On June 14, 2023, the Registrar of Companies, Hyderabad, issued a penalty order against M/s. Servicenow Software Development India Pvt Ltd for violating Section 179(3) of the Companies Act, 2013. The company granted a substantial inter-corporate loan of ₹13,57,37,989 to M/s. Servicenow Data Services Pvt Ltd without prior board approval, as mandated. This non-compliance led to penalties totaling ₹3,90,000, including ₹2,10,000 for the company and ₹60,000 each for three defaulting directors. The penalties account for the violation period from January 19, 2022, to September 29, 2022. The company and directors must pay the penalties and file Form INC-28 within 30 days of the order. Non-compliance within 90 days may result in further fines or imprisonment. Appeals can be filed with the Regional Director within 60 days of receiving the order.
F.NO. ROCH/U72900TG2014FTC092163/TELANGANA/179 OF 2613/2023
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. 179/ OF 2023
IN THE MATTER OF SECTION — 179 OF COMPANIES ACT 2013
AND
IN THE MATTER OF
MIS. SERVICENOW SOFTWARE DEVELOPMENT INDIA PRIVATE LIMITED
A Company incorporated under the Companies Act, 1956 with CIN U72900TG2014FTC092163, having its Registered office situated at Knowledge City,7th Floor, Plot No 2, Phase 1, Survey No.83/1, Raidurgam Village, Serilingampally, Rangareddi – 500081, Hyderabad. Telangana, India.
ORDER UNDER SECTION 454 READ WITH SECTION 450 OF COMPANIES ACT, 2013
FOR THE VIOLATION OF SECTION 179(3) OF THE COMPANIES ACT, 2013
1. Whereas M/s. SERVICENOW SOFTWARE DEVELOPMENT’ INDIA PRIVATE LIMITED (hereinafter referred as ‘Company’) is registered in the State of Telangana vide CIN No. U72900TG2014FTC092163, having its registered office address at Knowledge City,7th Floor, Plot No 2, Phase 1, Survey No,83/1, Raidurgam Village, Serilingampally, Rangareddi – 500081, Hyderabad, Telangana, has filed an application along with its officer in default u/s 450 for adjudication of violation of section 179(3) 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 during the financial year 2021-22 had granted an inter-corporate loan of Rs. 13,57,37,989/- (Rupees Thirteen Crones Fifty-Seven Lakhs Thirty-Seven Thousand Nine Hundred and Eighty-Nine only) out of total agreed financial assistance of Rs. 15,00,00,000/- (Rupees Fifteen Crores only) to M/s. Service now Data Services Private Limited in which 2 (Two) directors of the applicant company are interested in multiple transactions as under:
| S. No. | Date of Disbursement | Amount of loan |
| 1 | January 19, 2022 | Rs. 6,33,803/- |
| 2 | January 20, 2022 | Rs. 78,102/- |
| 3 | January 27, 2022 | Rs. 2,22,92,000/- |
| 4 | February 7, 2022 | Rs. 38,08,850/- |
| 5 | February 8, 2022 | Rs. 89,25,234/- |
| 6 | February 23, 2022 | Rs. 10,00,00,000/- |
| Total | Rs. 13,57,37,989/- | |
The applicant company did not obtained approval of its Board of Directors prior granting the loan to M/s. Servicenow Data Services Private Limited as required under section 179 (3) (f) of the Companies Act, 2013. Hence, the applicant company has violated the section 179 (3) of the Companies Act, 2013.
3. The applicant company has further submitted that it has convened and held the Board meeting on 29th September 2022 and shall continue to comply with the requirements of the Companies Act, 2013 including Rules, Notifications, Circulars issued thereunder.
4. Whereas as per Section 179 (3) of the Companies Act, 2013 states the following:
“(3) The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely: —
(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorize buy-back of securities under section 68;
(c) to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;]
(g) to approve financial statement and the Board’s report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another company;
(k) any other matter which may be prescribed”
5. Whereas Section 450 of the Companies Act, 2013 contemplates the following:
“If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction OK 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 lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person”
6. After considering the submission made in the application made by the company and the facts of the case it is proved beyond doubt that the officers of the company have defaulted in complying the provisions under Section 179 (3) (f) of the Act In this regard, 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
For Company:
| Sl No. | Name of the Company | On default | On continuing default penalty of Rs. 1000/- for each day subject to a maximum of Rs. 2,00,000/- for company | Total penalty |
| 1 | Mis. Servicenow Software Development India Private Limited (represented by Mr. Rajaraman Santhanam (Director)) (Period of default from 19.01.2022 to 29.09.2022 i e., 253 days) | Rs. 10,0001- | 253 * Rs. 1000/- = Rs. 253 000/- | Rs. 2,10,000/- |
For officer in default:
| Name of the officer in default | On default | On continuing default penalty of Rs. 1000/- for each day subject to a maximum of Rs. 50,000/-for officer in default | Total penalty | |
| 1
|
Mr. Rajaraman Santhanam (Director)) (Period of default from 19.01.2022 to 29.09.2022 i.e., 253 days) | Rs. 10,000/- | 253 * Rs. 1000/- = Rs. 2,53,000/- | Rs. 60,000/- |
| 2 | Mr. MARK COCKERILL (Director) Period of default from 19.01.2022 to 29.09.2022 i.e., 253 days) | Rs. 10,000/- | 253 * Rs. 1000/- = Rs. 2,53,000/- | Rs. 60,000/- |
| 3 | Mr. MARK WILLIAM ALLOY (Director) Period of default from 19.01.2022 to 29.09.2022 i.e., 253 days) | Rs. 10,000/- | 253 * Rs. 1000/- = Rs. 2,53,000/- | Rs. 60,000/- |
| Total penalty imposed | Rs.3,90,000/- |
The penalty as indicated above, shall be paid and e-Form INC-28 shall be filed within 30 days from the date of issue of this order by the defaulters (out of their own resources) with the office of RoC, Hyderabad with copies of challan in proof of payment.
7. 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.”
8. 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 14th of June 2023.
(JOSEKUTTY V.E.)
REGISTRAR OF COMPANIES,
HYDERABAD.
