Introduction : The Registrar of Companies (ROC) in Madhya Pradesh has issued an adjudication order against M/s. Pioneer Pollution Control & Air Systems Private Limited for not adhering to Section 173(3) of the Companies Act, 2013. This section mandates sending written notices for board meetings to every director through hand delivery, post, or electronic means. This case sheds light on the legal obligations of companies regarding board meeting notifications and the consequences of non-compliance.
Background and Proceedings: The Ministry of Corporate Affairs appointed an adjudicating officer to address the non-compliance under the Companies Act, 2013, and its penalties. Despite multiple opportunities to present evidence of compliance, Pioneer Pollution Control & Air Systems Pvt. Ltd. failed to provide proof of service notices as required, leading to the adjudication process.
Company Profile: Pioneer Pollution Control & Air Systems Pvt. Ltd., with a significant turnover and no affiliations as a holding or subsidiary company, underscores the applicability of these regulations to a wide range of corporate entities, regardless of size or industry.
Legal Framework and Penalties: The adjudication centered around Section 173(3) of the Act, which is crucial for ensuring transparency and proper governance within a company. The inability to adhere to this requirement led to the imposition of penalties on both the company and its individual officers, highlighting the personal accountability of directors in corporate governance.
Implications of the Order: The order not only imposes financial penalties but also stresses the potential for further legal consequences, including imprisonment for non-compliance within a specified period. This emphasizes the seriousness with which the Ministry of Corporate Affairs views compliance with procedural requirements for corporate governance.
Conclusion : The adjudication order against M/s. Pioneer Pollution Control & Air Systems Private Limited serves as a critical reminder of the importance of complying with the Companies Act, 2013. It illustrates the consequences of neglecting corporate governance procedures, especially concerning board meetings. Companies must ensure strict adherence to legal requirements to avoid penalties and uphold the principles of good corporate governance. This case highlights the need for diligent compliance practices to mitigate legal risks and maintain corporate integrity.
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GOVERNMENT OF INDIA
MINSTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES, MADHYA PRADESH
Order No. ROC-G/Adj. Pen. /u/ s. 173(3)/ Pioneer Pollution/3654 Dated : 14/02/2024
In the matter of adjudication proceeding under sub-section (3) of Section 173 of
the Companies Act, 2013.
And
In the matter of
M/s. Pioneer Pollution Control 85 Air Systems Private Limited
(CIN-U4100MP1991PTC006282)
Date of hearing 12th February, 2024
1. Appointment of adjudicating officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 appointed 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 adjudicating penalties under the provisions of this Act.
2. Company:
Whereas company M/s. Pioneer Pollution Control 86 Air Systems Private Limited (CIN- U41000MP1991PTC006282) [herein after known as company] is a registered company with this office under the provisions of Companies Act, 2013 having its registered office situated at Plot No. 76A 8599, New Industrial Area-II, Mandideep, Raisen 462046, M.P. as per the MCA website.
| Sl. No. |
Particulars | Details |
| 1. | Paid-up capital (F.Y. 2021-22) | 45,20,000 |
| 2. | Turnover (F.Y. 2021-22) | |
|
a. Revenue from operation |
8,19,86,742 | |
|
b. Other income |
20,52,027 | |
| 3. | Holding company | No |
| 4. | Subsidiary company | No |
| 5. | Whether company registered under Section 8 | No |
| 6. | Whether company registered under any other Special Act | No |
3. Subsequently, this office had issued show cause notice U/ s. 173(3) to the company and its officers in default vide No. ROC-G/Adj.Pen./u/s. 173(3)/Pioneer Pollution/2841 to 2845 dated 13.12.2023 for not sending the notice in writing to every director at his address and such notice shall be sent by hand delivery or by post or by electronic means.
4. Thereafter, “Notices of Inquiry” vide No. ROC-G/Adj. Pen./u/s. 173(3)/Pioneer Pollution/3193 to 3197 dated 10.01.2024 were issued to the company and its officers in default. As per [Rule 3(3), Companies (Adjudication Of Penalties) Rules, 2014 and the date of hearing was fixed on 17.01.2024 at 11.00 A.M. in the office of Registrar of Companies, Madhya Pradesh, Sanjay Complex, A-Block, 3rd Floor, Jayendraganj, Gwalior.
5. Thereafter, this office has received a letter dated 16.01.2024 from the company regarding application for grant of adjournment-cum-application for fixing a future date of hearing. On the basis of request made by the company this office has granted the time and the date of hearing was fixed on 01.02.2024 at 11.00 A.M. On the date of 24.01.2024 this office has again received e-mail dated 24.01.2024 and had requested to fix a fresh date of hearing anytime after 11.02.2024. Hence, office has again fixed the date of hearing on 12.02.2024 at 11.30 A.M.
6. On the date of hearing i.e. 12.02.2024 Sh. Sanjeev Bansal, director and advocate Sh. Swapnil Agrawal on behalf of company have attended the hearing.
7. During the hearing the company was unable to submit the proof of service notice as provided in Section 173(3) of the companies act, 2013 and hence, violated the provision of Companies Act, 2013.
8. Inspite of giving full opportunity of hearing heard the company was failed to submit the relevant documents before the adjudicating authority.
9. Order:
Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that the company and its officers in default are liable for penalty as prescribed under Section 173(4) of the Act for default is made in complying with the requirements of Section 173(3) of the Act.
Accordingly, I am inclined to impose a penalty as prescribed under sub-Section 4 of Section 173 of the Companies Act, 2013. The default of the penalty imposed on the company and officers in default are shown in the table below:
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the notice and penalty so imposed upon the officers-in-default shall be paid from their personal sources/income. It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.
| Nature of default |
Relevant section under the Companies Act, 2013 |
Name of persons on whom penalty is imposed | Total default amount (Rs.) | Final penalty imposed. (Rs.) |
| Meeting of board | S. 173(3) | Sanjeev Bansal | 25,000/- | 25,000/- |
| Manoj Bansal | 25,000/- | 25,000/- | ||
| Rajveer Arya Bansal | 25,000/- | 25,000/- | ||
| Madhvi Bansal | 25,000/- | 25,000/- |
10. The penalty amount shall be remitted by the company through MCA21 portal within 60 days from the date of order. The company needs to file INC-28 as per the provisions of the act, attaching the copy of adjudication order along with payment challans.
11. Any person aggrieved by the order of adjudicating authority under Section (3) of Section 454 may prefer an appeal to the Regional Director having jurisdiction in the matter.
12. Every appeal under sub-section (5) of Section 454 shall be filed within 60 days from the date on which the copy or order made by the adjudicating authority is received by the aggrieved person and shall be in such form, manner and be accompanied by such fee as may be prescribed.
13. As per Section 454(8) (i) where a company fails to comply with the order made under sub-section (3) or sub-section (7) as the case may be within a period of 90 days from the date of receipt of the copy of the order, the company shall be punishable with fine which shall not be less than twenty-five thousand, but which may extend to five lakh rupees.
14. Where an officer of a company or any other person who is in default fails to comply with the order made under sub-section (3) or sub-section (7) as the case may be within a period of 90 days from the date of receipt of the order, such officer shall be punishable with imprisonment which may ‘extend to six months or with the fine which shall not be less than twenty five thousands rupees but which may extend to one lakh or with both.
15. This order is without prejudice to the rights available to this office to initiate separate actions including but not limited to the penal actions for contraventions of related, incidental and/ or continuing offences/contraventions.
16. In terms of the provisions of sub-rule 3 of the Companies (Adjudication of Penalties) Rules, 2014 copy of the order is being sent to Sh. Sanjeev Bansal, director, 64/65, Seth Phoolchand Nagar, near Arti Udhyaan, Ward No. 1, Mandideep, Raisen 462046, M.P., Sh. Manoj Bansal, director, Tansen Road, Opp. MPSEB Officer, Gird, Gwalior 474002, M.P., Sh. Rajveer Arya Bansal, director, 40, Near Chamda Mill, GIRA, Gwalior 474003, M.P., Ms. Madhvi Bansal, director, 64/65, Seth Phoolchang Nagar, Near Arti Udhyaan, Ward No.1, Mandideep, Raisen 462046, M.P., RD, NWR, Ahmedabad nd will also upload on MCA website.
The adjudication notice stand disposed off with this order.
(Mukesh Kumar Soni, ICLS)
Registrar of Companies,
Madhya Pradesh, Gwalior.
Signed on this day of 12th day of February, 2024.
Place: Gwalior, Madhya Pradesh.
Copy to:
M/ s. Pioneer Pollution Control 8; Air Systems Private Limited, Plot No. 76A, 8; 99, New Industrial Area-II, Mandideep, Tehsil Goharganj, Raisen 462046, M.P. for information.
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