No Woman Director Appointed (Section 149 Violation): MCA Imposes ₹4 Lakh Penalty

The Ministry of Corporate Affairs, through the Registrar of Companies, Chennai, issued an adjudication order under Section 149 of the Companies Act, 2013, imposing penalties on M/s. Pentagon Global Solutions Limited for failing to appoint a woman director.

M/s. Pentagon Global Solutions Limited, a previously listed company, was found in violation of Section 149 of the Companies Act, 2013, for not appointing a woman director within the mandated timeframe. Despite being issued notices and opportunities to respond, the company and its managing director failed to attend the adjudication hearings, leading to an ex-parte decision by the Adjudicating Authority.

The violation spanned from April 1, 2015, to August 15, 2018, totaling 1233 days of non-compliance. As per Section 172 of the Companies Act, 2013, penalties were imposed, amounting to ₹3,00,000 on the company and ₹1,00,000 on the managing director, aggregating to ₹4,00,000. The adjudication order mandates the payment within 90 days and provides avenues for appeal as per regulatory provisions.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES, TAMIL NADU, ANDAMAN & NICOBAR ISLANDS, CHENNAI
II FLOOR, C- WING, SHASTRI BHAVAN, 26, HADDOWS ROAD, NUNGAMBAKKAM, CHENNAI- 6

F.NO.ROC/CHN/PENTAGON GLOBAL/ADJ/S.149/2024 DATE: 20 JUN 2024

ADJUDICATION ORDER UNDER SECTION 149 OF THE COMPANIES ACT, 2013
IN THE MATTER OF M/S. PENTAGON GLOBAL SOLUTIONS LIMITED

1. Appointment of Adjudicating Officer: –

The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 has appointed Registrar of Companies, Chennai as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter referred as Act or Companies Act, 2013) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Company: –

Whereas the company viz. M/s. Pentagon Global Solutions Limited with CIN: U73100TN1995PLC030734 (herein after referred as ‘ company’ or ‘ subject company’) is a registered company with this office under the provisions of section 7 of the Companies Act, 2013 having its registered office as per MCA21 Registry at 27/2, Hindi Prachar Sabha Street, T. Nagar, Chennai 17.

The financial & other details of the subject company as available on MCA-21 portal is stated as under:

3. Directors during the period of violation

4. Section and Penal Provision as per Companies Act, 2013

Section 149. Company to have Board of Directors

(1) Every company shall have a Board of Directors consisting of individuals as Directors and shall have—

(a) a minimum number of three Directors in the case of a public company, two Directors in the case of a private company, and one director in the case of a One Person Company; and

(b) a maximum of fifteen Directors:

Provided that a company may appoint more than fifteen Directors after passing a special resolution:

Provided further that such class or classes of companies as may be prescribed, shall have at least one-woman director.

(2) Every company existing on or before the date of commencement of this Act shall within one year from such commencement comply with the requirements of the provisions of sub-section (1).

Rule 3 of the Companies (Appointment and Qualification of Directors), Rules 2014 – Woman Director on the Board.

The following class of companies shall appoint at least one woman director-

(i) every listed company;

(ii) every other public company having –

(a) paid—up share capital of one hundred crore rupees or more; or

(b) turnover of three hundred crore rupees or more:

Provided that a company, which has been incorporated under the Act and is covered under provisions of second proviso to sub-section (1) of section 149 shall comply with such provisions within a period of six months from the date of its incorporation:

Provided further that any intermittent vacancy of a woman director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy whichever is later.

Section 172 -Penalty

“If a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.”

5. Facts of the Case:

Pursuant to the Ministry’s Instruction, the ROC Chennai had issued Show Cause Notice U/s. 149 of the Companies Act, 2013 to the company and its Managing Director on 29.06.2015 for violation of Section 149 of the Companies Act, 2013. After that the ROC Chennai had filed a complaint in E.O.C.0 No. 29/2016 against the company and Managing Director before the Court of Ld. Additional Chief Metropolitan Magistrate, Economic Offences, Egmore, Chennai wherein stated that the company being a Listed company should have appointed one Woman Director as on 01.04.2015 but as per the signatory details of the company available in MCA records, no woman director is appointed in the company till date Consequently violated Section 149 of the Companies Act, 2013. The Court of Ld. Additional Chief Metropolitan Magistrate, Economic Offences, Egmore, Chennai vide order dated 10.11.2023 in E.O.C.C. No. 29/2016 stated that “Petition (CrIMP No. 8461/2023) filed by the complainant u/s. 257 of Cr.P.0 for withdrawal of complaint. Petition is allowed and the case is withdrawn from the file of this Court and transferred to ROC/ Adjudicating Authority for adjudication U/s. 454 of the Companies Act, 2013.Hnece, this case in EOCC No.29/2016 is closed as withdrawn”.

6. Adjudication Hearing:

The Adjudicating Authority had issued notice of hearing dated 04.03.2024 by fixing the hearing on 12.03.2024 at 11:45AM. No response received for the hearing notice dated 04.03.2024 and neither the authorized representative of the company nor the Managing Director attended the hearing on 04.03.2024. Hence, as per Rule 3(8), Companies (Adjudication of Penalties) Rules 2014, the matter is being proceeded with in the absence of such persons (ex-parte).

7. Analysis of Non-compliance of Section 149 of the Companies Act, 2013

It is observed that the company was a listed company till 16.08.2018, after that the status of the company changed to unlisted with a new CIN: U73100TN1995PLC030734.As per Section 149 of the Companies Act, 2013 a listed company should have appointed at least one Woman Director within one year from the commencement of the Companies Act, 2013. Hence, the company should have appointed a women director w.e.f 01.04.2015. But as per the signatory details available in MCA portal, no women director has been appointed by the company. Hence, there is a violation of Section 149 of the Companies Act, 2013. Further, the company’s status changed to unlisted w.e.f 16.08.2018. Hence, the period from 01.04.2015 to 15.08.2018 is considered as the period of default for the violation.

8. Decision

Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that there is violation of Section 149 of the Companies Act for non- appointment Woman Director in the Board for the period from 01.04.2015 to 15.08.2018 i.e. 1233 days. Accordingly, I am inclined to impose a penalty on the company and Officers in default as prescribed under Section 172 of the Companies Act, 2013

The details of the penalty imposed on the company Officer in default is shown in the table below:

Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.3,00,000/- (Rupees Three lakhs) is imposed on the company and Rs.1,00,000/- (Rupees One lakh) is imposed on the Managing Director. Totally Rs. 4,00,000/- (Rupees Four lakhs) is imposed as penalty amount for violation of Section 149 of the Companies Act, 2013.

9. The said amount of penalty shall be paid through online by using the website mca.gov.in(Misc. head), within 90 days of receipt of this order, and intimate this office with proof of penalty paid.

10. Whereas Appeal against this order may be filed with the Regional Director (SR), Ministry of Corporate Affairs, 5th Floor, Shastri Bhavan, 26 Haddows Road, Chennai-600006, Tamil Nadu within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website 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].

11. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order, “(8)(i) Where company fails to comply with the order made under sub­section (3) or sub-section (7), as the case may be within a period of ninety days from the date of the receipt of the copy of the order, 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.

(ii) Where an officer of a company or any other person who is in default fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be within a period of ninety days from the date of the receipt of the copy of the order, such officer 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 with both”.