MCA imposes penalty for Delay in MGT-14 Submission for MD Re-appointment

The Office of the Registrar of Companies in Maharashtra, Pune, operating under the Ministry of Corporate Affairs, Government of India, has issued an adjudication order concerning penalties imposed on Kan Biosys Private Limited for a significant delay in submitting Form MGT-14 related to the reappointment of Mrs. Sandeepa Ravindra Kanitkar as the Managing Director. This article will provide a detailed analysis of the case, including relevant provisions of the Companies Act, the facts surrounding the delay, the penalties imposed, and the implications for the company and its officers.

Facts about the Case:

• Section 117(1) of the Companies Act, 2013, mandates the filing of resolutions and agreements within 30 days of their passing.
• The company was required to file Form MGT-14 for Mrs. Sandeepa Ravindra Kanitkar’s reappointment as Managing Director by July 23, 2022.
• However, the company filed the Form MGT-14 on March 15, 2023, resulting in a delay of 235 days.

Relevant Provisions of the Companies Act, 2013:

• Section 117(1) requires timely submission of resolutions and agreements.
• Section 117(3)(c) pertains to resolutions related to the appointment or reappointment of a managing director.
• Section 117(2) outlines penalties for non-compliance.

Penalties Imposed:

• The company and its officers, responsible for the delay in filing Form MGT-14, are liable for penalties.
• The penalty for the company and its director is Rs. 210,000, with an additional Rs. 100 per day of continuing failure, up to a maximum of Rs. 233,500.
• However, since the company is categorized as a small company, reduced penalties are applicable.

Reduced Penalty:

• The reduced penalty for the company and its director is Rs. 16,750 each, given their small company status.

Payment and Appeal:

• The penalties must be paid through the Ministry of Corporate Affairs portal.
• An appeal against this order can be filed with the Regional Director (Western Region) within sixty days from the date of receipt of the order.

Conclusion: The adjudication order by the Registrar of Companies in Maharashtra, Pune, serves as a reminder of the importance of timely compliance with the Companies Act, 2013. Kan Biosys Private Limited and its director, while facing penalties, benefit from reduced charges due to their small company status. Companies must ensure adherence to regulatory timelines to avoid such penalties in the future.

This case highlights the significance of legal compliance in corporate governance, particularly in matters related to resolutions and agreements concerning key appointments within a company.

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Office of the Registrar of Companies
Maharashtra, Pune
Ministry of Corporate Affairs
Government of India

ROCP/ADJ/Sec-117 (3)(c)/JTA(B)/23-24/4/1378 to 1380 Dated: 11th September, 2023

Adjudication Order

Adjudication Order of Penalties in the Matter Kan Biosys Private Limited having CIN U24239PN2005PTCO20704 under Section 454(3) Read With 117(3)(c) of the Companies Act, 2013

Please Read:

• Companies (Adjudication Of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019 (G.S.R.131(E) ).
• Provisions of Sub-section (1) & Sub-section (2) of Section 117 of the Companies Act, 2013.
• Gazette Notification of Ministry of Corporate Affairs vide No. A-42011/11,2/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015)
• Companies (Amendment) Act, 2019.
• General Circular No. 1/2020 dated 02.03.2020;
• The under signed vide Companies (Amendment) Act, 2020 is entrusted to adjudicate penalties under section 117 of the Act with effect from 21.12.2020

In respect of:

KAN BIOSYS PRIVATE LIMITED having CIN- U24239PN2005PTCO20704 having its registered office at as per MCA-21 Registry at address at-“Raveedeep, 917/17, Ganesh Wadi, Off Fergusson Road Pune-4, Off Fergusson Road, Pune, Maharashtra,411004,India”

Appointment of Adjudicating Officer:

Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015) appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) r/w Rule 3(1) of Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act. The undersigned vide Companies (Amendment) Act, 2020 is entrusted to adjudicate penalties under section 117(2) of the Companies Act, 2013.

1. Company:

KAN BIOSYS PRIVATE LIMITED having CIN- U24239PN2005PTCO20704 (herein after referred as Company) is a registered company with this office under the provisions of section 2(35) and Section 3(1)(iii) of the Companies Act, 1956 having its registered office as per MCA21 Registry at “Raveedeep, 917/17, Ganesh Wadi, Off Fergusson Road Pune-4, Off Fergusson Road, Pune, Maharashtra,411004,India”

2. Facts about the Case:

a) In terms provisions of section 117(1) of the Companies Act, 2013, a copy of every resolution or any agreement, in respect of matters specified in sub­section together with the explanatory statement under suction 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty d9ys of the passing or making thereof in such manner and with such fees as may be prescribed;

b) WHEREAS the company has filed Suo-moto application for the adjudication and it is seen that the company was required to file the Board Resolution in Form MGT-14 for re-appointment of Mrs. Sandeepa Ravindra Kanitkar as the Managing Director latest by 23.07.2022. However, the company has not filed the Form MGT-14 within stipulated time as prescribe in Act. Further, the form was filed on 15/03/2023 with the delay of 235 days.

c) Accordingly, the adjudication officer has issued adjudication notice vide ROCP/ADJ/Sec-117(3)(c)/JTA(B)/23-24/1178 to 1179 dated 03.08.2023 (herein after referred as Adjudication Notice) under Section 454(4) read with 117 of the Companies Act, 2013 read with Rule 3(2) Of Companies (Adjudication of Penalties), 2014 as amended in Amendment Rules, 2020, to the company and its officers in default for the violation of the provisions of the act as mentioned in para “a 86 b” above;

d) A reply to the Adjudication notice has been received on 18.08.2023 from the company and its director stating that due to inadvertence, the company could not file MGT-14 within the prescribed period and it was filed on 15.03.2023.

3. Relevant provisions of the Companies Act, 2013:

As per Section 117(1) of the Companies Act, 2013, a copy of every resolution or any agreement, in respect of matters specified in sub-section together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed;

Provided that the copy of every resolution which has the effect of altering the articles and the copy of every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement.

AND WHEREAS As per Section 117(3) of the Companies Act, 2013,- The provision of this section shall apply to –

(c), any r solution of the Board of Directors of a company or agreement executed by a company, relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment, of a managing director;

AND WHEREAS As per rule 24 of the Companies (Management and Administration) Rules, 2014 – Resolutions and Agreements to be Filed;

A copy of every resolution or any agreement required to be filed, together with the explanatory statement under section 102, if any, shall be filed with the Registrar in Form No. MGT.14 along with the fee.

As per Section 117(2), If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees and every officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the fir t during which such failure continues, subject to a maximum of fifty thousand pees

4. ORDER:

a. The applicant company and its officers, who have defaulted the provisions of section 117(3)(c) of the Act for non-filling Form MGT-14 within stipulated time as prescribe in Act and are liable for penalties under section 117(2) of the Act ;

b. In exercise of the powers conferred on the undersigned vide Notification dated 24t¹1 March, 2015 and having considered the facts and circumstances of the case besides submissions made by the Noticee(s) and after taking into account the factors mentioned herein above, I do hereby impose the penalty on the officers in default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, 2014 and the proviso of the said Rule and Rule 3(13) of Companies (Adjudication Of Penalties) Rules, 2014 r/w General Circular No. 1/2020 dated 02.03.2020; as per table below for violation of section 117(1) of the Act:-

c. Furthermore, as seen from the financial statements of the company and the criteria prescribed, the company falls under the definition of small company as per the provision of section 2(85) of the Companies Act, 2013. Therefore, the provision of imposing lesser penalty as per the provision of section 446B of the Companies Act 2013 shall be applicable in this case.

d. Criteria of Small Company:- As per the Section 2(85) of the Act, and for the purposes of sub-clause (i) and sub-clause (ii) of clause (85) of section 2 of the Act, paid up capital and turnover of the small company shall not exceed rupees Two crore and rupees Twenty crore respectively.

e. Facts about Small Company:- As per the Form MGT-7A vide SRN F56946288 dated 12.01.2023 for the FY year ended  31.03.2022, the paid-up share capital of the Company is 1,385,035 turnover of the Company is 141,229,489. Hence, the said company falls under the definition of small company as per the provision of section 2(85) of the Companies Act, 2013.

f. I am of the opinion that penalty so imposed is commensurate with the aforesaid failure committed by the notice(s).

g. The Noticee(s)/applicant(s) shall pay the penalty so imposed through Ministry of Corporate Affairs portal only as p r rule 3(14) of Companies (Adjudication Of Penalties) Rules, 2014.

h. Appeal against this order may be filed under section 454(5) of the Act, in writing with the Regional Director (Western Region), Ministry of Corporate Affairs 100, Everest, 5th Floor, Netaji Subhash Road, Marine Drive, Mumbai-400002, 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 of the Act read with Companies (Adjudication of Penalties) Rules, 2014 as emended by Companies (Adjudication of Penalties) Amendment Rules, 2019.

i. Your attention is also invited to section 454(8)(ii) of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order in terms of the provisions of section 454(8)(i) of the Act.

j. In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to Kan Biosys Private Limited and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Western Region), and Ministry of Corporate Affairs at New Delhi.

(Mangesh Jadhav,
Adjudicating Officer
Registrar of Companies
Maharashtra, Pune