Introduction: In a recent development, M/s Nissan Motor India Private Limited finds itself subject to penalties following an adjudication order issued by the Registrar of Companies, Tamil Nadu, Chennai. The order, dated September 13, 2023, highlights the company’s failure to comply with key provisions of the Companies Act, 2013, raising questions about corporate governance and adherence to regulatory guidelines.
Violation Details: The adjudication order centers around a violation of Section 203(4) of the Companies Act, 2013, coupled with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Specifically, the company failed to fulfill the obligation of appointing a whole-time Company Secretary within six months of the vacancy arising, as mandated by the Act.
Chronology of Events: The company appointed Subhadeep Sarkar as the whole-time Company Secretary on July 2, 2018. However, after his resignation on January 21, 2021, the board was required to fill the resulting vacancy by July 2021. It was observed that the appointment of Ms. Nikki Srivastava took place only on January 17, 2022, leading to a violation of the stipulated timeframe.
Adjudication Process: Following the violation, the Registrar of Companies initiated an adjudication process. The company and its directors were issued an Adjudication Hearing Notice on August 21, 2023, providing an opportunity to present their case. Shri Janakiraman, a Practicing Company Secretary, represented the company during the proceedings and admitted to the violation.
Penalties Imposed: The adjudicating officer, B. Srikumar, ICLS, imposed penalties as per Section 454 of the Companies Act, 2013. M/s Nissan Motor India Private Limited faces a penalty of Rs. 5,00,000, while each director in default, including Shri. Rakesh Srivastava, Shri. Tyagi Rahul, and Shri Ryan Austin Udy, is fined Rs. 2,28,000. The cumulative penalty amounts to Rs. 11,84,000.
Appeal Process and Default Consequences: The document outlines the appeal process, allowing any aggrieved party to appeal to the Regional Director within sixty days. Additionally, it warns of consequences if the imposed penalties are not paid within ninety days, indicating the possibility of further fines and even imprisonment.
Conclusion: This adjudication order serves as a significant reminder of the importance of adhering to regulatory frameworks and corporate governance standards. M/s Nissan Motor India Private Limited, a prominent player in the automotive industry, faces financial repercussions due to lapses in fulfilling statutory obligations. The incident emphasizes the need for companies to ensure timely compliance with the Companies Act and other relevant regulations to maintain trust and credibility in the business environment. As the company contemplates its next steps, this episode underscores the broader significance of regulatory adherence in sustaining a healthy and transparent corporate ecosystem.
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/NISSAN/ADJ/203/2023 Date: 13/09/2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 8A OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014 FOR VIOLATION OF PROVISIONS OF SECTION 203(4) OF THE COMPANIES ACT, 2013 BY M/S NISSAN MOTOR INDIA PRIVATE LIMITED
1. In the matter of M/s Nissan Motor India Private Limited (CIN U34100TN2005PTC073897) incorporated on 07/02/2005 under the jurisdiction of Registrar of Companies, Chennai with the registered office situated at Plot No.1A, SIPCOT Industrial Area, Orgadam, Mattur Post Sriperumpudur Tamilnadu – 602105 India.
2. Whereas pursuant to sub-section (4) of Section 203 of the Companies Act 2013, which read as under:
“If the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.”
3. Whereas pursuant to Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rule 2014, which read as under:
“Every private company which has u paid up share capital of ten crore rupees or more shall have a whole-time company secretary.”
4. Whereas the company had appointed Subhadeep Sarkar as whole-time Company Secretary of the Company on 02”d July 2018 as required under provision of Section 203(4) read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Subsequently, Mr. Subhadeep Sarkar resigned and moved out of the Company with effect from 2I January 2021.
5. Whereas, Company supposed to appoint whole-time Company Secretary on or before 07.2021. It is observed that, Ms. Nikki Srivastava, was selected and joined the Company as the whole time Company Secretary with effect from 171‘ January 2022. The Board of directors at the Board Meeting has failed to 1111 up the resulting vacancy for the period from 23.07.2021 to 16.01.2022. On the basis of above said fact, the company is deemed to have been violated the provision of the said Section 203(4) of the Companies Act, 2013 read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
6. On the basis of the e-form GNL-1 vide SRN F58809690 dated 15.02.2023 and the application of the company and its officers on 16/02/2023 this office had issued Adjudication Hearing Notice to the Company and its Directors on I 08.2023 fixing the hearing date as 21/08/2023. Due to Administrative exigencies, the hearing has been postponed and rescheduled on 06.09.2023 at 12.00 Noon
7. Pursuant to revised hearing notice issued to the company and its directors on 30.08.2023, Shri Janakiraman (Practicing Company Secretary), Authorized by the company and directors appeared before the undersigned and made submissions that, “the said violation may he adjudicated and accepted to pay the penalty as prescribed u/s 203(5) of the Companies Act, 2013.”
8. Whereas on the basis of Suo-motto application received for Adjudication of offences u/s 454 of the Act r/w Companies (Adjudication of Penalty), Rules 2014, has been verified in the light of the latest Companies Amendment Act, 2020 wherein. Section 454 of the Companies Act, 2013, particularly sub section 3 and its proviso states that;
“The adjudicating officer may, by an order
(a) Impose the penalty on the company, the officer who is in default, or any other person, as the case may be. staling therein any non-compliance or default under the relevant provisions of this Act: and
(b) Direct such company, or officer who is in default or any other person, as the case may be, to recta the delimit, wherever he considers fit.
9. Whereas as per section 203 (5) of the Companies Act, 2013, which read as under:-
“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 offiftv 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 jive lakh rupees”
10. Shri K. Janakiraman (PCS), Authorised Representative admitted the violation and hence following penalty referred to in Para No.9 is imposed on the applicant for the delay of 178 days in appointing a Whole time Company Secretary.
|
S.No |
Company and Officers in default | Amount of Penalty for 1′ default | Additional Penalty for Continuing Offence (From 23.07.2021 to 16.01.2022 Delay of 178 days) |
Total amount of Penalty Imposed |
| 1 | M/s Nissan Motor India Private Limited – Company |
Rs.500,000/- | Nil | Rs. 5,00,000/‑ |
| 2 | Shri. Rakesh Srivastava – Director |
Rs. 50.000/- | 1000*178 days days of delay = Rs.1,78,000 | Rs. 2.28,000/‑ |
| 3 | Shri. Tyagi Rahul – Director |
Rs. 50,000/- | 1000 * 178 days of delay = Rs.1,78,000 |
Rs. 2.28.000/- |
| 4 | Shri Ryan Austin Udy – Director | Rs. 50.000/- | 1000*178 days of delay = Rs.1,78,000 |
Rs. 2.28.000/- |
Therefore in view of the above said violation of Section 203(4) of the Companies Act, 2013 read with Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014. the undersigned in exercise of the powers vested to him under Section 454(1) &
(3) of the Companies Act, 2013.Hereby impose a penalty of Rs.5,00,000/- to the company and Rs.2,28,000 /- each to the officer in default (Totaling Rs.11,84,000/- as penalty amount).
11. Whereas sub-section (5) of section 454 of the Companies Act,2013 provides that 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 and further sub-section(6) provides that every appeal under sub-section(5) shall be filed within sixty days form the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person and shall he in such form. manner and be accompanied by such fees as may be prescribed.
12. Please note that as per Section 454(8) (i) of the Companies Act, 2013. Where company does not pay the penalty imposed by the adjudicating officer or the Regional Director within a period of ninety days from the date of the receipt of the copy of the order, the company shall be punishable with tine 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 who is in default does not pay the penalty 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-live thousand rupees but which may extend to one lakh rupees, or with both.
In case of default in payment of penalty, prosecution will be tiled under section 454(8) (i) and (ii) of the Companies Act, 2013 at your own costs without any further notice. Alongwith the penalty to be imposed and the same should be submitted.
B. SRIKUMAR,ICLS
REGISTRAR OF COMPANIES
TAMILNADU, CHENNAI.
ADJUDTCATING OFFICER
