Case Law Details

Case Name : m
Appeal Number :
Date of Judgement/Order :
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Introduction: The Ministry of Corporate Affairs, India, has issued an order regarding the violation of Section 203(1) of the Companies Act, 2013 by CISTRO TELELINK LIMITED. This detailed analysis delves into the circumstances, legal provisions, adjudication process, penalties, and appeal options associated with this case.

Detailed Analysis:

1. Background and Legal Framework: The Companies Act, 2013 mandates the appointment of key managerial personnel, including a company secretary. Violation of this provision attracts penalties under Section 203(5) of the Act.

2. Case Overview: CISTRO TELELINK LIMITED failed to appoint a company secretary promptly, leading to a violation of Section 203(1) of the Companies Act, 2013. Despite notices and opportunities for response, the company and its directors remained non-compliant.

3. Adjudication Process: The Registrar of Companies conducted an inquiry and issued notices to the company and its officers. Hearings were held, and responses were considered before reaching a decision.

4. Penalties Imposed: The adjudicating officer imposed penalties on CISTRO TELELINK LIMITED and its officers in default, considering the severity and duration of the violation. The penalty amounts are specified based on the provisions of Section 203(5) of the Companies Act, 2013.

5. Appeal Options: The order provides information on the appeal process, including the timeline and required documentation for filing appeals with the Regional Director (NWR), Ministry of Corporate Affairs, Ahmedabad.

Conclusion: The penalty order against CISTRO TELELINK LIMITED serves as a reminder of the importance of regulatory compliance under the Companies Act, 2013. It underscores the accountability of companies and their officers in adhering to statutory obligations. Understanding the legal implications, adjudication process, and appeal mechanisms is crucial for entities operating within the corporate framework of India. Compliance not only avoids financial penalties but also upholds corporate governance standards essential for sustainable business practices.

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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Office of The Registrar of Companies, Madhya Pradesh
Sanjay Complex.  ‘A’ Block, 3rd Floor,
Jayendraganj, GwaIior —474009.
Email : roc. gwalior@mca.gov.in

No. ROC-G/Adj-Penal/Order/S. 203(1)/2024/3560 Dated : 06 Feb 2024

To,

1. M/S CISTRO TELELINK LIMITED,
206, AIREN HEIGHTS, AB ROAD,
INDORE, MADHYA PRADESH, 452010, INDIA.
Email: cistrotelelink@gmail.com

2. SHRI ARUN KUMAR SHARMA, (DIRECTOR)
(FROM 29.09.2011 TO TILL DATE)

3. MS RENU MANENDRA SINGH, (DIRECTOR)
(FROM 29.09.2014 TO TILL DATE)

4. SHRI GANESH SAHEBRAO SAINDANE, (DIRECTOR)
(FROM 29.09.2015 TO TILL DATE)

5. SHRI OM PRAKASH MADHOGARHIA, (WHOLE TIME DIRECTOR)
(FROM 17.02.2014 TO 31.12.2018)

6. MS. BANDANA SINGH, (DIRECTOR)
(FROM 11.08.2018 TO TILL DATE)

7. The Regional Director (NWR),
RoC Bhavan, Opp. Rupal Park Society,
Behind Ankur Bus Stop,
Naranpura, Ahmedabad — 380 013.

8. E-Gov Cell, MCA, for uploading the documents.

Sub: Order under section 454 for violation of Section 203(1) of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules. 2014.

Sir,

Please find enclosed herewith copy of order dated 05.02.2024 passed in the matter of M/s CISTRO TELELINK LIMITED for necessary compliance.

Yours’s faithfully,

Encl : As above.

(Mukesh Kumar Soul)
Registrar of Companies,
Madhya Pradesh, Gwalior.

Order for Penalty for Violation of Section 203(1) of the Companies Act, 2013
In the matter of Companies Act, 2013
And
In the matter of adjudication proceeding under Sub-section (1) of Section 203 of the
Companies Act, 2013.
And
In the matter of M/s CISTRO TELELINK LIMITED
(CIN: L19201MP1992PLC006925)

1. M/S CISTRO TELELINK LIMITED,
206, AMEN HEIGHTS, AB ROAD,
INDORE, MADHYA PRADESH, 452010, INDIA,
Email: cistrotelelink@gmail.com

2. SHRI ARUN KUMAR SHARMA, (DIRECTOR)
(FROM 29.09.2011 TO TILL DATE)
3. MS RENU MANENDRA SINGH, (DIRECTOR)
(FROM 29,09,2014 TO TILL DATE)
4. SHRI GANESH SAHEBRAO SAINDANE, (DIRECTOR)
(FROM 29,092015 TO TILL DATE)
5. SHRI OM PRAKASH MADHOGARHIA, (WHOLE TIME DIRECTOR)
(FROM 17.02.2014 TO 31.12.2018)
6. BANDANA SINGH, (DIRECTOR)
(FROM 11.08.2018 TO TILL DATE)…..Respondent

Appointment of Adjudicating Officer

The Ministry of Corporate Affairs vide its Gazette notification no A-42011/112/2014-Add.II, dated 24.03.2015 appointed the undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act. The undersigned is entrusted to adjudicate penalties under section 12 of the Companies Act, 2013.

MCA Imposes Penalty of Rupees. 568000 for 18 days delay in CS Appointment

Company

Whereas Company, CISTRO TELELINK LIMITED (CIN: L19201MP1992PLC006925) [herein after known as Company] is a registered company with this office under the provisions of Companies Act, 1956/ 2013 having its registered office situated at 206, Airen Heights, AB Road, Indore, Madhya Pradesh, 452010, India, as per the MCA website.

Si.
No.

Particulars Details
1. Paid-up capital (F.Y. 2022-23) 5,13,43,000/-
 2. Turnover (F.Y. 2022-23) 20,14,000/-
3. Net worth of the Company (F.Y. 2022-23) 4,40,00,000/-
4, Holding company No
S. Subsidiary company No
6. Whether company registered under Section 8 No
7. Type of Company Public company
8. Whether company registered under any other Special Act No

3. Law relating to Appointment of Key Managerial Personnel:

Section 203(1):

Every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel-

(i) Managing director, or chief executive officer or manager and in their absence, a whole-time-director.

(ii) Company secretary; and

(iii) Chief financial officer

Provided that an individual shall not be appointed or reappointed as the chairperson of the company in pursuance of the articles of the company, as well as the managing director or chief executive officer of the company at the same time after the date of commencement of this Act unless-

(a) The articles of such a company provide otherwise or

(b) The company does not carry multiple businesses.

Provided further that nothing contained in the first proviso shall apply to such class of companies engaged in multiple business and which has appointed one or more chief executive officers for each such business as may be notified by the Central Government.

Section 203(4):

If the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be filled-up by the board at a meeting of the board within a period of six months from the date of such vacancy.

Rule 8 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014

Every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel.

4. Facts of the case

Whereas this office conducted inquiry under section 206(4) of the Companies Act, 2013 and during the course of inquiry it has been found that as per section 203 (1) of the Companies Act, 2013 read with Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to appoint Company Secretary in the board of the directors. But company has appointed company secretary on 20.11.2018 while company was to appoint at the time when company was listed at stock exchange. Thus, it appears that the company and its officers in default has violated the provisions of Section 203(1) of the Companies Act, 2013 which attracted penal provisions under section 203(5) of the Companies Act, 2013 for the period from 02.11.2018 to 20.11.2018.

5. Accordingly, this office had issued Show Cause Notice u/s. 203(1) of the Act vide letter no. ROC- /Adj.Pen./Sec.203(1)/CTL/AT/2023/2887to2892 dated 18.12.2023 to the registered office of the company and its officers in default. However, no reply has been submitted from company and its directors till date.

6. Thereafter, “Notices of Inquiry” vide letter No. RoC-G/Adj.Pen./Sec.203(1)/CTUAT/ 2023/3123-3127 dated 04.01.2024 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 23.01.2024 at 11:30 AM in the Office of Registrar of Companies, Madhya Pradesh, Sanjay Complex, A block-III floor, Jayendraganj, Gwalior, Madhya Pradesh. The company vide mail dated 12.01.2024 and letter dated 12.01.2024 has requested for extension of time in the matter. Accordingly, this office vide mail dated 19.012024 has fixed the date of hearing on 05.02.2024 at 11:30 AM. Company and its directors have submitted their reply dated 31.01.2024 to this office.

7. Practicing Company Secretary Mr. Ayaz Shaikh, representative of the Company and Directors have appeared on the date so fixed i.e., 05.02.2024 at 11.30 A.M. Hence, as per Rule 3(8), Companies (Adjudication of Penalties) Rules 2014, the matter is being proceeded.

8. Penalty Provision for violation:

Non-compliance of section 203(1) would result in penal action under section 203(5) which read as under:

Section 203(5):

If any company makes any default in complying with the provisions of this Section, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty offifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.

9. The subject company does not get covered under the purview of small company as defined u/s 2(85) of the Act. Hence the benefit of section 446B would not be applicable on the company.

10. Order

Having Considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that the Company and its officers in default are liable for penalty as prescribed under Section 203(5) of the Act for default is made in complying with the requirements of Section 203(1) of the Act read with Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 by the company viz. CISTRO TELELINK LIMITED for the period of 18 days from 02.11.2018 to 20,11.2018, in terms of section 203(1) of the Companies Act, 2013. Accordingly, I am inclined to impose a penalty as prescribed under Sub-section (8) of Section 12 of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are shown in the table below:

Nature of Default
Relevant section under the Companies Act, 2013
Name of persons on whom penalty is imposed
First Default (Rs.)
Default Continues (Rs.)
Total default amount (Rs.)
Maximum Penalty (Rs.)
Final Penalty imposed (Rs.)
A B C D E F G H
Non appointment of Company Secretary S. 203(1) On Company 500000 1000 x 18

=18000

518000 500000 500000
Shri Om Prakash Madhogarhia, (Whole Time Director) 50000 1000 x 18

=18000

68000 500000 68000

11. The company and its officers who is in default are hereby directed to pay the penalty amount as per column no. H of above 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. 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.

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 www. 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. In Terms of The Provisions of Sub-Rule (9) Of Rule 3 Of The Companies (Adjudication Of Penalties) Rules, 2014, copy of the order is being sent to M/S CISTRO TELELINK LIMITED, 206, AIREN HEIGHTS, AB ROAD, INDORE, MADHYA PRADESH, 452010, INDIA, SHRI OM PRAKASH MADHOGARHIA, (WHOLE TIME DIRECTOR) (FROM 17.02.2014 TO 31.12.2018),  and Regional Director (NWR), Naranapura, Ahmedabad and will also be Uploaded On MCA Website.

The adjudication notice stands disposed off with this order.

Download Judgment/Order

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