Delay in Appointment of CS & CFO: MCA imposes ₹45 Lakh Penalty

On September 11, 2024, the Registrar of Companies-cum-Official Liquidator in Himachal Pradesh issued an order under Section 454 of the Companies Act, 2013, concerning Abhitech Energycon Limited. The company, registered under CIN U74210HP1997PLC001112, failed to comply with Section 203 of the Companies Act for a significant period. This section mandates that companies meeting certain criteria must appoint key managerial personnel, including a Company Secretary (CS) and Chief Financial Officer (CFO). Abhitech Energycon defaulted on this requirement from June 19, 2017, to December 12, 2022, a total of 1,502 days.

The adjudicating officer, appointed by the Ministry of Corporate Affairs, has imposed penalties on both the company and its directors. For the period of default, the company faces a maximum fine of Rs. 5 lakh, while each director is also liable for a similar amount. In total MCA imposes Penalty of Rs. 45 Lakh. The total penalties are commensurate with the period of non-compliance and are to be paid through the Ministry’s portal. Non-compliance with this order could result in further legal consequences, including fines or imprisonment for the directors. The decision reflects strict adherence to the regulatory framework designed to ensure proper corporate governance.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES-
CUM- OFFICIAL LIQUIDATOR
HIMACHAL PRADESH,
CORPORATE BHAWAN,
PLOT NO.4-B, SECTOR 27B, CHANDIGARH
PHONE NO.172-2639415, 2639416

Order No. ROC-HP/2024-25/Sec.203/001112/293 to 302 Dated: 11/09/2024

Order under Section_454 for Violation of Section 203 of the Companies Act,2013 read with Companies (Adjudication of Penalties) Rules, 2014

IN THE MATTER OF M/S ABHITECH ENERGYCON LIMITED

(CIN: U74210HP1997PLC001112)

1. Appointment of Adjudicating Officer

The Ministry of Corporate Affairs vide its gazette notification no S0.831(E) dated 24.3.2015, has appointed the undersigned as Adjudicating Officer (AO) 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 adjudging penalties under the provisions of this Act.

2. Company

Abhitech Energycon Limited (herein after referred to as “the company”) is a company registered with this office under the Provisions of the Companies Act, 2013 (or previous Acts in force, as applicable) having its registered office situated at Plot No. 9, Industrial Area, Lodhimajra, Tehsil Baddi, Distt. Solari (HP)-174101. The financial and other details of the subject company as on 31.03.2023 (latest financials filed) are as under :-

3. RELEVANT PROVISIONS OF THE COMPANIES ACT, 2013 WHICH ARE APPLICABLE IN THE PRESENT CASE

Provision of Section 203 of the Companies Act, 2013 and Rule 8 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is as under:

“As per Section 203(1) of the Companies Act, 2013, Every company belonging to such class or classes of companies as maybe prescribed shall have the following whole time key managerial personnel:-

(i) Director, or Chief Executive Officer or manager and in their absence, a whole-time director:

(ii) Company Secretary; and

(iii) Chief Financial Officer.

Further as per Rule 8 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company and every other public company having a paid up share capital of ten crore rupees or more shall have whole-time key managerial personnel”.

Provision of Section 203(5) of Companies Act, 2013 is as under:-

“Section 203(5) of the Companies Act, 2013, If any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.”

4. Rule 3(12) of The Companies (Adjudication of Penalties) Rules, 2014 is as under:-

While adjudging quantum of penalty, the adjudicating officer shall have due regard to the following factors, namely.-

a) size of the company

b) nature of business carried on by the company,

c) injury to public interest,

d) nature of the default,’

e) repetition of the default,’

f) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default: and

g) (the amount of loss caused to an investor or group of investors or creditors as a result of the default

Provided that, in no case, the penalty imposed shall be less than the minimum penalty prescribed, if any, under the relevant section of the Act.

5. Rule 3 (13) of The Companies (Adjudication of Penalties) Rules, 2014 read as under:

In case a fixed sum of penalty is provided for default of a provision, the adjudicating officer shall impose that fixed sum, in case of any default therein.

6. FACTS ABOUT THE CASE

The Company and its directors have filed Suo-moto application under Section 454 of the Companies Act, 2013 read with The Companies (Adjudication & Penalties) Rules, 2014 before the Registrar of Companies-cum-Official Liquidator, Himachal Pradesh for adjudication of penalties for non-compliance of Section 203 of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel ) Rules, 2014 for period of 1502 days (02.11.2018 to 13.12.2022).

It is observed form e-Form PAS-3 filed by the Company vide SRN G32282402 on 06.01.2017 that the paid-up capital of the Company crossed the limit of Rs. 10 crores w.e.f. 20.12.2016 and it was required to appoint KMPs ( i.e. Company Secretary & Chief Financial Officer) w.e.f. 19.06.2017. However, the Company has appointed Company Secretary and Chief Financial Officer on 13.12.2022. The Company has defaulted in compliance with Section 203 of the Companies Act, 2013 for a period of 19.06.2017 to 12.12.2022 (i.e. 2002) days.

Thus, it is evident that company has violated the provisions of Section 203 of the Companies Act, 2013 as above and Default has been made good on 13.12.2022 by appointing Company Secretary and Chief Financial Officer. The e-Form DIR-12 was filed by the Company vide SRN F54623749 on 26.12.2022.

6. ADJUDICATION OF PENALTY:

Now, in exercise of the powers conferred on the undersigned vide Notification dated 24t^h March, 2015 and having considered the facts of the case, I hereby impose the penalties for violation of section 203(1) of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel ) Rules, 2014, on the company and its directors under Section 203(5) of the Companies Act, 2013 as under :-

I am of this opinion that penalty is commensurate with the aforesaid failure committed by the addressees and penalty so imposed upon the Officer-in-default shall be paid from their personal sources/income.

7. 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.

8. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi 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].

9. Your attention is also invited to Section 454(8)(i) and 454(8)(ii) of the Companies Act,2013, which state as under:-

(i) Where 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 ninety days from the date of the receipt of the copy of the order, the company shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to five lakh rupees.

(ii) 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 ninety days from the date of the receipt of the copy of the order, such officer shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.

10. In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to the following persons:-

a. M/s Abhitech Energycon Limited, Plot No. 9, Industrial Area, Lodhimajra Tehsil Baddi, Distt. Solan, Himachal Pradesh.

b. Prasad Tulshidas Samant, Plot No. 9, Industrial Area, Lodhimajra Tehsil Baddi, Distt. Solan, Himachal Pradesh.

f. Ganesh Dattatraya Samant, Plot No. 9, Industrial Area, Lodhimajra Tehsil Baddi, Distt. Solan, Himachal Pradesh.

d Mr. Hemant Raghunath Mohite, Plot No. 9, Industrial Area, Lodhimajra Tehsil Baddi, Distt. Solan, Himachal Pradesh.

e Mr. Vijay Chandrakant Kamble, Plot No. 9, Industrial Area, Lodhimajra Tehsil Baddi, Distt. Solan, Himachal Pradesh.

f . Mr. Subodh Hareshwar Raut, Plot No. 9, Industrial Area, Lodhimajra Tehsil Baddi, Distt. Solan, Himachal Pradesh.

g. Swatantra Kumar, Plot No. 9, Industrial Area, Lodhimajra Tehsil Baddi, Distt. Solan, Himachal Pradesh.

h. Vivek Vijay Pandit, Plot No. 9, Industrial Area, Lodhimajra Tehsil Baddi, Distt. Satan, Himachal Pradesh.

i. Siddharth Pradip Rao, Plot No. 9, Industrial Area, Lodhimajra Tehsil Baddi, Distt. Solan, Himachal Pradesh.

j. Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi and this order will also be uploaded on website of Ministry of Corporate Affairs.

(Kamna Sharma)
Registrar of Companies-cum-Official Liquidator & Adjudication Officer
Himachal Pradesh