The Registrar of Companies, Jaipur, has imposed a penalty on Dalas Biotech Limited for non-compliance with Section 177(2) of the Companies Act, 2013, which mandates a properly constituted Audit Committee. The company failed to meet this requirement following the resignation of an Independent Director in November 2017, and continued to be non-compliant until January 2023 when a new Independent Director was appointed. A penalty of ₹5,00,000 was imposed on the company and ₹1,00,000 each on the defaulting director, totaling ₹6,00,000. This decision followed an adjudication process, including a show cause notice and hearings, where the company’s late rectification was deemed insufficient. The penalty must be paid through the Ministry of Corporate Affairs portal, with appeals possible within 60 days. Non-payment could lead to additional fines or imprisonment as stipulated under Section 454(8) of the Companies Act, 2013.
GOVERNMEN OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES CUM OFFICIAL LIQUDIAOTR,
ATTACHED TO RAJASTHAN HIGH COURT, JAIPUR BENCH AT JAIPUR
CORPORATE BHAWAN, G/6-7, RESIDENCY AREA, CIVIL LINES, JAIPUR- 302001
ORDER FOR PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICTION OF PENALTIES) RULES, 2014 AND COMPANIES (ADJUDICATON OF PENALTIES AMENDEMENT RULES, 2015 FOR THE VIOLATION OF SECTION 177 (2) OF COMPANIES ACT, 2013 READ WITH RULE 6 OF COMPANIES (MEETING OF BOARD AND ITS POWER) RULES, 2014 IN THE MATTER OF: –
ADJUDICATION ORDER
1. Appointment of Adjudicating Officer: –
WHEREAS the Ministry of Corporate Affairs vide its Gazette Notification No. SO 831 (E) dated 24.03.2015 appointed the Registrar of Companies/undersigned as Adjudicating Officer in exercise of the Power conferred by Section 454 of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014. The Registrar of Companies vide the Companies (Amendment) Act, 2019 is entrusted with power to adjudicate penalty as provided under Section 178(8) of the Companies Act, 2013.
2. Respondent Company:
WHEREAS Dalas Biotech Limited (CIN U24232RJ1989PLC005056) is registered with this office under the provisions of Companies Act, 2013 and having its registered office at E-292, RIICO Industrial Area, Bhiwadi, Rajasthan- 301019.
3. Relevant provisions of the Companies Act, 2013: –
WHEREAS as per the provision of section 177 (1) of the Companies Act, 2013 “The Board of Directors of every listed public company and such other class or classes of companies, as may be prescribed, shall constitute an Audit Committee.’
WHERAS as per the provision of section 177 (2) of the Companies Act, 2013 “The Audit Committee shall consist of a minimum of three Directors with independent Directors forming a majority.”
WHEREAS as per provision of Rule 6 of the Companies (Meeting of Board and Its Powers) Rules, 2014 “The Board of directors of every listed public company and a company covered under rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 shall constitute an ‘Audit Committee, and a ‘Nomination and Remuneration Committee of the Board’.”
WHEREAS as per provision of section 178 (8) of the Companies Act, 2013 “In case of any contravention of the provisions of section 177 and this section, the company shall be liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of one lakh rupees.”
4. Facts of the Case:
> That the Independent Director of the respondent company namely Shri Bodh Raj Sikari (DIN- 01134045) has resigned from the directorship in the respondent company on 23.11.2017. After his resignation from the directorship of the respondent company, the constitution of the Audit Committee of the respondent company was not as per the requirement of section 117(2) of the Companies Act, 2013. Hence, the respondent company has violated the provision of section 177(2) of the Companies Act, 2013 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014.
> In view of the above, this office has issued a Show Cause Notice vide letter dated 05.12.2023 to the respondents. In this regard, the respondent company has furnished its reply vide letter dated 20.12.2023 stating that respondent company could not find the eligible person to be appointed as the second Independent Director in the respondent company. Further, the respondent company has stated that the Shri Sambhu Yadav (DIN: – 09814369) has been appointed as the second Independent Director on 06.01.2023.
The reply of the respondent company has been examined by this office and not found to be satisfactory.
>Further, this office has issued an Adjudication Notice dated 24.01.2024 to the respondents and fixed a date of hearing in the matter on 20.02.2024. However, at the time of the hearing on 20.02.2024, none appeared on behalf of the respondents.
Therefore, the Competent Authority has decided to give a last opportunity to the respondent for a hearing on 24.04.2024.
> Further, at the time of hearing on 24.04.2024, Shri Rahul Sharma, Practicing Company Secretary and Shri Shivam Jha, Company Secretary- Trainee, and authorized representatives of the respondents have appeared in the matter and submitted that the default has already been made good as the respondent company has appointed another Independent Director namely Shri Sambhu Yadav (DIN; 09814369) on 06.01.2023.
5. in view of the above facts, the undersigned has reasonable cause to believe that the provision of section 177(2) of the Companies Act, 2013 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014 have not been complied with by the respondents and therefore liable for penal action under section 178(8) of the Companies Act, 2013. Accordingly, in exercise the power of 454 (3) of the Companies Act, 2013, I inclined to impose a penalty on the respondents, as under-
| Nature of default |
Relevant section of the Companies Act, 2013 and Rules made thereunder | Name of persons on whom penalty imposed |
Minimum limit for penalty (In Rs.) | Maximum limit for Penalty (In Rs.) | Final Penalty Imposed (In Rs.) |
| The Constitution of the Audit Committee is not as per provision of section 177(2) of the Companies Act, 2013. |
Section 177(2) of the Companies Act, 2013 read with read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014. |
Dalas Biotech Limited | 5,00,000/- | — | 5,00,000/- |
| Sangita Rajani, Whole Time Director | 1,00,000/- | — | 1,00,000/- | ||
| Grand Total | 6,00,000/- | ||||
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the respondents and penalty so imposed upon the Officers-in-default shall be paid from their personal sources/ income. It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.
6. Appeal against this order may be filed in writing with the Regional Director (NWR), Ministry of Corporate Affairs, Ahmedabad within a period of sixty days from the date of receipt of this order, in e-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 Companies Act, 2013 read with Companies (Adjudicating of Penalties) Rules, 2014).
7. Attention is also invited to section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013, which state that in case of non-payment of penalty amount, 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 and officer in default 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 both.
8. In terms of the provisions of sub-Rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to the following: –
i. Dalas Biotech Limited at E-292, RIICO Industrial Area, Bhiwadi, Rajasthan, 301019.
ii. Sangita Rajani, Whole Time Director at D — 34, 2nd Floor, Gulmohar Park, Andrewsganj, Defence Colony, South Delhi, New Delhi- 110049.
iii. Regional Director, NWR, Ministry of Corporate Affairs, Ahmedabad at ROC Bhavan, Opp. Rupal Park Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad, Gujarat-380 013.
The adjudication notice stands disposed off with this order.
(RUVIT KUMAR)
ROC-cum-OL & Adjudicating officer,
Rajasthan, Jaipur
Signed on this 21st May 2024.
Place: Jaipur, Rajasthan,
File No. ROCJP/SCN/177/2023-24/984
