LEVY OF PENALTY OF RS. 20 LAKHS FOR NON-APPOINTMENT OF COMPANY SECRETARY BY THE MINISTRY OF CORPORATE AFFAIRS (MCA)

 

LEVY OF PENALTY OF RS. 20 LAKHS FOR NON-APPOINTMENT OF COMPANY SECRETARY BY THE MINISTRY OF CORPORATE AFFAIRS (MCA)

 

Matter in Line:

#SOLIS PHARMACHEN PRIVATE LIMITED CASE STUDY
#Non-Appointment of Company Secretary

The Ministry of Corporate Affairs (MCA) in the matter of SOLIS PHARMACHEN PRIVATE LIMITED has levied a penalty of Rs. 20 Lakhs for the Non-Appointment of Company Secretary

Introduction: The Registrar of Companies, Gujarat, Dadra & Nagar Haveli, under the Ministry of Corporate Affairs, has imposed a substantial penalty of Rs. 17.12 Lakh on Solis Pharmachem Private Limited for failure to appoint a Company Secretary, violating Section 203 of the Companies Act, 2013. This article provides an in-depth exploration of the order, including the hearing details, grounds of application, and the implications for the company and its officers.

Company Overview:

SOLIS PHARMACHEM PRIVATE LIMITED is a 4 Years old company, incorporated on 03 Dec 2019. It is classified as Private UnListed Indian Non-Government Company. Its authorized share capital is ₹25,00,00,000.00 ( ₹25.00 Cr ) and its paid up capital is ₹24,75,79,000.00 ( ₹24.76 Cr ). As per MCA the main line of business is Manufacture Of Chemicals And Chemical Products.

SOLIS PHARMACHEM PRIVATE LIMITED's Annual General Meeting (AGM) was last held on 02 Aug 2023 and as per records from Ministry of Corporate Affairs (MCA), its balance sheet was last filed on 31 Mar 2023.

SOLIS PHARMACHEM PRIVATE LIMITED's unique Corporate Identification Number (CIN) is U24100GJ2019PTC111161 and its registration number is 111161. It is registered at RoC-Ahmedabad.

The company is registered with email address solis.pharmapvtltd@gmail.com.

The company is incorpozrated with the address Plot No. 4707/A/5; Sentogen Plot ; Near Lyka chokdi; Ankleshwar; Bharuch; Gujarat; 393002; India.

The current status of the company is Active.

 

Facts of the Case:

 

A suo-moto application filed by the company in GNL-1 vide SRN F63476352 dated 25.08 2023, the Company has issued only one Class of Shares i.e. Equity Shares having a face value of Rs. 10 Each and having the right to vote. The classification of the Company’s Share Capital in terms of its Authorized Share capital and issued, subscribed and paid-up Share Capital are as under:

 

A. The Authorized Capital: Presently, the Authorized Share Capital of the Company is Rs. 25,00,00,000 (Two Crore Fifty Lac) Equity shares of Rs. 10 (Rupees Ten) each; and

 

B. Issued, Subscribed and Paid up Share Capital: The issued, subscribed capital and Paid-up Share Capital of the Company is Rs. 24,75,79,000 (Rupees Twenty-four Crore Seventy Five Lac Seventy Nine Thousand Only) divided into 2,47,57,900 (Two Crore Forty-seven Lac Fifty-seven Thousand Nine Hundred only) Equity shares of Rs. 10 (Rupees Ten) each.

 

The presenting officer has submitted that the matter is fit for further proceedings as the company and its Officers in default are liable for penalty under section 203(5) of the Companies Act, 2013 for non-compliance with Section 203 of the company viz. SOLIS PHARMA CHEM PRIVATE LIMITED in the financial Year 2022-23 and 2023-24.

 

It is further submitted that there is reasonable ground to believe that the company and its officers in default have violated the provisions of Section 203 of the Companies Act, 2013 as noticed though the company has filed a suo-motto application for adjudication. In view of the facts narrated above, the company and its directors/ officers, in default are liable for a penalty under Section 203(5) of the Companies Act, 2013 and the Rules, made thereunder.

 

The Presenting Officer further submitted that it is observed from the Balance Sheet/ Financial statement as at 31.03.2023 the paid-up capital of the company is Rs. 24,75,79,000 and Turnover is Rs. 4,25,37,779. Hence, as per the Ministry’s Notification No. G.S.R. 700(E) dated 15.09.2022, in light of Companies (Specification of definition details) Amendment Rules, 2022 with respect to the provisions of Section 2(85) of the Companies Act, 2013, the company does not fall under the ambit of “small company”. Therefore, the provisions of imposing lesser penalty as per the provisions of Section 446B of the Companies Act, 2013 shall not be applied to the company.

 

Order Passed:

 

While adjudging the quantum of penalty under Section 203(5) of the Companies Act, 2013, the Adjudicating Officer shall have due regard to the following factors, namely,

 

a. The amount of disproportionate gain or unfair advantage, whenever quantifiable, made as a result of default.

 

b. The amount of loss caused to an investor or group of investors as a result of the default.

 

c. The repetitive nature of default.

 

With regard to the above factors to be considered while determining the quantum of penalty, it is noted that the disproportionate gain or unfair advantage made by the notice or loss caused to the investor as a result of the delay on the part of the notice to redress the investor grievance are not available on the record. Further, it may also be added that it is difficult to quantify the unfair advantage made by the notice or the loss caused to the investors in a default of this nature.

 

Having considered the facts and circumstances of the case and submissions made by the presenting Officer and after taking into account the facts cited above, the undersigned has reasonable cause to believe that the company and its officers in default have failed to comply with the Provisions of Section 203 of the Companies Act, 2013.

 

Hereby, a penalty of Rs. 7,12,000 is to be imposed for default.

 

AO is of the opinion that the penalty is commensurate with the aforesaid default committed by the Noticees:

 

The company/Officer is further directed to rectify the default failing which this office shall be proceeded further the matter in pursuant to Section 454A of the Companies Act, 2013 for the non-compliance of the aforesaid provisions of the Companies Act, 2013.

 

The noticees shall pay the amount of penalty individually for the company and its officers from their personal sources/ income by way of e-payment available on Ministry Website under “Pay Miscellaneous fees” category in MCA fee and payment Services under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 within 60 days from the date of receipt of this order and copy of this adjudication order and Challan/SRN generated after payment of penalty through online mode shall be filed in INC-28 under the MCA portal without further reference.

 

Conclusion:

The said case and the penalty imposed by the MCA reflect a strict warning to the other Companies regarding Compliance with the Companies Act, 2013. Companies must ascertain their default promptly, and the detailed analysis provides insights into the adjudicating officer’s considerations. This case emphasizes the well known thought : “IF YOU THINK COMPLIANCE IS EXPENSIVE, TRY NON-COMPLIANCE”

 

 

Thanks & Regards,

CS Ravi Garg

E-mail: csravi2014@gmail.com

 

Please do not print if not necessary. Let's contribute to a better society.

Disclaimer:

IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION.