In the realm of corporate governance, meticulous record-keeping holds paramount importance. However, deviations from prescribed protocols, such as non-numbering of pages and omitting crucial details in board meeting minutes, can lead to severe consequences. This article delves into a recent case where the Ministry of Corporate Affairs (MCA) imposed penalties on SANY HEAVY INDUSTRY INDIA PRIVATE LIMITED for such violations.
Introduction
The adjudication order issued by the Registrar of Companies, Maharashtra, Pune, sheds light on the violations committed by SANY HEAVY INDUSTRY INDIA PRIVATE LIMITED, as per the provisions of the Companies Act, 2013. The company, along with its officers, faced penalties under Section 118(11) for non-compliance with prescribed norms regarding the maintenance of board meeting minutes.
Detailed Analysis
The adjudication order meticulously examines the facts of the case, highlighting specific instances of non-compliance. These include:
1. Non-Consecutive Page Numbering: Contrary to Secretarial Standard-2, the company failed to consecutively number the pages of its minutes books for Extraordinary General Meetings (EGM) and Annual General Meetings (AGM). This procedural lapse, though seemingly trivial, signifies a breach of regulatory standards.
2. Missing Details in Board Meeting Minutes: Another violation pertained to the omission of essential details, such as the date, place, and signatures, in certain board meeting minutes. Such oversights not only contravene Secretarial Standard-1 but also undermine the integrity and authenticity of corporate records.
Conclusion
In light of the aforementioned violations, the adjudicating officer imposed penalties on the company and its officers. Despite the company’s explanations and requests for leniency, the gravity of non-compliance warranted punitive action. This case serves as a stark reminder of the stringent regulatory framework governing corporate governance practices. Moving forward, adherence to prescribed standards and meticulous record-keeping remain imperative to avoid regulatory scrutiny and penalties.
In essence, the penalties imposed underscore the significance of upholding regulatory compliance in corporate affairs, reinforcing the adage that diligence today averts penalties tomorrow.
****
OFFICE OF THE
REGISTRAR OF COMPANIES
MAHARASHTRA, PUNE
MINISTRY OF CORPORATE AFFAIRS
GOVERNMENT OF INDIA
Adjudication Order No. RoCP/ADJ/sany/order/118/22/MV/2024/341 Date: 17 MAY 2024
ADJUDICATION ORDER
*****
Adjudication Order of penalties in the matter of SANY HEAVY INDUSTRY INDIA PRIVATE LIMITED having CIN U45201PN2002PTC181239 under Section 454(3) r/w section 118 of the Companies Act, 2013.
Please Read:
- Companies (Adjudication Of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019 (G. S. R.131(E) ).
- Provisions of Subsection (1) and (11) of Section 118 of the Companies Act, 2013.
- Gazette Notification of Ministry of Corporate Affairs vide No. A-42011/112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015)
In respect of:
SANY HEAVY INDUSTRY INDIA PRIVATE LIMITED having CIN U45201PN20021-‘1C181239 is a company governed by the provisions Act, and registered with this office having its office Plot No.E- 4, Chakan Industrial Area , Phase-III„ Taluka -Khed Dist, Pune-410501, Pune, Pune, Maharashtra, 410501, India and its officers.
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015) appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) r/w Rule 3(1) of Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company:
SANY HEAVY INDUSTRY INDIA PRIVATE LIMITED having CIN U45201PN2002PTC181239 (herein after referred as Company) is a registered company with this office under the provisions of section 7 of the Companies Act, 2013 having its registered office as per MCA21 Registry at address ” “Plot No.E- 4, Chakan Industrial Area , Phase-III„ Taluka -Khed Dist, Pune-410501, Pune, Pune, Maharashtra, 410501, India..
3. Facts about the Case:
a) As per Section 118 of the Act – Every company shall cause minutes of the proceedings of every general meeting of 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-n by postal ballot in books kept for that purpose with their pages consecutively numbered.
(2) The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.
(3) All appointments made at any of the meetings aforesaid shall be included in the minutes of the meeting.
(4) In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes shall also contain–
(a) the names of the directors present at the meeting; and
(b) in the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concurring with the resolution.
(5) There shall not be included in the minutes, any matter which, in the opinion of the Chairman of the meeting,–
(a) is or could reasonably be regarded as defamatory of any person; or
(b) is irrelevant or immaterial to the proceedings; or
(c) is detrimental to the interests of the company.
(6) The Chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in sub-section (5).
(7) The minutes kept in accordance with the provisions of this section shall be evidence of the proceedings recorded therein.
(8) Where the minutes have been kept in accordance with sub-section (1) then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid.
(9) No document purporting to be a report of the proceedings of any general meeting of a company shall be circulated or advertised at the expense of the company, unless it includes the matters required by this section to be contained in the minutes of the proceedings of such meeting.
Section 118(10) of the Act – Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.
As per Section 118(11), If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.
b) Whereas an Inquiry of the company under section 206 of the Companies Act, 2013 was conducted by this office; and it was observed that;
(i) As per Section 118 “(2) The minutes of each meeting shall contain a f air and correct summary of the proceedings thereat.” r.w. Secretarial Standard 1″ Meetings of The Board Of Directors “.As per Company’s submission dated 15.02.2022 details at para no. 2., date of foreign directors into India is Given as under:
| Name of Director | Departure from India | Status as on date |
| Dacheng Zhu | 09.01.2022 | In India |
| Yan Xinhui | 12.06.2020 | Out of India |
| Xiang Wenbo | 14.12.2018 | Out of India |
However, it has been observed that on the board meeting dated 25.11.2019,Mr.Xiang Wenbo was shown to be present in the meeting as in the minutes recorded, no leave of absence was granted as all the directors were present in the meeting. Further, as per above table Mr. Xiang Wenbo’s departure date from India as per company’s submission was 14.12.2018, hence his presence on 25.11.2019 is not possible. Thus, company and officers have violated section 118(1) of the Companies Act, 2013 r.w Secretarial Standard 1 issued by the Council of the Institute of Company Secretaries of India and liable for action under section 118(11) of the Companies Act, 2013.
(ii) As per Secretarial Standard -2 clause 17.1.4 ” The pages of the Minutes books shall be consecutively numbered. However it has been observed that the Company has not numbered EGM & AGM Minutes page book” and also, for the board meeting as per Secretarial Standard -1 clause 7.1.4 ” The pages of the minutes books shall be consecutively numbered”. Therefore, there is violation of Secretarial Standard 1 & 2 issued by the Council of the Institute of Company Secretaries of India. Thus the company and its officers are liable for action under section 118 of the Companies Act, 2013.
(iii) As per Secretarial Standard -1 clause 7.6 signing and Dating of Minutes 7.6.1 Minutes of the meeting of the Board shall be signed and dated by the chairman of the meeting or the Chairman of the next meeting. However, it has been observed that the company has not recorded date and place of the Board Meeting Minutes while signing the minutes. And it has been observed that some of the minutes have not been signed for instance Board meeting minutes dated 20.03.2020.
Therefore, there is violation of Secretarial Standard 1 & 2 issued by Council of the Institute of Company Secretaries of India. Thus, the company and its officers are liable for action under section 118(11) of the Companies Act, 2013.
c) The matter was also taken up with the company during the course of the said inquiry and the company had submitted its reply stating that:
a) As correctly noted by the learned ROC above, our director Mr. Xiang Wenbo had not attended the Board Meeting physically at the place of the Board meeting. However, attended the meeting online wherein he physically present in China. It may noted that the Section 173(2) of the Companies Act, 2013 read along with the Secretarial Standards issued by Council of the Institute of Company Secretaries of India, allow Board Meetings through video conferencing or the audio visual means in such meetings. We also draw your kind attention to relevant rules of the above-mentioned section. The attendance of Mr. Xiang was accordingly recorded.
Accordingly, we would like to humbly submit that neither the company nor its officers have violated section 118(1) of the Companies Act, 2013 r.w Secretarial Standard 1 issued by the Council of the Institute of Company Secretaries of India and are not liable for action under section 118(11) of the Companies Act, 2013.
b) As correctly noted by the learned ROC, the scan copy of the pages of the minute books of EGM and AGM does not have consecutive numbering on them. This being procedural lapse, we have already taken actions to correct the situation going ahead. Also non-mentioning of the numbering on the page do not have any adverse impact as the Board processing or minutes thereof.
We would like to humbly submit that being clerical error, request waiver of this violation under Secretarial Standard 1 & 2 issued by Council of the Institute of Company Secretaries of India and thereby kindly not take any action under section 118(11) of the Companies Act on the Company or its officers.
c) As correctly noted by the learned ROC, the company has not recorded the date and place of the Board meeting minutes while signing the minutes for some meeting. It may be please noted that the meetings so identified by the learned ROC for the period covered under the 1st wave of the Pandemic Corona. Due to the sheer pressure of the situation, new norms of working, Limited mobility for official work as well as medical emergencies for some support staff we have seen this document issue. If the Learned ROC check the documents for the earlier or later period, the above observations may be different from what has been stated above.
In view of this we humbly request waiver of this violation under Secretarial Standard 1 & 2 Council of the Institute of Company Secretaries of India and thereby kindly not take any action under section 118(11) of the Companies Act on the Company or its officers.
ANDWHEREAS, the JO after considering the reply has concluded that the company has violated the provision of section 118 of Companies Act, 2013.
d) Accordingly, as per the directions of the competent authority, the adjudication officer has issued adjudication notice vide ROCP/ADJ/SHIIPL/MV/118/23-24/3191-3196 dated 01.03.2024 (herein after referred as Adjudication Notice) under Section 454(4) read with 118 of the Companies Act, 2013 read with Rule 3(2) Of Companies (Adjudication of Penalties), 2014 to the company and its officers in default for the violation of the provisions of the act as mentioned in para “a, b & c” above;
e) A reply to the Adjudication notice has been received on 15.03.2024 & 22.03.2024 from the company and Mr. Deepak Garg (Director). The Company has replied that “that Mr. Xiang Wenbo, Director had attended the meeting held on 25.11.2019 through online mode/ video conferencing which is permitted by Secretarial Standard-1 issued by the Council of the Institute of Company Secretaries of India.
Since, there has been no violation of Section 118(2) of the Companies Act, 2013, the Company humbly requests your good office to not to impose penalties under section 118 (11) for the above observations.
Further, the Company and director humbly submits that failure to do consecutive numbering of the Minutes Books of AGM, EGM and Board Meetings was unintentional and there has been no adverse impact on the Board processing due to this and corrective action has been taken thereof.
Further, the Company and director also submit that during the first wave of the Corona Pandemic and owing to the adverse situations there has been a lapse of non-mentioning of the time, place while signing of Minutes of few Board meetings are from the year 2020.
The said lapse was unintentional and considering the adversities faced during the pandemic, the Company and myself humbly request to take a lenient view.
Further, the JO has already concluded that the company has violated the provisions of section 118 of the Act.
4. Relevant provisions of the Companies Act, 2013:
Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and resolutions passed by postal ballot.—(1) Every company shall cause minutes of the proceedings of every general meeting of 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.
(2) The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.
(3) All appointments made at any of the meeti ngs aforesaid shall be included in the minutes of the meeting.
(4) In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes shall also contain—
(a) the names of the directors present at the meeting; and
(b) in the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concurring with the resolution.
(5) There shall not be included in the minutes, any matter which, in the opinion of the Chairman of the meeting,—
(a) is or could reasonably be regarded as defamatory of any person; or
(b) is irrelevant or immaterial to the proceedings; or
(c) is detrimental to the interests of the company.
(6) The Chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in subsection (5).
(7) The minutes kept in accordance with the provisions of this section shall be evidence of the proceedings recorded therein.
(8) Where the minutes have been kept in accordance with sub-section (1) then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid.
(9) No document purporting to be a report of the proceedings of any general meeting of a company shall be circulated or advertised at the expense of the company, unless it includes the matters required by this section to be contained in the minutes of the proceedings of such meeting.
(10) Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.
(11) If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.
5. ORDER:
a. Considering the above facts of the case and the relevant provisions; the undersigned now hereby pronounces the order. Further, the delay in issuance of the order is on account of examination of reply; checking MCA21 records; other administrative reasons.
b. The company and its officers have defaulted the provisions of section 118 of the Act as referred in para 3 (ii) and (iii) of above. Hence the company and its officers are liable for penalty u/ s 118 (11) of the Companies Act, 2013″ on two count;
c. In exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the facts and circumstances of the case, I do hereby impose the penalty on the company and its 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 118 of the Act:-
a) Non-numbering of pages of minutes book in consecutive manner:-
| Penalty imposed on company/director(s) | Total / maximum penalty (In Rs) |
| Sany Heavy Industry India Private Limited | 25000 |
| Yan Xinhui | 5000 |
| Deepak Garg | 5000 |
| Xiang Wenbo | 5000 |
| Dacheng Zhu | 5000 |
| Anand Deeparam Choudhary | 5000 |
b) Non recording of date/place/sign on Board Meeting Minutes:-
| Penalty imposed on company/director(s) | Total / maximum penalty (In Rs) |
| Sany Heavy Industry India Private Limited | 25000 |
| Yan Xinhui | 5000 |
| Deepak Garg | 5000 |
| Xiang Wenbo | 5000 |
| Dacheng Zhu | 5000 |
| Arland Deeparam Choudhary | 5000 |
d. I am of the opinion that penalty so imposed is commensurate with the aforesaid failure committed by the notice(s).
e. The Noticee(s)/applicant(s) shall pay the penalty so imposed through Ministry of Corporate Affairs portal only as per rule 3(14) of Companies (Adjudication of Penalties) Rules, 2014.
f. Appeal against this order may be filed under section 454(5) of the Act, in writing with the Regional Director (Western Region), Ministry of Corporate Affairs100, Everest, 5th Floor, Netaji Subhash Road, Marine Drive, Mumbai-400002, 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 Companies (Adjudication of Penalties) Rules, 2014 as emended by Companies (Adjudication of Penalties) Amendment Rules, 2019.
g. 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.
h. 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 SANY HEAVY INDUSTRY INDIA PRIVATE LIMITED and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Western Region) and Ministry of Corporate Affairs at New Delhi.
(Mangesh Jadhav, ICLS)
Adjudicating Officer
Registrar of Companies
Maharashtra, Pune
