ROC Levies penalty of Rs. 17.25 Lakhs for Non-Appointment of Company Secretary [Read Order]

The Registrar of Companies in the matter of KHED DEVELOPERS LIMITED has levied a penalty of Rs. 17.25 Lakhs for Non-Appointment of the Company Secretary.

KHED DEVELOPERS LIMITED having CIN U70102PN2008FLC131478 is a company governed by the provisions Act and registered with this office having its office C-303 Maharana Heights, Chavhanmala, Holewadi,ne Maharashtra 410505 India.

Facts About Case

In terms of provisions of section 203 (1) Companies Act, 2013 r/w Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, “every private company which has a paid-up share capital of ten crore rupees or more shall have a whole-time company secretary”.

In terms of the provisions of section 203(4) of the Act, if the office of any Whole-Time Key Managerial Personnel is vacated, the resulting vacancy shall be filled up by the Board within a period of six months from the date of such vacancy; in the instant case, the company has not appointed the Company secretary since 03.02.2020 to 16.08.2020 despite the last appointed Company Secretary vacating the office on 03.08.2019.

In terms of the provisions of Section 203 (5), If any company makes any default in complying with the provisions of this 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.

Accordingly, the adjudication officer has issued adjudication notice vide ROCP/ADJ/203/23-24/1127 to 1135 dated 27.07.20 3 (hereinafter referred as Adjudication Notice) under Section 454(4) read with 203 of the Companies Act, 2013 read with Rule 3(2), Of Companies (Adjudication of Penalties), 2014 as amended in Amendment Rules, 2019 to the company and its officers in default for the violation of the provisions of the act as mentioned in para “a and b” above.

A reply to the Adjudication notice was received on 10.08.2023 from the company stating that Mr Swanand Eknath Shede (PAN: CFAPS8215Q) resigned as the Whole Time Company Secretary of the Company by tendering his resignation w.e.f August 03, 2019.

Immediately after his cessation as the Company Secretary, the Company initiated the search for a suitable candidate for the position of Company Secretary by approaching practicing professional to help the Company find a suitable candidate for the vacancy caused.

The Company had evaluated the candidature of various qualified Company Secretaries for filling the vacant position. However, the Company could not complete the process of appointment of suitable candidate, within the permitted timelines. Also, prevailing COVID restrictions from March 2020 viz., restrictions on movement and social distancing norms for an extended period, constrained the Company in finding a suitable candidate.

However, keeping in view the social distancing norms, the Company continued searching for a suitable candidate. As soon as there was ease of COVID restrictions, the Company interviewed and appointed the current Company Secretary in the Board meeting held on August 17, 2020, i.e. first Board Meeting upon ease of COVID restrictions after the initial massive wave of Covid-19 Virus.

Furthermore, under section 454(4) of the Act read with Rule 3(2) of the opportunity to submit a reply by issuing an Adjudication Notice vide OCP/ADJI 203/23-24/1127-1135 dated 27.07.2023 herein after referred as Adjudication Notice to why the penalty should not be imposed under the provisions of 203(5) of the Act against the Company and its officers in default forte above stated violations.

Order

The applicant company and its officers, who have provisions of section 203(1) r/w 203(4) of the appointment of Whole Time Company Secretary are liable for penalties under section 203(5) of the Act w.e.f. 03rd February 2020 to 16th August 2020, as the last CS vacated the office on 03rd August 2019.

In exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and after taking into the factors mentioned herein above, hereby impose the penalty of Rs. 17.25 Lakhs on the company and its officers in default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, 2014.

The Notice(s)/applicant(s) shall pay the penalty imposed through the Ministry of Corporate Affairs portal only as per rule 3(14) of Companies (Adjudication of Penalties) Rules, 2014.

For Official Order Download PDF Given Below: