In a recent adjudication case under the Companies Act, 2013, Indira IVF Hospital Private Limited, along with its key officers, found itself facing a significant penalty of Rs. 1.60 Lakh for failing to hold mandatory board meetings. This article delves into the details of the case, examining the violation, the arguments presented, and the resulting adjudication order.
The case in question revolves around the alleged violation of Section 173(1) of the Companies Act, 2013, which mandates that companies should hold a minimum of four board meetings in a year. In this instance, Indira IVF Hospital Private Limited failed to conduct any board meetings in the year 2021, thereby breaching this crucial requirement.
The company acknowledged its oversight and took the initiative to self-report the violation through its Director & CEO, Shri Kshitiz Murdia. Following this, the Registrar of Companies, Rajasthan, Jaipur, issued a notice for adjudication on August 12, 2022, citing the violation of Section 173 of the Companies Act, 2013, punishable under Section 450 of the same Act.
On August 29, 2022, a hearing took place where Shri Bhanu Mishra, Advocate, and Sh. Akshit Kumar Jangid, PCS, represented the company and parties No. 02 to 04. They admitted to the company’s violation and requested that the offense be adjudicated with a minimum penalty. The defense also pointed out that the company had rectified the situation by conducting a board meeting for the year 2022 on February 24, 2022, with proper appointments and cessations of Directors, as per the Ministry of Corporate Affairs (MCA) portal.
However, despite these submissions, the Registrar of Companies found reasonable cause to believe that the company, along with its officers in default/KMP, had indeed violated Section 173(1) of the Companies Act, 2013. Consequently, they were held liable for penal action under Section 450 of the same Act, read with Section 454 of the Companies Act, 2013.
The adjudication order, dated September 8, 2022, imposed a penalty as follows:
- Indira IVF Hospital Private Limited: Rs. 10,000/- per count * 4 counts = Rs. 40,000/-
- Shri Kshitiz Murdia (CEO): Rs. 10,000/- per count * 4 counts = Rs. 40,000/-
- Shiree Satish Kothari (CS): Rs. 10,000/- per count * 4 counts = Rs. 40,000/-
- Sayan Bandyopadhyay (CFO): Rs. 10,000/- per count * 4 counts = Rs. 40,000/-
The total penalty amounted to Rs. 1.60 Lakh. It was specified that the penalty should be paid within 90 days from the receipt of the order via an appropriate challan on the MCA Portal. Importantly, the penalty imposed on the Directors was to be paid from their personal accounts.
The order also cautioned that failure to pay the penalty within the stipulated period would lead to legal action under Section 454(8) of the Companies Act, 2013.
Conclusion:
The case of Indira IVF Hospital Private Limited serves as a reminder of the importance of adhering to statutory requirements, such as holding mandatory board meetings as prescribed by the Companies Act, 2013. In this instance, the company faced a significant penalty of Rs. 1.60 Lakh for its lapse, highlighting the gravity of such violations in the eyes of the law. It underscores the necessity for companies to ensure strict compliance with all regulatory obligations to avoid potentially costly repercussions.
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Registrar of Companies, Rajasthan, Jaipur
No. ROC-JP/Adj./2022-23/Sec 173/CA 2013
In the matter of Companies Act 2013
In the matter of adjudication proceeding under section 454(3) read with section 173(1) of the Companies Act, 2013 punishable under section 450 of the Companies Act, 2013.
And
In the matter of
1. Indira IVF Hospital Private Limited
2. Shri Kshitiz Murdia
3. Shiree Satish Kothari
4. Sayan Bandyopadhyay
Date of hearing: 29.08.2022
Present
Shri C.M. Karl Marx, Registrar of Companies, Rajasthan, Jaipur
Shri Bhanu Mishra, Adv and Sh. Akshit Kumar Jangid, PCS on behalf of Company and Party No. 02 to 04.
Adjudication Order
That the company through Sh. Kshitiz Murdia, Director & CEO has Suo-moto, made an application to adjudicate the violation committed by company by non-holding the board meetings as required by the section 173 of the Companies Act, 2013.
That this office has issued notice for adjudication dated 12.08.2022 for violation 173 of the Companies Act, 2013 punishable under section 450 of the Companies Act 2013 to the Company and its Officers in default/KMP. The opportunity of being heard was provided to the company and its officers in default/KMP on 29.08.2022.
That on the date of hearing i.e. 29.08.2022 Shri Bhanu Mishra, Adv and Sh. Akshit Kumar Jangid, PCS appeared on behalf of the Company and Party No. 02 to 04. Shri Bhanu Mishra, Adv and Sh. Akshit Kumar Jangid, PCS submitted that the company has violated 173(1) of the Companies Act, 2013 punishable under section 450 of the Companies Act 2013 by not holding any board meeting as required under the Companies Act, 2013 for the Year 2021 and prayed to adjudicate the offence by imposing minimum penalty. Further, they submitted that the Company had conducted the board meeting for the Year 2022 on 24.02.2022. Appointment and cessation of Directors were taken as per MCA portal.
That in view of the above facts the undersigned has reasonable cause to believe that the provision of Section 173(1) of the Companies Act, 2013 had not complied with as required under law by the Company and its officers in default/KMP and therefore liable for penal action under section 450 of the Companies Act, 2013 r/w sec 454 of the Companies Act, 2013.
That as per section 173(1) of the Companies Act, 2013; the company should hold a minimum of four meetings of board in a year and in this case the company has not hold any board meeting in the year 2021, therefore the default has been committed on four counts.
That in exercising of the power conferred U/s 454 of the Companies Act, 2013 undersigned has passed the adjudication order imposing penalty as under:
Penalty imposed on the Company Indira IVF Hospital Private Limited, Shri Kshitiz Murdia (CEO), Shiree Satish Kothari (CS). Sayan Bandyopadhyay(CF0), for violation of section 173(1) of the Companies Act, 2013 punishable under section 450 of the Companies Act:-
| Accused | Penalty imposed (Rs.) |
| Indira IVF Hospital Private Limited | 10,000/- * 4 = 40,000/- |
| Shri Kshitiz Murdia (CEO) | 10,000/- * 4 = 40,000/- |
| Shiree Satish Kothari (CS) | 10,000/- * 4 = 40,000/- |
| Sayan Bandyopadhyay(CFO) | 10,000/- * 4 = 40,000/- |
| Total | 1,60,000/– |
That taking in above facts total penalty of Rs. 40,000/- is imposed on the company and Rs. 40,000/- on each Officer in default/KMP namely Shri Kshitiz Murdia (CEO), Shri Shiree Satish Kothari (CS) and Sayan Bandyopadhyay(CF0) to be paid as stated herein above within 90 days from the receipt of order vide appropriate challan on MCA Portal. The penalty imposed on the Directors should be paid from their personal account.
That failure to pay penalty within the stipulated period the company and its director / officers in default are liable for legal action U/s 454(8) of Companies Act 2013.
The matter stands disposed of in accordance with the order above.
Signed on 08.09.2022
(C.M. Karl Marx)
Registrar of companies,
Rajasthan, Jaipur
Endt. No. ROC-JP/Adj./2022-23/Sec 173/2338 to 2343
