In July 2024, the Registrar of Companies, Hyderabad issued an adjudication order against M/s. Standard Glass Lining Technology Limited for failing to appoint a Company Secretary (CS) despite crossing the paid-up capital threshold of ₹5 crore, as mandated by Section 203(1) of the Companies Act, 2013. This provision requires certain classes of companies to appoint key managerial personnel, including a CS.
M/s. Standard Glass Linings Technology Limited, registered under CIN U29220TG2012PLC082904, saw its paid-up capital increase to ₹181.63 crore by the financial year 2022-23, triggering the requirement for a CS. Despite this, the company did not appoint a CS within the stipulated timeframe of six months from April 30, 2014, when its paid-up capital first exceeded ₹5 crore. The company claimed it made efforts to comply but only appointed a CS in October 2021, over five years and five months later.
The adjudication order, under Section 203(5) of the Companies Act, 2013, imposed penalties on both the company and its officers who were in default. The penalties totaled ₹30 lakh, distributed among the company and several directors based on their roles and the duration of non-compliance. Specifically, M/s. Standard Glass Lining Technology Limited was fined ₹5 lakh for the period of default from November 1, 2014, to September 30, 2021. Additionally, each director faced penalties of ₹50,000 plus ₹1,000 per day for the duration of the continuing contravention, up to a maximum of ₹5 lakh per director.
The decision was based on the company’s admission of the violation and subsequent application for adjudication. The order specified that the penalties must be paid within 90 days via the MCA website, mca.gov.in, under the “Misc. head” category. Failure to comply within the stipulated timeframe could result in further fines or imprisonment for the company officers, as per Section 454(8) of the Act.
Moreover, the order provided recourse for appeal. The company and its officers had the option to file an appeal within sixty days from the date of receipt of the order, using Form ADJ available on the Ministry of Corporate Affairs website. The appeal needed to detail the grounds for contesting the penalty and include a certified copy of the adjudication order.
In conclusion, the adjudication order by the Registrar of Companies, Telangana, Hyderabad, underscores the regulatory importance of timely compliance with statutory requirements under the Companies Act, 2013. It highlights the legal obligations imposed on companies regarding the appointment of key managerial personnel and the serious consequences of non-compliance, aimed at maintaining transparency, accountability, and adherence to corporate governance norms in India.
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MINISTRY OF CORPORATE AFFAIRS
GOVERNMENT OF INDIA
OFFICE OF THE REGISTRAR OF COMPANIES, TELANGANA, HYDERABAD
2ND FLOOR, CORPORATE BHAWAN, BANDLAGUDA, NAGOLE, HYDERABAD — 500 068
Order F. NO.ROC/HYD/STANDARD/ADJ/S.203/2024-25/ 850 DATE: 15.07.2024
ADJUDICATION ORDER UNDER SECTION 203(1) OF THE COMPANIES ACT, 2013 IN THE MATTER OF M/S. STANDARD GLASS LINING TECHNOLOGY LIMITED
1. Appointment of Adjudicating Officer: –
The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad. II, dated 24.03.2015 has appointed Registrar of Companies, Hyderabad as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter referred as Act or Companies Act, 2013) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company: –
Whereas the company viz M/s. STANDARD GLASS LINING TECHNOLOGY LIMITED with CIN U29220TG2012PLC082904 (herein after referred as ‘company’ or ‘subject company’) is a registered company with this office under the Companies Act, 2013 having its registered office as per MCA21 Registry at D.12, PHASE I, IDA, JEEDIMETLA, Hyderabad, HYDERABAD, Telangana, India, 500055. The financial & other details of the subject company as available on MCA-21 portal is stated as under:
| S. No. | Particulars | Details as on F.Y. 2022-23 |
| 1. | Paid up Capital | Rs.1,81,63,45,200/- |
| 2. | a. Revenue from Operation | 209,72,30,000 |
| b. Other Income | 3,92,59,000 | |
| c. Profit for the Period | 20,11,88,000 | |
| 3. | Whether it is a Holding Company | Yes |
| 4. | Whether it is a Subsidiary Company | NO |
| 5. | Whether company registered under Section 8 of the Act? | NO |
| 6. | Whether company is a small company? | NO |
| 7. | Whether company registered under any other special Act? | NO |
3. Section and Penal Provision as per Companies Act, 2013
Section 203. Appointment of Key Managerial Personnel.:
(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 Officer or manager and in their absence, a whole-time director.
(ii) company secretary; and
(iii) Chief Financial Officer:
Section 203. Appointment of Key Managerial Personnel
(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 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
4. Facts of the case:
Whereas the company has suo moto applied for the adjudication application stating that “the paid-up capital of the company was increased from Rs.3,57,14,290 to Rs. 6,02,00,000 with effect from 30th April 2014. As the company has crossed the threshold limit of Rs. 5.00 Crore with effect from 30th April 2014, the company was required to appoint the company secretary within the period of 6 months from the date of 30th April 2014 i.e., up to 31′ October 2014. The company had taken all possible steps to fulfill the requirement of the aforesaid section, but the company had failed to do so within the stipulated time. Pursuant to the notification dated 3rd January 2020 Rule 8A of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 had amended and the applicable threshold limit of paid-up capital for appointment of Company Secretary has been increased to Rs.10,00,00,000/- with effect on after l’ April 2020. However, the company had appointed the CS w.el Pt October 2021 i.e. after the delay of 5 years and 5 months.
On 26th February 2024 the company has passed a Board Resolution in respect of Adjudication and authorizing any director of the company, Company Secretary of the Company and Mr. Naresh Kumar Sharma, Practicing Company Secretary or any other person as authorized by them to appear on behalf of company to represent before the Hon’ble office of Registrar of Companies, Hyderabad.”
Therefore, the Company and its officers have violated the provisions of Sec 203 (1) of the Companies Act 2013 and liable for penal action u/s 203(5) of the Companies Act 2013.
The Company Secretary M/s. Hima Priya Kallam (Membership No. ACS 62384) and the CFO of the Company Mr. Anjaneyulu Pathuri has visited office of Registrar of Companies, Hyderabad office with an application and request for the urgent hearing in the matter keeping in view their request the hearing was given to them on 15/07/2024 at 3:30 PM.
5. Decision
Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that Company and its officers in default are liable for penalty as prescribed under Section 203(5) of the Act for violation of Section 203(1) of the Companies Act, 2013.
(i) Accordingly, I am inclined to impose a penalty as prescribed under Section 203(5) of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are shown in the table below:
| S.No | Particulars | Penalty for default (Rs.) | Maximum Penalty (Rs.) | Period of Default | Final Penalty Imposed (Rs.) |
| 1.
|
M/s. Standard Glass Lining Technology Limited | Rs.5,00,000/- | Rs.5,00,000/- | 01.11.2014 To 30.09.2021 | Rs.5,00,000/- |
| 2.
|
Mr. Nageswara Rao Kandula (Managing Director)
|
Rs. 50,000/- + Rs. 1000/- per day for continuing contravention (2526 Days) | Rs.5,00,000 | 01.11.2014 To 30.09.2021 | Rs. 5,00,000 |
| 3.
|
Mr. Punna Rao Kudaravalli (Director) | Rs. 50,000/- + Rs. 1000/- per day for continuing contravention (2526 Days) | Rs.5,00,000 | 01.11.2014 To 30.09.2021
|
Rs. 5,00,000 |
| 4.
|
Mrs. Krishna Veni Kandula (Director)
|
Rs. 50,000/- + Rs. 1000/- per day for continuing contravention
(2526 Days) |
Rs.5,00,000 | 01.11.2014 To 30.09.2021 | Rs. 5,00,000 |
| 5.
|
Mrs. Katragadda Venkata Ramani (Director)
|
Rs. 50,000/- + Rs. 1000/- per day for continuing contravention (2143 Days) | Rs.5,00,000 | 01.11.2014 To 12.09.2020
|
Rs. 5,00,000 |
| 6.
|
Mr. Suryadevara Venkateswara Rao (Director)
|
Rs. 50,000/- + Rs. 1000/- per day for continuing contravention (2143 Days) | Rs.5,00,000 | 01.11.2014 To 12.09.2020
|
Rs. 5,00,000 |
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 the penalty imposed above on Company and its Officers in default as penalty amount for violation of Section 203(1) of the Companies Act, 2013.
8. The said amount of penalty shall be paid online by using the website mca.gov.in(Misc. head) within 90 days of receipt of this order and intimate this office with proof of penalty paid.
9. Whereas Appeal against this order may be filed with the Regional Director (SER), Ministry of Corporate Affairs, 3rd Floor, Corporate Bhavan, Bandlaguda, Nagole, Hyderabad, Telangana, 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 this order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].
10. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order, “(8)(i) Where company fails to comply with the order made under sub- section (3) or sub-section (7), as the case may be within a period of ninety days from the date of the receipt of the copy of 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.
(ii) Where an officer of a company or any other person who is in default fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be 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.”
(PARVINDER SINGH, I.C.L.S)
REGISTRAR OF COMPANIES
TELANGANA, HYDERABAD
