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Section 179 of the Companies Act, 2013 outlines the powers of the Board of Directors in managing the affairs of a company. It grants the Board the authority to exercise all such powers and take decisions on behalf of the company, except for those specifically reserved for the shareholders in a general meeting. The section also empowers the Board to delegate certain powers to committees, managing directors, or key managerial personnel, as prescribed. Additionally, the Companies (Meetings of Board and its Powers) Rules, 2014 specify certain powers that can only be exercised through a board resolution, such as borrowing money, investing funds, or approving financial statements. This provision ensures a structured and accountable decision-making process within the company’s governance framework.
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 (ER), Kolkata, for consideration.
Facts of the Case with ROC and RD
In GRA International Bizkom Limited, concerned ROC had issued adjudication notice for violation of section 179 of the act dated 19/10/2022 to the company and its officers in default. In this regard, a reply dated 28/10/2022 & 01/11/2022 was received by the ROC from the company and its officers in default for aforesaid adjudication notice which was not found satisfactory by the adjudicating authority.
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 12/01/2024.
The authorised representative was asked to make submissions regarding any infirmity in the order of ROC. The authorised representative had no valid submissions in this regard. Hence, the order of ROC is confirmed as no cogent ground was made out by authorised representative.
Imposed Penalty
Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty u/s 450 of the companies Act 2013 against the defaulters (First default = Rs. 10,000 continuing defaults = Rs. 1000 per day. Subject to maximum Rs. 2,00,000 in case of company and Rs. 50,000 in case of officer in default and any other person)
|
Relevant Periods |
To whom penalty imposed |
First Default |
Default Continues |
Maximum Penalty |
|
2014-15 |
On Company |
10,000 |
1895*1000 = 18,95,000 |
2,00,000 |
|
On 1st director |
10,000 |
1895*1000 = 18,95,000 |
50,000 |
|
|
On 2nd director |
10,000 |
1895*1000 = 18,95,000 |
50,000 |
|
|
On 3rd director |
10,000 |
1895*1000 = 18,95,000 |
50,000 |
|
|
2015-16 |
On Company |
10,000 |
1529*1000= 15,29,000 |
2,00,000 |
|
On 1st director |
10,000 |
1529*1000= 15,29,000 |
50,000 |
|
|
On 2nd director |
10,000 |
1529*1000= 15,29,000 |
50,000 |
|
|
On 3rd director |
10,000 |
1529*1000= 15,29,000 |
50,000 |
|
|
2016-17 |
On Company |
10,000 |
1164*1000 =11,64,000 |
2,00,000 |
|
On 1st director |
10,000 |
1164*1000 =11,64,000 |
50,000 |
|
|
On 2nd director |
10,000 |
1164*1000 =11,64,000 |
50,000 |
|
|
On 3rd director |
10,000 |
1164*1000 =11,64,000 |
50,000 |
|
|
2017-18 |
On Company |
10,000 |
799*1000 = 7,99,000 |
2,00,000 |
|
On 1st director |
10,000 |
799*1000 = 7,99,000 |
50,000 |
|
|
On 2nd director |
10,000 |
799*1000 = 7,99,000 |
50,000 |
|
|
On 3rd director |
10,000 |
799*1000 = 7,99,000 |
50,000 |
|
|
2018-19 |
On Company |
10,000 |
432*1000 = 4,32,000 |
2,00,000 |
|
On 1st director |
10,000 |
432*1000 = 4,32,000 |
50,000 |
|
|
On 2nd director |
10,000 |
432*1000 = 4,32,000 |
50,000 |
|
|
On 3rd director |
10,000 |
432*1000 = 4,32,000 |
50,000 |
|
|
2019-20 |
On Company |
10,000 |
269*1000 = 2,69,000 |
2,00,000 |
|
On 1st director |
10,000 |
269*1000 = 2,69,000 |
50,000 |
|
|
On 2nd director |
10,000 |
269*1000 = 2,69,000 |
50,000 |
|
|
On 3rd director |
10,000 |
269*1000 = 2,69,000 |
50,000 |
Confirming ROC Order
After considering all the facts, circumstances and all the submission made by the appellants, concerned RD did not find any valid submission. Hence confirm the order of ROC.
Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed for LLP, OPC shall not be more than half of the specified penalty, subject to a maximum limit. In adjudication matter of GRA International Bizkom Limited being a public company does not fall under the criteria of section 446B of the companies Act 2013.
CCL Observations:
From the above case, it is apparent that GRA International Bizkom Limited failed to comply with the provisions of Section 179 of the Companies Act, 2013, leading to adjudication by the Registrar of Companies (ROC). Despite the opportunity to present its case, the company and its officers in default were unable to provide any valid justification to refuse the charges. Consequently, the penalties imposed by the ROC were upheld by the Regional Director (RD) upon appeal.
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