Rama Crimpers Pvt Ltd: Adjudication Order u/s 454 issued for Sec 173 violation, ROC-Ahmedabad

Rama Crimpers Pvt Ltd: Adjudication Order u/s 454 issued for Sec 173 violation, ROC-Ahmedabad. In this article, we will take you through the mandatory provisions under Section 173(1) of the Companies Act, 2013. As per section 173(1), Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board. 
Applicable Provisions:- 
As per section 173(1) of the Companies Act, 2013, Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board. 
Provided that the Central Government may, by notification, direct that the provisions of this sub-section shall not apply in relation to any class or description of companies or shall apply subject to such exceptions, modifications or conditions as may be specified in the notification. 
(4) Every officer of the company whose duty is to give notice under this section and who fails to do so shall be liable to a penalty of twenty-five thousand rupees. 
Facts of the case: 
The Gap between two board meetings was more than 120 days i.e. 144 days. Thus, the company and its directors have violated the provisions of section 173 of the Companies Act, 2013 read with Companies (Meeting of Board and its powers) Rules, 2017 and liable for penalize under section 450 of the Companies Act, 2013. 
After reviewing the appeal and the company’s circumstances, the Regional Director acknowledged to reduce the penalties imposed and the penalty imposed by the Registrar of Companies is reduced to Rs. 5,000/- each on the company and its directors. 
Penalty Imposed by Registrar of Companies on Company and Officers in Default 
Taking into consideration the facts of the appeal and submissions made by the authorized representative, the penalty imposed by Registrar of Companies is reduced.

Violation of section

Penalty imposed on company/ directors

Penalty imposed by ROC

Revised penalty imposed by RD

Sec. 173 of the Companies Act, 2013

Company

17,000

5,000

Director-1

17,000

5,000

Director-2

17,000

5,000

Total

51,000

15,000

Reduction in penalty 
The ground stated for the reduction of penalty are as follows: 
a) That the Company is a small company within the purview of MSME with a very low profit.
b) That there is No public interest involved, the company is a private limited company (Closely Held Company)
Exemption to Startup/ Small Company/OPC under section 446B: 
As per sec. 446B of the Companies Act, 2013, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.  
In this case, Section 446B will not apply. 
Conclusion 
In conclusion, In summary, the Regional Director's decision shows a balanced approach to corporate governance. It emphasizes the importance of following regulations while also considering the company’s financial struggles. This case highlights the need for flexibility in enforcement, allowing for accountability and compassion during tough times. 
Download MCA adjudication order:

In this article, we will take you through the mandatory provisions under Section 173(1) of the Companies Act, 2013. As per section 173(1), Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board.

Applicable Provisions:-

As per section 173(1) of the Companies Act, 2013, Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board.

Provided that the Central Government may, by notification, direct that the provisions of this sub-section shall not apply in relation to any class or description of companies or shall apply subject to such exceptions, modifications or conditions as may be specified in the notification.

(4) Every officer of the company whose duty is to give notice under this section and who fails to do so shall be liable to a penalty of twenty-five thousand rupees.

Facts of the case:

The Gap between two board meetings was more than 120 days i.e. 144 days. Thus, the company and its directors have violated the provisions of section 173 of the Companies Act, 2013 read with Companies (Meeting of Board and its powers) Rules, 2017 and liable for penalize under section 450 of the Companies Act, 2013.

After reviewing the appeal and the company’s circumstances, the Regional Director acknowledged to reduce the penalties imposed and the penalty imposed by the Registrar of Companies is reduced to Rs. 5,000/- each on the company and its directors.

Penalty Imposed by Registrar of Companies on Company and Officers in Default

Taking into consideration the facts of the appeal and submissions made by the authorized representative, the penalty imposed by Registrar of Companies is reduced.

Violation of section	Penalty imposed on company/ directors	Penalty imposed by ROC	Revised penalty imposed by RD
Sec. 173 of the Companies Act, 2013	Company	17,000	5,000
	Director-1	17,000	5,000
	Director-2	17,000	5,000
	Total	51,000	15,000

Reduction in penalty

The ground stated for the reduction of penalty are as follows:

a) That the Company is a small company within the purview of MSME with a very low profit.

b) That there is No public interest involved, the company is a private limited company (Closely Held Company)

Exemption to Startup/ Small Company/OPC under section 446B:

As per sec. 446B of the Companies Act, 2013, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.

In this case, Section 446B will not apply.

Conclusion

In conclusion, In summary, the Regional Director's decision shows a balanced approach to corporate governance. It emphasizes the importance of following regulations while also considering the company’s financial struggles. This case highlights the need for flexibility in enforcement, allowing for accountability and compassion during tough times.