MCA Imposes 5 Lakh Penalty for Missing Meeting Details in AGM Minutes

In a recent adjudication proceeding, M/s STARNET BREEDING AND RESEARCH FARMS PRIVATE LIMITED, along with its directors Harshil Nuwal and Subhash Nuwal, faced penalties imposed by the Registrar of Companies in Rajasthan, Jaipur. The penalties, amounting to 5 Lakh rupees, were imposed due to a violation of section 118 of the Companies Act, 2013, read with SS-2. This article provides insights into the case, the reasons for the penalties, and the consequences for the company and its directors.

Detailed Analysis:

The case revolves around a violation of section 118 of the Companies Act, 2013, which pertains to the maintenance of minutes of proceedings of general meetings. According to the observations made during the inspection of the company’s books of accounts and financial statements, it was noted that the date of entry of minutes in the minute book and the time of the conclusion of the annual general meetings held on 29.09.2016, 29.09.2017, and 29.09.2018 were not mentioned.

This failure to comply with the provisions of section 118, read with SS-2, constituted a violation of the Companies Act, 2013. As a result, an adjudication notice dated 26.08.2022 was issued to the company and its officers in default, providing them with an opportunity to be heard on 14th September 2022 at the Registrar of Companies’ office in Jaipur.

During the adjudication proceeding, Mr. Amit Deedwania, representing Deedwania A & Co., appeared on behalf of the company and its directors. However, despite representation, it was established that the company and its directors were in default of the provisions of section 118 of the Companies Act, 2013, read with SS-2.

As a consequence of the violation, the Registrar of Companies imposed penalties. A total penalty of 37,500/- rupees was imposed on the company, and each of the two directors, Harshil Nuwal and Subhash Nuwal, was penalized with 7,500/- rupees. This resulted in a cumulative penalty of 52,500/- rupees for the default.

Conclusion:

The case of M/s STARNET BREEDING AND RESEARCH FARMS PRIVATE LIMITED emphasizes the importance of maintaining compliance with statutory requirements outlined in the Companies Act, 2013. Specifically, the accurate recording of minutes of proceedings of general meetings, including the date of entry and the time of conclusion, is essential to meet legal obligations.

Failure to adhere to these requirements led to the imposition of a penalty amounting to 52,500/- rupees on the company and its directors. This penalty must be paid in accordance with the order within the stipulated timeframe to avoid further legal action.

Companies and their directors are advised to exercise diligence in ensuring compliance with all relevant provisions of the Companies Act, 2013, to avoid financial penalties and legal complications. It is imperative that records and minutes of meetings are maintained accurately and in accordance with the law to uphold corporate governance standards.

*****

Registrar of Companies, Rajasthan, Jaipur

In the matter of Companies Act 2013
And
In the matter of adjudication proceeding under section 454 (3) of Companies Act, 2013
And
In the matter of adjudication proceeding for the violation of section 118 of the Companies Act, 2013 read with SS-2.
And
In the matter of

1. M/s STARNET BREEDING AND RESEARCH FARMS PRIVATE LIMITED
2. HARSHIL NUWAL
3.SUBHASH NUWAL

Date of hearing- 14/09/2022

Fact of the Case

1. That during the inspection of books of accounts and financial statements of the company, it is observed from the minutes of annual general meeting that date of entry of the minutes in the minute book, time of the conclusion of the meeting was not mentioned in respect to annual general Meeting held on 29.09.2016, 29.09.2017 and 29.09.2018, which is violation of section 118 of the Companies Act, 2013 read with SS-2.

2. The aforesaid violation was taken up with the company and its officers in default vide adjudication Notice dated 26.08.2022 for violation of section 118 of the companies Act, 2013 read with SS-1 giving an opportunity of being heard on 14th September, 2022 at 11.30 A.M. in the committee room of the 0/0 Register of the Companies Corporate Bhawan, G – 6 & 7, Residency Area, Civil Lines, Jaipur-302001.

3. That Mr. Amit Deedwania, Deedwania A & Co. has appeared today on behalf of Company and its directors. As the default was observed during the course of inspection by the inspecting officer, hence, Company and directors of the Company is defaulted the provisions of section 118 of the Companies Act, 2013 read with SS-2. On carefully examination and considering the fact of the case, I am on conclusion that the provision of section 118 of the Companies Act, 2013 have not been complied with by the Company and its directors.

ORDER

“That keeping in mind all the relevant facts as per the inspection report the inspecting officer has pointed out 03 board meetings in which secretarial standard was not followed by the company and provisions of section 446B of the Companies Act, 2013, penalty of Rs. 37,500/- (Rs. Thirty seven thousand and five hundred only) is hereby imposed on Company and Rs. Rs. 7,500/- (Rs. seven thousand five hundred only) each for 2 directors in default totaling to Rs. 52,500/- for the default of section 118 of the Companies Act, 2013 read with SS-2.”

Calculation table for penalty

The matter has been stands disposed of with this order. Signed this on 22nd day of September 2022.

C. M. Karl Marx
Registrar of companies, Rajasthan
Jaipur (Rajasthan)