Companies Act Penalty Reduced for MGT-6 Default

This document outlines an appeal filed under Section 454(5) of the Companies Act, 2013, by G2.Com India Private Limited and its six directors. The appeal was lodged against an adjudication order from the Registrar of Companies (ROC), Karnataka, dated May 24, 2024. The ROC had imposed penalties due to the company’s failure to file Form MGT-6 within the prescribed timeframe, which constituted a violation of Section 89 of the Companies Act, 2013. The company had admitted to the violation, stating that the delay was inadvertent. The initial penalty levied by the ROC was ₹5,00,000 on the company and ₹2,00,000 on each of the six directors, totaling ₹17,00,000.

During the hearing on October 8, 2024, the appellants’ representative explained that although Form MGT-4 (from shareholder Mr. Ayan Barua, whose share’s beneficial interest is held by Siftery Inc.) and MGT-5 (from the company) were submitted within 30 days, the company failed to file MGT-6 due to a lack of guidance. The appellants emphasized that there was no intent to violate the provision or deceive anyone, and the non-compliance did not result in any unlawful gain or loss. They requested a reduction in the penalty, arguing that the imposed amount was excessive and would cause financial injury.

Considering the submissions, the Regional Director reduced the penalty. The revised penalty was set at ₹3,00,000 for the company and ₹1,00,000 for each of the six directors, leading to a total aggregated penalty of ₹9,00,000. The appellants subsequently paid these modified penalties on October 25, 2024. With the compliance confirmed, the appeal was disposed of by the Regional Director, South East Region, Hyderabad, on May 30, 2025. Copies of the order were forwarded to the Registrar of Companies, Karnataka, and the Joint Secretary, E-Governance Cell, Ministry of Corporate Affairs, New Delhi.

F.No:9/33/ADJ/SEC.89 of CA, of 2013/KARNATAKA/RD(SER)/2024/1123
BEFORE THE REGIONAL DIRECTOR, SOUTH EAST REGION
MINISTRY OF CORPORATE AFFAIRS, HYDERABAD
IN THE MATTER OF COMPANIES ACT, 2013

IN THE MATTER OF G2.COM INDIA PRIVATE LIMITED

1. M/s. G2.Com India Private Limited

2. Mr. Ayan Barua, Director

3. Mr. Vamshi Krishna Mokshagundam, Director

4. Mr. Praveen Nune, Director

5. Mr. Balachandar Ganesh, Director

6. Mr. Timothy William Handorf, Director

7. Mr. Balagangadharan Karthik, Director

….. Appellants

Date of hearing: 08.10.2024
Present: Mr. Biswajit Ghosh, PCS, on behalf of the Appellants

ORDER

This is an appeal filed under section 454(5) of the Companies Act, 2013 (hereafter referred as the Act) by the above appellants in e-form ADJ vide SRN F96920343 dated 22.07.2024 against the adjudication order passed by the Registrar of Companies, Karnataka in F.No.ROC(B)/Adj.Ord.454-89/G2.Com/Co.No.085934/2024/ 1000 – 1006 dated 24.05.2024 under section 454 of the Act, for default in compliance with the requirements of Section 89 of the Companies Act, 2013.

2. The Registrar of Companies in his order of adjudication has stated that the company has filed an application on 15.11.2023 to adjudicate the violation of the provisions of section 89 of the Act, stating that due to inadvertent failed to file Form MGT-6 within the prescribed time limit which resulted in contravention of the provisions of section 89(6) of the Act. The hearing was held before the Registrar of Companies on 06.02.2024 and after hearing the authorized representative had levied a penalty of Rs.5.00 Lakhs on the Company and Rs.2,00,000/- each on 6 directors i.e., Mr. Ayan Barua, Mr. Vamshi Krishna Mokshagundam, Mr. Praveen Nune, Mr. Balachandar Ganesh, Mr. Timothy William Handorf and Mr. Balagangadharan Karthik (total aggregating to Rs.17,00,000/-).

3.1 Aggrieved by the adjudication order, the appellants had filed the above appeal. A report from the ROC called, and he has filed the same vide his report dated 29.08.2024. An opportunity of being heard was given to the Appellants on 08.10.2024.

3.2 The authorized representative Mr. Biswajit Ghosh, Practicing Company Secretary, appeared on behalf of the appellants before the then Regional Director and reiterated the submissions made in the appeal and also stated that one Mr. Ayan is a shareholder of the company and holds 1 share of Rs.10/- as a registered shareholder, wherein the beneficial interest in the said share is held by Siftery Inc (formerly known as G2.Com Inc). Though Mr. Ayan submitted the Form MGT-4 within the period of 30 days and the company had also filed the MGT-5 to the appellant company within the period of 30 days, unfortunately due to a lack of guidance, the company had not filed MGT-6 which resulted in violation of the provisions of the Section 89 of the Act.

3.3 The Appellants has further stated that it was not their intention to violate the provision and it was only due to a lack of guidance and expertise and there was no any intention to deceive anyone and the non-compliance did not result in any unlawful gain or loss to any one including the appellant company and that the penalty imposed by the ROC was heavy and will inflict irreparable financial injury to the appellants and that to prove its bona fide, the appellants had filed application before the ROC on 15.11.2023. With the above submission the appellants have requested for reducing the penalty as permitted under section 454(7) of the said act.

4. In view of the above, taking into consideration the facts of the appeal and the submissions made by the authorized representative, the then Regional Director has reduced the penalty imposed by the Registrar of Companies to Rs. 3,00,000/- for the Company and Rs.1,00,000/- each for 6 directors i.e., Mr. Ayan Barua, Mr. Vamshi Krishna Mokshagundam, Mr. Praveen Nune, Mr. Balachandar Ganesh, Mr. Timothy William Handorf and Mr. Balagangadharan Karthik (total aggregating to Rs.9,00,000/-). 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.

5. Accordingly, the appellants have paid the penalty as under

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 the 30th day of May 2025.

Richa Kukreja
Regional Director, SER (I/C)
Hyderabad