Overview: The Registrar of Companies, Karnataka, has issued an adjudication order imposing penalties on Sango India Automotive Parts Private Limited for violations under Section 383A of the Companies Act, 1956, and Section 203 of the Companies Act, 2013. The company faced penalties for the delay in appointing a whole-time company secretary, as required by the aforementioned sections.
Background: Sango India Automotive Parts Private Limited, incorporated on 17.12.2012, falls under the jurisdiction of the Registrar of Companies, Karnataka, with its registered office at Unit No. 4, S Kumar Compound, 2145/866 Innovative Film City Road, Medanahalli, Bidadi Ramanagara, Bangalore – 562109.
Violations and Relevant Provisions
The company suo-motu filed an adjudication application on 10.08.2023, admitting a violation of Section 203 of the Companies Act, 2013. The violation pertained to the delay in appointing a whole-time company secretary after the resignation of Ms. Rashmi Jha, from 06.08.2022 to the appointment of Ms. Neetu Sharma on 19.04.2023.
The relevant provisions include:
i. Section 383A(1) of the Companies Act, 1956: Mandates that every company with a prescribed paid-up capital shall have a whole-time secretary.
ii. Section 203 of the Companies Act, 2013: Requires every company, falling within a prescribed class, to have a whole-time key managerial personnel, including a company secretary.
Adjudication Process
The company submitted an application admitting the violation, and a physical hearing was conducted on 27.09.2023. Representatives from the company, Ms. Neetu Sharma (Company Secretary), and Mr. Gautham Kumar (Manager – HR & Admin) attended the hearing and presented their submissions.
Penalties Imposed
The penalties were imposed considering the duration of default and the positions of the individuals responsible. The penalties are as follows:
| S. No. | Particulars | Duration of Default | Calculation of Penalty (In Rs.) | Maximum Penalty (In Rs.) | Penalty Imposed (In Rs.) |
|---|---|---|---|---|---|
| 1 | Company | 1,975 days (17.12.2012 to 11.05.2018 and 06.02.2023 to 18.04.2023) | 5,00,000 | 9,00,000 | 5,00,000 |
| 2 | Koichi Haraguchi, Managing Director | 72 days (06.02.2023 to 18.04.2023) | 1,21,000 | 5,00,000 | 1,21,000 |
| 3 | Takashi Tsunekawa, former Director | 657 days (17.12.2012 to 12.12.2014) | 7,06,000 | 5,00,000 | 5,00,000 |
| 4 | Tomoya Hashiguchi, former Director | 1,903 days (17.12.2012 to 11.05.2018) | 19,52,000 | 5,00,000 | 5,00,000 |
| 5 | Tomohiro Ishigami, former Director | 198 days (21.03.2014 to 12.12.2014) | 2,47,000 | 5,00,003 | 2,47,000 |
| 6 | Junichi Kume, former Director | 1,332 days (18.09.2014 to 11.05.2018) | 13,81,000 | 5,00,000 | 5,00,000 |
| 7 | Keiji Kondo, former Director | 271 days (08.12.2014 to 04.09.2015) | 3,20,000 | 5,00,000 | 3,20,000 |
| 8 | Michiaki Fukamaki, former Director | 300 days (08.10.2015 to 02.08.2016) | 3,49,000 | 5,00,000 | 3,49,000 |
| 9 | Masaaki Kubota, former Director | 46 days (27.03.2018 to 11.05.2018) | 95,000 | 5,00,000 | 95,000 |
Directions and Appeals
The company and the respective officers in default are directed to pay the penalties within 90 days from the date of receiving the order. The payment should be made through the Ministry of Corporate Affairs portal, and Form INC-28 must be filed with a copy of the order and payment challans. Any appeal against this order can be filed with the Regional Director (South East Region), Hyderabad, within 60 days.
Consequences of Non-compliance
The order highlights the consequences of non-compliance, with penal actions under Section 454(8)(i) and (ii) of the Companies Act, 2013, likely in case of non-compliance with the order.
Conclusion: This adjudication order emphasizes the importance of companies ensuring timely compliance with statutory provisions regarding the appointment of key managerial personnel, such as whole-time company secretaries. The penalties serve as a reminder for companies and their officers to adhere to the regulations stipulated by the Companies Act, 1956, and the Companies Act, 2013, to maintain corporate governance standards.
*****
Registrar of Companies, Karnataka
Kendriya Sedan, 2nd floor, ‘E’ wine,
Koramangala. Bengaluru – 560 034
Phone :080-25537449/25633105
E-mail ID: roc.bangalore@mca.gov.in
File No. ROC(B)/Adj. Ord 454-203/Sango India/Co.No.097826/2023/
Date:04.12.2023
ORDER Of ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 3 QF THE COMPANIES (ADJUDICATION OF PENAUTES) RULES. 2014 FOR VIOLATION OF PROVISIONS OF SFCTION 383A OF THE COMPANIES ACT. 1956 AND SECTION 203 OF COMPANIES ACT, 2013 READ WITH RULES (AS AMENDED FROM TIME TO TIME) FRAMED THEREIN BY SANGO INDIA AUTOk4ATIVE PARTS PRIVATE LIMITED
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.032015 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 the Companies Act, 2013.
2. The company, Sango India Automotive Parts Private Limited (hereinafter referred to as Company) was incorporated on 17.12.2012 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is situated at Unit No. 4, S Kumar Compound, 2145/866 Innovative Film City Road. Medanahalli, Bidadi Ramanagara, Bangalore – 562109.
3. The company has filed a suo-motu adjudication application on 10.08.2023 for violation of section 203 of the Act. It has been submitted in the application that subsequent to the resignation of Ms. Rashmi Jha as the company secretary w.e.f. 06.08.2022, there was no company secretary in the company till the appointment of Ms. Neetu Sharma on 19.04.2023 The company falls under the criteria for appointment of a whale-time company secretary and ought to have appointed the new company secretary within six months from the date of vacancy thereby violating the above-mentioned provision for a period from 06.02.2023 to 18.042023.
4. Whereas as per section 383A(1) of the Companies Act, 1956, every company having such paid-up capital share capital as may be prescribed shall have a whole time secretary and as per Rule 2 of Companies (Appointment and Qualifications of Secretary) Rules, 1988, every company having a paid-up share capital of not less than Rs. S crones shall have a whole-time secretary w.e.f. 15.03.2009. Further, as per proviso to Rule 2 of Companies (Appointment and Qualifications of Secretary) Rules, 1988, the company shall within a period of one year from the date of increase of the paid-up capital beyond threshold limits comply with these provisions.
5. After the commencement of the Companies Act, 2013, as per section 203(1) of Act. every company belonging to such class or classes of companies as may be prescribed shall have whole-time key managerial personnel and as per Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, w.e.f. 09.06.2014, every company other than a company covered under rule 8 which has a paid-up share capital of Rs. 5 acre or more shall have a whole-time company secretary and this threshold was further increased to Rs. 10 crore or more applicable in respect of financial years commencing on or after 01.04.2020.
6. Further, as per section 203(4) of the Act, if the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.
7. As per section 203(5) of the Act, 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.
8. Pursuant to the adjudication application filed by the company, Notice of hearing was sent on 18.09.2023 and physical hearing was held on 27.09.2023. It was attended by Ms. Neetu Sharma. company secretary, and Mr. Gautham Kumar, Manager (HR & Admin), authorised representatives who attended the hearing and placed their submissions before the Adjudicating Officer. The authorised representative was asked to give details of the share capital since incorporation and the same was submitted by the company on 06.10.2023. It is seen that the company was incorporated on 17.122012 along with paid-up capital of Rs. 37,50,00,000/- and company was required to appoint whole time company secretary from the date of incorporation i.e. 17.12.2012. The company has appointed company secretary only from 12.05. 2018. thereby violating the relevant provisions of the Act for non-appointment of company secretary from 17.122012 to 11.05. 2018.
9. In view of supra para no. 8, a separate adjudication notices dated 09.11.2023 were sent to Takashi Tsunekawa, Tomoya Hashiguchi, Tomohiro Ishigami, Junichi Kume, Keiji Kondo, Michiaki Fukamaki, Mitsuya Ueoka and Masaaki Kubota, former directors of the company for the above-mentioned non-compliance. It is seen from the records that for the duration of 17.122012 to 11.05.2018, they were the directors of the company, and the company did not have any managing director rendering them liable for penal action. A written submission through letter 25.11.2023 was submitted by the company stating that Takashi Tsunekawa and Michiaki Fukamaki have authorized the company, its managing director and its company secretary to represent the matter. It has been informed that Mitsuya Ueoka was deceased as on the date of filing the adjudication application. Further, company shared notice via email to Tomoya Hashiguchi, Tomohiro Ishigami, Junichi Kume, Keiji Kondo and Masaaki Kubota, but the company has not received any response from these former directors.
10. In view of the provisions detailed above and the records, the company and the respective officers in default have defaulted the provisions of section 383A(1) of the Companies Act, 1956 / section 203(1) of the Companies Act, 2013 dealing with appointment of whole-time company secretary for a duration of 1,975 days i.e. from 17.12.2012 to 11.05.2018 and from 06.02.2023 to 18.04.2023 for which they are liable to penalty. It is seen from the records that the company had a managing director from 28.02.2019 to till date. For the duration of default where the company had managing director, the managing director is being held liable as the officer who was in default, and for the remaining duration of default, all the directors of the company are being held liable. Further, as per written submission letter dated 25.11.2023 submitted by the company stating that Mitsuya Ueoka is deceased, no penalty is to be imposed on Mitsuya Ueoka, the former director.
11. It is seen that the company is a subsidiary of a foreign company and does not fall under the definition of a small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provisions of imposing lesser penalty as per the section 445B of the Act shall not be applicable in this case.
12. Therefore, having considered the facts and circumstances of the case and the submissions made by the company and present / past directors through their authorised representatives, in view of the above said violations of non-appointment of company secretary under the provisions of section 383A(1) of the Companies Act, 1956 / section 203(1) of the Companies Act. 2013, read with corresponding rules, in exercise of the powers vested under section 454(3)(a) of the Companies Act 2013, t do hereby impose penalty in the following manner on the company and the directors / officers who were in default of the offence committed:
|
S. |
Particulars of notice |
Duration of default |
Calculation of penalty (In Rs.) |
Maximum penalty (In Rs.) |
Penalty Imposed (In Rs.) |
| 1 | Company | 1,975 days (17.122012 to 11.05.2018 and 06.02.2023 to 18.042023) | 5,00.000 | 900,000 | 5,00,000 |
| 2 | Koichi Haraguchi, Managing Director | 72 days (06.022023 to 18.042023) | 1,21,000 (50,000+71 Χ 1,000) | 5,00,000 | 1,21,000 |
| 3 | Takashi Tsunekawa, former Director | 657 days
(17.122012 to 1212.2014) |
7,06,000 (50,000+656 X 1,000) | 5,00,000 | 5,00000 |
| 4 | Tomoya Hashiguchi, former Director | 1,903 days (17.12.2012 to 11.05.2018) | 19,52,000 (50,000+1,902 X 1000)
|
5,00,000 | 5,00,000 |
| 5 | Tomohiro Ishigami, former Director | 198 days (21.03.2014 to 12.12.2014) |
2.47,000 (50,000+197 X 1,000) |
5,00,003 |
2,47,000 |
| 6 | Junichi Kume. former Director | 1,332 days (18.092014 to 11.05.2018) | 13,81,000 (50,000+1,331 X 1,000) |
5,00,000 |
5,00,000 |
| 7 | Keiji Kondo, former Director | 271 days (08.122014 to 04.09.2015) | 3,20,000 (50,000+270 X 1,000) | 5,00,000 | 3,20,000 |
| 8 | Michiaki
Fukamaki, former Director |
300 days (08.10.2015 to 02082016) | 3,49,000 (50,000+299 X 1,C00) | 5,00000 | 3,49.000 |
| 9 | Masaaki Kubota, former Director | 46 days (27.032018 to 11.052018) | 95,000 (50,000+45 X 1,000) | 5,00,000 | 95,000 |
13. 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-28 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 www.mca.goscin (Miscellaneous head) specifying the details of this Order and the noticee who is paying the penalty.
14. 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.
15. 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.
16. The company is required to serve a copy of this Order on the director(s)/ officers)-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
