Vishnupriya Hotels and Resorts Pvt. Ltd. filed an appeal under Section 454(5) of the Companies Act, 2013, against a penalty imposed by the Registrar of Companies, Karnataka. The company was penalized for failing to appoint a resident director as required under Section 149(3) of the Act from April 1, 2014, to May 19, 2019. The adjudicating officer initially levied a total penalty of Rs. 6,00,000 on the company and its directors.
The company cited unforeseen circumstances, including staff reductions and the absence of company officials in India, as reasons for the non-compliance. It also argued that it was a non-profit entity with no financial transactions, making the penalty a severe financial burden. During the appeal hearing, the authorized representative requested a waiver, emphasizing the company’s financial constraints.
After reviewing the appeal, the Regional Director reduced the penalty to 10% of the original amount. The revised penalty required the company to pay Rs. 30,000, while each of the three directors paid Rs. 10,000, totaling Rs. 60,000. The appellants complied with the order and paid the penalty on January 16, 2025.
Following compliance, the appeal was disposed of, and the order was communicated to the concerned authorities, including the Registrar of Companies, Karnataka, and the Ministry of Corporate Affairs.
F.No:9/37/ADJ/SEC.149(3) of CA, 2013/KARNATAKA/RD(SER)/2024
BEFORE THE REGIONAL DIRECTOR, SOUTH EAST REGION
MINISTRY OF CORPORATE AFFAIRS, HYDERABAD
IN THE MATTER OF COMPANIES ACT, 2013 /6157
IN THE MATTER OF VISHNUPRIYA HOTELS AND RESORTS PRIVATE LIMITED
M/s. Water & Sanitation (India) for Urban Poor
2. Mr. Thomas Palakudiyil Scaria, Director
3. Mr. William Day, Director
4. Mr. Samuel George Christupher Parker, Former Director
Date of hearing: 12.12.2024
Present: Mr. Divesh Goyal, PCS on behalf of the
Appellants
Order
This is an appeal filed under section 454(5) of the Companies Act, 2013(hereafter referred as Act) by the above appellants in e-form ADJ vide SRN F98188949 dated 06.09.2024 against the adjudication order passed by the Registrar of Companies, Karnataka in F No. ROC(B)/Adj.Ord.454-149(3)/Water & Sanitation /Co.No.039701/2024/ dated 09.07.2024 under section 454 of the Act, for violation of provisions of Section 149(3) of the Companies Act, 2013.
2. The Registrar of Companies in his order of adjudication has stated that the company has filed a suo-motu application on 19.03.2024 and submits that it had failed to appoint a resident director on the board of the company under the provisions of Section 149(3) of the Act until the appointed Mr. Pawan Maini as the resident director on the board at the meeting of the board of directors held on 20.05.2019. The hearing was held before the Registrar of Companies on 22.05.2024 and after hearing the authorized representative Registrar of Companies had levied a penalty of Rs.3,00,000/- on the Company and Rs.1,00,000/- each for 3 directors namely Mr. Thomas Palakudiyil Scaria, Mr. Samuel George Christupher Parker and Mr. William Day (total aggregating to Rs.6,00,000/-).
3.1 Aggrieved by the adjudication order, the appellants have filed the above appeal, submitting that the company had decided to scale down its staff on account of completion of the project in Karnataka and lack of funding. Consequently, in the year 2010, the office bearers of the Appellant Company had resigned. Further stated that, due to the absence of company officials in India, the Appellant Company was unable to comply with the requirement to have at least one director residing in India for a minimum of 182 days during the financial year accordingly to the provisions under section 149(3) of the Companies Act, 2013 for a period from 01.04.2014 to 19.05.2019. Further the company has appointed Mr. Pawan Maini as Resident Director on the Board at the meeting of the Board of Directors held on 20.05.2019.
3.2 Appellant Company has stated that the alleged violations were not deliberate but rather the result of unforeseen circumstances arising from the absence of its directors and requested that while adjudicating quantum of penalty, the adjudicating officer shall have due regard to the following factors namely;
(a) Size of the company
(b) nature of the business carried on by the company
(c) injury to the public interest
(d) nature of default
(e) repetition of default.
3.3 The Appellant Company is a Section 8 Company with no business operations or financial transactions, imposing a penalty on a non-profit company in the process of liquidation, with no available funds, constitutes a severe financial burden.
4. The authorized representative Mr. Divesh Goya!, Practicing Company Secretary appeared for hearing on 12.12.2024 on behalf of the appellants before the then Regional Director and reiterated the submissions made in the appeal and requested to waive the penalty levied and the appellant company will be put to irreparable damage, loss, hardship and injustice.
5. Taking into consideration the above facts of the appeal and the submissions made by the authorized representative, the then Regional Director deemed had reduced the penalty to 10% i.e., Rs.30,000/- for the Company and Rs.10,000/- each for 3 directors namely Mr. Thomas Palakudiyil Scaria, Mr. Samuel George Christupher Parker and Mr. William Day (total aggregating to Rs.60,000/-). The appellants were directed to comply with this order and were also reminded about the provisions of Section 454(8) of the Act, in case of failure to comply.
6. Accordingly, the appellants have paid the penalty as under
| S.No | Name of the Appellants | Date of Payment |
SRN details | Penalty Paid |
| 1 | M/s. Water & Sanitation (India) for Urban Poor | 16/01/2025 | X92134584 | 30,000 |
| 2 | Mr. Thomas Palakudiyil Scaria | 16/01/2025 | X92136522 | 10,000 |
| 3 | Mr. Samuel George Christupher Parker | 16/01/2025 | X92136407 | 10,000 |
| 4 | Mr. William Day | 16/01/2025 | X92141852 | 10,000 |
| Total | 60,000 | |||
6. In view of the compliance reported, the appeal is accordingly disposed of, and this order is issued to the Appellants with a copy to Registrar of Companies, Karnataka and Joint Secretary, E-Governance Cell, Ministry of Corporate Affairs, New Delhi for information and necessary action.
Issued under my hand and seal on this 31st day of January 2025.
(Richa Kukreja)
Regional Director, SER
Ministry of Corporate Affairs, Hyderabad
