Company not maintained Minimum Number of Directors: MCA Imposes Penalty

The Ministry of Corporate Affairs (MCA) has issued a penalty against Purplehues Sunny Communication Private Limited for failing to maintain the minimum number of directors required under Section 149 of the Companies Act, 2013. This article delves into the details of the violation, the adjudication order, and the penalties imposed on the company and its director.

Detailed Analysis:

1. Appointment of Adjudicating Officer: The MCA, through a gazette notification, appointed the Registrar of Companies, Uttarakhand, as the Adjudicating Officer, exercising powers under Section 454 of the Companies Act, 2013, and the Companies (Adjudication of Penalties) Rules, 2014.

2. Company Information: Purplehues Sunny Communication Private Limited, registered since August 12, 1957, is under scrutiny for non-compliance. The inquiry reveals financial details, including a paid-up capital of Rs. 1,00,000 and undisclosed turnover.

3. Violation of Section 149: Following an inquiry under Section 206(4) of the Companies Act, 2013, it was found that the company failed to maintain the minimum number of directors as mandated by Section 149. A notice was issued, and the director, Shri Bhupender, submitted a written statement in response.

4. Sections Violated:

• Section 149(1): Mandates a minimum number of directors based on the type of company.
• Section 149(3): Requires at least one director to stay in India for a specified period.
• Section 149(4): Imposes the appointment of independent directors for listed companies.

5. Penalties Imposed: As no specific penalty is prescribed under Section 149, the general penalty under Section 172 is levied. The company and its director, Shri Bhupender, face penalties of Rs. 25,000 each.

6. Calculation of Penalties: Penalties are calculated based on the provisions of Section 172 and Section 446B of the Companies Act, 2013. Being a Small Company, penalties are set at one half of the specified amount.

7. Rectification and Payment: The company and its director are directed to rectify the default promptly. Penalties must be paid within 90 days through the MCA website. Failure to comply may lead to further consequences.

8. Appeal Process: Affected parties have the option to file an appeal within sixty days from the date of receipt of the order with the Regional Director (NR), Ministry of Corporate Affairs. The appeal must be accompanied by a certified copy of the order.

9. Non-Payment Consequences: Section 454(8) of the Companies Act, 2013, warns of consequences if penalties are not paid within the prescribed time limit.

Conclusion: The penalization of Purplehues Sunny Communication Private Limited by the MCA serves as a reminder of the critical importance of complying with statutory requirements. The case highlights the enforcement of corporate governance standards and the consequences of non-compliance. Companies are urged to adhere to the provisions of the Companies Act, 2013, to avoid penalties and legal repercussions. The adjudication order underscores the regulatory authority’s commitment to maintaining transparency and accountability in the corporate sector.

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Government of India
Ministry of Corporate Affairs
Office of Registrar of Companies
Cum-Official Liquidator, Uttarakhand
Attached to High Court, Nainital
Office at Mezzanine Floor, 78, Raipur Road
Shri Radha Place, Dehradun – 248001 (U.K.)
Phone: 0135 – 2745012/2745013
Email: [email protected]

Order No. ROC/UK/Purplehues Sunny Communication Private Limited/Penalty Order/2023/1161 to 1163 Dated:- 05.12.2023

ORDER

Adjudication Order for Penalty under Section 454(3) of the Companies Act, 2013 read with Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 for Violation of Section 149 of the Companies Act, 2013 in the Matter of Purplehues Sunny Communication Private Limited (CIN: U51909UR2020PTC011835)

1. Appointment of Adjudicating Officer:–

The Ministry of Corporate Affairs vide its gazette notification no A-42011/112/2014-Ad.11 dated 24.03.2015, has appointed Registrar of Companies, Uttarakhand as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 {herein after referred as Act} read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Company:–

Whereas the Company Purplehues Sunny Communication Private Limited [herein after known as Company] is a registered company with this office under the provisions of Companies Act, 2013/1956 (or previous Acts in force, as applicable) on 12/08/1957, having its registered office situated at C/o Rohit Durg Avas Vikas, Udham Singh Nagar, Rudrapur — 248197, Uttarakhand as per MCA website. The financial & other details of the subject company for immediately preceding Financial Year as available on MCA-21 portal is stated as under –

3. Facts of the Case: –

As per direction of the MCA an inquiry under section 206(4) of the Companies Act,2013 was conducted. The Registrar of Companies in its inquiry report had pointed out several violations of the Companies Act,2013 including violations of the section 149.The Registrar of Companies had pointed out that the Company has not maintained minimum number of Directors required as per section 149 of the act.

After receipt of sanction for taking penal action against the company notice was issued to the company dated 19/10/2023. In response Shri Bhupender, director of the company has submitted written submission dated 7/11/2023

Thus it is evident that the Company and its Directors including Key Managerial Personnel have failed to comply with the provision of section 149 pf the Companies Act,2013 thereby attracting the penal provisions mentioned under section 172 of the Act. The Company and its Director including key Managerial personnel are officers in default, as per section 2(60), of the Companies Act,2013 and are thus Liable for penal provision.

The Relevant Provisions of Sections 149 are reproduced as under:

Section 149(1)- Every company shall have a Board of Directors consisting of individuals as directors and shall have–(a) 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

(b) 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(3)- Every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial year.

Section 149(4)- Every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies.

Section 149(12)- Notwithstanding anything contained in this Act, —

(i) an independent director;

(ii) a non-executive director not being promoter or key managerial personnel, shall be held liable, only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently.

Section 172-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 punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.

4. ADJUDICATION OF PENALTY: –

In the present case it is evident that the company has made violation of section 149 of the Companies Act, 2013. However, since no penalty has been prescribed under section 149 of the Act, general penalty u/s 172 of the Act shall be Levied in this case.

However, since penalty prescribed under section 172 of the Companies Act, 2013 is an amount of Rs. 50,000/-so it is levied on the company that is M/s. Purplehues Sunny Communication Private Limited and Officers in default as mentioned below. Further since the company falls in the definition of the Small Company as per section 2 of the Companies Act,2013 the penalty imposed thus is calculated as per section 446B of the Companies Act,2013 as one half of the penalty specified in the provision.

a) The company and its directors are hereby directed to rectify the default immediately on the date of receipt of copy of this order.

b) The notices shall pay the said amount of penalty as mentioned in column C above through online mode by using the website mca.gov.in (Misc. head) in favor of Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days of receipt of this order, and intimate this office with proof of penalty paid.

c) Appeal against this order may be filed with the Regional Director (NR), Ministry of Corporate Affairs, B-2 Wing, 2nd Floor, Paryanvaran Bhawan, CGO Complex, Lodhi road, New Delhi —110003 within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of the order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].

d) Your attention is also invited to section 454(8) of the Act in the event of non-payment of penalty within the prescribed time limit

e) 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 Company and its officer in default and also to Office of the Regional Director (Northern Region), Ministry of Corporate Affairs at New Delhi.

(Imran Ahmad Siddiqui)
ROC-Cum-O.L. & Adjudicating Officer
Uttarakhand, Dehradun.