The Ministry of Corporate Affairs (MCA) has recently imposed a penalty on Helios and Matheson Information Technology Limited for failing to comply with the mandatory requirement of appointing at least one woman director on their board. This adjudication order was issued under Section 149 of the Companies Act, 2013, which stipulates that certain classes of companies, including listed companies, must have at least one woman director.
1. Background of the Case: The subject company, Helios and Matheson Information Technology Limited, is a listed entity currently under liquidation. Despite being a listed company, it failed to appoint a woman director as required by Section 149 of the Companies Act, 2013. The company was incorporated under the Companies Act, 1956, and had its financials and other details updated in the MCA-21 registry until 2013. However, the company did not appoint a woman director within the stipulated timeframe, leading to a violation of the Act.
2 Legal Framework: Section 149 of the Companies Act, 2013, mandates that certain classes of companies, including listed companies, must appoint at least one woman director within one year from the commencement of the Act. Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, further specifies the categories of companies that must comply with this requirement. Failure to comply attracts penalties under Section 172 of the Act, which imposes fines on both the company and its officers in default.
3. Proceedings and Violations: The Registrar of Companies (RoC) in Chennai issued a show-cause notice to Helios and Matheson Information Technology Limited and its directors on July 10, 2015, for not appointing a woman director. The notice highlighted the violation of Section 149 and indicated potential penalties under Section 172. Despite the notice, the company did not rectify the non-compliance. Subsequently, the RoC filed a complaint, and the case was transferred to the adjudicating authority for further action.
4. Adjudication Hearing: A hearing was scheduled on February 20, 2024, where the authorized representative of the directors appeared and made submissions. The adjudicating authority reviewed the case, considering the company’s liquidation status and the period of non-compliance. It was determined that the company was in default from April 1, 2015, to January 20, 2016.
5. Decision and Penalty: The adjudicating authority concluded that Helios and Matheson Information Technology Limited failed to appoint a woman director as mandated by the Companies Act, 2013. Given the company’s liquidation status, the penalty was imposed solely on the officers in default. The managing director and the whole-time director were each fined Rs. 1,00,000 for the 295 days of non-compliance. The total penalty amounted to Rs. 2,00,000, payable within 90 days.
6. Appeal and Compliance: The order allows for an appeal to the Regional Director (Southern Region) of the Ministry of Corporate Affairs within 60 days. Non-compliance with the penalty payment within the stipulated timeframe could result in further fines and possible imprisonment for the officers in default.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES, TAMIL NADU, ANDAMAN & NICOBAR ISLANDS, CHENNAI
II FLOOR, C- WING, SHASTRI BHAVAN, 26, HADDOWS ROAD, NUNGAMBAKKAM, CHENNAI- 6
F.NO.ROC/CHN/HELIOS AND MATHESON/ADJ/S.149/2024 DATE 20 JUN 2024
ADJUDICATION ORDER UNDER SECTION 149 OF THE COMPANIES ACT, 2013
IN THE MATTER OF WS. HELIOS AND MATHESON INFORMATION TECHNOLOGY LIMITED
(NOW UNDER LIQUIDATION).
1. Appointment of Adjudicating Officer: –
The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 has appointed Registrar of Companies, Chennai as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter referred as Act or Companies Act, 2013) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company: –
Whereas the company viz. M/s. Helios and Matheson Information Technology Limited (Now under liquidation) with CIN:L72291TN1991PLCO20443 (herein after referred as ‘ company’ or ‘ subject company’) is a registered company with this office under the provisions of section 7 of the Companies Act, 2013 having its registered office as per MCA21 Registry at Ad wave Towers, 9 South Boag Road, T Nagar, Chennai, Tamil Nadu 600017.The financial & other details of the subject company as available on MCA-21 portal is stated as under:
| S. No | Particulars | Information |
| 1. | Company’s Status | ‘Under Liquidation |
| 2. | Filing Status | Financial Statement: up to 30.09.2013 Annual Return: up to 30.09.2013 |
| 3. | Paid up Capital (As per Consolidated financial statement for the period 01.10.2012 to 30.09.2013) | Rs.26,41,23,290/- |
| a. Revenue from Operation | Rs.652,95,77,606/- | |
| b. Other Income | Rs.5,57,71,265/- | |
| c. Profit for the Period | Rs.51,32,98,349/- | |
| 4. | Whether it is a Holding Company | Yes |
| 5. | Whether it is a Subsidiary Company | No |
| 6. | Whether company registered under Section 8 of the Act? | No |
| 7. | Whether company registered under any other special Act? | No |
3. Directors during the period of violation
| S. No. | Name of Director Default | Designation | Date of Appointment | Date of Cessation |
| 1. | Muralikrishna Gadiyaram | Managing Director | 08.03.1991 | …. |
| 2. | Yerra Diwakar Sai | Wholetime Director | 25.03.2010 |
4. Section and Penal Provision as per Companies Act, 2013
Section 149. Company to have Board of Directors
(1) Every company shall have a Board of Directors consisting of individuals as Directors and shall have—
(a) a minimum number of three Directors in the case of a public company, two Directors in the case of a private company, and one director in the case of a One Person Company; and
(b) a maximum of fifteen Directors:
Provided that a company may appoint more than fifteen Directors after passing a special resolution:
Provided further that such class or classes of companies as may be prescribed, shall have at least one-woman director.
(2) Every company existing on or before the date of commencement of this Act shall within one year from such commencement comply with the requirements of the provisions of sub-section (1).
Rule 3 of the Companies (Appointment and Qualification of Directors), Rules 2014 Woman Director on the Board.
The following class of companies shall appoint at least one woman director-
(i) every listed company;
(ii) every other public company having –
(a) paid—up share capital of one hundred crore rupees or more; or
(b) turnover of three hundred crore rupees or more:
Provided that a company, which has been incorporated under the Act and is covered under provisions of second proviso to sub-section (1) of section 149 shall comply with such provisions within a period of six months from the date of its incorporation:
Provided further that any intermittent vacancy of a woman director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy whichever is later.
Section 172 -Penalty
“If a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.”
5. Facts of the Case:
Pursuant to the Ministry’s Instruction, the ROC Chennai had issued Show Cause Notice U/s. 149 of the Companies Act, 2013 to the company and its directors on 10.07.2015 wherein it was mentioned that the company M/s. Helios and Matheson Information Technology Limited being a listed company should appoint at least one Women director as per Section 149 of the Companies Act, 2013 within one year from the commencement of the Companies Act, 2013 i.e, 01.04.2014. But as per signatory details of the company, no woman Director has been appointed in the company till date. Hence, there is a violation of Section 149 of the Companies Act,2013 and the company and every Officer in default are liable for penal action U/s. 172 of the Companies Act, 2013. After that the ROC Chennai had filed a complaint in E.O.C.0 No. 11/2016 against the company and Officers in default before the Court of Ld. Additional Chief Metropolitan Magistrate, Economics Offences, Egmore, Chennai. The Court of Ld. Additional Chief Metropolitan Magistrate, Economic Offences, Egmore, Chennai vide order dated 19.09.2023 in E.O.C.C. No. 11/2016 stated that ” the case is withdrawn from the file of this Court and transferred to ROC/ Adjudicating Authority for Adjudication U/s. 454 of the Companies Act, 2013′.
6. Adjudication Hearing:
The Adjudicating Authority had issued notice of hearing dated 13.02.2024 by fixing the hearing on 20.02.2024 at 11:30AM. Pursuant to the notice dated 13.02.2024, Shri. Balasubramanian, ACS, the authorized representative of the directors appeared before the Adjudicating Authority on 20.02.2024 and made submissions that the violation may be Adjudicated.
7. Decision
It is noticed that the Hon’ble NCLT Division Bench -II Chennai in its order dated 13.07.2023 in CP(IB)/288(CHE)/2021 – M3bi India Private Ltd, Operational Creditor Vs Helios and Matheson Information Technology Limited, Corporate Debtor quoted the extract from the memo filed by the Official Liquidator that ” the Hon’ble High Court, Madras by an order dated 21.01.2016 in CP No. 143 to 145 / 2013 & 414 to 416 /2015 appointed the Official Liquidator attached to this Hon’ble Court as the Provisional Liquidator of M/s Helios & Matheson Information Technology Limited with directions to take charges of the assets and effects of the company in Provisional Liquidation. The Hon’ble Division Bench, Madras vide its order dated 15.022016 in CMP No. 2253 of 2016 in OSA No. 19/2016 granted interim stay on all further proceedings pursuant to the Impugned order dated 21.01.2016 in CP No. 143/2015 The Official Liquidator has handed over back the possession of the premises to the Management on 15.022016 It is submitted that vide order dated 20.03.2023 in CMP No. 10363/2016 in OSA No. 19/2016 the Hon’ble Division Bench has vacated the interim stay of winding up proceedings of the company in liquidation’: Further, stated that Hon’ble High Court of Judicature of Madras has already appointed Official Liquidator in the matter, the present proceeding under Section 9 of IBC, 2016 cannot continue before this Bench.
Without prejudice to any other legal proceedings having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that the company (now under liquidation) is being a listed company, as per Section 149 of the Companies Act, 2013 a listed company should have appointed at least one Woman Director within one year from the commencement of the Companies Act, 2013. Hence, the company should have appointed a women director w.e.f 01.04.2015. But as per the signatory details available in MCA portal, no women director has been appointed by the company. Hence, there is a violation of Section 149 of the Companies Act, 2013. Further, the company went into liquidation w.e.f 21.01.2016 till 14.02.2016. After that the company again went under liquidation w.e.f 20.03.2023 till date. Hence, the period as from 01.04.2015 to 20.01.2016 is considered as the period of default for the violation.
Accordingly, I am inclined to impose a penalty only on Officers in default (now Ex-Directors) as the company is currently under liquidation for the default period of 295 days
(01.04.2015 to 20.01.2016) as prescribed under Section 172 of the Companies Act, 2013.
The details of the penalty imposed on Officer in default is shown in the table below:
| S. No | Name of Officers in default | No of days of default | Penalty for default | Total Penalty | Maximum Penalty | Penalty Imposed |
| 1. | Muralikrishna Gadiyaram | 295 days | Rs.50,000/- + Rs. 500/- per day (in case of continuing failure) | 50,000+ 500 x 295 =1,97,500 | Rs.1,00,000/– | Rs.1,00,000/- |
| 2. | Yerra Diwakar Sai | 295 days | Rs.50,000/- + Rs. 500/- per day (in case of continuing failure) | 1 50,000+ 500 x 295 =1,97,500 | Rs.1,00,000/– | Rs.1,00,000/- |
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.1,00,000/- (Rupees One lakh) is imposed on each director. Totally Rs. 2,00,000/-(Rupees Two lakhs) is imposed as penalty amount for violation of Section 149 of the Companies Act, 2013.
8. The said amount of penalty shall be paid through online by using the website www.mca.gov.in(Misc. head), within 90 days of receipt of this order, and intimate this office with proof of penalty paid.
9. ‘Whereas Appeal against this order may be filed with the Regional Director (SR), Ministry of Corporate Affairs, 5th Floor, Shastri Bhavan, 26 Haddows Road, Chennai-600006, Tamil Nadu within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website mca.gov.in] 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 (Adjudicating of Penalties) Rules, 2014].
10. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order, “(8)(i) Where company fails to comply with the order made under subsection (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 ofa 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.”
(B. SRIKUMAR, ICLS)
REGISTRAR OF COMPANIES
TAMILNADU, CHENNAI.
ADJUDICATING OFFICER
