In the present case, the Company filed an appeal before the Regional Director, Southern Region, Chennai (“RD”) against the order issued by the Registrar of Companies, Chennai, Tamil Nadu (“ROC”) in which the penalty of INR 25,000/- was imposed on the Company and INR 5,000/- each on its managing director and whole-time director. According to the facts, the annual general meeting (“AGM”) of the Company for the financial year 2019-20 was held through video conferencing due to the covid-19 pandemic. Since the directors of the Company were unable to provide the refreshments to the shareholders due to the AGM conducted through video conferencing, therefore, they provided gift cards to all their minority shareholders in lieu of refreshments by considering the humanitarian approach towards their shareholders. After recapitulating the facts before the RD, the Company prayed for a lenient view by stating that they had no malafide intention and the default was made inadvertently.
After considering the facts and submissions, RD stated that since the Company has a whole-time company secretary and as per the provisions of section 205 of the Act, it is the duty of the company secretary to ensure that the company complies with the provisions of the secretarial standards, therefore, the company secretary is liable for the non-compliance. Therefore, RD set aside the penalty imposed on the Company and its directors and directed ROC to initiate the action against the company secretary of the Company alone for the violation of section 205 of the Act.
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