The Ministry of Corporate Affairs (MCA) has imposed a penalty of ₹6 lakh on JKJM Infrastructure Private Limited for the appointment of an additional director beyond the Annual General Meeting (AGM) date, violating Section 161(1) of the Companies Act, 2013. This order, issued by the Office of Registrar of Companies, Uttar Pradesh, highlights significant non-compliance by the company and its directors.
JKJM Infrastructure Private Limited, registered on March 13, 2012, with an authorized capital of ₹5 lakh, has its registered office at Zarib Chauki, Kalpi Road, Kanpur. During an inspection under Section 206(5) of the Companies Act, 2013, it was found that Mr. Ravishankar Prabhakar was appointed as an additional director on April 4, 2017. According to Section 161(1), an additional director holds office until the next AGM. However, Mr. Prabhakar continued in his role beyond this period, contravening the Act.
Provisions Violated
a. Section 161(1) of the Companies Act, 2013 allows the Board of Directors to appoint any person as an additional director, who holds office until the next AGM or the last date on which the AGM should have been held, whichever is earlier.
b. Section 172 of the Companies Act, 2013 states that if a company defaults in complying with any provisions for which no specific penalty is provided, the company and every officer in default are liable to a penalty. The penalty is ₹50,000, and in case of a continuing failure, an additional ₹500 for each day of default, with a maximum of ₹3 lakh for the company and ₹1 lakh for each officer in default.
A show-cause notice was issued to JKJM Infrastructure Private Limited and its directors on April 26, 2024, providing 15 days to respond. Despite this, no replies or necessary filings were received from the company or its directors. This lack of response further constituted a violation of Sections 161(1) and 172.
The default began from September 30, 2018 (the date after the due AGM date of September 29, 2018) to April 26, 2024, totaling 2035 days. The penalties imposed were calculated as follows:
- Initial Penalty: ₹50,000
- Continuing Default Penalty: ₹500 per day for 2035 days, amounting to ₹10,17,500
However, the maximum penalty for the company and each director was capped at ₹3 lakh for the company and ₹1 lakh for each officer. Therefore, the penalties were distributed as:
- JKJM Infrastructure Private Limited: ₹3,00,000
- Mr. Dipak Mohta: ₹1,00,000
- Mr. Sashi Kanta Jha: ₹1,00,000
- Mr. Ravishankar Prabhakar: ₹1,00,000
The company and its directors are required to pay the penalties through the MCA21 Portal within 90 days from the receipt of this order. Additionally, they must file Form INC-28, attaching the adjudication order and payment challans.
If the parties wish to appeal, they can do so within 60 days from the receipt of the order by filing with the Regional Director (Northern Region), Ministry of Corporate Affairs, New Delhi, in Form ADJ, stating the grounds of appeal and accompanied by a certified copy of the order.
Section 454(8) of the Companies Act, 2013, mandates that failure to comply with this order may result in further legal actions. The Office of Registrar of Companies, Uttar Pradesh, must be informed of any appeals along with the penalties imposed and payments made.
The penalty imposed on JKJM Infrastructure Private Limited and its directors underscores the importance of adhering to the provisions of the Companies Act, 2013, particularly concerning the tenure of additional directors.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES,
UTTAR PRADESH,
37/17, Westcott Building, The Mall,
Kanpur — 208001 (U.P.)
Phone : 0512 — 2550688/2540383
ORDER FOR VIOLATION OF SECTION 161(1) OF THE COMPANIES ACT, 2013 READ WITH SECTION 172 & READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 AND COMPANIES (ADJUDICATION OF PENALTIES) AMENDMENT RULES, 2019.
IN THE MATTER JKJM INFRASTRUCTURE PRIVATE LIMITED.
1. The Ministry of Corporate Affairs vide its Gazette notification no A-42011/112/2014-Ad.II dated 24.3.2015, has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. The Company JKJM INFRASTRUCTURE PRIVATE LIMITED has been registered under the provisions of the Companies Act, on 13.03.2012 and is having its registered office situated at 84/49, Zarib Chauki, Kalpi Road, Kanpur-208012. The authorized capital of the Company is Rs.500,000/-
3. That an inspection under section 206(5) of the Companies Act, 2013 has been ordered by the Central Government against JKJM Infrastructure Private Limited and during the course of inspection of the company ,it was observed by the Inspecting Officer from the MCA 21 Portal that the company has appointed Mr Ravishankar Prabhakar as an Additional Director on 04.04.2017. As per section 161(1) of the Companies Act, 2013 an Additional Director shall hold office upto the date of the next annual general meeting . I however, he is still working in the capacity of additional director till date which is in contravention of the said section. Therefore, the company has failed to comply with the provisions of section 161(1) of the Companies Act, 2013.
4. That provision of section 161(1) of the Companies Act, 2013 states that :
(1) The articles of a company may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an Additional Director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier.
(2) That provision of section 172 of the Companies Act, 2013 states that if a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.”
5. This office has issued show cause notice No. 07/18/ADJ/2024/JKJM INFRA/663 TO 666 dated 26.04.2024 to the company and its directors giving 15 days time to reply. However inspite of elapse of the said time period neither the company nor its directors have furnished their reply. Thus, violated provisions of Section 161(1) r/w section 172 of the Companies Act,2013.
6. Further, neither the company nor its directors or their representatives have either furnished reply or filed the said documents with this office. Thus making the company and its directors liable to penalty as per Section 172 of the Companies Act, 2013.
7. The date of default in the matter , Mr Ravishankar Prabhakar has been appointed as Additional Director in the company on 04.04.2017 and as per section 161 (1) of the Companies Act, 2013 he shall hold office upto the date of next annual general meeting i.e 29.09.2018 (due date of AGM for the financial year 2017-2018) but Mr Ravishankar Prabhakar is still Additional Director in the company and period of default commences from 30.09.2018 to 26.04.2024 (date of issue of show cause notice ).
8. That definition of section 2 sub section (85) of the Companies Act, 2013 is as follows:
“small company” means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees]; 3 [and]
(ii) turnover of which [as per profit and loss account for the immediately preceding financial year] does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
However, JKJM Infrastructure Private Limited does not fall under the definition of Small Company as, it is subsidiary of Geo Jute Limited (holding company) (as per Balance Sheet as at 31.3.2023) under the proviso of sub clause ii(A) of clause 85 of sub section 2 of the Companies Act, 2013.
9. Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose a penalty on each of the Noticee of Show Cause Notice dated 26.04.2024 under section 172 of the Companies Act, 2013 for failure to make compliance of the section 161(1) of the Act . I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee. The details of penalty imposed is as under :-
| Nature of default and period from which started Appointment of Additional Director, Alternate Director and Nominee Director | Section of the Companies Act.
Section 161(1) read with section 172 of the Companies Act, 2013 |
Name of the company/direct ors/defaulters
1. JKJM Infrastructure Private Limited. 2. Mr Dipak Mohta 3. Sashi Kanta Jha 4. Ravishankar Prabhakar |
Penalty imposed details (No. of days of default x penalty)
(i) 50,000/- + (ii). Rs 1017500 (Continuing default ( 2035 days X Rs 500) Rs 50,000/- + Rs 1017500/ = Total Rs 1067500/- (iii) Maximum Penalty = Rs. 300000/- (i) 50,000/- + (ii). Rs 1017500 (Continuing default ( 2035 days X Rs 500) Rs 50,000/- + Rs 1017500/ = Total Rs 1067500/- (iii) Maximum Penalty = Rs. 100000/- (i) 50,000/- + (ii). Rs 1017500 (Continuing default ( 2035 days X Rs 500) Rs 50,000/- + Rs 1017500/ = Total Rs 1067500/- (iii) Maximum Penalty = Rs. 100000/- i) 50,000/- + (ii). Rs 1017500 (Continuing default ( 2035 days X Rs 500) Rs 50,000/- + Rs 1017500/ = Total Rs 1067500/- (iii) Maximum Penalty = Rs. 100000/- Total penalties on each noticee Rs 6,00,000/- |
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the notice(s).
10. The Noticee shall pay the amount of penalty so imposed through MCA21 Portal only as per Rule 3(14) of Companies (Adjudication of Penalties) 2014 within 90 days receipt of this order . The company needs to file INC-28 , as per the provisions of the Act attaching the copy of the Adjudication order alongwith payment challans.
11. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodi Road, New Delhi, 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(5) & 454(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014].
12. Your attention is also invited to section 454(8) of the Companies Act, 2013, in the event of non-compliance of this order. In Case appeal is made 0/0 Registrar of Companies, U.P. may be informed alongwith the penalty imposed & the payments made.
(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur
No. 07/22/ADJ/2024/JKJM INFRA/1875 to 1879
Dated 27-06-2024
