CAN A COMPANY BE PENALIZED BY FOR THE VIOLATION OF NON CONDUCTING BOARD MEETINGS DUE TO DIRECTOR IMPRISONMENT AND SEALING OF OFFICE AND ASSETS?

 CAN A COMPANY BE PENALIZED BY FOR THE VIOLATION OF NON CONDUCTING BOARD MEETINGS DUE TO DIRECTOR IMPRISONMENT AND SEALING OF OFFICE AND ASSETS?

ROC CHHATTISGARH VS YALSCO REAL ESTATE & AGRO FARMING LIMITED

CORE LEGAL ISSUE

The company failed to conduct Board Meetings as mandated under Section 173 of the Companies Act, 2013.

The defense cited:

·      Imprisonment of key directors

·      Sealing of registered office and assets by authorities

STATUTORY REQUIREMENT UNDER SECTION 173:

·      Minimum 4 Board Meetings every year

·      Gap between two meetings should not exceed 120 days

Non-compliance attracts penalties under Section 450 (general penalty provision where no specific penalty is prescribed).

PENALTY IMPOSED UNDER SECTION 450 (GENERAL PENALTY FOR NON-COMPLIANCE)

PENALTY IMPOSED:

Company: ₹2,00,000

Directors: ₹50,000 each

IF ALL THE DIRECTORS OF THE COMPANY ARE UNDERGOING IMPRISONMENT , HOW THE DIRECTORS OF A COMPANY WILL CONDUCT A BOARD MEETING?

IF ALL DIRECTORS ARE IMPRISONED, PRACTICAL ISSUES ARISE:

·      No physical presence possible

·      Access to VC facilities inside prison is highly unlikely and subject to prison regulations

So, quorum itself fails, making the meeting invalid.

DOCTRINE OF IMPOSSIBILITY (KEY LEGAL PRINCIPLE)

Courts and tribunals often recognize that:

·      Law does not compel a person to do what he cannot possibly perform.

·      If directors are imprisoned and:

·      Office is sealed

·      Records are inaccessible

Then non-compliance (e.g., not holding Board Meetings) may be excused, depending on facts.

Hence, it is suggested that Yalsco Real Estate & Agro Farming Limited should appeal to RD and then to NCLT to condone such non-compliance.

                                       KEY TAKEAWAY

·      Compliance must continue even during adverse situations

·      Proper documentation & proactive steps are crucial

·      Statutory compliance is mandatory—operational challenges don’t excuse governance failures.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

POSH FAILURES AT TCS NASHIK

 POSH FAILURES AT TCS NASHIK

POSH FAILURES AT TCS NASHIK

COMPLETE FAILURE” OF INTERNAL SYSTEMS

The TCS Nashik BPO unit is facing a major crisis after multiple women employees alleged sexual harassment and coercion, with investigations revealing serious failures in implementing the POSH (Prevention of Sexual Harassment) Act.

 Nine FIRs have been filed, senior HR officials have been arrested, and experts are calling it a “complete failure” of internal systems.

 

KEY FACTS ABOUT THE POSH FAILURES AT TCS NASHIK

LOCATION:	TCS BPO unit in Nashik, Maharashtra.
COMPLAINTS:	At least eight women employees reported sexual harassment and coercion.
INVESTIGATION:	A Special Investigation Team (SIT) is probing the case, reviewing 78 emails and chat records.
LEGAL ACTION:	Nine FIRs have been registered; multiple arrests include a senior HR AGM who was part of the POSH Internal Committee.
SYSTEMIC FAILURE:	Experts highlight delayed responses, lack of escalation channels, and failure to act on repeated complaints.
PUBLIC BACKLASH:	TCS is facing severe criticism on social media and within the IT industry for allegedly violating the POSH Act, 2013.

 

WHY THIS IS CONSIDERED A POSH FAILURE?

IGNORED COMPLAINTS:	HR officials allegedly dismissed or failed to act on multiple grievances.
INTERNAL COMMITTEE BREAKDOWN:	The very HR official responsible for POSH compliance was arrested for negligence.
DELAYED ACTION:	Suspension of accused employees came only after police intervention.
LACK OF SAFE CHANNELS:	Employees had no independent, high-level reporting mechanism beyond their managers

 

FAILED TO TAKE COGNISANCE

Despite being a member of the POSH (Prevention of Sexual Harassment) Committee, the Operations Head failed to take cognizance of the victim's complaint and instead extended support to the accused.

INACTION (2022–2026)

The Nashik incident represents a serious breakdown of POSH governance, not merely individual misconduct. Allegations indicate multi-year inaction (2022–2026) despite formal complaints, compromised neutrality within the POSH Committee, and potential HR complicity.

TAKEAWAY

The TCS Nashik case is a textbook example of how POSH compliance can fail when internal systems are weak and HR oversight is compromised. For organizations, the lesson is clear:

POSH policies must be enforced rigorously, with independent mechanisms and accountability at the highest levels.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

ARE THE ROLE OF COMPANY SECRETARY IS CHANGING? JD SPECIFIES FEMALE/SINGLE CANDIDATES AND COMBINES A COMPANY SECRETARY ROLE WITH THE PERSONAL SECREATARY DUTIES

 ARE THE ROLE OF COMPANY SECRETARY IS CHANGING?

JD SPECIFIES FEMALE/SINGLE CANDIDATES AND COMBINES A COMPANY SECRETARY ROLE WITH THE PERSONAL SECREATARY DUTIES

It’s disappointing to see how some organizations still misunderstand the role of a Company Secretary (CS).

A recent job post for “Company Secretary Cum Personal Secretary” mixed statutory CS responsibilities with personal assistance duties, including supporting the MD and traveling with him — which clearly aligns more with a Personal/Executive Assistant role.

Even more concerning was the preference for a “SINGLE FEMALE CANDIDATE,” raising serious concerns about professionalism and equal opportunity.

A Company Secretary is a Key Managerial Personnel (KMP), not a Personal Secretary.

It’s time organizations respect the distinction and define roles correctly.

Within 23 hours , about 84 candidates have applied for the position.

JD is a red flag. Gender biased and misrepresents the role of a Company Secretary. Is the POSH Act is in existence in the company?

3–4 PERSONAL PICTURES

One female CS  also received a mail from them. When she called on the given number, I was asked to send 3–4 personal pictures, which was quite inappropriate and disappointing. It’s really sad to see how our profession is being treated these days. A Company Secretary is a qualified professional and KMP, not someone to be approached in this manner. Organizations need to understand and respect the dignity of this role.

DECLINING STANDARDS

I am surprised to observe the declining standards in the industry, where, despite such unreasonable and concerning requirements, as many as 84 professionals have still applied, reflecting the challenging circumstances many are facing by the members of the Institute of Company Secretaries of India.

SPELLING OF 'SECRETARY'

The spelling of 'Secretary' itself shows HR's IQ level..Imagine how much he would be aware of CS profession...Poor HR team as usual always unaware of CS career ..

MCA & ICSI

Will the MCA and ICSI will come forward to address this kind of issues?

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

THREE SEASONS EXIM WAS FINED BY ROC ₹3.5 lakh FOR NOT SENDING NOTICE OF EGM TO ONE DIRECTOR OF THE COMPANY

 THREE SEASONS EXIM WAS FINED BY ROC ₹3.5 lakh  FOR NOT SENDING NOTICE OF EGM TO ONE DIRECTOR OF THE COMPANY

ROC,VIJAYAWADA VS THREE SEASONS EXIM LIMITED

ISSUE

Extraordinary General Meeting (EGM) held on 12th December 2016

Violation: One director (Mr. Upendranath Nimmagadda) did not receive the mandatory EGM notice.

LEGAL BASIS FOR PENALTY

• Section 101 of the Companies Act, 2013: Requires that notice of every general meeting be sent to all directors, members, auditors, and other prescribed persons.

• Secretarial Standard-2 (SS-2): Reinforces the requirement that notices must reach every director and relevant stakeholders.

As per the rules, notice of a meeting is required to be sent to all Members, Directors, Auditors, the Practising Company Secretary who has issued the Compliance Certificate, Debenture Trustees, if any, and such other specified recipients as may be applicable or required.

• Section 454 of the Companies Act, 2013: Empowers ROC to adjudicate penalties for non-compliance.

PENALTY IMPOSED

• Total Fine: ₹3.5 lakh

• Responsibility: Both the company and its directors were held liable.

• Reasoning: Even though only one director missed the notice, the ROC treated it as a serious lapse in compliance.

KEY LESSONS LEARNED

1. Notices must be served to all directors and stakeholders — even a single omission can trigger heavy penalties.

2. Maintain proof of delivery (registered post, email acknowledgment, courier receipts) to safeguard against disputes.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

CAN A LOSS-MAKING COMPANY RETURN CAPITAL TO ITS SHAREHOLDERS UNDER SECTION 66 OF THE COMPANIES ACT, 2013? YES, SAYS NCLT CHENNAI

 CAN A LOSS-MAKING COMPANY RETURN CAPITAL TO ITS SHAREHOLDERS UNDER SECTION 66 OF THE COMPANIES ACT, 2013? YES, SAYS NCLT CHENNAI

NCLT,CHENNAI Vs ABTRAN INDIA PRIVATE LIMITED

REDUCTION OF CAPITAL

Abtran India filed petition to NCLT Chennai for reducing its capital from Rs 3.04 crore to Rs 26.82 lakh. This involved cancelling a substantial portion of equity shares and paying Rs 4.97 per share to its shareholder from available cash reserves.

FINANCIAL RESTRUCTURING

The scheme also earmarked a portion of the reduction amount to write off accumulated losses. The company placed on record that its financial restructuring aimed to present a more accurate balance sheet and improve its ability to raise funds in the future.

STATUTORY POSITION – SECTION 66

Section 66 expressly allows a company to reduce its share capital “in any manner”, including:

Cancelling capital lost or not represented by assets

Paying off excess paid-up capital to shareholders

This provision is not restricted only to profit-making companies.

NCLT FINDING

The Tribunal noted that the scheme was duly approved by shareholders through a special resolution. It also recorded that the company had no creditors and no pending investigations. Financial disclosures showed sufficient liquidity to undertake the payout without affecting operations.

NO BAR IN LAW

The Tribunal held that accumulated losses do not bar a company from paying shareholders during capital reduction. It observed, "there are no serious allegations as regards the bona fides of the proposed scheme. It has been settled that there is no bar in law, for a loss making company to pay off shareholders, while undergoing a reduction in the share capital of the company”

A LOSS-MAKING COMPANY CAN RETURN CAPITAL IF:

✔ It has surplus capital despite losses (e.g., over-capitalization)

✔ The reduction is bona fide and not a regulatory bypass

✔ Creditors are fully protected

✔ NCLT is satisfied on fairness and solvency

CREDITORS’ INTERESTS ARE PROTECTED

·      No compromise or prejudice to creditors

·      Tribunal ensures solvency post-reduction

NCLT FINAL VERDICT

After reviewing financial statements, including recent profitability trends and cash balances, the Bench held that the scheme was viable. It found no procedural irregularities or legal prohibitions.

Accordingly, the Tribunal approved the reduction and confirmed the revised capital structure.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

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