Sponsored
    Follow Us:
Sponsored

On October 29, 2024, the Registrar of Companies for the North Eastern Region issued an order regarding M/s Ispat Sheets Limited, penalizing the company and its directors for failing to comply with Section 173(1) of the Companies Act, 2013. This section mandates that every company must hold a minimum of four Board meetings annually, with no more than 120 days between meetings. The inquiry, initiated by the Ministry of Corporate Affairs, revealed that the company did not meet this requirement, particularly noting a gap of 127 days between meetings in the financial year 2018-2019. The company’s claim of a clerical error was deemed unacceptable as no supporting documentation was provided. Consequently, the company was fined ₹10,000, while each of the three directors, identified as Hira Nand Jha, Naba Kumar Pal, and Om Prakash Jha, were also fined ₹10,000 each. The total penalty amounted to ₹40,000. The payment must be made within 90 days, with an appeal allowed within 60 days from the order’s receipt. Failure to pay may lead to increased penalties, including fines and potential imprisonment for the officers in default.

GOVERNMENT OF INDIA
Ministry Of Corporate Affairs
Office of the Registrar of Companies, North Eastern Region
1st Floor, BSNL Bhawan, Pan Bazar
Guwahati- 781001

File No. ROC/GHY/ADJ/ISPAT/454/2024-25/495 Dated: 29/10/2024

ORDER IN THE MATTER OF ADJUDICATION OF PENALTY UNDER SECTION 454(3) OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 FOR VIOLATION OF SECTION 173 OF THE COMPANIES ACT, 2013 READ WITH RULES MADE THEREUNDER.

IN THE MATTER OF ISPAT SHEETS LIMITED
(CIN – U27107AS1988PLC002877)

Appointment of Adjudication Authority:

1. The Ministry of Corporate Affairs vide its Gazette Notification No. A­42011/112/ 2014-Ad. II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred under section 454 of the Companies Act, 2013 [hereinafter known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 (Notification No. GSR 254(E) dated 31.03.2014) for adjudging penalties under the provisions of the Companies Act, 2013.

2. Company:

M/s Ispat Sheets Limited (herein referred to as ‘the company’) is a company having its registered office at “HOUSE NO. 36, S. C. Road By Lane-3 Athgaon Pukuripar, Kamrup, Guwahati-781001, Assam” and is registered under the provisions of the Companies Act, 1956/ 2013 on 22.02.1988 The CIN of the Company is U27107AS1988PLC002877.

3. Relevant Provisions of the Companies Act, 2013

Section 173(1) of the Companies Act, 2013

Every company shall hold the first meting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board:

Section 450 of the Companies Act, 2013: Punishment where no specific penalty or punishment is provided

If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made there under, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other Person shall be [liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.

Facts About the Case

The Ministry vide letter dated 27.02.2020 has given instruction to conduct inquiry u/s 206(4) of the Companies Act 2013, while conducting the inquiry the Inquiry Officer has pointed out that there was a violation of section 173(1) of the companies act ,2013.

Inquiry Officer/ROC has stated in its inquiry report- “Every company shall hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board.

The dates mentioned in MGT-7 filed for FY 2018-2019 for Board meetings are 27/04/2018, 01/09/2018, 10/12/2018 and 04/03/2019, the gap between 27/04/2018 and 01/09/2018 is 127 days, the company has prima facie violated the provisions of Section 173 of the Companies Act, 2013.

The company reply that there has been a clerical mistake and date of Board Meeting was actually 07/05/2018 instead of 27/04/2018 is unacceptable as company has not submitted copy of board minutes of correct date i.e. 07.05.2018 as claimed by the company in its reply. Further, company has also not filed revised Annual Return on MCA Portal for FY 2018-19 showing correct date of board meetings.

Hence, there is prima facie non-compliance of Section 173 read with Section 450 of the Companies Act, 2013 for holding board meeting on 01.09.2018 beyond 120 days from last board meeting held on 27.04.2018 (as shown in Annual Return for FY 2018­19).

4. Show Cause Notice reply and Personal Hearing

Registrar of Companies, Guwahati being an adjudicating authority had issued notice of hearing dated 31.08.2023 by fixing the hearing on 20.09.2023 at 11.30 am, however no one appeared on the said date of hearing .

Since no reply has been received from the company and its directors for the Adjudication notice, this office had issued Adjudication Hearing Notice to the subject company and its directors on 14.10.2024 by fixing the hearing date as on 23.10.2024 at 11:30. AM. However, no one appeared for the hearing.

5. Order

Having considered the facts and circumstances of the case and after taking into accounts the factors above, it is concluded that the company and its directors have violated section 173(1) of the Companies Act, 2013 and are liable for penalty as prescribed U/s 450 of the Companies Act,2013.

I hereby imposed penalty on company and its officer in default as prescribed under Section 450 of the Companies Act,2013. The details of the penalty imposed on the company and Officer in default are given in the table below:

Violation of Section of the Companies Act 2013 Company/ Of ficers to whom penalty imposed No. of days in default Total Penalty (Minimum) Maximum Limit for penalty  (Rs.) Penalty imposed
2 3 4 5 6 7
Section 173(1) of the Companies Act,2013 Company One time Rs.10,000+ Rs.1000/-(in case of continuing contravention) Rs. 2,00,000/- Rs.10,000/-
Hira Nand Jha One time Rs.10,000+ Rs.1000/- (in case of continuing contravention) Rs.50,000/- Rs.10,000/-
Naba Kumar Pal One time Rs.10,000+ Rs.1000/ – (in case of continuing
contravention)
Rs. 50,000/- Rs.10,000/-
Om Prakash Jha One time Rs.10,000+ Rs.1000/- (in case of continuing
contravention)
Rs. 50,000/- Rs.10,000/-
Total Rs.40,000

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.10,000/-(Rupees one thousand) is imposed on the company and Rs. 10,000/ – (Rupees Ten thousand) is imposed on each officer in default.

6. The noticee shall pay the amount of penalty individually for the company and its officers from their personal sources/income by way of e-payment available on Ministry website mca.gov.in under “Pay Miscellaneous Fees” category in MCA fees and Payment Services under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 within 90 days from the date of receipt of this order and copy of this Adjudication order and Challan/ SRN generated after payment of penalty through online mode shall be filed in INC-28 under the MCA portal without further reference.

7. On deposit of penalty through online and filing of INC-28 under MCA21 Portal, all proceedings under this section in respect of such default shall be deemed to be concluded in terms of first proviso of Sub-section 3 of Section 454 of the Companies Act, 2013 as the case may be.

8. However, Appeal against this order may be filed in writing with the Regional Director, North Eastern Region, Ministry of Corporate Affairs, 1ST Floor, BSNL Bhawan, Pan Bazar, Guwahati-781001, Assam, 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 the certified copy of this order. [Section 454(5) & 454(6) of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudicating of Penalties) Amendment Rules, 2019].

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, 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.

(DIP NARAYAN CHOWDHURY)
REGISTRAR OF COMPANIES &
ADJUDICATING OFFICER
MINISTRY OF CORPORATE AFFAIRS
GUWAHATI

Sponsored

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Leave a Comment

Your email address will not be published. Required fields are marked *

Sponsored
Sponsored
Ads Free tax News and Updates
Sponsored
Search Post by Date
December 2024
M T W T F S S
 1
2345678
9101112131415
16171819202122
23242526272829
3031