Adjudication Order Sec. 454: Shri Narayani Nidhi Ltd Penalized, ROC Chennai Sec 117(3)

Adjudication Order Sec. 454: Shri Narayani Nidhi Ltd Penalized, ROC Chennai Sec 117(3). In this article, we will take you through the mandatory provisions under Section 117(1) of the Companies Act, 2013, A copy of every resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed within the time specified under section 403: 
Provided that the copy of every resolution which has the effect of altering the articles and the copy of every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement. Failure to comply with these requirements may result in penalties for both the company and the officers in default, as specified under Section 403 of the Companies Act, 2013. Therefore, it is essential to adhere to these provisions to avoid any legal consequences. 
Applicable Provisions:- 
A copy of every resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed. 
Provided that the copy of every resolution which has the effect of altering the articles and the copy of every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement. 
(2) If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees and every officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of fifty thousand rupees. 
As per Section 117(3)(g) of the Companies Act, 2013, resolutions passed in pursuance of sub-section (3) of section 179: 
[Provided that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions; and] 
Facts of the case: 
The company had filed an application for seeking status of Nidhi before the Ministry of Corporate Affairs in e-Form NDH-4 vide SRN: R34197020, dated 27.02.2020. However, consequent upon filing the said form the Minishy of Corporate Affairs has observed that the company has not filed Form MGT-14 for Board Resolution passed for approval of accounts with ROC.for the,financial years from 2014-15 to 2018--19. Thus, the provisions of sec. 117(3)(g) read with sec. 179(3)(g) of the Companies Act, 2013 is violated. 
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 to.

Violation of section

Penalty imposed on company/ directors

Penalty imposed by ROC

Revised penalty imposed by RD

Sec. 117(3) of the Companies Act, 2013

Company

8,65,400

2,00,000

Managing Director

2,50,000

1,00,000

Total

11,15,400

3,00,000

Reduction in penalty 
The grounds stated for the reduction of penalty are as follows:

That the Company has inadvertently omitted to file relevant Form MGT-14 as pointed out by the Ministry of Corporate Affairs and it has been noticed only when it was pointed out by the MCA. The non-filing is purely due to inadvertence and lack of professional advice and hence prayed for lenient view.

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 does not apply, as the company does not meet the criteria. 
Conclusion 
The company faced penalties for not filing important documents on time. 
They appealed this decision, explaining that their failure was largely due to lack of professional advice and hence prayed for lenient view. The Regional Director reviewed their appeal and agreed to reduce the penalty amount recognizing the circumstances the company faced. This case shows that companies can successfully appeal penalties if they have valid reasons for their non-compliance, particularly when those reasons are beyond their control.  
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In this article, we will take you through the mandatory provisions under Section 117(1) of the Companies Act, 2013, A copy of every resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed within the time specified under section 403:

Provided that the copy of every resolution which has the effect of altering the articles and the copy of every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement. Failure to comply with these requirements may result in penalties for both the company and the officers in default, as specified under Section 403 of the Companies Act, 2013. Therefore, it is essential to adhere to these provisions to avoid any legal consequences.

Applicable Provisions:-

A copy of every resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed.

(2) If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees and every officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of fifty thousand rupees.

As per Section 117(3)(g) of the Companies Act, 2013, resolutions passed in pursuance of sub-section (3) of section 179:

[Provided that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions; and]

Facts of the case:

The company had filed an application for seeking status of Nidhi before the Ministry of Corporate Affairs in e-Form NDH-4 vide SRN: R34197020, dated 27.02.2020. However, consequent upon filing the said form the Minishy of Corporate Affairs has observed that the company has not filed Form MGT-14 for Board Resolution passed for approval of accounts with ROC.for the,financial years from 2014-15 to 2018--19. Thus, the provisions of sec. 117(3)(g) read with sec. 179(3)(g) of the Companies Act, 2013 is violated.

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 to.

Violation of section	Penalty imposed on company/ directors	Penalty imposed by ROC	Revised penalty imposed by RD
Sec. 117(3) of the Companies Act, 2013	Company	8,65,400	2,00,000
	Managing Director	2,50,000	1,00,000
	Total	11,15,400	3,00,000

Reduction in penalty

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

That the Company has inadvertently omitted to file relevant Form MGT-14 as pointed out by the Ministry of Corporate Affairs and it has been noticed only when it was pointed out by the MCA. The non-filing is purely due to inadvertence and lack of professional advice and hence prayed for lenient view.

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 does not apply, as the company does not meet the criteria.

Conclusion

The company faced penalties for not filing important documents on time.

They appealed this decision, explaining that their failure was largely due to lack of professional advice and hence prayed for lenient view. The Regional Director reviewed their appeal and agreed to reduce the penalty amount recognizing the circumstances the company faced. This case shows that companies can successfully appeal penalties if they have valid reasons for their non-compliance, particularly when those reasons are beyond their control.