Listed Company with 10 Crore Paid-Up Capital, Lacking 2 Independent Directors: MCA Imposes Penalty
The Ministry of Corporate Affairs, under the Companies Act, 2013, appointed the Registrar of Companies, Chennai, as the Adjudicating Officer to adjudicate penalties. In this case, M/s. Info-Drive Software Limited, now under liquidation, violated Section 149(4) of the Act by not having the required number of independent directors. The company, with a paid-up capital of 10 crore rupees, should have had at least two independent directors, but it failed to maintain this requirement.
The company had one independent director initially, but after resignations, it lacked any independent directors, breaching the statutory provision. The matter was brought before the Adjudicating Authority after a complaint was filed, leading to an adjudication hearing where the company and its directors, Mr. Jaffer Sadiq Ameer and Mr. Andrew Niranjan Seshiah, presented their case.
Given the company’s current liquidation status and the absence of regularization of Mr. Andrew Niranjan Seshiah as a director, the penalty was imposed solely on Mr. Jaffer Sadiq Ameer, the former director. The penalty amounted to Rs. 1,00,000, as per Section 172 of the Companies Act, 2013, to be paid within 90 days. Failure to comply with the order may result in further penalties or imprisonment, as outlined in the Act. Appeal against the decision can be made to the Regional Director within sixty days.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES, TAMIL NADU, ANDAMAN & NICOBAR ISLANDS, CHENNAI
II FLOOR, C- WING, SHASTRI BHAVAN, 26, HADDOWS ROAD, NUNGAMBAKKAM, CHENNAI- 6
F.NO.ROC/CHN/INFO-DRIVE/ADJ/S.149(4)/2024 DATE: 1 APR 2024
ADJUDICATION ORDER UNDER SECTION 149 (4) OF THE COMPANIES ACT, 2013
IN THE MATTER OF M/S. INFO -DRIVE SOFTWARE LIMITED (NOW UNDER LIQUIDATION).
1. Appointment of Adjudicating Officer: –
The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014Ad.II, dated 24.03.2015 has appointed Registrar of Companies, Chennai as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter referred as Act or Companies Act, 2013) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company: –
Whereas the company viz M/s. Info- Drive Software Limited (Now under liquidation) with CIN:L36999TN1988PLC015475 (herein after referred as ‘ company’ or ‘ subject company’) is a registered company with this office under the provisions of section 7 of the Companies Act, 2013 having its registered office as per MCA21 Registry at Crown Court, Sixth Floor, Office No. 3, No. 128, Cathedral Road, Chennai 600086. The financial & other details of the subject company as available on MCA-21 portal is stated as under:
| S. No. | Particulars | Details as on F.Y. 2013-14 |
| 1. | Paid up Capital | 45,09,02,200 |
| 2. | a. Revenue from Operation | 63,19,53,000 |
| b. Other Income | 4,50,26,000 | |
| c. Profit for the Period | 12,68,000 | |
| 3. | Whether it is a Holding Company | No |
| 4. | Whether it is a Subsidiary Company | No |
| 5. | Whether company registered under Section 8 of the Act? | No |
| 6. | Whether company registered under any other special Act? | No |
3. Directors during the period of violation
| S.No. | Name of Director Default | Designation | Date of Appointment | Date of Cessation |
| 1. | Shri.Jaffer Sadiq Ameer | Director | 12.03.2013 |
- Mr. Seshagiri Rao was demised on 27.06.2016. Therefore, the charge against him was abated.
- Mr. Andrew Niranjan Seshiah was not regularized as a director.
4. Section and Penal Provision as per Companies Act, 2013
Section 149 of the Companies Act, 2013– Company to have Board of Directors:
Every listed public company shall have at least one-third of the total number of Directors as independent Directors and the Central Government may prescribe the minimum number of independent Directors in case of any class or classes of public companies.
Rule 4 of the Companies (Appointment and Qualification of Directors), Rules,2014 provides :
(1) The following class or classes of companies shall have at least two directors as independent directors
(i) the Public Companies having paid up share capital of ten crore rupees or more; or
(ii) the Public Companies having turnover of one hundred crore rupees or more;
(iii) the Public Companies which. have in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees:
Provided that in case a company covered under this rule is required to appoint a higher number of independent directors due to composition of its audit committee, such higher number of independent directors shall be applicable to it:
Provided further that any intermittent vacancy of an independent director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy, whichever is later:
Provided also that where a company ceases to fulfil any of three conditions laid down in sub-rule (1) for three consecutive years, it shall not be required to comply with these provisions until such time as it meets any of such conditions;
Explanation. – For the purposes of this rule, it is here by clarified that, the paid up share capital or turnover or outstanding loans, debentures and deposits, as the case may be, as existing on the last date of latest audited financial statements shall be taken into account:
Provided that a company belonging to any class of companies for which a higher number of independent directors has been specified in the law for the time being in force shall comply with the requirements specified in such law.
Section 172 of the Companies Act, 2013- Penalty
“If a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every
officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of 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.
5. Issue of Adjudication Notice:
Pursuant to the Ministry’s Instruction, the Registrar of Companies, Chennai has conducted an Inspection of books and papers of M/s. Info Drive Software Limited U/s. 206(5) of the Companies Act, 2013. The JO reported that the company being a listed public company, having paid up share capital of ten crores rupees, mandatorily required to have two directors as independent directors. Further, reported that one of the directors of the company Shri. Pramod Manoharlal Jain resigned on 12.12.2017 and therefore on 13.12.2017 the company was having only one independent director. Thereafter another independent director Lakshmi Sankarakrishnan Ramalingam also resigned with effect from 05.04.2018. From 06.04.2018 onwards the company did not have any director as Independent Director. Thus, contravening the provisions of Section 149 (4) of the Act read with Rules thereunder. After that this office filed a complaint before the Additional Chief Metropolitan Magistrate Economic Offences, Egmore Chennai in EOCC No. 92/2019 against the company and its directors for violation of Section 149(1) of the Companies Act, 2013 read with Rule 3(i) of Companies (Appointment of Directors) Rules, 2014. The Hon’ble Court of the Additional Chief Metropolitan Magistrate, E.0-I, Egmore, Chennai 600008 vide order dated 31.07.2023 in E.O.C.C. No. 92/2019 ordered that “the case is withdrawn form the file of this Court and transferred to ROC/Adjudicating Authority for Adjudication U/s. 454 of the Companies Act, 2013”.
6. Adjudication Hearing:
The Adjudicating Authority has issued notice of hearing dated 14.02.2024 by fixing the hearing on 20.02.2024 at 01:15 PM. Mr. Murthy, Advocate has appeared before the Adjudicating Authority on 20.02.2024 on behalf the company and directors namely Mr. Jotter Sadiq Ameer and Mr. Andrew Niranjan Seshiah. The authorized representative made submission that the violation of Section 149(4) may be adjudicated and penalty may be imposed only on director.
7. Decision
The Hon’ble NCLT Chennai Bench II vide order dated 06.04.2022 in IA/1316/IB/2020 & IA/129(CHE)/2021 in CP/1000/IB/2018 appointed a liquidator in the matter of Corporate Debtor Info- Drive Software Limited under IBC 2016. Further, in the said order stated that the liquidator shall issue the public announcement that the Corporate Debtor is in liquidation.
Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that there is violation of Section 149(4) of the Companies Act, 2013 for 1575 days from 13.12.2017(company was having only one independent director) to date of appointment of liquidator i.e, 06.04.2022.
- I am inclined to impose a penalty only on the director (now Ex- Director) namely Mr. Jaffer Sadiq Ameer as prescribed under Section 172 of the Companies Act, 2013 as the company is currently under liquidation Mr. Andrew Niranjan Seshiah is not regularized as a director.
The details of the penalty imposed on Officer in default is shown in the table below:
| S. No | Officers in default | No of days of default | Per day penalty for default | Total Penalty. | Maximum Penalty | Penalty Imposed |
| 1. | Shri. Jaffer Sadiq Ameer, Director | 1575 days | Rs. 500/- | Rs. 50,000 + Rs. 500 x 1575 days = 8,37,500 | Rs. 1,00,000/- | Rs. 1,00,000/- |
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.1,00,000/- (Rupees One lakh) is imposed on each director. Totally Rs. 1,00,000/-(Rupees Two lalchs) is imposed as penalty amount for violation of Section 149(4) of the Companies Act, 2013.
8. The said amount of penalty shall be paid through online by using the website www.mca.gov.in (Misc. head), within 90 days of receipt of this order, and intimate this office with proof of penalty paid.
9. Whereas Appeal against this order may be filed with the Regional Director (SR), Ministry of Corporate Affairs, 5th Floor, Shastri Bhavan, 26 Haddows Road, Chennai-600006, Tamil Nadu within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website mca.gov.in] 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 (Adjudicating of Penalties) Rules, 2014].
10. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order, “(8)(i) Where 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 ninety days from the date of the receipt of the copy of the order, 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.
(i1) 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 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.”
(B. SRIKAMAR, ICLS)
REGISTRAR OF COMPANIES
TAMILNADU, CHENNAI.
ADJUDICATING OFFICER
