Companies Act Section 454 — Adjudication of penalties
CHAPTER XXIX MISCELLANEOUS
Commercial / Corporate
Summary
Sub-section (1) allows the Central Government to officially appoint officers of the government, who are at least of the rank of Registrar, to act as adjudicating officers. These officers are responsible for deciding and imposing penalties under this Act, and they must do so in the manner that is prescribed by rules.
Sub-section (2) requires the Central Government, when appointing these adjudicating officers, to specify in the official appointment order the area or scope of authority (jurisdiction) that each officer will have.
Under clause (a) of sub-section (3), the adjudicating officer can issue an order that imposes a penalty on the company, the officer who is in default, or any other person, depending on the situation. The order must state the specific non-compliance or default under the relevant provisions of this Act.
Under clause (b) of sub-section (3), the adjudicating officer can also direct the company, the officer in default, or any other person to fix or correct the default, wherever the officer considers it appropriate to do so.
The proviso to sub-section (3) states that if the default relates to not complying with sub-section (4) of section 92 or sub-section (1) or sub-section (2) of section 137, and the default has been corrected either before the adjudicating officer issues a notice or within thirty days of that notice, then no penalty will be imposed. In such a case, all proceedings under this section regarding that default are considered to be closed.
Sub-section (4) requires the adjudicating officer, before imposing any penalty, to give the company, the officer in default, or any other person a reasonable chance to be heard.
Sub-section (5) allows any person who is unhappy with an order made by the adjudicating officer under sub-section (3) to file an appeal with the Regional Director who has jurisdiction over the matter.
Sub-section (6) states that any appeal under sub-section (5) must be filed within sixty days from the date the person receives a copy of the adjudicating officer's order. The appeal must be in the form, follow the manner, and be accompanied by the fees that are prescribed by rules.
Sub-section (7) allows the Regional Director, after giving both parties to the appeal an opportunity to be heard, to pass any order that he thinks is appropriate. This order can confirm, modify, or set aside the original order that was appealed against.
Under clause (i) of sub-section (8), if a company fails to comply with an order made under sub-section (3) or sub-section (7) within ninety days from the date it receives a copy of the order, the company will be punishable with a fine. This fine will not be less than twenty-five thousand rupees, but it can go up to five lakh rupees.
Under clause (ii) of sub-section (8), if an officer of a company or any other person who is in default fails to comply with an order made under sub-section (3) or sub-section (7) within ninety days from the date of receiving a copy of the order, that officer will be punishable with imprisonment for up to six months, or with a fine that is not less than twenty-five thousand rupees but may extend to one lakh rupees, or with both.
Official Text
(1) The Central Government may, by an order published in the Official Gazette, appoint as many officers of the Central Government, not below the rank of Registrar, as adjudicating officers for adjudging penalty under the provisions of this Act in the manner as may be prescribed.
(2) The Central Government shall while appointing adjudicating officers, specify their jurisdiction in the order under sub-section (1). 3[
(3) The adjudicating officer may, by an order—
(a) impose the penalty on the company, the officer who is in default, or any other person, as the case may be, stating therein any non-compliance or default under the relevant provisions of this Act; and
(b) direct such company, or officer who is in default, or any other person, as the case may be, to rectify the default, wherever he considers fit.] 1[Provided that in case the default relates to non-compliance of sub-section (4) of section 92 or sub-section (1) or sub-section (2) of section 137 and such default has been rectified either prior to, or within thirty days of, the issue of the notice by the adjudicating officer, no penalty shall be imposed in this regard and all proceedings under this section in respect of such default shall be deemed to be concluded.]
(4) The adjudicating officer shall, before imposing any penalty, give a reasonable opportunity of being heard to 2[such company, the officer who is in default or any other person].
(5) Any person aggrieved by an order made by the adjudicating officer under sub-section (3) may prefer an appeal to the Regional Director having jurisdiction in the matter.
(6) Every appeal under sub-section (5) shall be filed within sixty days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person and shall be in such form, manner and be accompanied by such fees as may be prescribed.
(7) The Regional Director may, after giving the parties to the appeal an opportunity of being heard, pass such order as he thinks fit, confirming, modifying or setting aside the order appealed against.
(8)
(i) Where company 3[fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be,] within a period of ninety days from the date of the receipt of the copy of the order, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees.
(ii) 4[Where an officer of a company or any other person] who is in default 5[fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be,] within a period of ninety days from the date of the receipt of the copy of the order, such officer shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. 6[