Introduction: In a case brought before the Regional Director, South East Region, Ministry of Corporate Affairs, Hyderabad, under the Companies Act, 2013, we delve into the matter of Toyotsu Bharat Integrated Services Private Limited, formerly known as Technotrends Auto Park Private Limited. The company, its directors, and the penalty imposed for non-compliance with Section 203 of the Act will be thoroughly analyzed in this article.
Detailed Analysis:
1. Background: M/s. Toyotsu Bharat Integrated Services Private Limited, formerly Technotrends Auto Park Private Limited, filed an appeal under section 454(5) of the Companies Act, 2013. The appeal was against the adjudication order passed by the Registrar of Companies, Karnataka, dated 12.06.2023.
2. Violation of Section 203: The Registrar of Companies, in their order, highlighted that the company was required to appoint a Whole-Time Company Secretary due to an increase in paid-up capital. However, the company failed to do so from 30.12.2015 to 28.03.2019, spanning 1185 days. This non-compliance constituted a violation of Section 203 of the Companies Act.
3. Penalty Imposition: The adjudication order led to the imposition of a penalty of Rs. 5.00 Lakhs on the company and its two Managing Directors, Mr. Manabu Asada and Mr. Tomohiro Yama, totaling Rs. 15.00 Lakhs.
4. Appeal and Hearing: The appellants were granted an opportunity to be heard on 01.08.2023. Mr. B Pavan Kumar Reddy, a Practicing Company Secretary, represented the appellants. He argued that the delay in compliance was inadvertent and unintentional, causing no financial loss or harm to the public or stakeholders. He requested a reduction in the imposed penalty.
5. Reduction of Penalty: After considering the facts and submissions, the Regional Director found grounds to interfere with the adjudication order. The penalty was reduced to Rs. 3,00,000 for the company and Rs. 1,00,000 each for Mr. Manabu Asada and Mr. Tomohiro Yama, aggregating to Rs. 5,00,000. The appellants were directed to comply with this order and the relevant sections of the Companies Act, 2013.
Conclusion: The case of Toyotsu Bharat Integrated Services Private Limited’s appeal under the Companies Act, 2013, sheds light on the importance of compliance with statutory provisions. The reduction of the penalty, taking into account the inadvertent nature of the non-compliance, serves as a reminder of the necessity of adhering to regulatory requirements. This case exemplifies the regulatory framework’s focus on achieving justice and fairness in matters of corporate governance.
F.No:9/17/ADJ/SEC.203/2013/KARNATAKA/RD(SER)/2022/4389
BEFORE THE REGIONAL DIRECTOR, SOUTH EAST REGION
MINISTRY OF CORPORATE AFFAIRS, HYDERABAD
IN THE MATTER OF COMPANIES ACT, 2013
IN THE MATTER OF TOYOTSU BHARAT INTEGRATED SERVICES PRIVATE LIMITED FORMERLY KNOWN AS TECHNOTRENDS AUTO PARK PRIVATE LIMITED
1. M/s. Toyotsu Bharat Integrated Services Private Limited (formerly known as Technotrends Auto Park Private Limited)
2. Manabu Asada, Managing Director
3. Tomohiro Yama, Managing Director
Appellants
Date of hearing : 01.08.2023
Present : Mr. B Pavan Kumar Reddy, PCS
ORDER
This is an appeal filed under section 454(5) of the Companies Act, 2013 by the above appellants in e-form ADJ vide SRN F62068010 dated 23.06.2023 against the adjudication order No. ROC/(B)/Adj.Ord.454-203/Techno trends/Co.No.73973/2022-23 dated 12.06.2023 under section 454 passed by the Registrar of Companies, Karnataka for default in compliance with the requirements of Section 203 read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Further as per the Ministry of Corporate Affairs, portal it is observed that M/s. Technotrends Autopark Private Limited was changed to Toyotsu Bharat Integrated Services Private Limited on 26.04.2022.
2. Registrar of Companies in his order of adjudication has stated that the company was incorporated on 05.03.2014 having a paid up capital of Rs.1,00,000 and it was subsequently increased to Rs.35.01 Crores on 30.12.20215 pursuant to further issue of equity shares and the company was required to appoint Whole Time company Secretary from this date onwards. Thereafter, the same was increased to Rs.62.61 Crores on 06.05.2016, further increased to Rs.102.61 crores on 25.01.2017, further to Rs.134.91 crores on 17.04.2018 and further increased to the present paid up capital of Rs.211.51 crores on 25.01.2022.
Further Registrar of Companies in his adjudication order has stated that the Company has not appointed a Whole Time Company Secretary from 30.12.2015 to 28.03.2019 i.e. for a period of 1185 days thereby violated the provisions of Section 203 of the Companies Act. As per records the company has appointed Company Secretaries i.e. Mr. Murali Athmanathan on 29.03.2019 and resigned on 17.12.20020 and Mr. Sameersudarshan Venkatesh Rao Raned from 08.02.2021 and continuing. Hearing was held before Registrar of Companies on 12.06.2023 and after hearing the authorized representative had levied a penalty of Rs.5.00 Lakhs each on the Company and for 2 officers i.e., Mr. Manabu Asada, Managing Director and Mr. Tomohiro Yama, Managing Director (total aggregating to Rs.15.00 Lakhs).
3. An opportunity of being heard was given to the Appellants on 01.08.2023. The authorized representative Mr. B Pavan Kumar Reddy, Practicing Company Secretary appeared on behalf of the appellants and reiterated the submissions made in the appeal and submitted that since the delay was inadvertent and unintentional on the part of the applicants and did not cause any financial loss to the company or its stakeholders at large or injury to the interest of public and requested to reduce the penalty as levied by the Registrar of Companies in its adjudication order.
4. Though there is a default committed, there is a ground in interfering with the impugned adjudication order of Registrar of Companies to the extent of reducing the quantum of penalty as stated above. Hence, taking into consideration the facts of the appeal and submissions made by the authorized representative. I deem it would meet the end of justice if the penalty imposed by Registrar of Companies is reduced for the Company to Rs.3,00,000/- and for 2 officers i.e., Mr. Manabu Asada, Managing Director and Mr. Tomohiro Yama, Managing Director to Rs.1,00,000/- each (total aggregating to Rs.5,00,000/-). The appellants are directed to comply with this order and also provisions of Section 454(8) of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014.
5. Accordingly, penalty was paid by the Company amounting to Rs.3,00,000/- and by 2 officers i.e., Mr. Manabu Asada, Managing Director and Mr. Tomohiro Yama, Managing Director to Rs.1,00,000/- each (total aggregating to Rs.5,00,000/-) vide SRN’s X49730831, X49735889 and X49738610 dated 11.08.2023 respectively. Accordingly, this order is issued to the Appellants with a copy to Registrar of Companies, Karnataka and Joint Secretary, E-Governance Cell, Ministry of Corporate Affairs, New Delhi for information and necessary action.
Issue under my hand and seal on this the 10th day of October 2023
(DR. RAY SINGH)
REGIONAL DIRECTOR (SER)
HYDERABAD
