The Ministry of Corporate Affairs (MCA) recently took action against M/s Pearce Services Global Private Limited for non-disclosure of interest by its directors in the first board meeting, as mandated by Section 184(1) of the Companies Act, 2013. This violation led to the imposition of penalties under Section 454 of the Act.
According to Section 184(1) of the Companies Act, 2013, directors are required to disclose their concerns or interests in any company, bodies corporate, firms, or other associations of individuals, including their shareholding, at the first board meeting in which they participate. Failure to comply with this provision can result in penalties, as outlined in Section 184(4) of the Act.
In the case of M/s Pearce Services Global Private Limited, it was found that the directors did not disclose their interests or concerns at the first board meeting held in the financial year 2022-2023. Although the disclosure was made in a subsequent board meeting on 21st September 2022 by filing Form MBP-1, this did not absolve them of the initial non-disclosure.
The company attributed the default to inadvertent errors, stating that certain decisions were pending at the management level during the setup of the registered office. However, the MCA deemed this explanation insufficient and proceeded with the adjudication of penalties.
After considering the facts and circumstances of the case, the adjudicating officer imposed penalties on the directors in accordance with Section 184(4) of the Companies Act, 2013. Each director was fined Rs. 100,000 for the violation. The penalty was deemed to be commensurate with the severity of the offense, and it was directed that the amount be paid through the Ministry of Corporate Affairs portal.
*****
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
Order No. ROC CHD/Adj/88 Dated: 03/05/2024
Order Under Section 454 for Violation of Section 184(1) of the Companies Act, 2013, Read with Companies (Adjudication of Penalties) Rules, 2014
In the Matter of M/s Pearce Services Global Private Limited
(CIN: U74999PB2022FTC055586)
1. 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 adjudging penalties under the provisions of this Act.
2. Company: –
Whereas the Company M/S PEARCE SERVICES GLOBAL PRIVATE LIMITED (CIN: U74999PB2022FTC055586) was incorporated on 04/04/2022 having its registered office at 801- B, C, D and E, 8th Floor Block B, Bestech Business Tower, Sector 66 Mohali, Punjab 160059, India as per data available with MCA website.
Provisions of the Act: –
3. Whereas as per Section 184(1) of Companies Act, 2013 :
“(1) Every director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding, in such manner as may be prescribed.”
4. Whereas as per Section 184(4) of the Act
“(4) If a director of the company contravenes the provisions of sub-section (1) or sub-section (2), such director shall be [liable to a penalty of one lakh rupees.”
Facts about the case: –
5. Whereas as per record, the directors of the company have not disclosed their interest or concern in companies or bodies corporate or firms or association of individuals including their shareholding at the first meeting of the Board meeting held in FY 2022-2023 as required in Section 184 (1) of the Companies Act, 2013. As per record made available by the company, the directors have disclosed such interest only in the Board meeting held on 21.09.2022 by filing the relevant Form MBP-1. Therefore, the directors of the company are liable to penalty under section 184 (4) of Companies Act, 2013 for the said violation for FY 2022-2023.
Submission by the company :
6. The applicant company has stated that the default was caused inadvertently and unintentionally since the directors of the company were involved into setup of registered office and certain decisions were pending at management level, thereby resulting in an inadvertent error in filing Form No. MBP-1. It has also stated that the applicants had suo-motu rectified the mistake by disclosing in the Board meeting held on 21st September 2022, hence the offences may kindly be adjudicated with a levy of a token fees as the Registrar of Companies Chandigarh may deem fit and proper.
Adjudication of Penalty:
7. That an opportunity of being heard in the matter was given to company by issuing show cause notices on 22.02.2024 and the company filed Form GNL-1 for compounding of the said offence on 19.04.2024 vide SRN F94618030 and stated that the company inadvertently contravened the provision of section 184 of the Companies Act 2013 read with rule 9 of the Companies (Meetings of Board and its Powers Rules, 2014 and also that the aforesaid violation of 184(1) of the Act was without any malafide motive and it was unintentional and not committed willfully. Therefore, it is concluded that the directors of the company are liable for penalty as prescribed under Section 184(4) of the Act i.e. they have not disclosed their interest or concern in companies or bodies corporate or firms or association of individuals including their shareholding at the first meeting of the Board meeting held in FY 2022-2023 as required in Section 184 (1). Accordingly, after having considered the facts and circumstances of the case, I am inclined to impose a penalty as prescribed under sub-section (4) of Section 184 of the Companies Act, 2013. The details of the penalty imposed on the directors are as under:
| Nature of Default | Violations under Companies Act, 2013 | Name of person on whom penalty imposed | Penalty for default (Rs) | Total Default amount
(Rs) |
Maximum Limit for penalty (Rs) | Final penalty Imposed
(Rs) |
| Non- disclosure of interest /concern by directors F.Y. 2022-23 | SEC. 184(1) | Company | NIL | NIL | ML | NIL |
| Sh. Prabjot Khosla | 100000 | 100000 | 100000 | 100000 | ||
| Sh. Benjamin Krick | 100000 | 100000 | 100000 | 100000 | ||
| Sh. Michael Wolf | 100000 | 100000 | 100000 | 100000 |
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticees 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.
8. 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].
9. Your attention is also invited to Section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013, which state that in case of non-payment of penalty amount, 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 officer in default 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.
10. 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: – (1.) M/s Pearce Services Global Private Limited, 801- B, C, D and E, 8th Floor Block B, Bestech Business Tower, Sector 66 Mohali, Punjab 160059 (2.) Mr. Prabjot Khosla, Whole-Time Director (3.) Mr. Benjamin Krick (4.) Mr. Michael Wolf and (5.) Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi and will also be uploaded on website.
(Kamna Sharma)
Registrar of Companies & Adjudicating Officer
Punjab and Chandigarh
