Introduction: The Ministry of Corporate Affairs (MCA) has taken decisive action against M/s. Hemco Engineering Private Limited for non-compliance related to the circulation of board meeting minutes. This article delves into the details of the penalties imposed and the circumstances leading to this adjudication.
Detailed Analysis:
1. Complaints Received:
- Two separate complaints were lodged with the MCA by directors of Hemco Engineering, highlighting violations related to board meetings and non-circulation of draft minutes.
- Complaints raised issues regarding the appointment of directors and non-compliance with Companies Act provisions.
2. Appointment Irregularities:
- Complaints revealed discrepancies in the appointment of directors during a board meeting held on 26.06.2023, raising concerns about adherence to legal requirements.
- Allegations included unauthorized attendance and appointments without proper notice.
3. Non-Circulation of Minutes:
- A significant violation involved the non-circulation of draft minutes for board meetings held on 11.08.2023 and 19.08.2023.
- Directors Pramod Jha and Rakesh Jha alleged a breach of Section 118 of the Companies Act, 2013, and Secretarial Standard – 1.
4. Show Cause Notice and Responses:
- MCA issued a show cause notice to Hemco Engineering and its officers in default.
- The company responded, presenting evidence of notice delivery for the Extraordinary General Meeting (EOGM) dated 26.06.2023.
5. Inquiry and Hearing:
- Notices of inquiry were issued, and a hearing was conducted on 19.12.2023, attended by the company’s representative, Mrs. Mamta Surange.
- ROC considered all responses, arguments, and evidence presented during the inquiry.
6. Adjudication and Penalties:
- Adjudicating Officer, Mukesh Kumar Soni, concluded that penalties were warranted under Section 118(1) of the Companies Act, 2013.
- Penalties were imposed on the company and officers in default, including Pramod Jha, Rakesh Jha, Mukesh Jha, Krishna Kant Jha, and Himanshu Jha.
7. Nature of Default and Penalties:
- The default related to the non-circulation of board meeting minutes.
- Penalties ranged from Rs. 2,500 to Rs. 12,500 on individuals and the company.
8. Payment and Compliance:
- The company was directed to remit the penalty amount through the MCA21 portal within 60 days.
- Compliance required filing INC-28, attaching the adjudication order and payment challans.
9. Appeal and Consequences:
- Appeals against the order can be made to the Regional Director within 60 days.
- Failure to comply within 90 days may result in additional fines and penalties.
10. Continued Monitoring:
- The order emphasizes that this action does not preclude further actions for related, incidental, or continuing offenses.
Conclusion: The MCA’s adjudication on Hemco Engineering reflects the government’s commitment to enforcing corporate governance standards. The penalties imposed underscore the importance of compliance with Companies Act provisions, ensuring transparency and adherence to procedural norms in board meetings. Companies and their officers must take these actions as a reminder to uphold legal and governance standards in their operations.
MINISTRY OF CORPORATE AFFAIRS
Office of The Registrar of Companies, Madhya Pradesh
Sanjay Complex, ‘A’ Block, 3rd Floor,
Jayendraganj, Gwalior —474009.
Email: roc.gwalioramca.gov.in
No. ROC-G/Adj. Pen./u/s. 118(1)Hemco Engineering/30o Dated: 26 DEC 2023
1. M/s. Hemco Engineering Private Limited, 53-A, Industrial Area, Malanpur NA, Distt. Bhind, M.P. 477117, M.P. E-mail I.D.: [email protected]
2. Pramod Jha, director (DIN- 01248720) (from 28.11.1996 to till date)
3. Rakesh Jha, director (DIN- 02293146) (From 07.02.2023 to till date)
4. Mukesh Jha, director (DIN-02448234), (From 28.11.1996 to till date)
5. Krishna Kant Jha, director (DIN- 10214840), (From 26.06.2023 to till date),
6. Himanshu Jha, director (DIN-10214850) (From 26.06.2023 to till date),
7. Regional Director, North-Western Region, Ministry of Corporate Affairs, Ahmedabad(Gujarat).
8. E-governance cell for uploading the documents.
In the matter of Companies Act, 2013
And
In the matter of adjudication proceeding under sub-section 1 of Section 118 of the Companies Act, 2013.
And
In the matter of M/s. Hemco Engineering Private Limited
(CIN-U74210MP1996PTC011428)
Date of hearing 19th December, 2023
1. Appointment of adjudicating officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.03.2015 appointed undersigned as adjudicating officer 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 company Hemco Engineering Private Limited (CIN-U74210MP1996PTC011428) [herein after known as company] is a registered company with this office under the provisions of Companies Act, 2013 having its registered office situated at 53-A, Industrial Area, Malanpur NA, District Bhind, M.P. 477117 as per the MCA website.
3. Facts about the case:
a. Whereas this office has received a complaint dated 02.08.2023 from Mr. Rakesh Jha and Mr. Pramod Jha directors of the company namely Hemco Engineering Private Limited and contents of the complaint are as follows:
“On 08.07.2023 a board meeting was called by the company for allotment of share and increase of paid-up share capital by the company at the registered office of the company. In the board meeting it was very surprised to see that, Mr. Krishna Kant Jha who was share holder of the company and Mr. Himanshu Jha came to attend the meeting unauthorizedly and when an objection had been raised it was informed orally that both have been appointed as a director while meeting dated 26.06.2023. The undersigned authorities were surprised because being a director it was obligatory on the part of other shareholders to issue a proper notice in respect of meeting dated 26.06.2023. When the undersigned has cross check the MCA portal it has been found that both the persons were appointed as a director of the company in utter disregard with the provisions of Section 100, 101, 102, 173, 174, 175 and other relevant provisions of Companies Act. There was no proper compliance of requirement of both Secretarial Standard No. 1 & 2 the undersigned did not receive any notice of board of meeting and/or extraordinary general meeting about the so-called meeting dated 26.06.2023 wherein both the persons were stated to be appointed as a director. The aforesaid actions is also contrary to the averments made in the petition pending before the NCLT”.
b. Whereas this office has received another complaint dated 18.08.2023 from Mr. Mukesh Jha, Mr. Himanshu Jha and Mr. Krishna Kant Jha, directors of the company namely Hemco Engineering Private Limited and contents are as follows:
” Mr. Pramod Jha and Mr. Rakesh Jha, Directors of the company have violated the provisions of Section118 of the Companies Act, 2013 read with Secretarial Standard – I issued by the Institute of Company Secretaries of India by not circulating the draft minutes of the Board Meeting dated 11.08.2023 and 19.08.2023 to them, which is violation of the provisions of Section 118 of the Companies Act, 2013 read with Secretarial Standard -1. Therefore, the provisions of the section 118 of the Act, have been contravened and every officer of the company who is in default as the case may have rendered themselves liable for penal provisions under Section 118(11) of the Act”.
c. As above mentioned, complaints the following table depicts is likely default:
| Particulars of events | Date of board meetings |
| Board meeting | 26.06.2023 |
| Board meeting | 08.07.2023 |
| Board meeting | 11.08.2023 |
| Board meeting | 19.08.2023 |
Subsequently, this office had issued show cause notice U/s. 118(1) of the Companies Act, 2013 to the company and its officers in default vide No. ROC-G/Adj.Pen./u/ s. 118(1)Hemco Engineering/2694 to 2699 dated 30.11.2023 to the company and officers in default.
4. In response of this office notice dated 30.11.2023 the office has received a letter from the directors of the company vide letter dated 12.12.2023, therein they have replied as under:
(i) That the contents of para 1 are formal in nature and needs no comments.
(ii) That the contents of para 2 are matter of record and needs no comments.
(iii) That the contents of para it is stated that the EOGM of the members of the company dated 26.06.2023 was called by the requisitionists member of the company by giving notice dated 02.06.2023 to appoint Mr. Krishna Kant Jha and Mr. Himanshu Jha on the board of directors of the company. The said notice was sent to all the members of the company vide speed post dated 02.06.2023 and were duly delivered the details of which are tabulated as under:
| Sl. No. |
Name of the member | Tracking number and ate | Delivery status |
| 1. | Mr. Pramod Jha | E148292757IN dated 02.06.2023 |
Item delivered |
| 2. | Mr. Rakesh Jha | E1482927466IN dated 02.06.2023 |
Item delivered |
| 3. | Mr. Krishna
Kant Jha |
E1482927585IN dated 02.06.2023 |
Item delivered |
| 4. | Mrs. Preeti Jha | E1482927700IN dated 02.06.2023 |
Item delivered |
| 5.
|
Mr. Mukesh Jha
|
E1482927452IN dated 02.06.2023 | Item delivered
|
Hence, baseless contentions of the complainants Mr. Rakesh Jha and Mr. Pramod Jha of non receipt of the notice of the EOGM has no legs to stand as the notice dated 02.06.2023 of the EOGM dated 26.06.2023 has been duly sent to every member of the company and accordingly neither the section 118 of the CA, 2013 nor the Secretarial standard have been violated by the undersigned.
(iv) That the contents of para forms part of the complaint dated 18.08.2023 filed by the undersigned and need no comments.
(v) That the contents of para it is stated that in light of the reply
to para 3a, the EOGM dated 26.06.2023 is not in default and rest do not merit response from the undersigned.
(vi) That the contents of para are mere reproduction of law and need no comment.
(vii) That the contents of para are mere reproduction of secretarial standard and need no comment.
(viii) That the contents of para it is stated that the undersigned has duly complied with Section 118 of the CA, 2013 read with SS1 issued by the Institute of company Secretaries of India and hence, it is prayed to the Ld. ROC to kindly abstain from initiating any penal action against the undersigned as the undersigned has duly complied with the provisions of the Act and the Secretarial Standards as mentioned in the notice under reply.
5. Thereafter, “Notices of Inquiry” vide No. ROC-G/Adj. Pen. /U/s. 118(1)/ Hemco Engineering/2852 to 2857 dated 13.12.2023 were issued to the company and its officers in default.
6. As per [Rule 3(3), companies (Adjudication of Penalties) Rules, 2014 and the date of hearing was fixed on 19.12.2023 at 3.00 P.M. in the office of Registrar of Companies, Madhya Pradesh, Sanjay Complex, A-Block, 3rd Floor, Jayendraganj, Gwalior.
7. On the date of hearing i.e. 19.12.2023, Mrs. Mamta Surange representative of the company has attended the hearing and she has also produced letter of authority of the company duly authorised by the company.
8. As per provisions of Section 446B of the Companies Act, 2013 provides that “Notwithstanding anything contained in this Act, if penalty is payable for non-compliance of any of the provisions of this act by a One Person Company, Small Company, Start-up company or producer company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other persons, as the case may be, shall be liable to a penalty which shall not be more than one half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company one lakh rupees in case of an officer who is in default or any other person, as the case may be”
Explanation – For the purposes of this section-
a. Producer company means a company as defined in clause (1) of Section 378A.
b. Start-up company means a private company incorporated under this Act or under the Companies Act, 1956 and recognised as start-up in accordance with the notification issued by the Central Government in the Department for Promotion of Industry and Internal Trade).
9. Order:
Having considered the facts and circumstances of the case and after taking into account the factors above and letter dated 30.11.2023 and 13.12.2023 issued by ROC, Gwalior, it is concluded that the company and its officers in default are liable for penalty as prescribed under Section 118(1) of the Act for default is made in complying with the requirements of Section 1118(1)of the Act of the company viz. Hemco Engineering Private Limited.
Accordingly, I am inclined to impose a penalty as prescribed under sub- Section 1 of Section 118 of the Companies Act, 2013. The default of the penalty imposed on the company and officers in default are shown in the table below:
|
Nature of |
Relevant section under the Companies Act, 2013 |
Name of persons on whom penalty is imposed |
Total default amount (Rs.) |
Final penalty imposed. (Rs.) |
| Minutes of board meeting |
S. 118(1) | On company | 25,000/- | 12,500/- |
| Pramod Jha | 5,000/- | 2,500/- | ||
| Rakesh Jha | 5,000/- | 2,500/- | ||
| Mukesh Jha | 5,000/- | 2,500/- | ||
| Krishana Kant Jha | 5,000/- | 2,500/- | ||
| Himanshu Jha | 5,000/- | 2,500/- |
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the notice 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 Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.
10. The penalty amount shall be remitted by the company through MCA21 portal within 60 days from the date of order. The company needs to file INC-28 as per the provisions of the act, attaching the copy of adjudication order along with payment challans.
11. Any person aggrieved by the order of adjudicating authority under Section (3) of Section 454 may prefer an appeal to the Regional Director having jurisdiction in the matter.
12. Every appeal under sub-section (5) of Section 454 shall be filed within 60 days from the date on which the copy or order made by the adjudicating authority is received by the aggrieved person and shall be in such form, manner and be accompanied by such fee as may be prescribed.
13. 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 90 days from the date of receipt of the copy of the order, the company shall be punishable with fine which shall not be less than twenty-five thousand, but which may extend to five lakh rupees.
14. 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 90 days from the date of receipt of the order, such officer shall be punishable with imprisonment which may extend to six months or with the fine which shall not be less than twenty five thousands rupees but which may extend to one lakh or with both.
15. This order is without prejudice to the rights available to this office to initiate separate actions including but not limited to the penal actions for contraventions of related, incidental and/ or continuing offences/ contraventions.
16. In terms of the provisions of sub-rule 3 of the Companies (Adjudication of Penalties) Rules, 2014 copy of the order is being sent to Himanshu Engineering Private Limited 53-A, Industrial Area, Malanpur NA, Distt. Bhind, M.P., Sh. Pramod Jha, director ____, Sh. Rakesh Jha, Director, ___, Sh. Mukesh Jha, Director, ___, Sh. Krishana Kant Jha, director ___, Sh. Himanshu Jha, ___, RD, NWR, Ahmedabad and will also upload on MCA website.
The adjudication notice stand disposed off with this order.
(Mukesh Kumar Soni, ICLS)
Registrar of Companies,
Madhya Pradesh, Gwalior.
Signed on this 19th December, 2023.
Place: Gwalior, Madhya Pradesh.
