In a recent development, the Ministry of Corporate Affairs (MCA) has imposed penalties on a company, its directors, and the company secretary for a violation related to the display of an Extraordinary General Meeting (EGM) notice on the company’s website. This order, issued under Section 454 of the Companies Act 2013, highlights the consequences of non-compliance with regulatory requirements.
Detailed Analysis
The company in question, United Telecoms Limited, was incorporated under the jurisdiction of the Registrar of Companies, Karnataka, and its registered office is located in Bangalore. A complaint was filed by one of the company’s shareholders, alleging that the company had conducted an EGM on August 6, 2021, through video conferencing or other audio-visual means but failed to display the EGM notice, as required by Section 114 of the Companies Act 2013, read with General Circular 14/2020.
Following the complaint, an adjudication notice was issued to the company on December 23, 2022. The company responded, explaining that it could not upload the EGM notice on its website due to ongoing website reconstruction.
Under Section 114(1) of the Act, a resolution must be deemed an ordinary resolution if the required notice has been duly given. As per the Ministry’s General Circular 14/2020, a copy of the notice for a general meeting should be prominently displayed on the company’s website.
The matter proceeded with a hearing held on May 31, 2023, where Mr. Bimlendu Kumar, a practicing company secretary and authorized representative of the company, presented the company’s case. In parallel, a letter was received from Ms. Chalasani Sandhya Rao, a non-executive director of the company, stating her role in highlighting the violation.
Subsequently, adjudication notices were sent to Ms. Swetha Jain and Ms. Dipika Todi, who served as company secretaries during the time of the default. Ms. Jain’s response indicated her resignation from the company in 2018, while Ms. Todi confirmed her resignation in 2022. Both noted that the company had not displayed the notice on its website but had served it to the shareholders.
The penalty for such violations, as per Section 450 of the Act, includes a monetary penalty of ten thousand rupees for the company and all officers or persons in default. In case of a continuing contravention, an additional penalty of one thousand rupees per day may be imposed.
The company, its officers, including the managing director, whole-time director, and company secretary, were found to have violated the provisions of Section 114(1) of the Act and were liable for penalties.
Conclusion
This order issued by the MCA serves as a reminder of the stringent regulatory requirements governing corporate compliance. The penalties imposed on the company, its directors, and the company secretary underscore the importance of adhering to statutory obligations, even in what may be perceived as procedural or minor matters.
Companies are advised to maintain a diligent approach to compliance and promptly address any violations to avoid penalties and legal consequences. The specific penalty amounts imposed should be paid within 90 days from the date of receipt of the order, and the company must file the necessary documentation to demonstrate compliance. Non-compliance with the order could lead to further penal actions under the Companies Act, 2013. Directors and officers are expected to be aware of their responsibilities and the consequences of non-compliance, as highlighted in this case.
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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.454-114/United Telecom/Co.No.007800/2023/ Date: 05.09.2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITES) RULES 2014 FOR VIOLATION OF PROVISION OF SECTION 114 OF THE COMPANIES ACT 2013 READ WITH RULES FRAMED THEREIN BY UNITED TELECOMS LIMITED
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Add 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 (hereinafter referred to as Act) read with Companies (Adjudication of Penalties) Rules 2014 for adjudging penalties under the provisions of the Companies Act, 2013.
2. The company, United Telecoms Limited (hereinafter referred to as Company) was incorporated on 07.03.1984 tinder the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is presently situated No. 18A/19, Doddanekundi Industrial Area. Mahadevapura Post. Whitefield, Bangalore – 560048.
3 A complaint was received from one of the shareholder(s) of the company stating that the company had conducted an EGM on 0608.2021 via video conferencing or other audio visual means, but not displayed the Notice dated 14.07.2021 on the company’s website as required under section 114 of the Act read with General Circular 14/2020. An adjudication notice was sent to the company on 23.12.2022 for the same and the company replied vide letter dated 17.01 2023 stating that the company was unable to upload the EGM notice on its website since the website was under reconstruction.
4. As per the provisions of section 114(1) of the Act, a resolution shall be an ordinary resolution if the notice required under this Act has been duly given and as per pare 3(A)(xiii) / 3(13)(xv) of Ministry’s General Circular 14/2020 dated 08,04.2020. a copy Of the notice for the general meeting shall also be prominently displayed on the website of the company.
5. Pursuant to the instructions received from the Directorate to proceed in the matter of non-compliance of section 114 of the Act read with General Circular 14/2020, this office had issued adjudication notice followed by hearing notices to the company and its directors for the said violation on 16.05.2023. Hearing was held on 31.05.2023 which was attended by Mr. Bimlendu Kumar. practising company secretary and authorised representative of the company and all directors except Ms. Chalasani Sandhya Rao. He made his submissions on the same lines as detailed out above and prayed for waiver of penalty as the non-compliance was procedural and minor. This office also received a letter dated 01.06.2023 from Ms. Chalasani Sandhya Rao through her attorney holder who submitted that Ms. Chalasani was a non-executive director of the company and the one who brought out the violation in the complaint to this office.
6. Separate adjudication notices dated 27.07.2023 were sent to Ms. Swetha Jain and Ms. Dipika Todi, company secretaries of the company for the above-mentioned non-compliance. A reply was received from Ms. Swetha Jain on 09.08 2023 stating that she had resigned form the company w.e.f 16.08.2018 and copies of her resignation letter and DIR-12 form filed were attached. A reply from Ms. Dipika Todi was received on 09.08.2023 stating that she had also resigned from the company w.e.f. 24.02.2022. She further submitted that although the company had not displayed the notice on the website, it had served the notice to the shareholders. It is noticed that Ms. Dipika Todi was the company secretary of the subject company during the occurrence of this default
7. As per provisions Of section 450 of the Act, if a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made there under or any condition, limitation or restriction subject to which any approval sanction consent confirmation, recognition direction or exemption in relation to any matter has been accorded given or granted, and for which no penalty or punishment is provided elsewhere in this Act. the company and every officer of the company who is in default or such other person shall be liable to a penalty of ten thousand rupees and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person. For the purpose of this default the company, managing director, whole time director and the company secretary are held liable.
8. The company and its officers, as mentioned in pan 10 of this order, have violated the provisions of section 114(1) of the Act read with per para 3(A)(xiii) / 3(8)(xv) of Ministry’s General Circular 14/2020 dated 08.04.2020 and are liable for penalty as provided under section 450 of the Act.
9. It is seen that the company is a public 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.
10. Therefore, having considered the facts and circumstances of the case and the submissions made by the company. promoters and directors through their authorised representatives, in view of the above said violation, in exercise of the powers vested under section 454(3)(a) of the Act, I do hereby impose penalty on the company, promoters and directors who were in default of the offence committed in a manner as tabulated herein:
|
S. No. |
Particulars of noticee | Penalty imposed |
| i. | Company | Rs. 10,000 |
| ii. | Potluri Padmavathi, Managing Director | Rs.10,000 |
| iii. | Krantipriya Chakravarty Mitra, Whole time Director | Rs. 10,000 |
| iv. | Dipika Todi, Company Secretary | Rs. 10.000 |
11. The company and its promoters/ directors / key managerial personnel who are in default 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 mca.gov.in (Miscellaneous head) specifying the details of this Order and the name of the noticee who is paying the penalty.
12. 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 AD) setting forth the grounds of appeal arid shall be accompanied 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 section 454(8)(i) and 454(8)(ii) of the Companies Act. 2013 against the company and directors / key managerial personnel who are in default 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
