Introduction: The Registrar of Companies, Karnataka, has issued an adjudication order dated 23.11.2023, penalizing Mukka Proteins Limited for non-compliance with Section 135(1) of the Companies Act, 2013. This article provides a detailed analysis of the order, the violations committed by the company, and the penalties imposed.
Detailed Analysis: Mukka Proteins Limited, a public limited company, faced penalties for its failure to constitute a Corporate Social Responsibility (CSR) Committee in accordance with Section 135(1) of the Companies Act, 2013. The violation occurred due to a delay in appointing independent directors after the company’s conversion to a public limited entity on 02.12.2019.
The article delves into the specific provisions of Section 135(1) of the Act, highlighting the mandatory requirements for companies with a net worth of rupees five hundred crores or more. The analysis covers the company’s breach, which resulted in penalties under Section 450 of the Act.
The adjudication process, initiated by the company’s application, involved a physical hearing on 26.09.2023, during which Mr. Chethan Nayak K, a practicing company secretary, represented Mukka Proteins Limited. The order specifies penalties for the company and its officers, considering the duration of the default and the provisions of Section 446B.
The article breaks down the penalties imposed on the company and key personnel, including Jessica Juliana Mendonca, Kalandan Abdul Razak, Kalandan Mohammed Haris, Kalandan Mohammed Arif, Umaiyya Banu, and Kalandan Mohammed Althaf. It provides a comprehensive understanding of the calculations, maximum penalties, and the final amounts imposed by the Adjudicating Officer.
Conclusion: In conclusion, the Registrar of Companies, Karnataka, through Adjudicating Officer Sanjay Sood, has imposed penalties on Mukka Proteins Limited and its officers for the violation of Section 135(1) of the Companies Act, 2013. The company and its key personnel are directed to pay the specified penalty amounts within 90 days. The article emphasizes the significance of compliance and highlights the consequences of non-compliance as per the Companies Act, 2013. It also alerts the concerned parties to the possibility of further penal actions in case of non-compliance with the order. Any appeals against this order are to be filed within 60 days with the Regional Director (South East Region), Hyderabad, as outlined in Form ADJ.
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Registrar of Companies, Karnataka
Kendriya Sadan, 2nd Floor, ‘E’- Wing,
Koramangala, Bengaluru – 560 034
Phone : 080-25537449/25633105
E-mail ID : roc.bangalore@mca.gov.in
File No. ROC(B)/Adj.Order 454-135/Mukka Proteins Co.No.055771/2023
Date: 23.11.2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITIES) RULES , 2014 FOR VIOLATION OF PROVISIONS OF SECTION 135(1) OF THE COMPANIES ACT,2013 READ WITH RULES (AS AMENDED FROM TIME TO TIME) THERIN BY MUKA PROTEINS LIMITED
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Adil dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter referred to as Act) read with Companies (Adjudication of Penalties) Rules. 2014 for adjudging penalties under the provisions of Companies Act. 2013.
2. The company, Mukka Proteins Limited (hereinafter referred to as Company), having CIN UO5OOKA2010PLC055771 was incorporated on 04.11.2010 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is situated at Mukka Corporate House, Door No. 18-2-16/4, First Cross, NG Road. Attavara. Martgaluru, Dakshina Kannada, Karnataka 575001.
3. The company has filed an adjudication application on 07.08.2023 for violation of section 135(1) of the Act It is seen that the company had converted from private limited company to a public limited company with effect from 02.12.2019. As a result of such a conversion, the provisions of section 149(4) of the Act were applicable to the company as its turnover and outstanding loans, debentures and deposits exceeded the prescribed limits and it was required to appoint independent directors from 02 122019, but the company had appointed them only on 1501.2022 Thereafter, the company has reconstituted the CSR Committee with an independent director with effect from 17.01.2022. Therefore, the company has violated the provisions of section 135(1) of the Act by not constituting the CSR Committee as prescribed and constituted the same only on 17.01.2022 with a delay of 777 days since the company did not have an independent director on its Board for the defaulting duration. Further, it has been submitted that the company had constituted a CSR Committee. though without independent director, and the amount to be spent under CSR as prescribed in section 135 of the Act has been appropriately spent in each financial year.
4. As per section 135(1) of the Act, every company having net worth of rupees five hundred crore or more. or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors. out of which at least one director shall be an independent director.
5. As per section 450 of the Act if a company or any officer of a company or any other person contravenes any of the provisions of the Act. or the rules made thereunder. or any condition, limitation or restriction subject to which any approval sanction, consent confirmation, recognition, direction or exemption in relation to any matter has been accorded given or granted, and for which no penalty or punishment is provided elsewhere in this Act the company and every officer of the company who is in default or such other person shall be liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues subject to a maximum of two lath rupees in case of contravention continues. subject to a maximum of two lath rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.
6. Pursuant to the adjudication application filed by the company, Notice of hearing was sent on 18.09.2023 and physical hearing was held on 26.09.2023 which was attended by Mr. Chethan Nayak K, practising company secretary who made his submissions on the above lines as stated in the application.
7. It is seen that the company is a public limited company, the company does not fall under the definition of a small company as per the provisions of section 2(85) of the Act. Therefore, the provisions of imposing lesser penalty as per the section 4468 of the Act shall not be applicable in this case.
8 Therefore. having considered the facts and circumstances of the case and the submissions made by the company / director / key managerial personnel through their authorised representative, in view of the above said violation under the provisions of section 135(1) of the Act in exercise of the powers vested under Section 454(3) of the Companies Act 2013.1 do hereby impose penalty in the following manner on the company and all the officers in default:
| S. No. |
Particulars | Period of Default |
Calculation of Penalty |
Maximum Penalty (In Rs.) |
Penalty imposed (In Rs.) |
|
| 1. | Company | 777 days (02.12.2019 to 16.012022) | 7,86,000 (10000 + 1000 X 776) | 2,00,000 | 2,00,000 | |
| 2. | Jessica Juliana Mendonca, Company Secretary | 572 days (02.12.2019 to 25.062021) | 5.81,000 (10000 + 1000 )( 571) | 50,000 | 50,000 | |
| 3. | Kalandan Abdul Razak, Director | 329 days (22.02.2021 to 16.01.2022) | 3,38,000 (10000 + 1000 X 328) | 50,000 | 50,000 | |
| 4. | Kalandan Mohammed Haris, Director | 329 days (22.02.2021 to 16.01.2022) | 3,38,000 (10000 + 1000 X 328) | 50.000 | 50,000 | |
| 5. | Kalandan Mohammed Arif, Director |
329 days (22.022021 to 16012022) | 3,38,000 (10000 + 1000 X 328) | 50,000 | 50,000 | |
| 6. | Umaiyya Banu, Director | 329 days (22.02.2021 to 16.012022) | 3,30,000 (10000 + 1000 X 328) | 50.000 | 50,000 | |
| 7. | Kalandan Mohammed Althaf, Director | 329 days (22.02.2021 to 16.01.2022) | 3.30,000 (10000 + 1000 X 328) | 50,000 | 50,000 | |
| 8. | Mehaboobsab Mahrnadgous Chalyal, Company Secretary | 5 days (12.01.2022 to 16.01.2022) | 14,000 (10000 + 1000 X 4) |
50,000 | 14,000 | |
9. The company and its directors / key managerial personnel are hereby directed to pay the penalty amount as tabulated above within 90 days from the date of receipt of this Order and file Form INC-2B attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website mca.gov.in (Miscellaneous head) specifying the details of this Order and the notice who is paying the penalty.
10. Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in Form AD) setting forth the grounds of appeal and shall be accompanies by a certified copy of this Order.
11. Your attention is also invited to section 454(8) of the Companies Act 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under 454(8)(i) and (ii) of the Companies Act, 2013 against the company and directors / key managerial personnel without further notice in the matter.
12. The company is required to serve a copy of this Order on the director(s)/ officer(s)-in-default mentioned above in terms of provisions of section 20 of the Companies Act, 2013.
(Sanjay Sood)
Registrar of Companies. Karnataka
and Adjudicating Officer
