MCA levied Rs. 10 Lakh Penalty for delay in appointment of whole-time CS

Menzies Aviation Bobba (Bangalore) Private Limited failed to appoint a whole-time company secretary (CS) within the prescribed time frame, resulting in a violation of Section 203 of the Companies Act, 2013 for a period of 730 days. The managing director, Mr. Bobba Veerasamynathan, has been held liable for the violation. The order imposes a penalty of Rs. 5,00,000 Each on both the company and the managing director, with a directive to pay the penalty within 90 days.

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/Menzies Bobba/Co.No.39761/2023 Date:12.04.2023

ORDER OF ADJUDICATION OF PENALTY UNDER SECT.ION 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITES) RULES. 2014 FOR VIOLATION OF PROVISIONS OF SECTION 203 OF THE COMPANIES ACT, 2013 READ WITH RULES (AS AMMENDED FROM TIME TO TIME) FRAMED THEREIN BY MENZIES AVIATION BOBBA (BANGALORE) PRIVATE LIMITED

Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of the Companies Act, 2013 (hereinafter referred to as Act).

2. The company, Menzies Aviation Bobba (Bangalore) Private Limited was incorporated on 20.06.2006 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka with its registered office situated at Cargo Terminal 1, Kempegowda International Airport, Bangalore — 560300.

3. A scheme of arrangement under section 233 of the Act was sanctioned by the competent authority wherein Menzies Bobba Ground Handling Services Private Limited (Transferor company), a company registered in the state of Telangana, got merged into Menzies Aviation Bobba (Bangalore) Private Limited (Transferee company). During the proceedings of the merger petition, non-compliance of section 203 in the Transferor company was pointed out pursuant to which an affidavit was filed by the applicant company affirming to take necessary steps to submit an adjudication application before the Registrar of Companies. Clause 7.1 of the approved scheme provides for any proceeding of whatever nature against the transferor company to be enforced against the transferee company. Further, para (3) of the sanction order of the scheme by the competent authority clearly states that the companies shall not be absolved of any of their statutory liability in any manner. As per section 240 of the Act, notwithstanding anything in any other law for the time being in force, the liability in respect of offences committed under this Act by the officers in default, of the transferor company prior to its merger, amalgamation or acquisition shall continue after such merger, amalgamation or acquisition. This adjudication application has been filed by the transferee company on 16.11.2022 for violation of section 203 of the Act by the transferor company for a period preceding the sanction of the merger.

4. As per section 203(1) of Companies Act, 2013, every company belonging to such class or classes of companies as may be prescribed shall have whole-time key managerial personnel and as per Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every company other than a company covered under rule 8 which has a paid-up share capital of Rs. 5 crore or more shall have a whole-time company secretary and this threshold was further increased to Rs. 10 crore or more applicable in respect of financial years commencing on or after 01.04.2020.

5. Further, as per section 203(4) of the Companies Act, 2013, 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.

6. Whereas subsequent to the cessation of Deepika Kanchi as a company secretary on 31.12.2019, the transferor company had a period of six months to fill up the vacancy i.e. by 30.06.2020. However, the company has failed to do so citing the reasons that there were no operations and the company had filed a scheme of amalgamation with its holding company which was eventually sanctioned on 30.06.2022 and it has been found that the reasons provided by the company are not tenable. Hence, there is a violation of section 203 of the Act from 01.07.2020 to 30.06.2022 i.e. a period of 730 days.

7. Pursuant to the adjudication application filed by the transferee company on 16.11.2022, a Notice of hearing was sent on 20.02.2023 to the transferee company and Mr. Bobba Veerasamynathan, Managing Director and officer in default of the transferor company during the period of default. A physical hearing was held on 09.03.2023. It was attended by Ms. Dakshayani and Mr. Abhilash, practicing company secretaries and authorised representatives of the company and they made their submissions in accordance with the adjudication application already filed. However, no representation from Bobba was there nor any reply has been received from him by this office in this regard.

8. Since the non-compliance is based on facts mentioned above and has been accepted by the company in its adjudication application and by the authorised representatives in the hearing, there arises no doubt whatsoever on the conclusion that there has been a violation of section 203 of the Act for the above mentioned duration. Further, Mr. Bobba Veerasamynathan is the officer in default for the said violation as he was incumbent in the capacity of Managing Director of the transferor company for the said duration and is liable in terms of provisions of section 240 of the Act. Further, he has neither represented himself nor has provided any clarification in his defence. In view of this, the undersigned hereby proceeds to adjudicate the violation of section 203 of the Act against the company and the managing director as provided below.

3. As per section 203(5) of the Companies Act, 2013, 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 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.

10. It is seen that the transferor company was a subsidiary of the transferee company and 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 4468 of the Act shall not be applicable in this case.

11. Therefore, having considered the facts and circumstances of the case and the submissions made by the company / director / key managerial personnel through their authorised representative, in view of the above said violation of non-appointment of a company secretary under the provisions of section 203(1) read with section 203(4) of the Companies Act, 2013 read with Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, 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 during the period of offence committed:

12. The company and its directors / 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.

13. Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in Form ADJ setting forth the grounds of appeal and shall be accompanied by a certified copy of this Order.

14. 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.

(Sanjay Sood)

Registrar of Companies, Karnataka

and Adjudicating Officer