Penalty Imposed on United Technologies for Non-appointment of whole-time CS

United Technologies Corporation India Private Limited was penalized for violating Section 203 of the Companies Act, 2013, which mandates the appointment of a whole-time company secretary for firms with a paid-up capital exceeding ₹10 crore. The company failed to make the appointment within the required timeframe after increasing its capital on July 28, 2022, resulting in a default for 458 days until October 30, 2023. Although the company requested a lenient penalty due to difficulties in finding a suitable candidate, the law stipulates a fixed penalty. Consequently, the company and its directors were fined based on the duration of the default, with penalties ranging from ₹1,59,000 to ₹5,00,000 for each involved party. The penalties are to be paid through an online process within 90 days, with an option for appeal within 60 days. Non-compliance could lead to further legal actions under the Companies Act.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS,
OFFICE OF REGISTRAR OF COMPANIES,
NCT OF DELHI & HARYANA
4TH FLOOR, IFCI TOWER, 61, NEHRU PLACE,
NEW DELHI -110019

ORDER OF PENALTY UNDER SECTION 203 OF THE COMPANIES ACT, 2013 IN THE MATTER OF UNITED TECHNOLOGIES CORPORATION INDIA PRIVATE LIMITED (CIN: U63000DL2008FTC270957)

1. Appointment of Adjudicating Officer: –

Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 appointed Registrar of Companies, NCT of Delhi & Haryana as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter known as Act) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Company: –

Whereas the company namely UNITED TECHNOLOGIES CORPORATION INDIA PRIVATE LIMITED (herein after known as ‘company’) incorporated under the Companies Act, 1956 having its registered office as per MCA21 Registry at address 505, 506A Fifth Floor, Worldmark 2, Asset Area No 8, Aerocity, IGI Airport, New Delhi, South West Delhi, Delhi,110037, India. The financial & other details of the subject company for immediately preceding F.Y 2023-24 as available on MCA-21 portal is stated as under:

3. Facts about the Case: –

I. This office is in receipt of application on 11.07.2024 from the company and 3 other applicants for adjudication of penalties for default u/s 203 of the Act. As per the application, the company had earlier filed an application before RD(NR) for this default. In an order dated 06.06.2024 passed by RD(NR), it has been noted that the said default is decriminalized. Thereafter, the representative submitted a letter dated 20.05.2024 to withdraw the compounding application and file a fresh application for adjudication. The company has withdrawn its application filed compounding vide GNL-F94057379.

II. As per the application, the following has been submitted:

i. That the paid-up capital of the company increased to Rs. 10,56,99,990 w.e.f. 28.07.2022 and accordingly in terms of section 203(1) of the Act r/w Rule 8A of the Companies (Appointment and Remuneration of the Managerial Personnel) Rules, 2014, the company was required to appoint a whole-time company secretary on 28.07.2022.

ii. That the company could only appoint a whole-time CS on 30.10.2023 and hence, the Company has made a default on the aforesaid provision for a period 28.07.2022 to 29.10.2023 (i.e. total period of default is 458 days).

III. Accordingly, a show cause notice for the default was issued to the company and its officer on 13.08.2024 and a response dated 28.08.2024 was received seeking extension of time to submit the reply. Further responses dated 27.09.2024 and 30.09.2024 were received on behalf of the company and all other noticees except for Sh. Pankaj Anand and Sh. Amit Pathak. In these responses, it was submitted that the company was unable to find a suitable candidate for the post and hence, it resulted in a delay in such an appointment. Further, it was submitted that a lenient view may be taken while levying penalty as this was their first contravention of appointment of whole-time CS.

IV. The non-executive directors, namely, Surinder Singh Kainth, Divyesh Jamnadas Dalal and Kurt Andrew Percy submitted that they were not officer in default in the contravention of this appointment and hence, no penalty must be levied. Further, one of the noticee, Sandeep Sharma (ex-director) submitted that he vacated the position of director in the company w.e.f. 25.08.2023 and hence, his penalty may be waived off.

V. Mr. Tanuj Vohra, Company Secretary (the authorized representative of the Company) appeared for oral submission in the matter on 05.12.2024 and requested to take a lenient view while levying penalty on the company and its officers.

4. The relevant provision of the Act and Rules therewith:

Section 203 (Appointment of Key Managerial Personnel)

(1) Every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel,—

(i) managing director, or Chief Executive Officer or manager and in their absence, a whole-time director;

(ii) company secretary; and

(iii) Chief Financial Officer:

Provided that an individual shall not be appointed or reappointed as the chairperson of the company, in pursuance of the articles of the company, as well as the managing director or Chief Executive Officer of the company at the same time after the date of commencement of this Act unless,—

(a) the articles of such a company provide otherwise; or

(b) the company does not carry multiple businesses:

Provided further that nothing contained in the first proviso shall apply to such class of companies engaged in multiple businesses and which has appointed one or more Chief Executive Officers for each such business as may be notified by the Central Government.

> (5) “If any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees”

Rule 8A (Appointment and Remuneration of Managerial Personnel) Rules,  2014.

> Rule 8A. Every private company which has a paid-up share capital for ten crore rupees or more shall have a whole-time company secretary.

5. Adjudication of penalty: –

i. The paid-up capital of the company exceeded Rs. 10 crores w.e.f. 28.07.2022 and thus the company was accordingly required to appoint whole-time CS. The company could appoint whole-time CS on 30.10.2023 and hence, there was a non-compliance for a period of 458 days as per Section 203 of the Companies Act, 2013. The submission of the company granting remission in the penalty cannot be considered as the law provides for a fixed penalty.

ii. Further, it is to be noted that as per section 203 (5), “every director and key managerial personnel of the company” will be at default for such non­compliance. Therefore, every member of the Board during the period of default will be liable for such contravention.

iii. The subject company does not get covered under the purview of small company as defined u/s 2(85) of the Act. Hence, the benefit of section 446B would not be applicable on the company.

iv. Now in exercise of the powers conferred on me vide Notification dated 24th March, 2015 and having considered the reply submitted by the subject Company in response to the notice, I hereby impose the penalty on the Company and its officers in default under Section 203 of the companies act 2013 for violation as follows:-

TABLE-I

7. Order:

a. Names of parties as mentioned in TABLE-I above are hereby directed to pay the penalty amount as per column no. ‘E’ therein. In case of parties other than company, such amount is required to be paid out of their own funds.

b. The said amount of penalty shall be paid through online by using the website mca.gov.in (Misc. head) in favor of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, within 90 days of receipt of this order, and intimate this office with proof of penalty paid.

c. Appeal against this order may be filed with the Regional Director (NR), Ministry of Corporate Affairs, B-2 Wing, 2nd Floor, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi-110003 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 the order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].

d. Your attention is also invited to section 454(8) of the Act in the event of non­compliance with this order.

(Pranay Chaturvedi, ICLS)
(Adjudicating Officer)
Registrar of Companies
NCT of Delhi & Haryana

No. ROC/D/Adj/Order/Section 203/UNITED/5145-5154

Date: 27.01.2025