In a recent development, the Registrar of Companies, Rajasthan, Jaipur, has taken strict action against M/s INTERLINK EXPORTS LIMITED and its key personnel, Shri NARAYAN TUKARAM BADDI (CFO) and Shri ALOK NARAYAN BADDI (CEO), for their failure to comply with the provisions of Section 204(1) of the Companies Act, 2013. This non-compliance pertains to the attachment of the Secretarial audit report (in form MR-3) with the Board report for multiple financial years. The consequences of this violation have led to a substantial penalty being imposed by the Ministry of Corporate Affairs (MCA).
Background: Section 204 of the Companies Act, 2013, along with the (Appointment and remuneration of Managerial Personnel) Rules 2014, mandates that every listed company or public company with a paid-up share capital of fifty crore rupees or more or a turnover of 250 crore rupees or more must annex a secretarial audit report, provided by a practicing company secretary in form MR-3, to its Board’s report, as required by Section 134(3) of the Companies Act, 2013.
Show Cause Notice: The MCA initiated proceedings against M/s INTERLINK EXPORTS LIMITED and its directors by issuing a show cause notice on April 25, 2022. The company responded to the notice on May 25, 2022, but their response was deemed unsatisfactory, leading to further complications for the listed company.
Adjudication Proceedings: Subsequently, the violation of Section 204(1) was taken up with the company and its officers in default through an adjudication notice dated June 30, 2022. The company and its directors were given an opportunity to be heard on July 15, 2022, which they failed to avail. A second chance was provided on September 16, 2022, but again, no one appeared on behalf of the company.
Default Confirmation: The non-appearance of the company and its directors, coupled with the continued violation, led to the conclusion that the director/KMP of the company was in default. It was determined that the provisions of Section 204(1) of the Companies Act, 2013, had not been adhered to by the company and its directors.
Conclusion: In light of the facts and provisions of Section 446B of the Companies Act, 2013, it was established that M/s INTERLINK EXPORTS LIMITED did not qualify as a small company under Section 2(85) of the Act. Consequently, a penalty of Rs. 12,00,000/- (Rs. Twelve Lacs only) was imposed on the company, and an equal penalty was levied on its key managerial personnel (KMPs), totaling to Rs. 36,00,000/-. This penalty was imposed for the failure to attach the Secretarial audit report (in form MR-3) for the financial years 2015-16 to 2020-21.
Penalty Calculation Table:
- 2015-16: Total Penalty – 6,00,000 INR
- 2016-17: Total Penalty – 6,00,000 INR
- 2017-18: Total Penalty – 6,00,000 INR
- 2018-19: Total Penalty – 6,00,000 INR
- 2019-20: Total Penalty – 6,00,000 INR
- 2020-21: Total Penalty – 6,00,000 INR
This order, dated October 12, 2022, concludes the matter, and the penalty has been imposed on the company and its KMPs for their failure to adhere to the mandatory reporting requirements under the Companies Act, 2013.
*****
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 204 of the Companies Act, 2013.
And
In the matter of
1) M/s INTERLINK EXPORTS LIMITED.
2) Shri NARAYAN TUKARAM BADDI (CFO)
3) Shri ALOK NARAYAN BADDI (CEO)
Fact of the Case
1. That it is has been noticed that the company has not complied with the provisions of Section 204(1) of the Companies Act, 2013 for attaching Secretarial audit report (in form MR-3) in respect to the financial year 2015-16, 2016-17, 2017-18, 2018-19, 2019-20 and 2020-21 by virtue of applicability as per Rule 9 of the Companies (Appointment and remuneration of Managerial Personnel) Rule 2014.
2. That the provisions of the section 204 of the Companies Act, 2013 read with (Appointment and remuneration of Managerial Personnel) Rules 2014 requires that every listed company or every public company having paid up share capital of fifty cores rupees or more or every public company having turnover of 250 cores rupees or more shall annex with its Boards report made in terms of sub-section (3) of section 134 of the Companies Act, 2013 a secretarial audit report, given by a company secretary in practice in form MR-3 prescribed under the said Rule.
3. That this office has issued show cause notice to the Company and its directors on 25.04.2022. The Company has furnished reply to the said notice vide its letter dated 25.05.2022, which was not found satisfactory as its a listed Company and de-listed by BSE sue to noncompliance of listing agreement. Hence, the company has not complied with the provisions of Section 204(1) of the Companies Act, 2013 for attaching Secretarial audit report (in form MR-3) by the company by virtue of applicability as per Rule 9 of the Companies (Appointment and remuneration of Managerial Personnel) Rule 2014.
4. That violation of Section 204(1) of the Companies Act, 2013 was taken up with the company and its officers in default vide adjudication Notice dated 30.06.2022 for violation of section 204 of the companies Act, 2013 giving an opportunity of being heard on 15th July, 2022 at the committee room of the 0/o Register of the Companies Corporate Bhawan, G – 6 86 7, Residency Area, Civil Lines, Jaipur-302001. Further, due to non-appearance on 15.07.2022 again given an opportunity of being heard on 16th September, 2022
5. That no one appeared on behalf of Company and other directors. Further, the default is not rectified as on date. Hence, it is concluded that director/KMP of the Company is defaulted. On carefully examination and considering the fact of the case, I am on conclusion that the provision of section 204 (1) 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 and provisions of section 446B of the Companies Act, 2013 it is found that paid up capital of Company is 2.96 Crore and it’s not feet in criteria of small Companies as per provision of section 2 (85) of the Companies Act, 2013. Hence, penalty of Rs. 12,00,000/- (Rs. Twelve Lacs only) is hereby imposed on Company and Rs. 12,00,000/- (Rs. Twelve Lacs only) is hereby imposed on KMPs for 2 KMPs in default totaling to Rs. 36,00,000/- for the default Secretarial audit report (in form MR-3) in respect to the financial year 2015-16 to 2020-21.”
Calculation table for penalty
| Financial Year | Penalty imposed on company / director(s) | Total Penalty (In Rs.) |
Total / maximum penalty imposed |
| 2015-16 | On company | 2,00,000 | 2,00,000 |
| Sh. NARAYAN TUKARAM BADDI (CFO) | 2,00,000 | 2,00,000 | |
| Sh. ALOK NARAYAN BADDI (CEO) | 2,00,000 | 2,00,000 | |
| Total Penalty for 2 0 1 5-1 6 | 6,00,000 | 6,00,000 | |
| 2016-17 | On company | 2,00,000 | 2,00,000 |
| Sh. NARAYAN TUKARAM BADDI (CFO) | 2,00,000 | 2,00,000 | |
| Sh. ALOK NARAYAN BADDI (CEO) | 2,00,000 | 2,00,000 | |
| Total Penalty for 2 0 1 6- 17 | 6,00,000 | 6,00,000 | |
| 2017-18 | On company | 2,00,000 | 2,00,000 |
| Sh. NARAYAN TUKARAM BADDI (CFO) | 2,00,000 | 2,00,000 | |
| Sh. ALOK NARAYAN BADDI (CEO) | 2,00,000 | 2,00,000 | |
| Total Penalty for 2017-18 | 6,00,000 | 6,00,000 | |
| 2018-19 | On company | 2,00,000 | 2,00,000 |
| Sh. NARAYAN TUKARAM BADDI (CFO) | 2,00,000 | 2,00,000 | |
| Sh. ALOK NARAYAN BADDI (CEO) | 2,00,000 | 2,00,000 | |
| Total Penalty for 2018-19 | 6,00,000 | 6,00,000 | |
| 2019-20 | [On company | 2,00,000 | 2,00,000 |
| Sh. NARAYAN TUKARAM BADDI (CFO) | 2,00,000 | 2,00,000 | |
| Sh. ALOK NARAYAN BADDI (CEO) | 2,00,000 | 2,00,000 | |
| Total Penalty for 2019-20 | 6,00,000 | 6,00,000 | |
| 2020-21 | On company | 2,00,000 | 2,00,000 |
| Sh. NARAYAN TUKARAM BADDI 6 Lakh Penalty (CFO) | 2,00,000 | 2,00,000 | |
| Sh. ALOK NARAYAN BADDI (CEO) | 2,00,000 | 2,00,000 | |
| Total Penalty for 2020-21 6,00,000 6,00,000 | |||
The matter has been stands disposed of with this order. Signed this on 11th day of October 2022.
Order No. 2628 to 2632
Date:- 12/10/2022
C. M. Karl Marx
Registrar of companies, Rajasthan
Jaipur (Rajasthan)
