Introduction: The Ministry of Corporate Affairs (MCA) has issued an adjudication order against EUEB India Private Limited for violating Rule 149 of the Companies Act, 2013. This article provides an in-depth analysis of the order and its implications on the company.
Detailed Analysis: EUEB India Pvt Ltd, registered under the Companies Act, faced scrutiny for non-compliance with Section 149, which mandates a minimum number of directors on the board. Despite notices and opportunities for response, the company and its directors failed to provide satisfactory explanations, leading to the imposition of penalties.
Key Points:
- Violation of Rule 149: The company failed to maintain the minimum required number of directors on its board, as stipulated by Section 149 of the Companies Act, 2013.
- Inquiry and Notices: An inquiry revealed the company’s non-compliance with the directorship requirements. Subsequent notices for adjudication were issued, but no response was received from the company or its directors.
- Penalty Imposition: Considering the severity of the violation, MCA imposed penalties on the company and its officers in default, as prescribed under Section 172 of the Companies Act, 2013.
Conclusion: The penalty order underscores the importance of adherence to statutory provisions regarding directorship in companies. Non-compliance not only attracts financial penalties but also reflects poorly on corporate governance standards.
In conclusion, EUEB India Pvt Ltd’s case serves as a reminder for companies to ensure compliance with regulatory requirements to maintain transparency and accountability in their operations. Adhering to the provisions of the Companies Act is crucial for upholding the integrity of the corporate sector and protecting the interests of stakeholders.
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 — 2310323/2310443
Order No. 07/01/ADJ-149/EUEB INDIA /6705 to 6707 DATED: 30/01/2024.
ORDER FOR VIOLATION OF RULE 149 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES 2014 & COMPANIES (AMENDMENT) ACT, 2020
IN THE MATTER OF EUEB INDIA PRIVATE LIMITED
Appointment of Adjudicating Officer: –
1. The Ministry of Corporate Affairs vide its gazette Notification No. A-42011/112/2014Ad.II, dated 24.03.2015, has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 under the provisions of this Act.
Company: –
2. Whereas the Company Eueb India Private Limited has been registered under the provisions of Companies Act on 03/10/2019 with Roc, Kanpur, and Having Registered Office at A-402, Sector 47, NOIDA Gautam Buddha Nagar UP 201303/, The authorized capital of the company is Rs. 10,00,000/,
3. The Directorate vide its letter no. Inq./Guard/2021/10971 dated 17.12.2021 and Ministry’s letter no. F.No. CL-H-08/131/2021-DGCoA-MCA dated 13.12.2021 directed to conduct the inquiry u/s. 206(4) of the Companies Act, 2013, against the said company. The Inquiry Officer (I0) has observed from the MCA21 Registry that one of the Directors of the Company, namely Mr. Himanshu Kapoor, has filed DIR-11 vide SRN T33787359 and has resigned from the Company on 29.07.2021. Since there are only 2 directors in the Company (Mr. Himanshu Kapoor and Mr. Wang Ke), his resignation (if accepted) will result in unlawful composition of the Board of Directors will fall below the minimum requirement as stipulated in Section 149(1) of the Companies Act, 2013. The Inquiry officer has sought clarification/information for said violation. The reply furnished by one of the Director Mr. Hianshu Kapoor not found satisfactory. Accordingly, the Inquiry officer has reported the said violation in the Inquiry Report dated 31.03.2022. The Directorate vide its letter No.Inquiry/206(4)/Eueb India /RD(NR)/2022/3144 dated 07.06.2022 has accorded the penal action for non-compliance of section 149 read with section 172 of the Companies Act, 2013 Thus, it is evident that the company and its Directors have failed to comply with the provisions of section 149 of the Companies Act, 2013, in maintaining the minimum requirement of the directors in the board of the company, thereby attracting the penal provisions mentioned under Section 172 of the Act.
4. Accordingly, a Show Cause Notice No. 07/01/Adjudication-Rule12-A/ EUEB INDIA /5623-5625 dated 17.11.2023 was issued to its officer in default under section 149 of the Companies Act, 2013 by this office. This office has not received the said letter undelivered also.
5. The Company and its officers in default have failed to furnish any reply to the said Show Cause Notice, hence no hearing was fixed in this matter. Further, neither the defaulting director nor any representative of the director has either furnished his reply or has appeared before the undersigned which has further strengthened the apprehension that the Director of the company has failed to comply with the provisions of Section 149 of the Companies Act, 2013 thereby attracting the penal provisions mentioned under Section 172 of the Act.
Provisions of the Act:-
6. Section 149(1) of the Companies Act, 2013 provides that: –
“Every company shall have a Board of Directors consisting of individuals as directors and shall have-
(c) A minimum number of three directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company, and
(d) A maximum of fifteen directors:
Provided that a company may appoint more than fifteen directors after passing a special resolution:
Provided further that such class or classes of companies as may be prescribed shall have at least one-woman director.
Section 149 read with 172 of the Companies Act, 2013 provides that —
“If a company contravenes any of the provisions of this Chapter and for which no specific 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 Iakh rupees in case of an officer who is in default.
7. As per provisions of section 466B of the Companies Act, 2013 provides that “Notwithstanding anything contained in this act, if penalty is payable for non-compliance of any of the provisions of this act by a One Person Company, Small Company, start-up company or producer company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other persons, as the case maybe be, shall be liable to a penalty which shall not be more than one half of the penalty specified in such provisions subject to a maximum of two Iakh rupees in case of a company and one Iakh rupees in case of an officer who is in default or any other person, as the case may be”.
8. Order:
Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose penalty as prescribed under section 173(4) of the Act. The default of the penalty imposed on the company (Being Small Company as per section 2(85) of the Act) and officers in default are shown in the table below:
| Nature of default Section | Relevant section under the Co. Act. 2013 (penalty provision) | Name of persons on whom penalty imposed | Initial Penalty as per Section 149 , read with 172 of C.A. 2013 (Rs.) |
No. of days of default | Per day penalty for default (Rs.) |
Total default amount (Rs.) | Maxi-mum Penalty (Rs.) | Final Penalty Imposed as per Sec. 466B (Rs.) |
| Failure to comply the provision of sec. 149(1)(a) of the C.A, 2013 since 29.7.21
|
149 read with 172 of C.A. 2013
|
Company | 50000 | 859 | 500 | 429500 +50000 = 479500 | 300000 | 150000 |
| Wang Ke | 50000 | 859 | 500 | 429500 +50000 =4 79500 | 100000 | 50000 |
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the notice(s).
9. 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 adjudication order alongwith payment challans.
10. 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].
11. 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/o Registrar of Companies, U.P. maybe informed alongwith the penalty imposed & the payments made.
(Seems Lath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur
