The Registrar of Companies (ROC) in Cuttack has issued an adjudication order imposing a penalty on Hari Machines Limited and its managerial personnel for violating Section 197(3) of the Companies Act, 2013. The company, which was in default of its bank loan repayments, paid managerial remuneration of Rs. 25,41,300 for the financial year 2017-18 without obtaining the mandatory prior approval from the Central Government. The order states that a company is required to seek such approval before paying remuneration when it has defaulted on debt repayments for a continuous period of thirty days in the preceding financial year.
The ROC order also reviewed the liability of several directors and officers who responded to the show-cause notice. The ROC determined that Amit Kedia and Sangita Drolia, who served as non-executive and independent directors, were not liable for the offense. This decision was based on a Standard Operating Procedure (SOP) issued by the Ministry of Corporate Affairs, which limits the liability of such directors for operational matters. The ROC also absolved the Chief Financial Officer (CFO), Kailash Kumar Agrawal, from responsibility, noting that he was not present at the board meeting where the remuneration was approved and that his role was primarily limited to financial reporting.
However, the ROC held the managing director, Sabyasachi Mishra, and the company secretary, Rakesh Ganeriwal, liable for the violation. The order imposes penalties of Rs. 1 lakh each on the company secretary and the managing director. The order states that the company secretary, being aware of the statutory provisions, should have ensured compliance, and his advice was not followed by the executive management. The managing director is held responsible for the decision to pay the unauthorized remuneration. The order also notes that since the company is under liquidation, it is also liable for the penalty. The company and the liable officers have been directed to pay the penalties within 90 days.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Cuttack
ROC-cum-Official Liquidator, Ministry Of Corporate Affairs, Corporate Bhawan, 2nd & 3rd Floor, Plot No-9(P), Sector-1,CDA,
Cuttack, Odisha, India, 753014
Phone: 0671-2366952 |
E-mail: roc.cuttack@mca.gov.in
Order ID: PO/ADJ/08-2025/CT/00617 Dated: 28/08/2025
ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (‘THE ACT’) FOR VIOLATION OF SECTION 197(15) OF THE Companies Act, 2013.
A. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette notification number S.O. 831(E) dated 24/03/2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 [herein after known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act..
B. Company details:
In the matter relating to HARI MACHINES LIMITED. [herein after known as Company] bearing CIN L29299OR1948PLC000713, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at RAJGANGPUR NA SUNDERGARH Sundargarh Orissa India 770017
Individual details:
In the matter relating to RAKESH GANERIWAL [herein after known as individual] having DIN 02120801 and having its address at G-1005,4TH FLOOR,BLDG-10, KOYLA VIHAR,VASUNDHARA,VIP ROAD, KOLKATA West Bengal India 700052
In the matter relating to KAILASH KUMAR AGRAWAL [herein after known as individual] having DIN 02393634 and having its address at 1901, HORIZON TOWER-4, UNIWORLD CITY, NEW TOWN KOLKATA West Bengal India 700156
In the matter relating to AMIT KEDIA [herein after known as individual] having DIN 00014952 and having its address at MAYURA APARTMENT, FLAT-1E, BHAIRAB BAGUI LANE NEAR 44 BUS STAND, BAGUIATI, NORT 24 PAR GANAS KOLKATA West Bengal India 700059
In the matter relating to SABYASACHI MISHRA [herein after known as individual] having DIN 00233852 and having its address at Flat No.1703 Horizon Tower-3, Uniworld City New Town North 24 Parganas West Bengal India 700156
In the matter relating to SANGITA DROLIA [herein after known as individual] having DIN 00409862 and having its address at BLOCK D, 2ND FLOOR 13, SELIMPUR ROAD KOLKATA West Bengal India 700031
C. Provisions of the Act:
If any person makes any default in complying with the provisions of this section, he shall be liable to a penalty of one lakh rupees and where any default has been made by a company, the company shall be liable to a penalty of five lakh rupees.]
D. Facts about the case:
1. Default committed by the officers in default/noticee – The Company has paid a remuneration of Rs.25,41,300 for FY 201718 although the company was running in loss during the years.
Further, one of the stipulation made in Schedule-V of the Act provides that the limits specified under this section shall apply, if the company has not made any default in repayment of any of its debts (including public deposits) or debentures or interest payable thereon for a continuous period of thirty days in the preceding financial year before the date of appointment of such managerial person.
But, the company has defaulted in repayment of bank loan during these years. Hence, prior approval of the Central Government is required to pay such remuneration which is not obtained by the company and hence, the company has contravened the Section 197(3) of the Companies Act, 2013.
2. N. A.
E. Order:
1. Facts about the case : The Company has paid a remuneration of Rs.25,41,300 for FY 2017-18 although the company was running in loss during the years. Further, one of the stipulation made in Schedule-V of the Act provides that the limits specified under this section shall apply, if the company has not made any default in repayment of any of its debts (including public deposits) or debentures or interest payable thereon for a continuous period of thirty days in the preceding financial year before the date of appointment of such managerial person. But, the company has defaulted in repayment of bank loan during these years. Hence, prior approval of the Central Government is required to pay such remuneration which is not obtained by the company and hence, the company has contravened the Section 197(3) of the Companies Act, 2013.SCN : The Show Cause Notice (SCN) was issued on 15.07.2025, through e-mail as well as Speed Post, to (1) the company ? Hari Machines Limited, (2) Shri Sabyasachi Mishra, Managing Director, (3) Shri Kailash Kumar Agrawal, CFO, (4) Shri Rakesh Ganeriwal, Company Secretary, (5) Shri Amit Kedia, Director and (6) Ms. Sangita Drolia, Director. Reply of the Company/Officers : Shri Ashutosh Gupta and Gaurav Rana. Counsel & Authorised Representative on behalf of Shri Kailash Kumar Agarwal, Shri Rakesh Ganeriwal, Shri Amit Kedia and Ms. Sangita Drolia have submitted reply vide letter dated 05.08.2025, wherein they have submitted that:- Shri Amit Kedia and Ms. Sangita Drolia were Independent Directors of the company during the relevant period. Being non-executive and Independent Directors, they were not involved in the day-to-day affairs of the company or in decisions relating to managerial remuneration. Their role was limited to providing independent oversight and governance, and they did not exercise control over operational or financial matters. Further, it has been submitted that Shri Kailash Kumar Agarwal, the Chief Financial Officer CFO) of the company, had absolutely no role, either direct or indirect, in the determination, approval, or disbursement of the managerial remuneration in question. It is a matter of record that the decision to pay managerial remuneration was taken exclusively by the then Managing Director and other Executive Directors, without any consultation with or participation from Mr. Agarwal. Furthermore, Mr. Agarwal was not present in the Board Meeting(s) wherein such managerial remuneration was proposed, discussed, or approved. As such, he was not privy to the contents of the resolution(s) passed or the rationale adopted in approving such remuneration. The role of CFO is primarily limited to financial reporting, and overall supervision of financial operations as per the policies framed by the Board. With regards to role of Shri Rakesh Ganeriwal, Company Secretary, it is submitted that he had no role in the determination or payment of managerial remuneration. However, in his capacity as Company Secretary, he had apprised the Board of Directors about the applicable provisions of the Companies Act, 2013 in respect of managerial remuneration, including requisite approvals and limits prescribed therein. Despite his advice, the then Managing Director and Executive Management failed to adhere to the statutory provisions, which resulted in the present default. Therefore, he cannot be attributed with any liability for actions taken contrary to his professional advice. The company and other Directors/Officers in default have not submitted any reply. Order : Based on the submissions made by the Authorised Representative on behalf of above Directors/Officers and in terms of the Companies Act, 2013, it is found/observed that there is merit in the submissions in respect of Shri Amit Kedia and Ms. Sangita Drolia. As per Form32/ DIR12 (SRN-B45629631 dated 18.08.2012 and SRN-C55194476 dated 09.06.2015), Shri Amit Kedia and Ms. Sangita Drolia were appointed as non-executive and Independent Direc s. Thus, these 2 (two) Independent Directors are not liable for the offences in lieu of the principles laid down in the SOP issued by the Ministry vide General Circular No.1/2020 (F.No.16/1/2020-Legal dated 02.03.2020).With regards to submission made in respect of Shri Kailash Kumar Agarwal, CFO, it is stated that the role of CFO is primarily limited to financial reporting, and overall supervision of financial operations as per the policies framed by the Board. He was not present in the Board meeting(s) wherein such managerial remuneration was proposed, discussed, or approved. It is not ascertained from the MGT-7, AOC-4 and other available documents that Shri Agarwal has attended the Board Meeting in which such managerial remuneration was proposed and approved. Section 197(15) of the Companies Act, 2013 provides that if any person makes any default in complying with the provisions of this section, he shall be liable to be punished. It is not established that Shri Kailash Kumar Agarwal was involved in the process of the offence occurred. In respect of Shri Rakesh Ganeriwal, Company Secretary, submissions made by the Authorised Representative has not been found satisfactory. Being the Company Secretary, he is supposed to make agenda for every Board Meeting and apprise the same to the Board in its meetings. Hence, Shri Rakesh Ganeriwal, Company Secretary is liable to be punished for violation of Section 197(3) of the Companies Act, 2013. It is observed that the company is under Liquidation vide Order of the Ho’ble NCLT dated 16.11.2018. The other Directors/officers have not submitted any reply in the matter. Hence, the A.O. do hereby impose penalty upon Directors/Officers in default for the relevant period namely:-Shri Sabyasachi Mishra (Managing Director) and Shri Rakesh Ganerial (Company Secretary) under the provisions of Section 197(15) of the Companies Act, 2013 for violation of Section 197(3) of the Companies Act, 2013.
2. The details of penalty imposed on the company, officers in default and others are shown in the table below:
| (A) | Name of person on whom penalty imposed (B) | Rectification of Default required
(C) |
Penalty Amount
(D) |
Additional Penalty (E) (*Per day of continuing default i.e. date of rectification of default less order issue date) | Maximum limit for Penalty (F) |
| 1 | HARI MACHINES LIMITED. having CIN as L29299OR1948P LC000713 | 0 | 0 | 500000 | |
| 2 | RAKESH GANERIWAL having DIN as 02120801 | 100000 | 0 | 100000 | |
| 3 | KAILASH KUMAR AGRAWAL having DIN as 02393634 | 0 | 0 | 100000 | |
| 4 | AMIT KEDIA having DIN as 00014952 | 0 | 0 | 100000 | |
| 5 | SABYASACHI MISHRA having DIN as 00233852 | 100000 | 0 | 100000 | |
| 6 | SANGITA DROLIA having DIN as 00409862 | 0 | 0 | 100000 |
3. The notified officers in default/noticee shall rectify the default mentioned above and pay the penalty, so applicable within 90 days of receipt of the order.
4. The notified officers in default/noticee shall pay the penalty amount via ‘e-Adjudication’ facility which can be accessed through the respective login IDs on the website of Ministry of Corporate Affairs and upload the copy of paid challan / SRN of e-filing (if applicable) on the ‘e-Adjudication’ portal itself. It is also directed that the penalty so imposed upon the officers in default shall be paid from their personal sources/income.
5. Appeal against this order may be filed in writing with the Regional Director, RD Kolkata within a period of sixty days from the date of receipt of this order, in Form ADJ setting for 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].
6. For penal consequences of non-payment of penalty within the prescribed time limit, please refer Section 454(8) of the Companies Act, 2013.
Sudhir Kapoor,
Registrar of Companies
ROC Cuttack
