ROC Imposed penalty for Non filing of e-form MGT-14 for Reappointment of Managing Director

The Registrar of Companies (ROC), Gujrat, Dadra and Nagar Haveli has recently imposed penalties on a company, including its officer in default for the violation of Section 117 of the Companies Act, 2013. The Company failed to file the required e-form MGT-14 along with the Board Resolution within the stipulated time frame of 30 days from the date of passing the resolution for reappointment of a Managing Director.

The company Suo-moto filed an application admitting non-compliance with Section 117 of the Act. In response, the Presenting Officer submitted that as per the provisions of Section 117(2) of the Companies Act, 2013, the Company was liable for a penalty of Rs. 10,000/- and if the default continued, an additional penalty of Rs. 100/- per day would be levied for each day during which the failure persisted, subject to a maximum penalty of Rs. 2,00,000/-. Additionally, the officer in default would be subjected to a penalty of Rs. 10,000/-, with an additional penalty of Rs. 100/- per day, subject to a maximum of Rs. 50,000/- for each defaulting officer. After considering the submissions and facts presented, the Adjudicating Authority had imposed a penalty of Rs. 2,00,000/- on the Company and Rs. 50,000/- per each officer.

1. ROC took action against a company for its failure to adhere to Section 117 of the Companies Act, 2013. By imposing penalties on the company and its defaulting officers, the authorities underscored the importance of compliance with statutory requirements. It serves as a reminder for companies to diligently fulfil their obligations within the prescribed timelines to avoid facing penalties and legal consequences.

BEFOR THE ADJUDICATING OFFICER

REGISTRAR OF COMPANIES, GUJARAT, DADRA & NAGAR HAVELI

Order No. ROC-Guj/Adj. Order/Sec. 117/2023/1010 To 17 Dated: 19 May 2023

ORDER FOR PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 FOR VIOLATION OF SECTION 117 OF THE COMPANIES ACT, 2013.

IN THE MATTER OF M/s. SPC LIFE SCIENCES LIMITED

(U24230GJ2005PLC046252)

Date of hearing- 08.05.2023

1. Shri R. C. Mishra (ROC), Adjudicating Officer

2. Mr. Gajanan Kate (AROC), Presenting Officer.

Company/Officers/Directors/KMP/ Authorised Representative.

Mr. Niraj Trivedi (PCS) Authorised Representative of the Company/Director present in hearing before Adjudication Authority.

Appointment of Adjudication Authority: –

1. The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-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 Act.

Company:

2. M/s. SPC LIFE SCIENCES LIMITED (herein after referred to as “the Company”) is a Company registered under the provisions of the Companies Act, 1956/2013 in the State of Gujarat. having CIN (U24230GJ2005PLC046252) and presently having its registered office situated at 284/1, 2 & 3 GIDC Estate, Makarpura, Vadodara, Gujarat- 390 010.

Fact of the case:

3. The Company vide SRN F59922450 dated 26.03.2023 has filed Suo-moto Adjudication application under section 454 of the Companies Act, 2013 for violation of Section 117 of the Companies Act, 2013.

4. On request of the company vide letter dated 26.03.2023, the undersigned vide e-mail dated 28.04.2023 has given an opportunity of being heard to the company and its officer in default on 08.05.2023 at 2.30p.m in the matter.

Reply / submission made by Authorized Representatives.

5. Mr. Niraj Trivedi (PCS) Authorised Representative of the Company/Directors present in hearing on 08.05.2023 and submitted that Mr. Snehal Ravjibhai Patel was re-appointed as Managing Director in the Board Meeting held on 25.05.2016. The Company should have been filed e-form MGT-14 alongwith Board Resolution dated 25.05.2016 on MCA portal on or before 24.06.2016. Due to inadvertent error and lack of knowledge, the company could not filed the said resolution with e-form MGT-14 on MCA portal on or before 24.06.2016 i.e. within 30 days from the date of passing Board resolution dated 25.05.2016.

However, the said resolution with e-form MGT-14 was filed by the company on MCA portal vide SRN AA1698553 on 24.03.2023 which is taken on record on 24.03.2023. Hence, the company has complied with the provisions of section 117 of the Companies Act, 2013.

During the hearing, the representative of the Company/director has requested to take a lenient view and impose minimum penalty in the matter.

6. Submission of the Presenting Officer:

The Presenting Officer submitted that the Resolution passed by the company dated 25.05.2016 should have been filed on or before 24.06.2016. However, the said Resolution was filed on MCA portal in e-form MGT-14 vide SRN AA1698553 on 24.03.2023 with delay by 2436 days.

The Presenting Officer further submitted that as per the provisions of section 117(2) of the Companies Act, 2013, the Company liable for penalty of Rs. 10,000/- and if the default is continued further penalty is Rs. 100/- per day during which such failure continues subject to maximum Rs. 2,00,000/- and the penalty for the officer in default is Rs. 10,000/- and if the default is continued further penalty of Rs. 100/- per day during which such failure continues subject to maximum Rs. 50,000/- for each and every officer in default. The Adjudicating authority has power under section 454 of the Companies Act, 2013read with section 117(2) of the Act to impose penalty for violation of section 117 of the Companies Act, 2013.

ORDER:

7. While adjudging quantum of penalty under section 117 of the Companies Act, 2013, the Adjudication Officer shall have due regard to the following factors, namely:

(a) The amount of disproportionate gain or unfair advantage, whenever quantifiable. made as a result of default.

(b) The amount of loss caused to an investor or group of investors as a result of the default.

(c) The repetitive nature of default.

8. With regard to the above factors to be considered while determining the quantum of penalty, it is noted that the disproportionate gain or unfair advantage made by the noticee or loss caused to the investor as a result of the delay on the part of the noticee to redress the investor grievance are not available on the record. Further, it may also be added that it is difficult to quantify the unfair advantage made by the noticee or the loss caused to the investors in a default of this nature.

9. The undersigned considered the submission made by the representative of the company/ Director and Presenting Officer. Having considering the facts and circumstances of the case and after taking into account the above factors, the undersigned has reasonable cause to believe that the company and its officers in default have violated the provision of section 117 of the Companies Act, 2013 by delay in filing of e-form MGT-14 with resolution. I hereby imposed penalty on the Company and its officers in default for violation of 117 of the Companies Act, 2013 as per Table below:-

10. The noticee shall pay the amount of penalty individually for the company and its directors (out of own pocket) by way of form No. INC-28 of e-payment (available on Ministry Website mac.gov.in) under “Pay miscellaneous fees” category in MCA fee and payment Service within 90 (ninety) days of this order and the Challan/SRN generated after payment of penalty through online mode shall be forwarded to this office along with the copy of form No. INC- 28.

11. Appeal if any, against this order may be filed in writing with the Regional Director, North Western Regional, Ministry of Corporate Affairs, ROC Bhavan, Opp. Rupal Park, Nr. Ankur Bus stand, Naranpura. Ahmedabad (Gujarat) 380 013 within a period of sixty days from the date of receipt of this order, in e-Form ADJ setting forth the grounds of appeal and shall be accompanied by the certified copy of this order. (Section 454 of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019).

12. Please note that as per the provisions of section 454(8)(i) of the Companies Act, 2013. where company does not pay the penalty imposed by the Adjudication officer or the Regional Director within a period of Ninety days (90 days) from the date of the receipt of the copy or order, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakhs rupees. Further as per section 454(8)(ii) of the Companies Act, 2013, where an officer of a company who is in default does not pay the penalty within a period of Ninety days (90 days) from the date of receipt of the copy of the order, such officers 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.

13. Your attention is also invited to section 454(8) of the Companies Act, 2013 in the event of non-compliance of this order which provides that in case of default in payment of penalty, prosecution will be filed u/s. 454(8)(ii) of the Companies Act, 2013 at your own cost, risk and responsibility without any further notice.

The adjudication notice stands disposed of with this order.

Signed this day of May, 2023.

Copy to:

(R. C. MISHRA) ICLS
Adjudicating officer,
Registrar of Companies,
Gujarat, Dadra and Nagar Haveli.