ROC Imposes Penalty as Company Failed to Appoint Mandatory CFO for Six Years

Directors Penalised Because Mandatory CFO Appointment Was Delayed Beyond Statutory Requirement; ROC Levies Heavy Penalty Because Company Violated CFO Appointment Requirement Under Companies Act; Company and Officers Held Liable Because No Whole-Time CFO Was Appointed; ROC Rejects Leniency Plea Because Non-Appointment of CFO Continued for Several Years.

The Registrar of Companies, Cuttack passed an adjudication order under Section 454 of the Companies Act, 2013 against Bajrangbali Sponge and Power Limited and its directors/officers for violation of Section 203(1)(iii) read with Rule 8 of the Companies (Appointment and Remuneration) Rules, 2014 for failure to appoint a whole-time Chief Financial Officer (CFO). The ROC observed from MCA records that the company’s paid-up share capital exceeded Rs.10 crore from 01.04.2014 onwards, making appointment of a CFO mandatory. However, no CFO was appointed from 01.04.2014 to 25.05.2020. The company admitted the default and attributed the delay to administrative oversight during organisational transition, while also seeking leniency on the ground that no loss was caused to shareholders, creditors, or the public exchequer. After considering the submissions and admissions made during the hearing, the ROC concluded that the company and its officers violated Section 203(1)(iii). Penalties under Section 203(5) were imposed, including Rs.5 lakh each on the company and several directors/officers.

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, Orissa, India, 753014
Phone: 0671-2366952
E-mail: roc.cuttack@mca.gov.in

Order ID: PO/ADJ/05-2026/CT/02135 | Dated: 15/05/2026

ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (THE ACT’) FOR VIOLATION OF SECTION 203(5) OF THE COMPANIES ACT, 2013.

A. Appointment of Adjudicating Officer:

Ministry of Corporate Affairs vide its Gazette notification number S.O. 698(E) dated 10/02/2026 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 BAJRANGBALI SPONGE AND POWER LIMITED [herein after known as Company] bearing CIN U271020R2000PLC006364, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at PLOT NO.82, SECTOR-A, IDC, KALUNGA DISTRICT: SUNDERGARH NA ROURKELA SUNDARGARH ORISSA INDIA 770031

Individual details:

In the matter relating to HANS RAJ DHANKAR ______________

In the matter relating to SHISH PAL SOLANKI ______________

In the matter relating to RAVINDER SINGH ______________

In the matter relating to AMIT KUMAR AGARWAL ______________

In the matter relating to PREM CHAND AGARWAL ______________

In the matter relating to AKHIL KUMAR AGARWAL ______________

In the matter relating to SHASHI AGARWAL ______________

In the matter relating to SUSHIL KUMAR PANDEY ______________

In the matter relating to BIJAYA KUMAR PANDA ______________

C. Provisions of the Act:

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.

D. Facts about the case:

1. Default committed by the officers in default/noticee – Section 203(1)(iii) of the Companies Act 2013 inter-alia provides that

Every Company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel ?

(iii) Chief Financial Officer.

Rule 8 of the Companies (Appointment and Remuneration) Rules, 2014 provides that :-

Every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel.

It is observed from the MCA portal that paid up Share Capital of the company was more than Rs.10.00 crore from 01.04.2014 onwards, whereas the company has failed to appoint a Chief Financial Officer (CFO) from 01.04.2014 to 25.05.2020 as per provisions of Section 203(1)(iii) of the Companies Act 2013 read with Rule 8 of the Companies (Appointment and Remuneration) Rules 2014. Hence, the company and its Directors/Officers for the relevant period are liable to be punished under Section 203(5) of the Companies Act 2013 for violation of Section 203(1)(iii) of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration) Rules, 2014.

2. No reply to the Show Cause Notice (SCN) dated 24.02.2026 was received from the company and its Directors, except from Shri Prem Chand Agarwal, Managing Director of the company. Accordingly, in order to provide an opportunity of being heard, an e-hearing was scheduled and conducted on 27.04.2026.

E. Order:

1. a) Reply to the Show Cause Notice: In response to the Show Cause Notice (SCN) dated 24.02.2026, Shri Prem Chand Agarwal, Managing Director of the company, vide letter dated 19.03.2026, submitted that he was representing the company and the other Directors/Officers in default mentioned in the said SCN. In his reply, it was submitted that the company acknowledges that its paid-up share capital exceeded Rs.10.00 crore during the relevant period, thereby attracting the requirement for appointment of whole-time Key Managerial Personnel under Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.1t was further submitted that the delay in appointment was not a wilful defiance of law, but occurred due to inadvertent administrative oversight during a period of organisational transition. Shri Agarwal also submitted that the company has otherwise maintained a satisfactory compliance record and had acted in good faith to rectify the default immediately upon becoming aware of the same. It was further submitted that the delay in appointment did not result in any loss to the public exchequer nor prejudice the interests of shareholders or creditors of the company.Accordingly, a prayer was made to take a lenient view in the matter and to consider reduction or waiver of the penalty proposed under Section 203(5) of the Companies Act, 2013.b) E-Hearing held on 27.04.2026: Shri Sanjeev Kumar Sahu, Practising Company Secretary, duly authorised by the company and its Directors/Officers in default, appeared in the e-hearing on the scheduled date and time. Upon being queried regarding the violation of Section 203(1)(iii) of the Companies Act, 2013, Shri Sahu admitted that there was no Chief Financial Officer (CFO) in the company during the period mentioned in the notice.Shri Sahu further submitted that the company is a promoter-driven company and that the delay in appointment of the CFO did not result in any loss to the public exchequer nor prejudice the interests of shareholders or creditors. It was also submitted that the delay was not deliberate or intentional, but was caused due to inadvertent administrative oversight during a period of organisational transition. Shri Sahu requested that a lenient view may be taken and the penalty proposed under Section 203(5) of the Companies Act, 2013 may be reduced or waived.Upon being further queried whether the Directors/Officers mentioned in the notice were holding office during the relevant period of default, Shri Sahu confirmed the same.c) Conclusion: Shri Prem Chand Agarwal, Managing Director of the company, vide letter dated 19.03.2026, admitted that the paid-up share capital of the company had exceeded Rs.10.00 crore during the relevant period, thereby attracting the requirement for appointment of whole-time Key Managerial Personnel under Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Further, Shri Sanjeev Kumar Sahu, PCS, duly authorised by the company and its Directors/Officers in default, attended the e-hearing held on 27.04.2026 and admitted that there was no Chief Financial Officer (CFO) in the company during the period mentioned in the notice.Having considered the submissions made in the reply, the statements made during the course of hearing, the facts and circumstances of the case, and the documentary evidence available on record, it is concluded that the company and its Officers in default have violated the provisions of Section 203(1)(iii) of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Accordingly, in exercise of the powers conferred under Section 203(5) of the Companies Act, 2013, penalty is hereby imposed upon the company and its Directors/Officers in default for the period from 01.04.2014 to 25.05.2020 for violation of Section 203(1)(iii) of the Act.The company and the Officers in default shall pay the penalty amount as mentio herei below through online mode in compliance with Rule 3(14) of the Companies (Adjudication of Penalties) Amendment Rules, 2019, within a period of 90 days from the date of receipt of this order, specifying the details of this order and the name of the noticee making such payment. Further, the company shall file e-Form INC-28 along with a copy of this order and the payment challans in proof of remittance of penalty immediately after payment of the penalty amount.

2. The details of penalty imposed on the company, officers in default and others are shown in the table below:

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 Hyderabad 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.

Sitaram Gupta,
Registrar of Companies
ROC Cuttack