Registrar of Companies, Karnataka, has imposed penalties on Jai Shree Krishna Steel Works Private Limited for failing to maintain minutes of meetings as mandated under Section 118 of the Companies Act, 2013. An inspection revealed that the company had not produced meeting minutes, indicating non-compliance with record-keeping requirements. Despite claiming that the minutes were maintained but inaccessible due to SARFAESI Act proceedings involving their premises, the company failed to provide evidence of efforts to recover the documents. Consequently, the company was fined ₹25,000, and its directors, Mahesh Askarandas and Kunal Mahesh, were each fined ₹5,000. The penalties must be paid within 90 days, and failure to comply could result in further actions under Section 454(8) of the Act. The company has the right to appeal this decision within 60 days.
Registrar of Companies, Karnataka
Kendriya Sadan, 2nd Floor, ‘E’- Wing,
Koramangala, Bengaluru – 560 034
Phone : 080-25537449/25633105
E-mail ID : [email protected]
F No. ROC(B)/Adj.Order/454-118/JSK Steel Works/ Co.No.050503/2024 Date: 24.05.2024
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITES) RULES, 2014 FOR VIOLATION OF PROVISIONS OF SECTION 118 (AS AMENDED TIME TO TIME) FRAMED THEREIN BY JAI SHREE KRISHNA STEEL WORKS PRIVATE LIMITED.
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of Companies Act, 2013 (hereinafter referred to as Act).
2. The company, Jai Shree Krishna Steel Works Private Limited (hereinafter referred to as Company) having CIN: U27107KA2009PTC050503 was incorporated on 28.07.2009 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is situated at 565-A, KIADB Industrial Area, Samudravalli, Hobli, Shanthigrama, Hassan, Karnataka – 573201.
3. It is seen that an Inspection under section 206 of the Act, was conducted on the company. During the course of inspection under section 206(5) of the Act, no minutes of the meeting were produced to the inspector of inspection which prima facie confirm that company has not maintained the minutes of meeting where business or transaction relating to purchase, sale and loan are recorded. Further the company neither produced documents to place reliance on their reply nor arranged the same for verification to the Inspector. Thus the company and its officers have violated the revisions of Section 118(1) of the Act and liable for action under section 118(11) of the Act. Hence an adjudication notice was issued by the Registrar of Companies on 20.04.2023 for violation of the provisions of section 118(1) of the Act and directed the company to file an adjudication application. Thereafter, the company has filed its adjudication application on 10.11.2023.
4. As per the provisions of section 118(1) of the Act, 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. As per the provisions of section 118(10) of the Act, 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, and approved as such by the Central Government.
5. As per provisions of section 118(11) of the Act, 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.
6. Pursuant to the adjudication application filed by the company, Notice of hearing was sent on 24.01.2024 and physical hearing was held on 06.02.2024. It was attended by Mr. Shrinath Bhat, practising company secretary who appeared on behalf of the company and directors and made his submissions. As stated in the application, he informed that the company had maintained the minutes of the meeting from the date of its incorporation. However office premises is now under the possession of ARC Phoenix ARC Pvt Ltd under the SARFAESI Act. Further states that South Indian Bank Limited has assigned the loan due from the company in favour of Phoenix ARC Pvt Ltd vide agreement dated 06.01.2017 and Phoenix ARC Pvt Ltd took possession of secured asset under section 13(4) of the SARFAESI Act vide resolution no. 100/2018-19 dated 06.01.2017. Therefore, due to the above reasons, unable to produce the required documents.
7. As seen from the financial statements of the company and the criteria prescribed, the company does not fall under the definition of a “small company” as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, imposing lesser penalty as per the provisions of section 446B of the Companies Act, 2013 shall not be applicable to the company.
8. The company has not produced anything on record to show efforts made to secure the copies of minutes book of every general meeting as well as Board Meeting from secured creditor/ DRT or any other court of law. In any case, the compliance requirements of Companies Act cannot be dispensed with only because SARFAESI proceedings commenced against the company.
9. Therefore, having considered the facts and circumstances of the case and the – submissions made by the company / director / key managerial personnel through their authorised representative, in view of the above said violation of non-compliance of provisions of section 118 of the Companies Act, 2013, in exercise of the powers vested under section 454(3) of the Act, I do hereby impose penalty in the following manner on the company and all the officers in default during the period of offence committed:
| S. No. |
Particulars |
Penalty imposed (maximum penalty) |
| 1 | Company | Rs. 25,000 |
| 2 | Mahesh Askarandas, Director | Rs. 5,000 |
| 3 | Kunal Mahesh, Director | Rs. 5,000 |
10. The company and its directors / key managerial personnel are hereby directed to pay the penalty amount as tabulated above within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website mca.gov.in (Miscellaneous head) specifying the details of this Order and the noticee who is paying the penalty.
11. Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in Form ADJ setting forth the grounds of appeal and shall be accompanies by a certified copy of this Order.
12. Your attention is also invited to section 454(8) of the Companies Act, 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under 454(8)(i) and (ii) of the Companies Act, 2013 against the company and directors / key managerial personnel without further notice in the matter.
13. The company is required to serve a copy of this Order on the director(s)/ officer(s)-in-default mentioned above in terms of provisions of section 20 of the Companies Act) 2013.
(Sanjay Sood)
Registrar of Companies, Karnataka
and Adjudicating Officer
