Non-compliance with Section 118(10) Companies Act: MCA imposes Penalty

Ministry of Corporate Affairs imposed penalties on Anheuser Busch InBev India Limited for non-compliance with Section 118 of the Companies Act, 2013. The violations pertain to the failure to observe secretarial standards in Board meetings during FY 2020-21, 2021-22, and 2022-23. Specific deficiencies include lack of proof for sending notices, agendas, and minutes, among others. The company acknowledged the violations, which resulted in a penalty of ₹25,000 per financial year for the company and ₹5,000 per officer in default per year. Total penalties amount to ₹1,50,000. Payment must be made within 90 days, failing which additional fines or imprisonment may apply. Officers affected include directors, company secretaries, and CFOs. The order outlines avenues for appeal and requires compliance via the MCA portal.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES
100, “EVEREST”, MARINE DRIVE,
MUMBAI – 400 002
Website : www.mca.gov.in

Order No. ROC(M)/Sec 118/Anneuser/ADJ-ORDER/2023-24/2965 to 2974 Date : 24 DEC 2024

Order for Penalty under Section 454(3) for violation of Section 118 of the Companies Act, 2013.

IN THE MATTER OF ANHEUSER BUSCH INBEV INDIA LIMITED

(CIN: U65990MH1988PLC0496871

Appointment of Adjudicating Officer: –

1. Ministry of Corporate Affairs vide its Gazette Notification No.A-42011/112/2014-Ad.II dated 24.03.2015 appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 [herein after known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

Company: –

2. The company viz ANHEUSER BUSCH INBEV INDIA LIMITED (herein after known as ‘The Company’) is a registered company with this office under the provisions of the Companies Act, 2013 having its registered office as per MCA21 Registry at address Unit No.301-302, Dynasty Business Park, B Wing 3rd Floor, Andheri Kurla Road, Andheri ( East) NA, Mumbai, Mumbai City,Maharashtra,400059,India.

Facts about the Case: –

3. The Company filed suo-moto application dated 24.08.2024 u/s 454 towards violation of Section 118(1) of the Companies Act, 2013.

4. The Company in its above said Application stated that the provision of Sec 118(10) of the Act states that “(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.” However, the Applicant Company could not comply with all the provisions of secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India with respect to board meetings for Financial years 2020-21, 2021-22 and 2022-23.

5. That non-compliance with respect to the Secretarial Standards mainly pertain to failure to furnish proof of sending of Notice and Agenda for the Board Meetings, Proof of sending of draft Minutes and copy of signed and certified minutes, proof of circulation of some resolutions passed by circulation along with their approval and proof of sending notice of General Meeting to the Directors and Auditors of the Company.

6. The Company admits that it is not in proper compliance with the provisions of Sec 118(10) of the Act and Secretarial standards specified by the Institute of Company Secretaries of India and as per Section 118(11) of the Companies Act, 2013, (11) If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees. Thus the Company and Officer in default are liable for penal provision u/s 118(11) of the Act.

Relevant Section 118 of the Companies Act, 2013 is reproduced as under:-

Section 118:

118. Minutes of Proceedings of General Meeting, Meeting of Board of Directors and Other Meeting and Resolutions Passed by Postal Ballot (1) Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and even,/ resolution passed by postal ballot and 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 concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered.

(11) If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.

Findings

7. Hearing was dispensed with as per suo-moto application of the Company and Applicants.

8. The Company admits that it is not in proper compliance with the provisions of Sec 118(10) of the Act and Secretarial standards specified by the Institute of Company Secretaries of India with respect to board meetings for FY.2020-2021, 2021-2022, 2022-2023.

9. The Applicant Company is Public Limited Company and as per MGT-7 filed by the Company vide SRN 874648221 dated 12/11/2020 for FY 2020-2021 the paid up capital of the Company was Rs. 6,165,778,780/- and turnover of Rs. 33,545,077,567.01/-, therefore, the Company does not falls under definition of Small company as per Section 2(85) of the Act and hence Section 446B does not apply in the present case.

10. Section 118(11) states that If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees. In view of Section 118 of the Act and considering period of violation following are the officers in default who are liable for the penal action u/s 118(11) of the Act:

ORDER: –

11. Having considered the facts and circumstances of the case and after taking into account the factors above, and submissions of the Applicant, I hereby impose a penalty of Rs. 25,000/- (Rupees Twenty-Five thousand only) on the Company for each financial year and a penalty of Rs. 5,000/- (Rupees Five thousand only) each on officer in default for respective financial year for failure to towards compliance with the provisions of Sec 118(10) of the Act and Secretarial standards specified by the Institute of Company Secretaries of India with respect to board meetings for FY.2020-2021, 2021-2022, 2022-2023 as per table given below:

Total penalty payable (A +B +C): Rs. 1,50,000/-.

12. I am of this opinion that, the penalty is commensurate with the aforesaid failure committed by the Officer of the Company.

13. The Noticee shall pay the said amount of penalty through “Ministry of Corporate Affairs” portal and proof of payment be produced for verification within 90 days of receipt of this order.

14. Please note that as per Section 454(8)(i) of the Companies Act, 2013, where company does not pay the penalty imposed by the Adjudicating Officer or the Regional Director within a period of ninety days from the date of receipt of the copy of the order, the the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five laid’ rupees.

15. Where an officer of a company who is in default does not pay the penalty 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.

16. Therefore, in case of default in payment of penalty, prosecution will be filed under Section 454(8)(i) and (ii) of the Companies Act, 2013 at your own costs without any further notice.

17. Further, the company and its officers are hereby direct that the penalty amount shall be remitted from their own sources through MCA21 portal within 90 days from the date of receipt of order. The company needs to file INC-28 as per the provisions of the Act, attaching the copy of the adjudication order along with payment challans.

18. As per Section 454 of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, appeal, if any, against this order may be filed in writing with the Regional Director, Western Regional, Ministry of Corporate Affairs, within a period of 60 days from the date of receipt of this order, in Form ADJ setting forth the grounds of appeal and shall be accompanied by the certified copy of this order.

19. In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to the Company and Noticee/s and also to Office of the Regional Director, Western Region, Ministry of Corporate Affairs.

(BENUDHAR MISHRA)
Registrar of Companies and Adjudicating Officer,
Maharashtra, Mumbai.