On June 1, 2023, the Registrar of Companies issued Order No. ROC-G/Adj-Penalties/Order/2023/504 to C.T. Cotton Yarn Limited for violating section 149(1) of the Companies Act 2013. The company, along with its directors – Mr. Madan Verma, Mr. Ashavin V Shinde, and Mr. Surendra Singh, were found guilty of not appointing a female director, as mandated by law for a listed company with certain paid-up share capital or turnover.
Despite receiving a show cause notice and Notices of Inquiry, no representative from the company attended the hearing scheduled for May 22, 2023, leading to an ex-parte proceeding on June 1, 2023. The company has been charged a penalty commensurate with the duration of their non-compliance, i.e., from December 21, 2020, to April 11, 2023.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Office of The Registrar of Companies, Madhya Pradesh
Sanjay Complex, ‘A’ Block, 3rd Floor, By Speed Post
474 009/ Jayendraganj, Gwalior — 474009.
Order No. ROC-G/Adj-Penalties/Order/2023/504 Dated: o1 JUN 2023
Sub: Order under section 454 for violation of Section 149(1) of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014.
Please find enclosed herewith copy of order dated 01.06.2023 passed in the Matter of MIs C.T. COTTON YARN LIMITED for necessary compliance.
End: As above.
Mukesh Kumar Soni
Registrar of Companies, (I/C)
Madhya Pradesh, Gwalior.
Order for Penalty for Violation of Section 149(1) of the Companies Act, 2013
In the matter of Companies Act, 2013
In the matter of adjudication proceeding under Sub-section (1) of section149 of Companies Act, 2013.
In the matter of C.T. COTTON YARN LIMITED
Appointment of Adjudicating Officer
1. Ministry of Corporate Affairs vide its Gazette Notification no A-42011/112/2014-Ad.II, dated 24.03.2015 appointed undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Whereas, Company T. COTTON YARN LIMITED having CIN: L17111MP1993PLC007834, (herein after referred to as “company”) is a registered company with this office under the provisions of Companies Act, 1956 having its registered office situated at 25-B, Malanpur Industrial Area, Bhind, Madhya Pradesh, 477116, India, as per the MCA21 Registry.
3. Law relating to Appointment Women Director in company:
(1) Every company shall have a Board of Directors consisting of individual as directors and shall have-
(a) A Minimum number of three directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company; and
(b) A maximum of fifteen directors
Provided that a company may appoint more than fifteen directors after passing a special resolution:
Provided further that such class or classes of companies as may be prescribed, shall have at least one women director.
Rule 3 of the Companies (Appointment and qualification of Directors) Rules, 2014: The following class of companies shall appoint at least one-woman director-
(i) Every listed company
(ii) Every other public company having-
(a) Paid-up share capital of one hundred crore rupees or more; or
(b) Turnover of three hundred crore rupees or more:
Provided that a company, which has been incorporated under the Act and is covered under provision of second proviso to sub-section (1) of section 149 shall comply with .such provisions within a period of six months from the date of its incorporation:
Provided further that any intermittent vacancy of a women director shall be filled-up by the Board at the earliest but no later than immediate next Board meeting or three months from the date of such vacancy whichever is later.
Explanation- For the purposes of this rule, it is hereby clarified that the paid-up share capital or turnover, as the case may be, as on the last date of latest audited financial statements shall be taken into account.
4. Facts about the Case; –
a) As per the Financial Statements filed by the company its Paid-up share capital and turnover as on 31.03,2011 is as under: –
b) The company is clearly required to appoint a woman director based on Rule 3(i) of Companies (Appointment and qualification of Directors) Rules, 2014 as the said company is a Listed Company.
5. Accordingly, this office had issued show cause notice for violation of section 149(1) of the Companies Act, 2013 to the company and its officer who is in default vide letter no. ROC-Gwalior/Adj.Pen./See.149/2023/111-114 dated 11.04.2023-. However, no reply is received from the company and its officer who is in default,
6. Thereafter, “Notices of Inquiry” vide letter No. RoC-Gwalior/Adj.Pen./Sec.149/2023/ 307-310 dated 09.05.2023 were issued to the Company and its officer who is in default as per [Rule 3(3), Companies (Adjudication of Penalties) Rules 2014] and the date of hearing was fixed on 22.05.2023 at 02:30 P.M in the Office of Registrar of Companies, Madhya Pradesh, Sanjay Complex, A block-III floor, Jayendraganj, Gwalior, Madhya Pradesh.
7. No representative of the Company or Directors have appeared on the date so fixed.
As, no one appeared, hence, as per Rule 3(8), Companies (Adjudication of Penalties) Rules 2014, the matter is being proceeded today i.e., 01.06.2023 (ex-parte).
8. Penalty Provision for violation: –
Non-compliance of section 149 r/w Rule 3 of Companies (Appointment and qualification of Directors) Rules, 2014 would give rise to liability under section 172 which read as under:
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, 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.]
9. It is, evident that the company has not complied with the provision of appointment of women director. Under Section 172, penalty is leviable on the company and its officers who is default. The period of default is being reckoned from the date 21.12.2020 effective date of amendment for section 172 from which penalty has provided through the Companies (Amendment) Act, 2020. Notification dated 28th September, 2020 Amendment Effective from 21st December 2020. The period of default would continue till the Show Cause Notice dated 11.04.2023 has issued. (This period is referred as default period.) Therefore, the default period is 840 days (from 21.12.2020 to 11.04.2023)
10. Accordingly, the calculation of penalty is given as under:
11. The company and its officers who is in default are hereby directed to pay the penalty amount as per column no. G of abbve Table. I am of this opinion that penalty is commensurate with the aforesaid failure committed by.the Notice and penalty so imposed upon the Officers-in-default shall be paid from their personal sources/ income. It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.
12. The company is hereby directed to rectify the default immediately from the date of receipt of copy of this Order.
13. Appeal against this order may be filed in writing with the Hon’ble Regional Director (NWR), Ministry of Corporate Affairs, Ahmedabad 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 this order. (Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014).
14. Your attention is also invited to Section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013, which state that in case of non-payment of penalty amount, the company shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to five lakh rupees and officer in default shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty five thousand rupees but which may extend to one lakh rupees or both.
15. In Terms of The Provisions Of Sub-Rule (9) Of Rule 3.0f The Companies (Adjudication Of Penalties) Rules, 2014, copy of the order is being sent to M/s. C.T. COTTON YARN LIMITED 25-B, Malanpur Industrial Area, Bhind, Madhya Pradesh, 477116, India, Mr. MADAN VERMA (DIRECTOR) 1019/3, Rajiv Nagar Gurgaon 122001 Haryana India, Mr. ASHAVIN V SHINDE (DIRECTOR) B7/86 Safdurjung Enclave New Delhi 110029 Delhi India, Mr. SURENDRA SINGH (DIRECTOR) 2, Karisath, Town/Vill-Karisath Anchal-Udwant Nagar I3hojpur 802157 Bihar India and Regional Director (NWR), Naranapura, Ahmedabad and will also be Uploaded on MCA Website.
The adjudication notice stands disposed off with this order.
(Mukesh Kumar Soni)
Registrar of Companies, (I/C) &. Adjudicating officer,
Madhya Pradesh, Gwalior.
Signed on this 01st day of June, 2023.
Place: Gwalior, Madhya Pradesh.