Penalty of Rs.21 Lakh levied on company for not appointing Company Secretary

The Ministry of Corporate Affairs(MCA) has levied Penalty of Rs.21 Lakh on company for not appointing Company Secretary.

The Company UGL ENGINEERING PRIVATE LIMIITED (herein alter known as Company) is a registered company with this office under the provisions of Companies Act, 1956 having its registered address – B-7,Om Parshwanath apartments, Desai & Sheth nagar, Sai baba nagar, Borivali (west), Mumbai, Mumbai City, Maharashtra, 400092 as per the MCA portal.

Facts about the Case:

The Company has filed application for adjudication for violation of provisions of Section 203 of the Companies Act, 2013 read with Rule 8A of Companies, (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Whereas, it has been observed from the Application dated 10.02.2022 received from the Company that the As per section 203 of the Companies Act, 2013 end Rule 8A of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014: A company other than a company covered under role 8 which has paid up share capital of five crore rupees more shall have a whole-time company secretary.

The Company has not appointed Whole Time Company Secretary from 9th June, 2014 till 30th May, 2019. This delay of appointment of Company Secretory resulted in violation of provisions of Section 203 of the Companies Act, 2013.

Findings and Observations:

The Company failed to appoint a Whole time Company Secretary from 9th June, 2014 till 30th May, 2019 with a delay of 1636 days thereby contravening the provisions of Section 203 of the Companies Act, 2013. As per Section 203(3) of the Companies Act, 2013, “If any Company makes any default in complying with the provision of the 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.

Further, Section 203(5) of the Companies Act, 2013 prescribes a penalty of Rs.50000/- and Rs.1000/- per day for continuing offence for every director and KMP. Section 203(4) or the Companies Act, 2013, states that “If the office of any whole time key managerial personnel is vacated, the resulting vacancy shall be filled-up by the Board at meeting of the Board within a period of six months from the date of such vacancy.” Thus, appointment of Key Managerial Person is the collective responsibility of the entire Board.

Order:

Having considered the facts and circumstances of the case and after taking into account the factors above, penalty impose on the Company and its Officers in default as per table below for violation of provisions of Section 203 of the Companies Act, 2013 for delay of 1636 days. Opinion on that, the penalty is commensurate with the aforesaid failure committed by the Noticee. A total penalty of Rs.21,00,000 has been imposed on company in default.

The period of violation of provisions under Section 203 of the Companies Act, 2013 is from 09-Jun-2014 till 30-May-2019 (1816 days) and 180 days has been deducted from the default period so the default period is 1636 days. As per signatory detail, available on MCA-21 portal, the above-mentioned individuals were Officials in default during the period of violation.

The Notice shall pay the said amount of penalty through Ministry of Corporate Affairs portal and proof of payment be produced for verification within 60 days of receipt of this order.

For Official Order Download PDF Given Below: