ROC Imposes Rs. 5 Lakh Penalty on Company for Failure to Appoint Company Secretary

HI-TECH Universal Printers and Publishers India Private Limited, having a paid-up share capital of Rs. 24.50 crore, was statutorily required under Section 203 of the Companies Act, 2013 to appoint a whole-time Company Secretary. The company failed to do so continuously since FY 2014–15. Upon its own request, adjudication proceedings were initiated by the Registrar of Companies.

During the proceedings, the company claimed the benefit of lesser penalty under Section 446B by asserting that it was a small company. However, on examination of financials, it was found that although turnover was below Rs. 40 crore, the company was a subsidiary, making Section 446B inapplicable.

Core Issue: Whether the company and its officers were liable for penalty under Section 203(5) of the Companies Act, 2013 for failure to appoint a whole-time Company Secretary, and whether reduced penalty under Section 446B could be granted.

ROC Ruled: The Registrar of Companies held that the company had clearly violated Section 203 of the Companies Act, 2013 by not appointing a whole-time Company Secretary despite meeting the prescribed capital threshold.

The plea for reduced penalty under Section 446B was rejected as the company was a subsidiary and therefore excluded from the benefit. A penalty of Rs. 5,00,000 was imposed on the company and on each officer in default, except one director in respect of whom a death certificate was produced. The company and officers were directed to rectify the default and pay the penalty within 90 days.

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