In a recent development, the Registrar of Companies in Rajasthan, Jaipur, issued an adjudication order under Section 454(3) read with Section 149(4) of the Companies Act, 2013, regarding the non-appointment of independent directors by Resonance Eduventures Limited. This article delves into the details of the case, the violation, the penalties imposed, and its implications.
Detailed Analysis
The case revolves around Resonance Eduventures Limited, a company operating in Rajasthan, Jaipur, and its failure to appoint independent directors as mandated by the Companies Act, 2013. According to Section 149(4) of the Act, every listed public company is required to have at least one-third of its total number of directors as independent directors. However, Resonance Eduventures Limited failed to comply with this provision for the period from November 19, 2019, to April 15, 2021.
The company voluntarily brought this violation to the attention of the authorities through its Managing Director & CEO, Shri Ram Kishan Verma. Consequently, an adjudication notice was issued on March 28, 2023, to the company, its directors, officers in default, and Key Managerial Personnel (KMP). This notice provided them with an opportunity to present their case, and a hearing was scheduled for April 11, 2023.
During the hearing, Sh. Akshit Kumar Jangid, FCS, representing the company and the relevant parties, acknowledged the violation of Section 149(4) of the Companies Act, 2013. He informed the authorities that the company had appointed independent directors, Mr. Nishant Jain and Mr. Tanmay Jain, effective April 15, 2023. Furthermore, he requested the imposition of the minimum penalty for the non-appointment of independent directors.
Based on the facts presented, the Registrar of Companies had reasonable cause to believe that Resonance Eduventures Limited had indeed violated Section 149(4) of the Companies Act, 2013, and its directors, officers in default, and KMP were liable for penal action under Section 172 of the Companies Act, 2013, read with Section 454.
Conclusion
In accordance with its authority under Section 454 of the Companies Act, 2013, the Registrar of Companies, Rajasthan, Jaipur, passed an adjudication order imposing penalties as follows:
- Resonance Eduventures Limited: A total penalty of Rs. 3,00,000 for the violation covering the period from November 19, 2019, to April 15, 2021.
- Shri Ram Kishan Verma (MD & CEO): A penalty of Rs. 1,00,000 for the same violation period.
- Shri Abhinav Gautam (CS): A penalty of Rs. 1,00,000 for the same violation period.
These penalties must be paid within 90 days from the receipt of the order through an appropriate challan on the MCA Portal. Failure to pay within the stipulated period may result in legal action against the company and its directors/officers in default.
In conclusion, this case serves as a reminder of the importance of compliance with corporate governance norms, particularly the appointment of independent directors as mandated by the Companies Act, 2013. Companies failing to adhere to such regulations risk facing penalties and legal repercussions.
*****
Registrar of Companies, Rajasthan, Jaipur
Order No. ROC-JP/Adj./2023-24/Sec 149/CA 2013
In the matter of Companies Act 2013
In the matter of adjudication proceeding under section 454(3) read with section 149(4) of the Companies Act, 2013 r/w rule 4 of Companies (Appointment of Directors) Rules, 2014 punishable under section 172 of the Companies Act, 2013.
And
In the matter of
1. Resonance Eduventures Limited
2. Shri Ram Kishan Verma (MD & CEO)
3. Shri Abhinav Gautam (CS)
Date of hearing: 11.04.2023
Present
Shri C.M. Karl Marx, Registrar of Companies, Rajasthan, Jaipur
Sh. Akshit Kumar Jangid, FCS on behalf of Company and Party No. 01 to 03.
Adjudication Order
That the company through Sh. Ram Kishan Verma, MD & CEO has Suo-moto, made an application to adjudicate the violation committed by company by non-appointing the independent directors of the company for the period 19.11.2019 to 15.04.2021 as required by the provision of Section 149(4) of the Companies Act, 2013 r/w rule 4 of Companies (Appointment of Directors) Rules, 2014.
That this office had issued notice for adjudication dated 28.03.2023 for violation Section 149(4) of the Companies Act, 2013 r/w rule 4 of Companies (Appointment of Directors) Rules, 2014 punishable under section 172 of the Companies Act 2013 to the Company and its Directors/ Officers in Default/ KMP. The opportunity of being heard was provided to the company and its directors / officers in default/KMP on 11.04.2023.
That on the date of hearing i.e. 11.04.2023 Sh. Akshit Kumar Jangid, FCS appeared on behalf of the Company and Party No. 01 to 03. Sh. Akshit Kumar Jangid, FCS submitted that the company has violated Section 149(4) of the Companies Act, 2013 r/w rule 4 of Companies (Appointment of Directors) Rules, 2014 punishable under section 172 of the Companies Act 2013 non- appointing the independent directors of the company for the period 19.11.2019 to 15.04.2021. Further it was submitted that the company has appointed Mr. Nishant Jain (DIN: – 08731168) and Mr. Tanmay Jain (DIN:-09094927) as the independent directors of the company w.e.f. 15.04.2023. Further it was prayed to adjudicate the offence for non-appointment of independent directors of the company by imposing minimum penalty. Appointment and cessation of Directors were taken as per MCA portal.
That in view of the above facts the undersigned has reasonable cause to believe that the provision of Section 149(4) of the Companies Act, 2013 r/w rule 4 of Companies (Appointment of Directors) Rules, 2014 of the Companies Act, 2013 had not complied with as required under law by the Company for the period 19.11.2019 to 15.04.2021 and its directors/officers in default/ KMP and therefore liable for penal action under section 172 of the Companies Act, 2013 r/w sec 454 of the Companies Act, 2013.
That section 149(4) of the Companies Act, 2013 states that: –
“(4) Every listed public company shall have at least one-third of the total number of Directors as independent Directors and the Central Government may prescribe the minimum number of independent Directors in case of any class or classes of public companies.
Explanation — For the purposes of this sub-section, any fraction contained in such one-third number shall be rounded off as one.”
That rule 4 of Companies (Appointment of Directors) Rules, 2014 states that: –
“Number of Independent Directors
11 [(1)] The following class or classes of companies shall have at least two directors as independent directors –
i. the Public Companies having paid up share capital of ten crore rupees or more; or
ii. the Public Companies having turnover of one hundred crore rupees or more; or
iii. the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees:
Provided that in case a company covered under this rule is required to appoint a higher number of independent directors due to composition of its audit committee, such-higher number of independent directors shall be applicable to it:
Provided further that any intermittent vacancy of an independent 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: Provided also that where a company ceases to fulfil any of three conditions laid down in sub-rule (1) for three consecutive years, it shall not be required to comply with these provisions until such time as it meets any of such conditions; Explanation. – For the purposes of this rule, it is here by clarified that, the paid-up share capital or turnover or outstanding loans, debentures and deposits, as the case may be, as existing on the last date of latest audited financial statements shall be taken into account:
Provided that a company belonging to any class of companies for which a higher number of independent directors has been specified in the law for the time being in force shall comply with the requirements specified in such law.”
That section 172 of the Companies Act, 2013 states that: –
” 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.”
That in exercising of the power conferred U/s 454 of the Companies Act, 2013 undersigned has passed the adjudication order imposing penalty as under:
Penalty imposed on the Company Resonance Eduventures Limited, Shri Ram Kishan Verma (MD & CEO) and Shri Abhinav Gautam (CS), for violation of section 149(4) of the Companies Act, 2013 r / w rule 4 of Companies (Appointment of Directors) Rules, 2014 punishable under section 172 of the Companies Act, 2013.:-
| Accused
|
No. of Days Delay | Penalty (fix) | Further Penalty | Total penalty | Maximum penalty | Penalty imposed |
| Resonance Eduventur es Limited |
19.11.2019 to 15.04.2021 = 513
|
50,000/- | 513 days x Rs. 500 = Rs. 2,56,500/- 7 – | 3,06,500/- | 3,00,000/- | 3,00,000/- |
| Shri Ram Kishan Verma (MD & CEO) | 19.11.2019 to 15.04.2021 = 513 | 50,000/- | 513 days x Rs. 500 = Rs. 2,56,500/- | 3,06,500/- | 1,00,000/- | 1,00,000/- |
| Shri Abhinav Gautam (CS) | 19.11.2019 to 15.04.2021 = 513 | 50,000/-
|
513 days x Rs. 500 = Rs. 2,56,500/- | 3,06,500/- | 1,00,000/- | 1,00,000/- |
| Total | 5,00,000/- |
That taking in above facts total penalty of 3,00,000/- is imposed on the company and Rs 1,00,000/- on each Officer in default/ KMP namely Shri Ram Kishan Verma (MD & CEO) and Shri Abhinav Gautam (CS) to be paid as stated herein above within 90 days from the receipt of order vide appropriate challan on MCA Portal. The penalty imposed on the Directors should be paid from their personal account.
That failure to pay penalty within the stipulated period the company and its director / officers in default are liable for legal action U/s 454(8) of Companies Act 2013.
The matter stands disposed of in accordance with the order above.
Signed on 11.04.2023
(C.M. Karl Marx)
Registrar of Companies, Rajasthan, Jaipur
Rajasthan, Jaipur
11/04/2023
Endt. No. ROC-JP/Adj./2023-24/Sec 149/CA 2013/171 to 175
