MCA Fines Company for Delayed Circulation of Board Meeting Minutes

Introduction:  Blue Sapphire Healthcares Private Limited and its directors. has been penalized by MCA for the delay in circulating draft minutes of its board meetings, a violation of Section 118 of the Companies Act, 2013.

Analysis: The Ministry of Corporate Affairs (MCA) has invoked Section 118 of the Companies Act, 2013, to impose penalties on Blue Sapphire Healthcares Private Limited for the delayed circulation of draft minutes of its board meetings. The case sheds light on the importance of adhering to the specified timelines for recording and circulating minutes of meetings, as outlined in both the Companies Act and Secretarial Standard – 1.

The adjudication process involves the appointment of an Adjudicating Officer, in this case, the Registrar of Companies, NCT of Delhi & Haryana. The company’s particulars, financial information, and details of the violation are meticulously outlined in the order.

The violation pertains to two board meetings held on 24th September 2021 and 21st January 2022. The company acknowledged the delay in circulating the draft minutes for these meetings, which was in violation of Clause 7.4 of Secretarial Standard – 1. Additionally, the company failed to enter the minutes in the Minute Book within the stipulated time frame, as required by Clause 7.5 of the same standard.

The penalties imposed by the MCA for this violation are as follows:

For Meeting Held on 24th September 2021:

• Blue Sapphire Healthcares Private Limited (Company): Penalty of Rs. 25,000
• Mukesh Kumar Mohta (Wholetime Director): Penalty of Rs. 5,000
• Anupam Pandey (Wholetime Director): Penalty of Rs. 5,000
• Prashant Pandey (Wholetime Director): Penalty of Rs. 5,000
• Narendra Kumar Pandey (Managing Director): Penalty of Rs. 5,000
• Shubham Mittal (Company Secretary): Penalty of Rs. 5,000

For Meeting Held on 21st January 2022:

• Blue Sapphire Healthcares Private Limited (Company): Penalty of Rs. 25,000
• Anupam Pandey (Wholetime Director): Penalty of Rs. 5,000
• Prashant Pandey (Wholetime Director): Penalty of Rs. 5,000
• Narendra Kumar Pandey (Managing Director): Penalty of Rs. 5,000
• Shubham Mittal (Company Secretary): Penalty of Rs. 5,000

The order emphasizes that the penalties must be paid within 90 days through the Ministry of Corporate Affairs’ online portal. Parties involved can also file an appeal against the order within 60 days with the Regional Director (NR), Ministry of Corporate Affairs.

Conclusion: The imposition of penalties by the Ministry of Corporate Affairs on Blue Sapphire Healthcares Private Limited and its directors for the delay in circulating draft minutes of board meetings underscores the government’s commitment to enforcing corporate compliance and adherence to the Companies Act. This case serves as a reminder to companies and their officials to strictly adhere to the prescribed timelines and standards when dealing with meeting minutes, ensuring transparency and accountability in corporate practices.

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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS,
OFFICE OF REGISTRAR OF COMPANIES,
NCT OF DELHI & HARYANA
4TH FLOOR, IFCI TOWER, 61, NEHRU PLACE,
NEW DELHI -110019

ORDER OF PENALTY PURSUANT TO SECTION 118 OF THE COMPANIES ACT, 2013 IN THE MATTER OF ADJUDICATION OF BLUE SAPPHIRE HEALTHCARES PRIVATE LIMITED (CIN: U74999DL2007PTC159674) 1. Appointment of Adjudicating Officer: –

Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 appointed Registrar of Companies, NCT of Delhi & Haryana as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter known as Act) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Company: –

Whereas the company viz. BLUE SAPPHIRE HEALTHCARES PRIVATE LIMITED (herein after known as ‘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 address Level 10, Hindustan Times House, 18-20 Kasturba Gandhi Marg, Connaught Place, New Delhi, Central Delhi,110001. . The financial & other details of the subject company for F.Y. 2021­2022 as available on MCA-21 portal is stated as under:

3. Facts about the Case: –

I. This office received a suo-moto application on 13.04.2023 for adjudication of penalties for default J/s 118 of the Act r/w Secretarial Standard -1.

II. In order to have further clarity, a query letter was raised to the company to which reply was furnished on 05.06.2023. It was stated that company had conducted its board meetings on 24.09.2021 and 21.01.2022 and circulated draft minutes for the respective board meetings on 22.10.2021 and 02.03.2022 respectively. As per Clause 7.4 of Secretarial Standard -1, the company was required to circulate draft minutes on or before 09.10.2021 and 05.02.2022 for the board meetings held on 24.09.2021 and 21.01.2022 respectively.

III. Whereas as per application and reply submitted it was observed that not only company has committed delayed in circulating the draft minutes, company has also committed a default of being late in entering the minutes in the Minute Book. The following table depicts the likely default:-

IV. A show Cause Notice was issued to the company and defaulting officer on 07.2023 against which reply was submitted by the company on 26.07.2023. The company acknowledge the default and reiterated that there was delay of 13 days and 25 days respectively in circulation of draft minutes of the meetings held on 24.09.2021 and 21.01.2022 respectively. Further due to late circulation of draft minutes non­compliance of para 7.5 of SS-1 took place.

4. The relevant provision of the sections 118 as on date of default are as under:

Section 118 (Minutes of Proceedings of General Meeting, Meeting of Board of Directors and Other Meeting and Resolutions Passed by Postal Ballot)

(1) Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered.

(10) “Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.”

(11) If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.

5. The relevant provision of Secretarial Standard (SS)-1

7.4. Finalisation of Minutes

“Within fifteen days from the date of the conclusion of the Meeting of the board or the Committee, the draft Minutes thereof shall be circulated by hand or by speed post or by registered post or by courier or by e-mail or by any other recognised electronic means to all the members of the Board or the Committee for their comments.”

7.5 Entry in the Minutes Book

7.5.1 Minutes shall be entered in the Minutes Book within thirty days from the date of conclusion of the Meeting.

5. Adjudication of penalty: –

i. With respect to the facts of the case and submissions made, it is noted that provisions of Section 118 r/w clause 7.4 as well as clause 7.5 of Secretarial Standard-1 for the aforesaid two meetings have not been complied with. It is further seen that one of the director Sh. Mukesh Kumar Mohta ceased to be director w.e.f. 21.01.2022. Hence, he shall not considered as officer in default for the violation pertaining to meeting held on 21.01.2022.

ii. The subject company does not get covered under the purview of small company as defined u/s 2(85) of the Act. Hence, the benefit of section 446B would not be applicable on the company.

iii. Now in exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the reply submitted on 26.07.2023 in response to the notice issued vide letter dated 21.07.2023, hereby impose the penalty on the company and its officer in default for defect pursuant to Section 118 of the Act r/w SS-1:

Table- I

Table- II

Table- Ill

Table- IV

6. Order:

a. Names of parties as mentioned in the table I, 11,111 & IV above are hereby directed to pay the penalty amount as per column no. ‘C’ therein. In case of parties other than company, such amount is required to be paid out of their own funds.

b. The said amount of penalty shall be paid through online by using the website mca.gov.in (Misc. head) in favor of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, within 90 days of receipt of this order, and intimate this office with proof of penalty paid.

c. Appeal against this order may be filed with the Regional Director (NR), Ministry of Corporate Affairs, B-2 Wing, 2nd Floor, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi-110003 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 the order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].

d. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order.

Place: New Delhi.

(Pranay Chaturvedi, ices)
(Adjudicating Officer)
Registrar of Companies,
NCT of Delhi & Haryana

No. ROC/D/Adj/Section 118/Blue Sapphire/3143-3149

Date: 9-8-2023