) to ensure that the company complies with the applicable secretarial standards.
(c) to discharge such other duties as may be prescribed.
Explanation. —For the purpose of this section, the expression “secretarial standards” means secretarial standards issued by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 and approved by the Central Government.
(2) The provisions contained in section 204 and section 205 shall not affect the duties and functions of the Board of Directors, chairperson of the company, managing director or whole-time director under this Act, or any other law for the time being in force.”.
2) As per the record available with this office. it has been found that the Company Secretary of the company has filed Suo-moto application in GNL- 1 vide SRN: F81577371 dated 20.11.2023 for adjudicating the violations of the provisions of Section 205 of the Companies Act, 2013.
3) Accordingly, the adjudication officer has issued hearing notice vide No. ROC/ADJ/353/089855/2023 dated 24.11.2023 (herein after referred as Adjudication Notice) under Section 454(4) read with 205 of the Companies Act, 2013 read with Rule 3(2) of Companies (Adjudication of Penalties) Rules, 2014 as amended in Amendment Rules. 2019, to the Company Secretary in default for the violation of the provisions of the act as mentioned in para “1 & 2” above giving an opportunity to submit a reply as to why the penalty should not be imposed under the provisions of 205 of the Act against the Company Secretory in default for the above stated violations.
4) The Company Secretory of the company has submitted his reply vide letter dated ler November 2023 enclosing the copy of the application made and including all the supporting documents to consider the application for adjudication specifically stated under provisions of section 205 of the Companies Act, 2013.
5) Mr. Arani Guha, Advocate, being the Authorized Representative of the noticee(s) attended the hearing physically on 01.12.2023 and submitted that there was an unintentional lapse of due diligence on the part of the Company Secretary in filing of MGT-7 digitally signed for the financial year 2018-19 and 2019-20 knowing the fact that the Statutory Audit has not been made during the said period thereby violation under section 205(1) of the Act contravened as pointed out by 1.0 during the course of Inspection under section 206(5) of the Companies Act, 2013.
Therefore the instant application is filed Suo- moto for adjudication under section 450 of the Companies Act. 2013 by the concerned Company Secretary. It is also informed that the revised MGT-7 for the Financial year 2018-19 and 2019-20 vide SRN F14953855 and F08216350 respectively have been filed for make good of the offence. Hence it is requested to adjudicate the case leniently. The matter was heard and ordered as under:
ORDER
1. The applicant Company Secretary, who have defaulted the provisions of section 205(1) of the Companies Act. 2013 for not performing the functions of Company Secretary with due diligence is liable for penalty under section 450 of the Companies Act, 2013.
2. In exercise of the powers conferred by Section 454(1) read with Section 454(3) of the Companies Act, 2013 read with Section 450 of the Companies Act, 2013. the undersigned is entrusted to adjudicate penalties under section 205 of the Companies Act. 2013. I do hereby impose the penalty of Total Rs. 20,000/- (Rupees twenty thousand only) upon Company Secretary in default pursuant as per table below for violation of section 205(1) of the Act for the period 2018-19 and 2019-20:
|
Name of the Applicant |
Amount Imposed (In Rs.) | Total Penalty (in Rs.) |
| CS Ayan Chakrobarty Company Secretary (Member. No.- 28577) | 10,000*2 | 20,000/- |
3. The noticee(s) shall pay the said amount of penalty individually (out of own pocket) by way of e-payment (available on Ministry website mca.gov.in) 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 writing 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 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 {Companies (Adjudication of Penalties) Rules, 2014].
5. Your attention is also invited to section 454(8) (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 in terms of the provisions of section 454(8) (i) of the Act.
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 CS AYAN CHAKROBARTY (Company Secretary) in default mentioned herein above and also to Office of the Regional Director (Eastern Region) and Ministry of Corporate Affairs at New Delhi.
Date: 20th December, 2023
(A. k, Sethi, ICLS)
Adjudicating Officer & Registrar of Companies,
West Bengal
