Penalty of Rs.9.51 Lakhs levied for Non-appointment of Independent Director [Read Order]

The Registrar of Companies in the matter of Mukka Proteins Limited has imposed a Penalty of Rs.9.51 Lakhs for the Non-appointment of Independent Director.

The company filed an adjudication application on 07.08.2023 for violation of section 149(4) of the Act. It is seen that the company had converted from a private limited company to a public limited company with effect from 02.12.2019. Thereafter, the provisions of section 149(4) of the Act were applicable to the company as its turnover and outstanding loans, debentures and deposits exceeded the prescribed limits. Therefore, appointment of independent directors was applicable to the company from 02.12.2019, but the company had appointed independent directors only on 15.01.2022 with a delay of 775 days.

As per section 149(4) of the Act, every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number af independent directors in case of any class or classes of public companies.

As per section 172 of the Act, if a company is in default in complying with any of the provisions of this Chapter (Chapter XI) and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.

Pursuant to the adjudication application filed by the company, a Notice of hearing was sent on 18.09.2023 and a physical hearing was held on 26.09.2023 which was attended by Mr. Chethan Nayak K, practising company secretary who made his submissions on the above lines as stated in the application.

It is seen that the company is a public limited company, the company 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 under the provisions of section 149(4) of the Act, in the exercise of the powers vested under Section 454(3) of the Companies Act 2013, hereby impose a penalty of Rs.9.51 Lakhs on the company and all the officers in default.

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 the case of directors, such a 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.

For Official Order Download PDF Given Below: