Delay for appointment of full time company secretary in the Company

Delay for appointment of full time company secretary in the Company .  
The board of directors must appoint a company secretary within six months after causing vacancy for the whole-time company secretary. In case of default company including its all officers in default will get penalised for maximum amount up to 5,00,000.
As per section 203 of the companies Act the appointment of KMP must be made by a resolution of the Board of Directors, and any vacancy in these positions must be filled within six months from the date of such vacancy to maintain smooth corporate functioning. Additionally, the section restricts a whole-time KMP from holding a similar position in more than one company, except in its subsidiary company, ensuring that key managerial personnel dedicate their efforts effectively to their respective organizations.
Applicable Provisions
The MCA adjudication order involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (WR), Mumbai, for consideration.
Facts of the Case with ROC and RD
In Sreenath Mhaskoba Sakhar Karkhana Limited, concerned ROC vide adjudication order dated 11/12/2023 held the company, its officers who have defaulted, liable for penalty under section 203(5) of the Act from 02/11/2018 to 30/06/2019 for non-appointment of whole-Time Company Secretary as per sections 203(1) and 203(4) of the Act.
Considering the fact and circumstances of the case, Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 17/05/2024.
The authorised representative stated that the default was unintentional, a first-time default and as default has been made good, a minimum amount of penalty as provided under the companies Act 2013 may be imposed, as relief.

ROC Pune has stated the following in his report that: -

The company has not appointed any CS since the provisions were applicable to the company w.e.f 01/04/2014.

The appellants are trying to justify the reason which are not covered under the relevant provisions.

With reference to default for the period from 01/04/2014 to 01/11/2018, the company had submitted that the company will go for compounding for the same. However, no such compounding has been filled.

Imposed Penalty
Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty on companies and officers in default as follows:

Violation of Section

To whom penalty imposed

First Default

Default Continues

Maximum Penalty

Section 203(4) r/w 203 (5) of the companies Act 2013

On Company

5,00,000

On 1st director

50,000

1000*239

2,89,000

On 2nd director

50,000

1000*239

2,89,000

On 3rd director

50,000

1000*239

2,89,000

On 4th director

1000*239

2,89,000

On 5th director

50,000

1000*239

2,89,000

On 6th director

50,000

1000*239

2,89,000

On 7th director

50,000

1000*239

2,89,000

On 8th director

50,000

1000*239

2,89,000

On 9th director

50,000

1000*239

2,89,000

Confirming ROC Order
Taking into consideration the adjudication order of the ROC submission made by the appellants in their application and oral submission of the authorised representative and ROC during the hearing, it is observed that:

The appeal has not been filled within the stipulated period of 60 days as provided under section 454 (6) of the Act.

There is no inherent defect in the adjudication order dated 19/12/2023

ROC, Pune has imposed penalty as per section 203(5) of the companies Act 2013.

In view of the above, the present appeal is dismissed with directions to the appellants to pay the penalty imposed by the ROC within 90 days, failing which ROC, Pune is directed to file prosecution under section 454(8) of the company and every KMP in default.
Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013 provides lesser penalties for Startups, OPCs, and Small Companies, capping penalties at half the specified amount. However, in the adjudication matter of Sreenath Mhaskoba Sakhar Karkhana Limited, being a public company, it does not qualify under Section 446B and hence is not eligible for the reduced penalty benefit.
CCL Observations:
The findings of the adjudication proceedings against Sreenath Mhaskoba Sakhar Karkhana Limited highlight a clear violation of Section 203 of the Companies Act, 2013, due to the company's failure to appoint Company Secretary within the prescribed time. Despite receiving an adjudication notice from the ROC, the company and its officers failed to provide an adequate response, leading to the imposition of penalties. During the appeal before the Regional Director (RD), authorised representatives did not able to make any cogent ground thus RD confirm the order of ROC.
Download MCA Adjudication Order

The board of directors must appoint a company secretary within six months after causing vacancy for the whole-time company secretary. In case of default company including its all officers in default will get penalised for maximum amount up to 5,00,000.

As per section 203 of the companies Act the appointment of KMP must be made by a resolution of the Board of Directors, and any vacancy in these positions must be filled within six months from the date of such vacancy to maintain smooth corporate functioning. Additionally, the section restricts a whole-time KMP from holding a similar position in more than one company, except in its subsidiary company, ensuring that key managerial personnel dedicate their efforts effectively to their respective organizations.

Applicable Provisions

The MCA adjudication order involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (WR), Mumbai, for consideration.

Facts of the Case with ROC and RD

In Sreenath Mhaskoba Sakhar Karkhana Limited, concerned ROC vide adjudication order dated 11/12/2023 held the company, its officers who have defaulted, liable for penalty under section 203(5) of the Act from 02/11/2018 to 30/06/2019 for non-appointment of whole-Time Company Secretary as per sections 203(1) and 203(4) of the Act.

Considering the fact and circumstances of the case, Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 17/05/2024.

The authorised representative stated that the default was unintentional, a first-time default and as default has been made good, a minimum amount of penalty as provided under the companies Act 2013 may be imposed, as relief.

ROC Pune has stated the following in his report that: -
The company has not appointed any CS since the provisions were applicable to the company w.e.f 01/04/2014.
The appellants are trying to justify the reason which are not covered under the relevant provisions.
With reference to default for the period from 01/04/2014 to 01/11/2018, the company had submitted that the company will go for compounding for the same. However, no such compounding has been filled.

Imposed Penalty

Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty on companies and officers in default as follows:

Violation of Section	To whom penalty imposed	First Default	Default Continues	Maximum Penalty
Section 203(4) r/w 203 (5) of the companies Act 2013	On Company	5,00,000		5,00,000
	On 1st director	50,000	1000*239	2,89,000
	On 2nd director	50,000	1000*239	2,89,000
	On 3rd director	50,000	1000*239	2,89,000
	On 4th director		1000*239	2,89,000
	On 5th director	50,000	1000*239	2,89,000
	On 6th director	50,000	1000*239	2,89,000
	On 7th director	50,000	1000*239	2,89,000
	On 8th director	50,000	1000*239	2,89,000
	On 9th director	50,000	1000*239	2,89,000

Confirming ROC Order

Taking into consideration the adjudication order of the ROC submission made by the appellants in their application and oral submission of the authorised representative and ROC during the hearing, it is observed that:

The appeal has not been filled within the stipulated period of 60 days as provided under section 454 (6) of the Act.
There is no inherent defect in the adjudication order dated 19/12/2023
ROC, Pune has imposed penalty as per section 203(5) of the companies Act 2013.

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013 provides lesser penalties for Startups, OPCs, and Small Companies, capping penalties at half the specified amount. However, in the adjudication matter of Sreenath Mhaskoba Sakhar Karkhana Limited, being a public company, it does not qualify under Section 446B and hence is not eligible for the reduced penalty benefit.

CCL Observations:

The findings of the adjudication proceedings against Sreenath Mhaskoba Sakhar Karkhana Limited highlight a clear violation of Section 203 of the Companies Act, 2013, due to the company's failure to appoint Company Secretary within the prescribed time. Despite receiving an adjudication notice from the ROC, the company and its officers failed to provide an adequate response, leading to the imposition of penalties. During the appeal before the Regional Director (RD), authorised representatives did not able to make any cogent ground thus RD confirm the order of ROC.