Introduction: The Ministry of Corporate Affairs, Registrar of Companies, Telangana, has issued a penalty order under Section 454 for the violation of Section 203 of the Companies Act, 2013 by AML Motors Private Limited. This order, dated 29th January 2024, outlines the details of the violation, the adjudication process, and the penalties imposed.
Detailed Analysis:
1. Appointment of Adjudicating Officer: The order begins by highlighting the appointment of the Adjudicating Officer, as per the powers conferred by section 454 of the Companies Act, 2013, and the Companies (Adjudication of Penalties) Rules, 2014.
2. Company Details: AML Motors Private Limited, with CIN U50404TG2021PTC152336, is identified as the company in question. The registered office is located at 3-6-239, Lilam Villa, Himayat Nagar, Hyderabad, Telangana, India.
3. Facts about the Case: The violation relates to the company’s delay in appointing a Whole Time Company Secretary, as mandated by section 203(1) of the Companies Act, 2013, and rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
4. Section 203 (1) and 203 (5) r.w rule 8A: The relevant sections of the Companies Act, along with rule 8A, are presented, outlining the necessity for a Whole Time Company Secretary and the penalties for non-compliance.
5. Adjudication Process: The article details the issuance of a showcase notice, the company’s response, and the subsequent personal hearing. It also covers the submission of additional documents during the adjudication process.
6. Findings and Penalty Imposed: The Adjudicating Officer finds the company and its officer in default guilty of non-compliance. Penalties are imposed as per the nature and duration of the default, amounting to Rs. 5,78,000 for the company and Rs. 1,28,000 for the officer.
Conclusion: In conclusion, the penalty order against AML Motors Private Limited highlights the importance of timely compliance with statutory requirements under the Companies Act, 2013. The detailed analysis provides insights into the adjudication process, the company’s response, and the findings that led to the imposition of penalties. Companies and officers should take note of the implications and ensure prompt adherence to legal obligations to avoid financial penalties and potential legal consequences. The article also emphasizes the appeal process and the consequences of non-compliance with the order.
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Government of India
Ministry of Corporate Affairs
Office of the Registrar of Companies, Telangana
2nd Floor, Corporate Bhawan, Bandlaguda,
Nagole, Hyderabad — 500 068
website: www.mca.gov.in
e-Mail ID: roc.hyderabad@mca.gov.in
Order No. ROC (H)/AMLMPL/ADJ-ORDER-3/152336/2023/2114 Date: 29-01-2024
ORDER FOR PENALTY UNDER SECTION 454 FOR VIOLATION OF SECTION 203 OF THE COMPANIES ACT, 2013.
IN THE MATTER OF AML MOTORS PRIVATE LIMITED
(CIN: U50404TG2021PTC152336)
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No.A-42011/112/2014-Ad.I I dated 2403-2015 appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 [herein after known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of the Act.
2. Company:
Whereas the Company AML Motors Private Limited [herein after known as Company] is a registered company with this office under the provisions of Companies Act, 2013 having registered office situated at 3-6-239, Lilam Villa, Himayat Nagar, Hyderabad, Telangana, 500029, India as per the MCA portal.
3. Facts about the Case:
The undersigned adjudicating Officer has received a suo-moto adjudication application filed jointly by the company M/s. AML MOTORS PRIVATE LIMITED (Applicant No.1) and Shri. Ganesh Ramachandra Aiyer Tarakkad (Applicant No.2) for adjudication of penalty under the provisions of section 454 of the Act and rules thereunder and stated therein inter al ia that:
1. It is submitted by the applicants that the applicant company has increased its paid-up capital from Rs. 99,00,000/- to Rs. 11,23,00,000/- on 22.12.2022. Pursuant to section 203(1) of the Act r/w Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the company was required to appoint Whole Time Company Secretary within six months i.e., 21St June 2023. However, the company has appointed the Whole Time Company Secretary on 09St September 2023 with a delay of 78 days as it could not find a suitable candidate. This delay of appointment of Whole-time Company Secretary resulted in violation of Section 203(1) of the Companies Act, 2013 and liable under Section 203(5) of the Companies Act, 2013.
4. Section 203 (1) and 203 (5) r.w rule 8A is reproduced as under:
Section 203 (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 (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 he liable to a penalty offirly 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.”
Rule 8A is reproduced as under:
“Every Private company which has a paid-up share capital of ten crone rupees or more shall have a whole time Company Secretary”
5. Showcase Notice, reply and Personal hearing:
Pursuant to the suo-moto application dated 20-10-2023received in this office under section 454 of the Act read with Companies (Adjudication of Penalty) Rules, 2014, this office had issued adjudication hearing notice to the company and directors on 08-12-2023 by fixing the date of hearing on 14-12-2023 at 11:30 AM at ROC office at Corporate Bhavan, Bandlaguda, Nagole, Hyderabad- 500 068. On scheduled date of hearing i.e., 14-12-2023 Shri. D V M Gopal PCS (C.P No. 6798) authorised representative of the company/officer appeared before the adjudicating authority and submitted that there was non-compliance of section 203 (1) r.w rule 8A of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 and the company has made the offence good on 9st September 2023 by appointing the Whole Time Company Secretary with a delay of 78 days. However, with regard to the officer in default he was submitted that vide Board Resolution dated 01-122022 Shri. Ganesh Ramachandra Aiyer Tarakkad (DIN: 03560204) the Nominee Director has been made responsible for ensuring compliance with the applicable provisions of the Act. The Authorised representative Shri. D V M Gopal has sought time to present some additional documents and submissions hence the hearing was adjourned to 03-01-2024. The Authorised representative has appeared on 03-01-2024 at 11:30 AM and has submitted that the GNL-3 form having SRN: AA6320155 has been filed with much difficulty and with the assistance of the technical team of the MCA Service provider on 28-12-2023 making Shri. Ganesh Ramachandra Aiyer Tarakkad (DIN: 03560204) responsible for the compliance of the applicable provisions of the Act. The Authorised representative has further submitted that all the necessary forms have already been filed and the offence has been made good on 09th September, 2023 and requested to take a lenient view and impose minimum penalty on the company and director.
6. Findings:
(i) The Company M/s. AML MOTORS PRIVATE LIMITED (Applicant No.1) and Shri. Ganesh Ramachandra Aiyer Tarakkad (Applicant No.2) jointly filed adjudication application through GNL-1 vide SRN:69694933 dated 20.10.2023 and physical copy of application dated 20.10.2023 and admitted that non-compliance of provision of section 203 (1) r.w. rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and made the offence good on 9′ September 2023 by appointing the Whole Time Company Secretary with a delay of 78 days.
ORDER
7. Having considered the facts and circumstances of the case and after taking into account the factors and submissions made in the application and by the Authorized Representative during the hearing on 14-12-2023 and 03-01-2024 and the facts of the case it is proved beyond doubt that the company and the officer of the company have defaulted in complying the provisions under Section 203 (1) of the Act and made the offence good on 9′ September 2023 with a delay of 78days. In this regard, the company, and its officer in default (within the meaning of section 2 (60) of the Companies Act, 2013). I hereby impose penalty as under;
|
Nature of default |
Name of the Company | Penalty as per Act. | Penalty Imposed | ||
| On default |
On Continuous Default | Total Penalty | |||
| Violation of Section 203 (1) of the Companies Act, 2013 | AML Motors Private Limited |
Rs. 5,00,000/- | 78*1000
=Rs. 78,000/- |
Rs. 5,78,000/- | Rs. 5,78,000/- |
|
Officer in Default |
Penalty as per Act. | Penalty Imposed | ||
| On default | On continuous
default |
Total penalty |
||
| Shri. Ganesh Ramachandra
Aiyer Tarakkad |
Rs. 50,000/- | 78*1000 = Rs. 78,000 |
Rs.1,28,000/- | Rs. 1,28,000 |
[No of days calculated from the date of increased of paid-up capital of the company (12-122022) to the appointment of Company Secretary (09-09-2023) after considering the vacancy period of six month as per section 203 (4) of the Companies Act, 2013 i.e, from 22-06-2023 till 08-09-2023 which comes to 78 days.]
AO is of the opinion that penalty is commensurate with the aforesaid offence committed by the noticee. The noticee shall pay the said amount of penalty through “Ministry of Corporate Affairs” portal and proof of same along with this order should be filed in e-from INC-28 within 30 days of receipt of this order, with the office of ROC, Hyderabad.
8. In this regard your attention is also drawn to the provisions of Section 454(5) and (6) which contemplates that:
“(5) Any person aggrieved by an order made by the adjudicating officer under sub-section (3) may prefer an appeal to the Regional Director having jurisdiction in the matter.
(6) Every appeal under sub-section (5) shall be filed within sixty days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person and shall be in such form, manner and be accompanied by such fees as may be prescribed. “
9. In this regard your attention is also drawn to the provisions of Section 454(8) (i) &(ii) of the Companies Act, 2013 which read as follows:
(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.
Therefore, in case of default in payment or penalty, prosecution will be filed under section 454(8)(i) and (ii) of the Companies Act, 2013 at your own costs without any further notice.
(PARVINDER SINGH, I.C.L.S)
REGISTRAR OF COMPANIES)
TELANGANA, HYDERABAD
