CS, Director and Company penalised for Non-pagination of Board Minutes and Keeping few pages blank

The Ministry of Corporate Affairs (MCA) in the matter of EIT Service India Private Limited has penalised the CS, Director and Company for Non-pagination of Board Minutes and Keeping few pages blank.

The company, EIT Services India Private Limited (hereinafter referred to as Company) having CIN: U72300KA2000PTC026968 was incorporated on 24.04.2000 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is situated at Digital Park. 39/40, Electronics City Phase II, Hosur Road, Bangalore – 560100, Karnataka.

Whereas, during the course of inquiry under section 206 of the Act, violation of section 118(1) of the Act was noticed stating that the Board Minutes do not contain proper pagination and few pages are kept blank without crossing the same with the initials of the Chairman of the Board. For the violation, Minutes of the Board Meeting dated 19.01.2017, 23.12.2017 and 23.03.2018 were pointed out in the inquiry report. Subsequently an adjudication notice dated 24.02.2023 was sent to the company and its directors. The company responded vide letter dated 12.03.2023 accepting the default stating that due to management change and oversight, there was non-compliance of section 118 of the Act read with SS-1.

As per the provisions of section 118(1) of the Act, every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered. As per the provisions of section 118(10) of the Act, every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, and approved as such by the Central Government.

As per provisions of section 118(11) of the Act, if any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.

Pursuant to the adjudication notice issued by this office, Notice of hearing was sent on 16.11.2023 and physical hearing was held on 06.12.2023 which was attended by Ms. Lekha Ashok, practising company secretary who appeared on behalf of the company and directors and made her submissions. She submitted further that the company has made the offence good and displayed the Minutes of the Board Meeting for the same.

It is seen that the company is a subsidiary company, it does not fall under the definition of a small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provisions of imposing lesser penalty as per the section 4468 of the Act shall not be applicable in this case.

Therefore, having considered the facts and circumstances of the case and the submissions made by the company / director / key managerial personnel through their authorised representative, in view of the above said violation of non-compliance of provisions of section 118 of the Companies Act, 2013, in exercise of the powers vested under section 454(3) of the Act, hereby a penalty of Rs.130000 on the company and all the officers in default during the period of offence committed.

The company and its directors / key managerial personnel are hereby directed to pay the penalty amount as tabulated above within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website (Miscellaneous head) specifying the details of this Order and the noticee who is paying the penalty.

Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in Form ADJ setting forth the grounds of appeal and shall be accompanies by a certified copy of this Order.

Your attention is also invited to section 454(8) of the Companies Act, 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under 454(8)(1) and (ii) of the Companies Act, 2013 against the company and directors / key managerial personnel without further notice in the matter.

For Official Order Download PDF Given Below: