Introduction: The Ministry of Corporate Affairs (MCA) has wielded its regulatory authority against M/s Shareway Securities Limited for a significant breach related to the delayed filing of MGT-14. This adjudication dives into the intricacies of the case, outlining the violations, penalties imposed, and the aftermath for both the company and its officers.
Detailed Analysis:
1. Background and Company Information:
- M/s Shareway Securities Limited, incorporated in 2008, is under the jurisdiction of the Registrar of Companies, Chennai.
- The company’s registered office is located at L Block, 46 Anna Nagar East Chennai – 600102, Tamilnadu, India.
2. Legal Provisions and Violations:
- The adjudication is based on violations of Section 117(1) of the Companies Act, 2013, in conjunction with Rule 24 of the Companies (Managements and Administration) Rules, 2014.
- Section 117(1) mandates the filing of resolutions and agreements with the Registrar within thirty days, while Rule 24 specifies the filing format (Form MGT 14).
3. Financial Year Resolutions and Default Days:
- The Board of Directors passed resolutions related to financial statements for the fiscal years 2014-15 to 2019-20.
- A detailed breakdown of default days, due dates, and filing dates reveals the extent of the delay, ranging from 1002 to 2786 days.
4. Adjudication Hearing and Admission of Violation:
- The office issued an Adjudication Hearing Notice on 07.09.2023, with the hearing scheduled for 12/09/2023 at 11.00 A.M.
- Shri S. Raghavan, a Practicing Company Secretary, represented the company and its directors during the hearing.
- Admission of unintentional violation and willingness to pay the prescribed penalty under Section 117(2) of the Companies Act, 2013, was presented.
5. Penalty Calculation and Imposition:
- Section 117(2) specifies penalties for failure to file resolutions within the stipulated period.
- The penalty calculation, as per the provisions, resulted in a total penalty of Rs. 34,40,600.
- The company and each officer in default face individual penalty amounts, reflecting the severity of the violations.
6. Appeal Process and Default Consequences:
- Section 454(5) provides the right to appeal against the order made by the adjudicating officer.
- Failing to pay the penalty within ninety days may lead to fines or imprisonment, as outlined in Section 454(8)(i) and (ii).
Conclusion: The penalty imposed on M/s Shareway Securities Limited underscores the MCA’s commitment to enforcing timely compliance with regulatory provisions. The unintentional violation serves as a cautionary tale, emphasizing the importance of adhering to filing deadlines and procedural norms outlined in the Companies Act, 2013. Companies and their officers should remain vigilant to avoid severe financial repercussions and legal consequences arising from non-compliance.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES,
TAIL NADU, ANDAMAN & NICOBAR ISLANDS,
CHENNAI II FLOOR, C- WING, SHASTRI BHAVAN,
26, HADDOWMS ROAD, NUNGAMBAKKAM, CHENNAI- 6
F.NO.ROC/CHN/SHAREWAY/ADJ/S.117/2023 Date: 13 OCT 2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 4..4 OF THE COMPANIES ACT, 2013 READ WITH RULE 24 OF THE COMPANIES (MANAGEMENTS AND ADMINISTRATION) RULES, 2014 FOR VIOLATION OF PROVISIONS OF SECTION 117 OF THE COMPANIES ACT, 2013 IN THE MATTER OF M/S. SHAREWAY SECURITIES LIMITED
1. In the matter of M/s SHAREWAY SECURITIES LIMITED (CIN U67120TN2008PLC066952) incorporated on 24/03/2008 under the jurisdiction of Registrar of Companies, Chennai with the registered office situated at L Block, 46 Anna Nagar East Chennai – 600102, Tamilnadu, India.
2. Whereas pursuant to sub-section (1) of Section 117 of the Companies Act 2013, which read as under:
“(1) A copy of every resolution or any agreement, in respect of matters specified in subsection (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall he filed with the Registrar within thirty days of passing or making thereof in such manner and with such, fees as may be prescribed.
3. Whereas pursuant to Rule 24 of Companies (Managements And Administration) Rule 2014,– which read as under:
“A copy of every resolution or any agreement required to be filed, together with the explanatory statement under section 102, if any. shall be filed with the Registrar in Form NO. MGT 14 along with the fee.
4. Whereas pursuant to sub-section (3)(g) of Section 179 of the Companies Act 2013, ‘‘ Hi read as under‑
“(3) The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely: (g) to approve financial statement and the Board’s report; –
5. Whereas the Board of Directors passed various resolutions between the period 2014-15 to 2019-20 with respect to the approval of the financial statements and the report of the Board of Directors. The details of the resolution passed are provided as under:
| S. No | Financial Year | Date of Passing the Resolution |
Due date of filing MGT-14 |
Date of Filing MGT –14 |
No. of Days of default |
SRN |
| 1. | 2014-2015 | 01.09.2015 | 30.09.2015 | 18.05.2023 | 2786 days | AA2511736 |
| 2. | 2015-2016 | 01.09.2016 | 30.09.2016 | 30.06.2023 | 2466 days | AA3220305 |
| 3. | 2016-2017 | 09.06.2017 | 08.07.2017 | 03.67.2023 | 2185 days | AA3221784 |
| 4. | 2017-2018 | 01.09.2018 | 30.09.2018 | 03.07.2023 | 1736 days | AA3207319 |
| 5. | 2018-2019 | 04.09.2019 | 03.10.2019 | 03.07.2023 | 1368 days | AA3207732 |
| 6. | 2019-2020 | 04.09.2020 | 03.10.2020 | 03.07.2023 | 1002 days | AA3208470 |
The lapse in complying with the provisions under Section 117 of the Companies Act, 2013 read with Rule 24 of the Companies (Management and Administration) Rules, 2014 and Section 403 of the Companies Act, 2013 is unintentional and the Company has inadvertently contravened the said provisions of the Companies Act, 2013.
6. On the basis of the e-form GNL-1 vide SRN F63223036 dated 17.08.2023 and the Physical application of the company and its officers dt. 23/08/2023 this office had issued Adjudication Hearing Notice to the Company and its Directors on 07.09.2023 fixing the hearing date as 12/09/2023 at 11.00 A.M
7. Pursuant to hearing notice issued to the company and its directors on 07.09.2023. Shri S. Raghavan (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 117(2) of the Companies Act, “
8. Whereas on the basis of Suo-motto application received for Adjudication of offences u/s 454 of the Act 2013 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, stating 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 rect the default, wherever he considers fit.–
9. Whereas as per section 117(2) of the Companies Act, 2013, which read as under:-
“If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees and every officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of fifty thousand rupees”
10. Shri S. Raghavan (PCS), Authorized Representative admitted the violation and hence following penalty referred to in Para No.9 is imposed on the applicants for the delay filing of MGT-14 for the financial year 2014-2015 to 2019-2020. have mentioned below.
A) Penalty Calculation as per Provision of Section 1 17(2) of the Companies Act. 2013
B) Company and the Officers in default
| S. No | Name of the Company and Officers in default | Period Offence | Total Penalty Imposed U/s 117(2) of the Companies Act 2013 |
| 1. | M/S. Shareway Securities Limited – (Company) | 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 | Rs. 10,40,600/‑ |
| 2. | Mr. Kabirdass Murali (Managing Director) |
Rs. 3,00,000/‑ | |
| 3. | Mr. Janardhanam Setlturaman (Director) |
Rs. 3,00,000/- | |
| 4. | Ms. Murali Hari Priya (Director) |
Rs. 3,00,000/‑ | |
| 5. | Mr. Jayaprakash Pai Muniyal (Director) |
Rs. 3,00,000/- | |
| 6. | Ms. Kavitha Jayaram (Director) |
Rs. 3,00,000/‑ | |
| 7. | Mr. Dharmaraj Harihara-puthran (Director) | Rs. 3,00,000/- | |
| 8. | Mr. Manoj Jayanthilal Shah (Company Secretary) | Rs. 3,00,000/‑ | |
| 9. | Mr. Anjanappa Ajath (Chief Financial Officer) |
Rs. 3,00,000/‑ |
Therefore in view of the above said violation of Section 117(1) of the Companies Act, 2013 read with 24 of the companies (Managements and Administration) rules, 2014 the undersigned in exercise of the powers vested to him under Section 454(1) & (3) of the Companies Act. 2013.11erek impose a penalty of Rs.10,40,600/- to the company an Rs.3,00,000 /- each to the officer in default (Totaling Its.34,40,600/- 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 be in such form. manner and he accompanied by such fees as may be
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 fine 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-five thousand rupees but which may extend to one lakh rupees, or with both.
In case of default in payment of penalty, prosecution will be filed 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.
ADJUDICATING OFFICER
