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There are a few resolutions like special resolutions passed by the company require mandatory filling of e-form MGT-14 within a prescribed period of time. Specifically, any filing of resolution and agreement passed under section 117 of the companies Act 2013 require mandatory filling of E- form MGT-14.
Section 117 of the companies Act mandates that, there are few resolutions and agreements which are required to be filled with the concerned departments within the prescribed period of time like:
- A copy of every resolution or any agreement, in respect of matters specified in subsection (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.
- 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 penalty often 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 often thousand rupees and in case of continuing failure, with a further penalty ofone hundred rupees for each day after the first during which such failure continues, subject to a maximum of fifty thousand rupees.
The provisions of this section apply to the resolution passed in pursuance of sub section (3) of Section 179 of the companies Act 2013.
Section 179 of the companies Act states about the power of Board. The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely: — (g) to approve financial statement and the Board's report.
Facts About of the case:
In Musiri Kamadhenu Nidhi Limited the Ministry vide order dated 04.08.2021 has rejected the form NDH-4 (Form for filing application for declaration as Nidhi and for updation of Status by Nidhi) filed by the company, wherein it was mentioned that "the company has not filed Board Resolution passed for approval of financials with ROC as per Section 117(3(g) and Section 179(3)(g) of the Companies Act,2013 and rules made there under. Thus, the company has violated Section 117(3)(g) and Section 179(3)(g) of the Companies Act,2013"
In response to the said order, the Registrar of Companies, Chennai had issued Show Cause Notice to the company and its directors as on date 28.12.2021. Reply received vide email dated 04.02.2022 and vide letter dated 06.01.2022 & 10.01.2022 from the company, Directors & Managing Director, stating that it was unintentional error made by the Professional.
The Adjudicating Authority had issued Notice of hearing by post and by email to the company and directors on 13.08.2024 for hearing on 12.06.2024. Neither the directors of the company nor their authorized representatives have appeared on the date so fixed. Hence, as per Rule 3(8) of Companies (Adjudication of Penalties) Rules 2014, the matter is being proceeded with in the absence of such persons (ex-parte).
Adjudication of Penalty
It is noticed that the company has not filed e-form MGT-14 regarding Board Resolution passed for approval of Financial Statements for the Financial Year 2()16-17 to 2020-21. Therefore, the company has contravened Section 117(3)(g) and Section 179(3)(g) of the Companies Act, 2013 for the financial year ended on 2016-17 to 202021.Hence, the company and its Officer in default are liable for penalty under Section 1 17 (2) of the Companies Act, 2013.
After considering facts, circumstances and submissions made by the authorised representative on the behalf of the company, the concerned ROC impose a penalty. It is noticed that the company has not filed e-form MGT-14 regarding Board Resolution passed for approval of Financial Statements for the Financial Year 2()16-17 to 2020-21. Therefore, the company has contravened Section 117(3)(g) and Section 179(3)(g) of the Companies Act, 2013 for the financial year ended on 2016-17 to 202021.Hence, the company and its Officer in default are liable for penalty under Section 1 17 (2) of the Companies Act, 2013.
For FY 2016-17
|
Name of the director |
Penalty for default |
Maximum Limit Penalty |
Penalty Impose |
|
Musiri Kamadhenu Nidhi Limited |
Rs.10,000 + Rs.100 per day (for continuing failure |
Rs. 2,00,000
|
Rs. 2,00,000
|
|
On 1st director |
Rs.10, OOO + Rs.100 per day (for continuing failure) |
Rs. 50,000 |
Rs.50,000 |
|
On 2nd director |
Rs.10, OOO + Rs.100 per day (for continuing failure) |
Rs. 50,000 |
Rs.50,000 |
|
On 3rd director |
Rs.10, OOO + Rs.100 per day (for continuing failure) |
Rs. 50,000 |
Rs.50,000 |
For FY 2017-18
|
Name of the director |
Penalty for default |
Maximum Limit Penalty |
Penalty Impose |
|
Musiri Kamadhenu Nidhi Limited |
Rs.10,000 + Rs.100 per day (for continuing failure |
Rs. 2,00,000
|
Rs. 2,00,000
|
|
On 1st director |
Rs.10, OOO + Rs.100 per day (for continuing failure) |
Rs. 50,000 |
Rs.50,000 |
|
On 2nd director |
Rs.10, OOO + Rs.100 per day (for continuing failure) |
Rs. 50,000 |
Rs.50,000 |
|
On 3rd director |
Rs.10, OOO + Rs.100 per day (for continuing failure) |
Rs. 50,000 |
Rs.50,000 |
For FY 2018-19
|
Name of the director |
Penalty for default |
Maximum Limit Penalty |
Penalty Impose |
|
Musiri Kamadhenu Nidhi Limited |
Rs.10,000 + Rs.100 per day (for continuing failure |
Rs. 2,00,000
|
Rs. 2,00,000
|
|
On 1st director |
Rs.10, OOO + Rs.100 per day (for continuing failure) |
Rs. 50,000 |
Rs.50,000 |
For FY 2019-20
|
Name of the director |
Penalty for default |
Maximum Limit Penalty |
Penalty Impose |
|
Musiri Kamadhenu Nidhi Limited |
Rs.10,000 + Rs.100 per day (for continuing failure |
Rs. 2,00,000
|
Rs. 2,00,000
|
|
On 1st director |
Rs.10, OOO + Rs.100 per day (for continuing failure) |
Rs. 50,000 |
Rs.50,000 |
For FY 2020-21
|
Name of the director |
Penalty for default |
Maximum Limit Penalty |
Penalty Impose |
|
Musiri Kamadhenu Nidhi Limited |
Rs.10,000 + Rs.100 per day (for continuing failure |
Rs. 2,00,000
|
Rs. 2,00,000
|
|
On 1st director |
Rs.10, OOO + Rs.100 per day (for continuing failure) |
Rs. 50,000 |
Rs.50,000 |
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 shall not be more than half of the specified penalty, subject to a maximum limit.
In this MCA adjudication order the company being a Nidhi company does not attract provision of lesser penalty as provided under Section 446(B) of the Companies Act, 2013.
Findings:
This case highlights the importance of timely compliance with statutory filing requirements under Section 117 and Section 179 of the Companies Act, 2013. Failure to file board resolutions approving financial statements led to significant penalties for both the company and its directors, demonstrating the financial and legal repercussions of non-compliance. It also highlights that claiming an "unintentional error" does not absolve liability, especially when regulatory bodies impose penalties based on continued non-compliance. Additionally, the case clarifies that Nidhi companies are not eligible for reduced penalties under Section 446B, reinforcing the necessity for diligent corporate governance and adherence to statutory obligations.
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