The Registrar of Companies (ROC) in Cuttack has issued an order imposing a penalty on Hari Machines Limited and certain directors for violating Section 197(3) of the Companies Act, 2013. The case arose from the company’s decision to pay managerial remuneration of ₹26,11,300 for the Financial Year 2016-17. This was in contravention of the Act’s provisions, as the company was operating at a loss and had defaulted on bank loan repayments for a continuous period of more than 30 days. Under these circumstances, prior approval from the Central Government was required for such payments, but the company failed to obtain it.
In response to a show-cause notice, legal representatives for some of the company’s directors provided a reply. The ROC found merit in the submissions from Amit Kedia and Sangita Drolia, both of whom served as independent and non-executive directors. The order notes that their roles were limited to providing oversight and that they were not involved in the day-to-day operational decisions or the specific approval of the managerial remuneration. Based on this, they were not held liable for the offense. Similarly, Kailash Kumar Agarwal, the CFO, was also exempted from the penalty as the ROC concluded his role was limited to financial reporting and he was not present in the board meeting where the remuneration was approved. However, the submissions made on behalf of the Company Secretary, Rakesh Ganeriwal, were deemed unsatisfactory, as he was responsible for ensuring legal compliance.
As a result of the adjudication, the ROC imposed penalties on the individuals deemed to be in default. The Managing Director, Sabyasachi Mishra, and the Company Secretary, Rakesh Ganeriwal, were each penalized ₹1,00,000. The company itself was not penalized as it is currently under liquidation. The order directs the penalized officers to pay their respective amounts from their personal funds within 90 days of receiving the order. They have the option to file an appeal with the Regional Director in Kolkata within 60 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/00616 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 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-03, Uni World City, New Town North 24 Parganas Kolkata 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
In the matter relating to KAILASH KUMAR AGRAWAL [herein after known as individual] having PAN AANPA4170C and having its address at 1901, HORIZON TOWER-4, UNIWORLD CITY, NEW TOWN KOLKATA West Bengal India 700156
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.26,11,300 for FY 201617 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.26,11,300 for FY 2016-17 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 . 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 Ganeriwal (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 | AMIT KEDIA having DIN as
00014952 |
0 | 0 | 100000 | |
| 4 | SABYASACHI MISHRA having DIN as 00233852 | 100000 | 0 | 100000 | |
| 5 | SANGITA DROLIA having DIN as 00409862 | 0 | 0 | 100000 | |
| 6 | KAILASH KUMAR AGRAWAL
having PAN as AANPA4170C |
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
