Delayed appointment of Wholetime Company Secretary- MCA Imposes Penalty

Registrar of Companies in Hyderabad, Telangana, issued an order under Section 454 read with Section 203(5) of the Companies Act, 2013, in response to a petition filed by Jenbacher Distributed Power India Private Limited. The company had failed to appoint a Whole-time Company Secretary within the specified time frame, resulting in a violation of Section 203(1) of the Act. The company subsequently appointed a Company Secretary, but with a delay of 854 days. As a result, the company and its directors are directed to pay a penalty of Rs. 9,00,000 within 30 days.

Please note Section 203(5) of the Companies Act, 2013 imposes penalties for non-compliance with the provision regarding the appointment of a Whole-time Company Secretary. According to this section, if a company fails to appoint a Whole-time Company Secretary as required, the company is liable to a penalty of five lakh rupees. Additionally, every director and key managerial personnel of the company who is in default may face a penalty of fifty thousand rupees. In the case of a continuing default, an additional penalty of one thousand rupees for each day of non-compliance may be imposed, with a maximum limit of five lakh rupees. These penalties aim to enforce the importance of fulfilling the legal requirement of appointing a Whole-time Company Secretary in accordance with the Companies Act, 2013.

F.NO. ROCH/U74990TG2018FTC12658511ELANGANA/203 OF 2013/2022/3082 To 3084
BEFORE THE REGISTRAR OF COMPANIES, HYDERABAD
FOR THE STATE OF TELANGANA
2ND, FLOOR, CORPORATE BHAWAN, THATTIANNARAM, G.S.I. POST, BANDLAGUDA,
NAGOLE, HYDERABAD-500 068

PETITION NO. ADJ. 203/8 OF 2022
MATTER OF SECTION – 203 OF COMPANIES ACT 2013
AND
IN THE MATTER OF
BACHER DISTRIBUTED POWER INDIA PRIVATE LIMITED

A company incorporated under the Companies Act, 2013, CI N: U74990TG2018FTC126585, having its egustered office situated at Vatika Business Centre, 6th Floor, Divyasree Omega C Block, Hitech City Road, Kondapur, Hyderabad – 500081, Telangana,

ORDER UNDER SECTION 454 READ WITH SECTION 203 (5)
OF COMPANIES ACT, 2013
FOR THE VIOLATION OF SECTION 203 OF COMPANIES ACT 2013

1. Whereas M/s. JENBACHER DISTRIBUTED POWER INDIA PRIVATE LIMITED (hereinafter referred as `Company’) is registered in the State of Telangana vide GIN No: U74990TG2018FTC126585 on 08.09.2018, having its registered office address at Vatika Business Centre, 6th Floor, Divyasree Omega C Block, Hitech City Road, Kondapur, Hyderabad – 500081, Telangana, has filed an suo moto application along with its officers in default Ws 203 (5) for adjudication of violation of section 203 (1) r/w section 454 of the Companies Act, 2013 (the Act) seeking necessary orders.

2. It is submitted by the applicants that the applicant company pursuant to section 203(1) of the Act r/w Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 was required to appoint Whole Tiime Company Secretary within six months, i.e,, on or before 30th September 2019, However, the company has not appointed Whole Time Company Secretary within a period of six months Le. from 31st March 2019 to 30th September 2019. However, the company has appointed the Whole Time Company Secretary on 01st February 2022 with a delay of 854 days, as it could not find a suitable candidate. This delay of appointment of Whole-time Company Secretary resulted in violation of Section 203(1) of the Companies Act, 2013 and liable under Section 203(5).

3. Further, the applicant company has submitted that it has appointed the Whole Time Company Secretary on 01St February 2022. Since the company has made good the offence by appointing the Whole Time Company Secretary, the company has prayed to pass an order for adjudicating the offence committed uis 203 (1) of the Companies Act, 2013.

4. Whereas Section 203 (5) of the Companies Act, 2013 contemplates the following:

“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.”

5. A reasonable opportunity of being heard was given to the applicants on 9th November 2022 at 12,00 noon under Sub-section 4 of the Section 454 of the Companies Act, 2013. Mrs. Madhavi Choudary, Company Secretary in practice attended the personal hearing on behalf of the applicants on 9th November 2022 at 12.00 noon and orally submitted that the company has complied with the provisions of Section 203 of the Companies Act, 2013 by appointing the Whole-time Company Secretary. She further made the request that, lesser penalty should be imposed on the company and its directors as the revenue from operation is nil as per the latest financial statement.

6. After considering the submissions made in the application and by the Authorized Representative, and the facts of the case it is proved beyond doubt that the company and the officers of the company have defaulted in complying the provisions under Section 203 (1) of the Act and made the offence good on Olst February 2022 with a delay of 854 days. In this regard, the company, and its officers in default (within the meaning of section 2 (60) of the Companies Act, 2013) are hereby directed to pay the following penalty from their own sources.

7. Having considered the facts and circumstances of the case besides oral submissions made by the representative of applicants at the time of hearing and after taking into the account the factors mentioned in the relevant Rules, I hereby impose a penalty on the company and its officers in default as per table below for the violation of Provision of Section 203 of the Companies Act, 2013 for the delay of 854 days.

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The penalty as indicated above, shall be paid within 30 days from the date of issue of this order by the defaulters (out of their own resources) and file e-Form INC-28, with the office of RoC, Hyderabad with copies of challan in proof of payment.

8. In this regard your attention is also drawn to the provisions of Section 454(5) and (6) which contemplates that:

“(5) Any person aggrieved by an order made by the adjudicating officer under sub-section (3) may prefer an appeal to the Regional Director having jurisdiction in the matter.

(6) Every appeal under sub-section (5) shall be filed within sixty days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person and shall be in such form, manner and be accompanied by such fees as may be prescribed.”

1. In this regard your attention is also drawn to the provisions of Section 454(8) (i) and (ii) of the Companies Act, 2013 which read as follows:

(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.

Issued under my hand and seal on this the 23rd of November 2022.

(JOSEKUTTY V.E.)
REGISTRAR OF COMPANIES, HYDERABAD
FOR THE STATE OF TELANGANA