Non-Appointment of Independent directors: MCA imposes Penalty

The Office of the Registrar of Companies, Punjab and Chandigarh, issued an order under Section 454 of the Companies Act, 2013, against M/s BCL Homes Limited for violating Section 149(4) concerning the appointment of independent directors. As per Section 149(4) and related rules, public companies meeting specific financial thresholds must appoint at least two independent directors. An inspection revealed non-compliance by BCL Homes Limited and its directors from April 1, 2017, to December 31, 2024. The adjudicating officer imposed penalties under Section 172 of the Act: ₹3,00,000 on the company and ₹1,00,000 each on four defaulting directors, namely Mr. Baldev Chand Bansal, Mr. Tarjinder Singh Bansal, Mr. Rajeev Kumar, and Ms. Krishna Devi. Penalties are payable through the Ministry of Corporate Affairs portal, with the defaulting officers required to pay from personal sources. Failure to comply within 90 days may lead to additional fines or imprisonment. Appeals against the order can be filed within 60 days with the Regional Director, Northern Region, Ministry of Corporate Affairs. The order also highlights further consequences for continued non-compliance under Section 454(8) of the Act.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF
COMPANIES PUNJAB AND CHANDIGARH,
CORPORATE BHAWAN
PLOT NO.4-B, SECTOR 27B, CHANDIGARH
PHONE NO.172-2639415, 2639416

Oredr No. ROC CHD/Adj/1004 to 1009 Dated: 08/01/2025

ORDER UNDER SECTION 454 FOR VIOLATION OF SECTION 149(4) OF THE COMPANIES ACT, 2013 READ WITH SECTION 172 OF THE COMPANIES ACT, 2013 READ WITH  COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014

IN THE MATTER OF M/S BCL HOMES LIMITED (CIN: U00082CH2005PLCO29291)

1. Appointment of Adjudicating Officer

The Ministry of Corporate Affairs vide its gazette notification no. S.O. 831(E) dated 24.3.2015, has appointed the undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudicating penalties under the provisions of this Act.

2. Company: –

Whereas the Company M/s BCL HOMES LIMITED (hereinafter referred to as “the Company”) is a company registered with this office under the Provisions of the Companies Act, 2013/1956 (or previous Acts in force, as applicable) having its registered office situated at Shop No 140, Village Dariya, Chandigarh, India, As per data available at MCA website, the other details as on 31.03.2022 are as under:

3. Relevant Provisions of the Companies Act, 2013 which are applicable in the present case Provision of Section 149(4) of the Companies Act, 2013 read with Rule 4(1) of the Companies (Appointment and Qualification of Directors) Rule, 2014 as under: –

“As per Section 149(4) of the Companies Act, 2013, every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies and as per Rule 4(1) of the Companies (Appointment and Qualification of Directors) Rule, 2014, the following class or classes of Companies shall have at least two directors as independent directors- (i) the public Companies having paid up share capital of ten crore rupees or more; or (ii) the public Companies having turnover of one hundred crore rupees or more; or (iii) the public Companies which have, in aggregate, outstanding, loan, debentures and deposits, exceeding fifty crore rupees.”

Provision of Section 172 of Companies Act, 2013 is as under:-

“Section 172 of the Companies Act, 2013 provides for 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 thousands 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 company and one lakh rupees in case of an officer who is in default.”

Relevant Rules are as under:-

(i) Rule 3(12) of Companies (Adjudication of Penalties) Rules, 2014

“While adjudging quantum of penalty, the adjudicating officer shall have due regard to the following factors, namely-

a) size of the company

b) nature of business carried on by the company,

c) injury to public interest,

d) nature of the default,’

e) repetition of the default,’

f) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default: and

g) the amount of loss caused to an investor or group of investors or creditors as a result of the default Provided that, in no case, the penalty imposed shall be less than the minimum penalty prescribed, if any, under the relevant section of the Act.”

(ii) Rule 3 (13) of Companies (Adjudication of Penalties) Rules, 2014 which read as under:

“In case a fixed sum of penalty is provided for default of a provision, the adjudicating officer shall impose that fixed sum, in case of any default therein.”

4. Facts about the case: –

That the Central Government has directed this office to conduct the inspection of books and papers of the Company. The Show cause Notice cum Preliminary

Finding Letter was issued to the company and directors on 28.02.2023. A summon was sent to the directors of the company seeking information with regard to various points on 15.3.2024. However, no reply has been received from the company or directors.

Accordingly, an Inspection report was prepared by the Inspecting officer and submitted the same to RD-NR vide Letter No. ROC-CHD/Inspection /BCL Homes/1002 dated 26.03.2024. During the inspection, it was found that the Company and its officers in default have violated the provisions of Section 149(4) of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rule, 2014.

5. Adjudication of penalty:

Now, in exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the facts of the case, I hereby impose the penalties for violation of section 149(4) of the Companies Act, 2013 2013 read with Rule (1) of the Companies (Appointment and Qualification of Directors) Rule, 2014, on the company and its directors under Section 172 of the Companies Act, 2013 as under :-

I am of this opinion that penalty is commensurate with the aforesaid failure committed by the addressee and penalty so imposed upon the Officers-in-default shall be paid from their personal sources/income.

It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Companies (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.

6. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi, within a period of sixty 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. [Section 454(5) & 454(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014].

7. Please note that as per Section 454(8):

(i), where a company 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, 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, and

(ii) in case of an officer of a company who is in default, 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.

8. In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to the following as under:

No. ROC CHD/Adj/1004 to 1009

Dated: 08/01/2025