Introduction: The Registrar of Companies in Karnataka has imposed a penalty of Rs. 49.70 lakh on Atlas Logistics Private Limited for non-compliance with the provisions of the Companies Act, 1956, and the Companies Act, 2013. The penalty is related to the delayed appointment of a company secretary, as mandated by Section 383A of the Companies Act, 1956, and Section 203 of the Companies Act, 2013. This adjudication underlines the importance of adhering to statutory requirements within the corporate sector.
Appointment and Authority: The Ministry of Corporate Affairs appointed the Adjudicating Officer under Section 454 of the Companies Act, 2013, to adjudicate penalties. The case involves Atlas Logistics Private Limited, a company incorporated on 24th June 1999, registered under the jurisdiction of the Registrar of Companies in Karnataka.
Suo-Motu Application: Atlas Logistics Private Limited filed a suo-motu application on 7th June 2023, reporting a violation regarding the appointment of a whole-time company secretary. The company stated that it crossed the paid-up capital threshold of Rs. 50 lakhs on 11th October 2000, requiring the appointment of a company secretary. However, the company failed to do so. On 11th June 2022, the applicable threshold was revised to Rs. 2 crores. Yet again, the company failed to appoint a company secretary. Subsequently, on 13th August 2007, the paid-up capital crossed the threshold of Rs. 2 crores, and then again to over Rs. 5 crores on 17th November 2007. The company failed to appoint a company secretary during these periods and only did so from 22nd July 2019.
Legal Provisions: Section 383A(1) of the Companies Act, 1956, and Section 203(1) of the Companies Act, 2013 mandate that companies meeting certain financial criteria shall have a whole-time secretary or company secretary, respectively. Rules and thresholds for these appointments have been defined under the relevant sections.
Penalties for Non-Compliance: Section 203(5) of the Companies Act, 2013, prescribes penalties for non-compliance, with a company being liable to a penalty of Rs. 5 lakh. Directors and key managerial personnel of the company who are in default are subject to penalties of Rs. 50,000, with additional penalties for continuing defaults.
Hearing and Representation: A hearing was conducted, and the company was represented by Mr. Shrisha V. M, a practicing company secretary. The former managing director and directors of the company were also present. However, no representation was received from other defaulting erstwhile managing directors and directors. The company later made a written submission, indicating that copies of notices were served to all defaulting directors.
Penalty Imposition: Based on the established facts and the applicable provisions, the company and the respective officers in default are deemed to have violated Section 383A(1) of the Companies Act, 1956, and Section 203(1) of the Companies Act, 2013. The penalty amounts imposed on the company and the directors or officers who were in default are as follows:
- Company: Rs. 5,00,000 (for 4169 days of default)
- Individual Directors (Hanumatha Rao Venkatesh Rao, Akihiko Okamoto, Tsukasa Hasegawa, Masahiko Kamata, Taiji Sugino, Selvam Abishekanthan Johnson, Navneet Jain, Yasushige Nishimura, Fumitaka Kichise, Masahiro Fujisawa, Anand Kudigrama): Total Rs. 44,70,000 for the relevant duration of default.
Payment and Appeal: The company and its directors/key managerial personnel are directed to pay the respective penalty amounts within 90 days from the date of receiving the Order. Form INC-28 must be filed, attaching a copy of the Order and payment challans. Directors are required to pay the penalty from their own funds. Payment should be made online through the specified website. An appeal can be filed within 60 days from the receipt of the Order.
Conclusion: The imposition of a penalty of Rs. 49.70 lakh on Atlas Logistics Private Limited and its directors emphasizes the importance of timely compliance with statutory requirements, including the appointment of a company secretary. Non-compliance with such regulations can result in substantial financial penalties, underlining the significance of adherence to corporate governance and legal norms.
*****
Registrar of Companies, Karnataka
Kendriya Sadan, 2nd Floor, ‘E’ Wing,
Koramangala. Bengaluru -560 034
Phone: 080 25537449/25633105
E-mail ID: roc. bangalore@ mca.gov.in
File No. ROC(B)/Adj.Ord.454-203/ATLAS/Co.No.25375/2023/Date:25.09.2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITES) RULES, 2014 FOR VIOLATION OF PROVISIONS OF SECTION 383A OF THE COMPANIES ACT, 1956 AND SECTION 203 OF THE COMPANIES ACT, 2013 READ WITH RULES (AS AMENDED FROM TIME TO TIME FRAMED THEREIN BY ATLAS LOGISTICS PRIVAILLIMITED
Ministry or Corporate Affairs vide its Gazette Notification No A-42011/11212014-Ad II dated 24.03.2015 has appointed the undersigned as Adjudication Officer in exercise of the powers conferred by section 454 of the Companies Act 2013 (hereinafter referred to as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of Companies Act, 2013
2. The company. Atlas Logistics Private Limited (hereinafter referred to as Company) was incorporated on 24.06_1999 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka with it registered office situated at No. 138, 2nd Floor, Maruthi Tower HAL Airport Road, Kadihalli, Karnataka 560008.
3. The company has filed a suo-motu application on 07.06 2023 regarding non‑appointment of whole-time company secretary i.e. violation of section 3133A of Companies Act, 1956 and section 203 of the Companies Act 2013. The company has submitted that its paid-up capital crossed the applicable threshold of Rs. 50 Lakhs to appoint a whole-time company secretary on 11.10.2000 and the company was required to appoint a company secretary from this date, but it has failed to do so. On 11.06 2022, the applicable threshold of Rs. 50 laths were revised to Rs. 2 crores and company was not required to appoint whole-time company secretary thereafter. The company has failed to appoint a company secretary, for the period from 11.10.2000 to 10.06.2002. Thereafter, on 13,08.2007. the paid-up capital of the company crossed the applicable threshold of Rs. 2 crores as further shares were issued and it was required to appoint a company secretary from this date, but It has failed to do so The paid-up capital was again increased to more than Rs. 5 crores on 17.11.2007. The company has once again failed to appoint a company secretary for the period from 13.08.2007 to 21.07.2019. The company has subsequently appointed a company secretary from 22.07.2019.
4, As per section 383A(1) of the Companies Act, 1956, every company having such paid-up capital share capital as may be prescribed shalt have whole time secretary and as. per Rule 2(1) of Companies (Appointment and Qualifications of Secretory) Rules, 1988. every company having a paid-up share capital of not less than rupees fifty lakhs shall have a whole-time secretary. This applicable threshold was increased to rupees two crores 11.06.2002 and thereafter increased to five crore rupees w.e.f. 15.03.2009 Further, as per proviso to Rule 2 of Companies (Appointment and Qualifications of Secretary) Rules. 1983, the company shall within a period of one year from the date of increase of the paid-up capital beyond threshold limits comply with the provisions of sub-rules (1 and (21 of rule 2.
5. As pet section 203(1) of the Companies Act, 2113, every company belonging to such class or classes of companies as may be prescribed shall have whole-time key managerial personnel arid as per Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, w.e.f. 09.08.2014, every company other than a company covered under rule 8 which has a paid-up share capital of R5, 5 crore or more shall have a who-time company secretary and this threshold was further increased to Rs. 10 crore of more applicable in respect of financial years commencing on or after 01.04.2020.
6. As per section 203(5) of the Companies Act, 2013 if ally 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 of fifty 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,
7. Pursuant to the adjudication application filed by the company, Notice of hearing was sent on 27.07.2023 and physical hearing was held on 10.08.2023 It was attended by Mr. Shrisha V M, practicing company secretary and authorised representative of the company, the erstwhile managing director and the erstwhile directors viz. Mr. Hanumantha Rao Venkatesh Rao, Selvam Abishekanathan Johnson and Anand Kudigrama. However, no representation from other defaulting erstwhile managing director and directors was received. The company thereafter made a written submission dated 2108.2023 intimating that the company had served the copies of Notices to all &faulting directors.
8. In view of he provisions detailed above and the records, the company and the respective officers in default have defaulted the provisions of section 383ACI) of the Companies Act. 1955 / section 203(1) of the Companies Act. 2013 dealing with appointment of whole-time company secretary for a duration of 4169 days i.e from 11.10.2001 to 10.06.2002 and from 13.08.2008 to 21.07.2019 for which they are liable to penalty. It is seen from the records that the company had a managing director from 24.06.1999 to 25.06.2012. For the duration of default where the company had managing director, the managing director is being hep liable as the officer who was in default, and for the remaining duration of default, all the directors of the company are being held liable.
9 As seen from the financial statements of the company and the criteria prescribed, the company does not fall under the definition of a small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provisions of imposing lesser penalty as per the section 446B of the Act shall not be applicable in this case.
10. Therefore, having considered the facts and circumstances of the case and the submissions made by the company and present/ past directors through their authorised representatives, in view of the above said violations of non-appointment of company secretary under the provisions of section 383A(1) of the Companies Act, 1956 / section 203(1) of the Companies Act 2013, read with corresponding rules, in exercise of the powers vested under section 454(3)(a) of the Companies Act 2013, I do hereby impose penalty in the following manner on the company and the directors / officers who were in default of the offence committed:
|
S. No. |
Particulars of notice | Duration of default |
Calculation of penalty (In Rs.) |
Maximum penalty (In Rs.) |
Penalty Imposed (In Rs.) |
| 1 | Company | 4169 days (11.10.2001 to 10.06.2002 and 13.08.2008 to 21.07.2019) |
5,00,000 | 5,00,000 | 5,00,000 |
| 2 | Hanumatha Rao Venkatesh Rao. Managing Director and Director | 2239 days (11.10.2001 to 10.06.2002 and 13.08.2008 to 11.10.2011 and 26.06.2012 to 22.12.2014) |
22.88,000 (50,000+2238 × 1,000) | 5,00,000 | 5,00,000 |
| 3 | Akihiko Okamoto, Managing Director and Director | 627 days (11.10.2011 to 25.06.2012 and 26.06.2012 to 2846.2013) |
6,76,000 (50.000+ 626 × 1,000) | 5,00,000 | 5,00,000 |
| 4 | Tsukasa Hasegawa, Director | 1695 days (29.11.2012 to 28.06,2013 and 30.06.2015 to 21.07.2019) |
17/14,000 (50,000+1694 × 1,000) | 5.00,003 | 5,00,000 |
| 5 | Masahiko Kamata, Director | 1031 days (26.062012 to 30.06.2015) | 10,80,000 (50.000+1030 × 1.000) | 5,00,000 | 5,00,000 |
| 6 | Taiji Sugino, Director | 273 days (26.062012 to 25.03.2013) | 3,22,000 (50,000.272 × 1,000) | 5,00,000 | 3,22,000 |
| 7 | Selvamabishe-kanthan Johnson. Director | 477 days (23.05.2014 to 28.09.2015) | 5,26,000 (50,000+476 ×1,000) | 5,00,000 | 5,00,000 |
| 8 | Navneet lain. Director |
91 days (30.06.2015 to 2849.2015) | 1,40.000 (54000.90 × 1.0001 | 540,000 | 1,40000 |
| 9 | Yasushige Nishimura, Director | 248 days (25.03.2013 to 27.112013) | 2,97,000 (50.000+247 × 1,000) | 5,00,000 | 2,97,000 |
| 10 | Fumitaka Kichise, Director | 450 days (28.01.2014 to 30.06.2015) | 4,99,000 (50.000+449 × 1,000) | 504000 | 4,99,000 |
| 11 | Masahiro Fujisawa, Director | 1483 days (30.062015 to 21.07.2019) | 15.32,000 (50,000+1482 × 1,000) | 5,00,000 | 5.00.000 |
| 12 | Anand Kudigrama. Director | 63 days (30.062015 to 31.08.2015) |
1,12,000 (50,030+62 × 1,000) |
5,00,000 | 1,12,000 |
11. The company and its directors f key managerial personnel are hereby directed to pay the penalty amount as tabulated above within 90 days from the date of receipt of this Order and file Form INC-28 attaching, a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website www.mca.gov.in (Miscellaneous head specifying the details of this Order and the noticee who is paying the penalty.
12. Appeal, if any, against this Oder may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the data of receipt of this Order in form ADJ setting forth the grounds of appeal and shall de accompanies by a certified copy of this Order.
13. Your attention is also Invited to section 454(8) of the Companies Act. 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under 454(8)(i) and (ii) of the Companies Act, 2013 against the company and directors / key managerial personnel without further notice in the matter
14 The company is required to serve a copy of this Order on the director(s)/ officer(s)-in‑ default mentioned above in terms of provisions of section 20 of the Companies Act, 2013.
(Sanjay Sood)
Registrar of Companies. Karnataka
and Adjudicating Officer
