MCA Imposes Penalty on Sitaram Maharaj Sakhar Karkhana (Khardi) Limited for Non-Compliance with Section 118(1) on Minutes Book Maintenance
Introduction: In a recent adjudication order issued by the Office of the Registrar of Companies, Maharashtra, Pune, the Ministry of Corporate Affairs (MCA) has imposed penalties on Sitaram Maharaj Sakhar Karkhana (Khardi) Limited for non-compliance with Section 118(1) of the Companies Act, 2013. The order, dated 21st December 2023, outlines the violations, the facts surrounding the case, and the penalties imposed on the company and its officers.
Background: Sitaram Maharaj Sakhar Karkhana (Khardi) Limited, a registered company under the Companies Act, 2013, faced an inspection by the Ministry of Corporate Affairs. The inspection, conducted under Section 206 of the Companies Act, 2013, revealed several discrepancies in the company’s minutes book maintenance. Notably, the company failed to serially number its minute book, record the purchase of vehicles, detail advances and loans given to group parties, and document remuneration to directors, among other lapses.
The company responded to the inspection findings, asserting compliance with Section 118 of the Companies Act, 2013. However, the Inspecting Officer (IO) deemed the company’s reply as vague and unconvincing, stating that the important transactions were neither incorporated nor approved by the Board of Directors in the minutes book.
Violation of Section 118: Section 118(1) of the Companies Act, 2013 mandates that every company should maintain minutes of general meetings, board meetings, and resolutions passed by postal ballot. The minutes must be prepared, signed, and kept within thirty days of the conclusion of the meeting or passing of resolutions. The minutes should include a fair and correct summary of the proceedings, and any default in compliance attracts penalties under Section 118(11) of the Act.
Penalties Imposed: Considering the violations and relevant provisions, the adjudicating officer issued penalties on Sitaram Maharaj Sakhar Karkhana (Khardi) Limited and its officers in default. The penalties, imposed under Rule 3(12) of the Companies (Adjudication of Penalties) Rules, 2014, are as follows:
- Sitaram Maharaj Sakhar Karkhana (Khardi) Limited: Rs. 25,000
- Rajlaxmi Raviraj Gaikward (CEO): Rs. 5,000
- Rohit Raja Kundani (Company Secretary, ceased on 01.08.2022): Rs. 5,000
- Nishant Sharma (Company Secretary, appointed on 01.08.2022): Rs. 5,000
- Raju Savakar Suryawanshi (CFO): Rs. 5,000
The penalties were imposed for the period from 06.04.2022 to 21.09.2022, and the adjudicating officer justified the penalties as commensurate with the failure to comply with Section 118.
Appeal and Consequences: The order provides an avenue for appeal under Section 454(5) of the Companies Act, allowing the aggrieved parties to file an appeal with the Regional Director (Western Region), Ministry of Corporate Affairs, within sixty days from the date of receipt of the order. The non-payment of penalties within the prescribed time limit may result in severe consequences as per Section 454(8)(ii) of the Act.
Conclusion: The adjudication order serves as a reminder of the importance of meticulous compliance with statutory provisions, particularly in maintaining accurate and comprehensive minutes of meetings. Companies are urged to adhere to the regulations outlined in the Companies Act, 2013, to avoid financial penalties and potential legal consequences. As the business environment evolves, strict adherence to corporate governance norms remains crucial for sustainable and lawful business operations
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Office of the Registrar of Companies
Maharashtra, Pune
Ministry of Corporate Affairs
Government of India
PCNTDA Green Building, Block A, 1st & 2nd Floor,
Near Akurdi Railway Station, Akurdi, Pune – 411044
Phone: 020-27651375/78, Email: [email protected]
Order No. RoCP/ADJ/order/118 /23-24/NAVCOM/SMSKKL/MV/2342 to 2347 Dated : 21st December 2023
ADJUDICATION ORDER
Adjudication Order of penalties in the matter of Sitaram Maharaj Sakhar Karkhana (Khardi) Limited CIN U15424PN1949PLC013656 under Section 4543 r/w section 118 of the Companies Act, 2013
Please Read:
Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019 (G.S.R.1, 1(E)).
Provisions of Subsection (1) and (11) of Section 118 of the Companies Act, 201,
Gazette notification of Ministry of Corporate Affairs vide No. A- 42011/112/2014-Ad. II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015)
In respect of:
Sitaram Maharaj Sakhar Karkhana (Khardi) Limited (U15424PN1999PLC013656) having its registered office as per MCA21 Registry at address “Sitaram Maharaj Sakhar Karkhana (Khardi) Limited, C/O Kalyanraao V Kale A/P Wadikuroli Pandharpur NA, Solapur, Maharashtra, 00000 India..”
1. Appointment of Adjudicating Officer:
Ministry, of Corporate Affairs vide its Gazette Notification No. A42 11/112/2014-Ad. II dated 24.03.2015 (see S.O. 831(E), dated 24.03.2015) appointed und resigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies act, 2013 (hereinafter known as Act) r/w Rule 3(1) of Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company:
Sitaram Maharaj Sakhar Karkhana (Khardi) Limited (U15424PN1999PLC013656) (herein after referred as registered company with this office under the provisions of Companies Act, 2013 having its registered office as per M address “Sitaram Maharaj Sakhar Karkhana (Khardi) Limited, C/O Kalyanraao V Kale A/P Wadikuroli Pandharpur NA, Solapur, Maharashtra, 00000 India..”
3. Facts about the Case:
A) As per Section 118(1) of the Act – Every company shall cause minutes of the proceedings of every general meeting of any class o shareholders or creditors, and every resolution passed by postal ballot a d every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concern , or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered.] (2) The minutes of each meetings shall contain a fair and correct summary of the proceedings thereat. (3) All appointments made at any of the meetings aforesaid shall be included ‘n the minutes of the meeting. (4) In the case of a meeting of the Board o committee of the Board, the minutes shall also contain—the Directors present at the meeting; and (b) in the case passed at the meeting, the names of the Directors, if any, or not concurring with the resolution.(5) There shall not b minutes, any matter wh.ch, in the opinion of the Chairman (a) is or could reasonably be regarded as defamatory of is irrelevant or immaterial to the proceedings; or (c) is d interests of the company. (6) The Chairman shall e discretion in regard to the inclusion or non-inclusion of minutes on the grounds’ specified in sub-section (5). (7) in accordance with the provisions of this section shall be proceedings recorded therein. (8) Where the minutes h accordance with sub-section (1) then, until the contrary meeting shall be deemed to have been duly called are proceedings thereat to have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of Directors, key managerial person4e1, auditors or company secretary in practice, shall be deemed to be valid. (9) No document purporting to be a report of the proceedings of any general meeting)l of a company shall be circulated or advertised at the expense of the company, unless it includes the matters required by his section to be contained in the minutes of the proceedings of such meeting. 1(10) Every company shall observe secretarial standards with respect to general and Board meetings specific by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries act, 1980 (56 of 1980), and approved as such by the Central Government
B) An Inspect on of the company under section 206 of the Companies Act, 2013 was conducted by an JO of this office. It was observed that “On the examination of Minutes Book of the Company, it has been observed that some of the following important transactions have not been incorporated in the Minutes Book of the Company:
a) Minute book not serially numbered as per requirement of the Act.
b) Purchase of vehicles by the company has not been recorded.
c) Details of advances/ Loans given to various Group Parties have not been given.
d) Details of remuneration to directors have not been approved by the Board nor has the same been recorded.
e) Details of employees engaged in the company have not been approved by the board.
f) Details of recorded.
g) Details of collections of funds through private placement from farmers
h) Details of vestments accepted from Sitaramn Maharaj Sakhar Karkhana, LLP by the subject company.
i) Auditors’ qualifications made by the statutory auditor n their audit report w re not discussed by the Board.
j) Large number of complaints has been received against the subject company which was not discussed by the Board.
k) Acceptance of share application money from the investors has not been recorded
l) No Board approval for raising funds through private placements at any point of time
m) Acceptance of unsecured loans Pratibhadevi Nagari Patsanstha amounting to Rs. 1.77 Crores and from Sahkar Shrimani Vasantarao Kale SSK amounting toRs. 40 Lakhs respectively from the public/relatives.
C) The matter was also taken up with the company during course of the said inspection and the company had submitted its reply stating that, “Company has complied with the requirements of section relating to Minutes relating to section 118 of the Companies Act, 2013.It is submitted that the Company has never given any loans / advances to group parties. The remuneration to directors is approved from time to time and wherever permissions were required all such permissions at board are duly recorded and considered at board report as per the 2013/ 1956.”
The IO has commented On the reply submitted by the company that “the reply of the company is vague and not convincing and the transactions have not been incorporated nor approved by the Board of Directors in the Minutes Book of the Company from time to time hence there is a violation of section 118 of the Companies Act, 2013 for which the company and its officers in default are liable for penal action.
D) Accordingly, as per the directions of the competent adjudication notice from the company officer has issued adjudication notice ROCP/ADJ/ SMSKKL/ 18/389-397 dated 26.05.202 referred as Adjudication Notice) under Section 454(4) read 118 of the Companies Act, 2013 read with Rule 3(2) of companies (Adjudication of Penalties), 2014 to the company and its officers in default for the violation of the provisions of the act as mentioned in para “A, B C” above;
E) No reply has been received to the Adjudication notice from the company. Further, the IO has already concluded that the company the provisions of section 118 of the Act and important transactions have not been incorporated nor approved by the Board of Directors in Minutes Book of the Company.
F) Relevant provisions of the Companies Act, 2013:
Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and resolution passed by postal ballot.—(1) shall cause minutes of the proceedings of every general meetings of any class of shareholders or creditors, and every resolution passed by every meeting of its Board of its Directors or of every committee be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered.
(2) The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.
(3) All appointments made at any of the meetings aforesaid shall be included in the minutes of the meeting.
(4) In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes shall also contain—
(a) the names of the directors present at the meeting; and
(b) in the case of each resolution passed at the meeting, the names of the directors,
if any, dissenting from, or not concurring with the resolution.
(5) There shall not be included in the minutes, any matter which in the opinion of the Chairman of the meeting, —
(a) is or could reasonably be regarded as defamatory of any )person; or
(b) is irrelevant or immaterial to the proceedings; or
(c) is detrimental to the interests of the company
(6) The Chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in subsection (5).
(7) ‘The minutes kept in accordance with the provisions of this section shall be evidence of the proceedings recorded therein.
(8) Where the mutes have been kept in accordance with sub-section (1) then, until the contrary is proved, the meeting shall be deemed to have been duly called and held and all proceedings thereat to have duly taken Place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid
(9) No document purporting to be a report of the proceedings of any general meeting of a co pang shall be circulated or advertised at the expense of the company, unless it includes the matters required by this section to be contained in the minutes of the proceedings of such meeting.
(10) Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.
(11) If any default is made in complying with the provisions of this section in reflect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the com any who is in default shall be liable to a penalty of five thousand rupees.
G) ORDER:
a. Considering the above facts of the case and the relevant provisions; the undersigned now hereby pronounces the order. Further, the delay in issuance of the order is on account of; checking MCA21 records; other administrative reasons.
b. The company and its officers, who have defaulted the provisions of section 118 of the Act as important transaction have not been incorporated nor approved by the Board of Directors in the Minutes Book of the Company from time to time as per requirements of Section 118 of the Companies Act, 2013. Hence the company has violated the provisions of section 118 and liable for penalty u/s 118 (11) of the Companies Act, 2013″.
c. In exercise of the powers conferred on the undersigned vide Notification dated 24th March, 201 and having considered the facts and circumstances of the case, I do hereby; impose the penalty on the company and its officers in default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, 2014 and the proviso of the said Rule and Rule 3(13) of Companies (Adjudication Of Penalties) Rules, 2014 r/w General Circular No. 1/2020 dated 02.03.2020; as per table below for violation of section 118 of the Act:
|
Period of default |
Penalty imposed on company/ director(s) | Designation | Total / maximum penalty (In Rs) |
| *06.04.2022 to **21:09.2022 | Sitaram Maharaj Sakhar Karkhana (Khardi) Limited | Company | 25,000 |
| *06.04.2422 to **21.09.2022 | Rajlaxmi Raviraj Gaikward | CEO (KMP) | 5,000 |
| *06,04.2622 to **31.07.2022 | Rohit Raja Kundani (Cessation on 01.08.2022) | Company Secretary | 5,000 |
| 01.08.2022 to **21.09.2022 | Nishant Sharma (appointment on 01.08.2022) | Company Secretary | 5,000 |
| *06.04.2022 to **21.09.2022 | Raju Savakar Suryawanshi | CFO (KMP) | 5,000 |
(*Date of issue of violations to company and its directors by the IO- 06.04.2022)
(** Date of Inspection report 21.09.2022)
d. I am of the opinion that penalty so imposed is commensurate with the aforesaid failure committed by the notice(s).
e. The Noticee(s)/applicant(s) shall pay the penalty so imposed through Ministry of Corporate Affairs portal only s per rule 3(14) of Companies (Adjudication of Penalties) Rules, 2014.
f. Appeal against this order may be filed under sect on 454(5) of the Act, in writing with the Regional Director ( Western Region), Ministry of Corporate Affairs100, Everest, 5t Floor, Netaji Subhash Road, Marine Drive, Mumbai-400002, 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 of t re Act read with Companies (Adjudication of Penalties) Rules, 201 as amended by Companies (Adjudication of Penalties) Amendment t Rules, 2019.
g. Your attention is also invited to section 454(8)(ii) of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order in terms of the provisions of section 454(8)(i) of the Act.
h. In terms of the provisions of sub-rule (9) of Rule 3 of companies (Adjudication of Penalties) Rules, 2014 as amended (Adjudication of Penalties) Amendment Rules, 2019 copy of this order is being sent to Sitaram Maharaj Sakhar Karkhana (Khardi) Limited and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Western Region) and ministry of Corporate Affairs at New Delhi.
(Mangesh Jadhav, ICLS)
Adjudicating Officer
Registrar of Companies
Maharashtra, Pune
