In a recent development, the Ministry of Corporate Affairs, Government of India, through the Registrar of Companies, Uttar Pradesh, issued an order concerning the violation of Section 161(1) of the Companies Act, 2013 by Inchoi Technology Electronic Materials Private Limited.
The order elucidates that Inchoi Technology, despite being incorporated on July 25, 2019, failed to regularize Mr. Thupten Namgyal, appointed as an additional director since May 28, 2021, as per Section 161(1) of the Companies Act, 2013. The inquiry, initiated by the Ministry, found the company in non-compliance and subsequently imposed penalties under Sections 161(1) and 172 of the Act.
A show-cause notice was issued to the directors and the company, demanding compliance. However, no satisfactory response was received, leading to the imposition of penalties amounting to Rs. 5,00,000/- (Rupees five Lakh only) in total, with Rs. 3,00,000/- as the principal penalty and Rs. 1,00,000/- maximum on each director.
The order mandates payment within 90 days by way of Demand Draft to the Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi. Additionally, it outlines the appeal process to be initiated within sixty days from the receipt of the order.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF
COMPANIES,
UTTAR PRADESH,
37/17, Westcott Building, The Mall,
Kanpur — 208001 (U.P.)
Phone : 0512 — 2310323/2310443
Order No. 07/01/ADJ-161(1)/ INCHOI TECHNOLOGY/ DATED 11/12/2023
ORDER FOR VIOLATION OF SECTION 161 (1) OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 & COMPANIES (AMENDMENT ACT 2020)
IN THE MATTER OF Mis. INCHOI TECHNOLOGY ELECTRONIC MATERIALS PRIVATE LIMITED
Appointment of Adjudicating Officer: –
1. The Ministry of Corporate Affairs vide its gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015, has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 under the provisions of this Act.
2. Whereas the Company Inchoi Technology Electronic Materials Private Limited (U25206UP2019PTC119476) which was incorporated on 25.07.2019 with RoC, Kanpur and having r/o at 033, Kasna Ecotech I, Extension -1, Greater Noida, Gautam Budh Nagar, Uttar Pradesh, 201306. The authorized capital of the company is Rs. 1,00,000/-
3. The Ministry vide letter no. F.No. CL-II-08/145/2021-DGCoA-MCA dated 18.02.2022 directed to conduct the inquiry u/s. 206(4) of the Companies Act, 2013, against the said company. During the course of inquiry, it is observed that Mr. Thupten Namgyal was appointed as additional director of the company w.e.f. 28.05.2021. However, he has not been regularized and he is holding the same designation since that date to present. As per Section 161(1) of the Companies Act, 2013, an additional director shall hold office up to the next annual general meeting. Hence the Inquiry Officer (10) sought information and documents from the Company under Section 206(1) of the Companies Act, 2013. The reply furnished by the company in this regard was not appropriate as it has furnished copy of board resolution pertaining to regularization of Mr. Thupten Namgyal, however as per section 152(2) of the Companies Act, 2013, every director shall be appointed by the Company in general meeting. Hence, the appointment of Mr. Thupten Namgyal as a director of the Company has to be done in a general meeting of the Company. Hence, it is non-compliance of Section 161(1) of the Companies Act, 2013. The report in this regard furnished to the Regional Director, Northern Region wherein non-compliance of section 152(2). The Directorate vide its letter No.Inquiry/206(4)/ INCHOI TECHNOLOGY /RD(NR)/2022/5574 dated 19.07.2022 has accorded the penal action under section 161(1) read with 172 of the Companies Act, 2013. Thus, it is evident that the company and its Directors have failed to comply with the provisions of section 161(1) of the Companies Act, 2013. And are thus liable for penal provisions.
Section 161(1) of the Companies Act, 2013 provides that: –
“The articles of a company may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier.”
Section 161(1) read with 172 of the Companies Act, 2013 provides that —
“The company and every officer of the company who is in default shall be liable to be a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty off 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.”
4. Accordingly, a Show Cause Notice No.. 07/01/Adj-161(1)/ INCHOI TECHNOLOGY /4409-4913 dated 13.10.2023 to the Directors of the company and No.. 07/01/Adj-161(1)/ INCHOI TECHNOLOGY/5507 dated 15.11.2023 to the company were issued to the company and its officers in default under section under Section 161(1) of the Companies Act, 2013, read with Companies (Adjudication of Penalties) Rules, 2014 by this office. This office has not received the said letter undelivered also.
5. The company and its officers in default have not furnished any reply to the said Show Cause Notice which was not found satisfactory as no compliance was made for the default till date, hence no hearing was fixed for this matter.
6. Further, neither any representative of the company nor its directors have either furnished proper reply or have appeared before the undersigned which has further strengthened the apprehension that the company and its Directors have failed to comply with the provisions of section 161(1) of the Companies Act, 2013, in regularizing the additional director (appointed on 28.05.2021) Mr. Thupten Namgyal as director in the board meeting of the company as on 30.09.2021.
7. The date of default in the matter has been taken as 30.09.2021 upto which the additional director (appointed on 28.05.2021) Mr. Thupten Namgyal shall be regularized as Director of the company. The default has been continuing since then.
8. Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose penalty of Rs. 3,00,000/- (Rupees Three Lakh only) and penalty of Rs. 1,00,000/- (Rupees One Lakh) maximum on each Director (5 Directors), total penalty Rs. 5,00,000/- (Rupees five Lakh only) under section 172 of the Companies Act, 2013 for failure to make compliance of section 161(1) of the Companies Act, 2013. It is of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee.
9. The Noticee shall pay the amount of penalty by way of Demand Draft in favour of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days receipt of this order. The Demand Draft shall be forwarded to this office Address.
10. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodi 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].
11. Attention is also invited to section 454(8) of the Companies Act, 2013, in the event of non-compliance of this order. In Case appeal is made 0/o Registrar of Companies, U.P. maybe informed alongwith the penalty imposed & the payments made.
(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur
