ROC Penalty Order: Non-Compliance with Minutes Recording Standards, Violation of Section 118 (11) of Companies Act 2013
ROC Penalty Order: Non-Compliance with Minutes Recording Standards, Violation of Section 118 (11) of Companies Act 2013
The Registrar of Companies (ROC), Ahmedabad, which operates under the Ministry of Corporate Affairs (MCA) in India, has released an order for adjudication under Section 454 of the Companies Act, 2013 (‘The Act’). It is basically a penalty order issued under Section 454 of the Companies Act 2013 for violation of Section 118 (11) of the Companies Act 2013. When this provision is violated, the respective company becomes liable to a penalty of Rs. 25,000, and every officer of the company who is in default will also be liable to a penalty of Rs. 5,000.
The matter is related to Parag Rameshbhai Gathani, Shrirang Shaunakkumar Bhatt, Dhiren Vinodchandra Shah, and Dilipbhai Chinubhai Shah. All of these individuals have their own DIN and registered address in Ahmedabad, Gujarat (India).
According to the Inspecting Officer’s report to the Directorate, the date of entry in the minute books as per SS-1 was not found in any of the minute books maintained by the company, since the minutes have not been recorded in a proper manner. The date of entry of such minute books specifically needs to be mentioned in every minute book. Therefore, it is a violation of the provisions of Section 118 of the Companies Act, 2013, with respect to SS-1.
Considering this violation, the Regional Director (RD) issued a letter dated 16.09.2023, taking appropriate action against the company. Underlined, the company and officers during the relevant period are liable to be penalised under Section 118 of the Companies Act, 2013. In its written reply, the company said that Mr. Dhiren Shah, Mr. Dilip Bhai Shah, and Shrirang Batt were not the official directors of the company during the financial year 2014-15 (the period considered under the ROC’s order for adjudication that Mr. Dhiren Shah, Mr. Dilip Bhai Shah, and Shrirang Batt were not directors during the financial year 2014-15, which is the period under consideration of the e-Adjudication Notice). Also replied to the report of Inspecting Officer Mr. Parag Rameshbhai Gathani, and Mr. Shrirang Shaunakkumar Bhatt was reported as an officer in default for the relevant period. Therefore, both these officers are liable to be penalised under the relevant section.
Considering the reply of the company, the IO inspection and ROC proposal, RD, Ahmedabad, confirmed a penalty of Rs. 25000 on the company and Rs. 5000 each on Mr. Parag Gathani and Shrirang Shaunakkumar Bhatt.
Based on the findings and the hearing, the ROC has imposed the following penalties:
| Person/Entity | Penalty Imposed |
| Harsh Gathani Enterprise Pvt. Ltd. (Company) | Rs. 25,000 |
| Parag Rameshbhai Gathani | Rs. 5,000 |
| Shrirang Shaunakkumar Bhatt | Rs. 5,000 |
| Dhiren Shah | Rs. 0 (Not liable, not director during 2014–15) |
| Dilipbhai Shah | Rs. 0 (Not liable, not director during 2014–15) |
The company and two directors are now required to pay the required amount within the period of 90 days of receiving this order. Payments should be done at the official website of MCA using the e-Adjudication portal. Thereafter, the company must upload the proof of payment on the same portal. Directors should ensure that they are paying the amount from their own income, not from the company’s funds.
If the penalised company and directors feel like the imposed penalty is unfair, then they are allowed to file an appeal challenging the order using Form ADJ to the Regional Director (RD), Ahmedabad, within 60 days from the receipt of this order. They must include a certified copy of this order and mention the grounds for their appeal. If the company or directors fail to pay the penalty amount within the 90-day period, then Section 454(8) of the Companies Act will apply, and further actions will be taken against the company.