TO WHICH AUTHORITY WE HAVE TO APPEAL EITHER TO NCLT OR HIGH COURT AGAINST THE PENALTY ORDER PASSED BY ROC OR REGIONAL DIRECTOR OF MCA ?

 TO WHICH AUTHORITY WE HAVE TO APPEAL EITHER TO NCLT OR HIGH COURT AGAINST THE PENALTY ORDER PASSED BY ROC OR REGIONAL DIRECTOR OF MCA ?

APPEAL TO REGIONAL DIRECTOR

You must appeal to the Regional Director (RD) of the Ministry of Corporate Affairs (MCA) to challenge a penalty order passed by the Registrar of Companies (ROC). Neither the NCLT nor the High Court has jurisdiction as the first appellate authority for ROC penalty orders.

ROC ADJUDICATION ORDERS (PENALTY ORDERS UNDER SECTION 454)

Where the ROC acts as an Adjudicating Officer and imposes penalties:

·      Appeal lies to the Regional Director (RD) under Section 454(5).

·      The appeal must generally be filed within 60 days.

In such cases:

·      Direct appeal to NCLT is not provided under Section 454.

·      After the RD passes the appellate order, the usual remedy is:

·      Writ Petition before the High Court under Article 226/227 of the Constitution.

ROC ORDERS WHICH ARE DIRECTLY APPEALABLE TO NCLT

CERTAIN ROC ACTIONS ARE SPECIFICALLY APPEALABLE TO NCLT UNDER OTHER PROVISIONS OF THE COMPANIES ACT. EXAMPLES:

·      Strike off of company name under section 248

·      Appeal/restoration petition before National Company Law Tribunal under Section 252.

·      Refusal of registration/rectification matters in some cases.

·      Compounding and oppression/mismanagement related proceedings.

So, not every ROC order goes to RD first.

NO SECOND APPEAL

There is presently no statutory second appeal to NCLT/NCLAT against an RD order under Section 454.

RD ORDERS

RD orders are generally:

Final administrative appellate orders under the Act.

Usually challenged through:

High Court writ jurisdiction.

·      Only where the Companies Act specifically provides a further appeal mechanism can the matter go to NCLT/NCLAT.

PRACTICAL SITUATION

TYPE OF ORDER	FIRST APPEAL	FURTHER REMEDY
ROCpenalty/adjudication order under Section 454	RD	High Court (writ)
ROC strike-off order under Section 248	NCLT	NCLAT → Supreme Court
Certain RD administrative orders	Usually no statutory appeal	High Court

IMPORTANT CASE LAWS ON MAINTAINABILITY OF WRIT AGAINST RD ORDERS

Some important judgments dealing with the maintainability of writ petitions against orders of the Regional Director (RD) / Registrar of Companies (ROC) under the Companies Act are as follows:

1.M/S KHETAN INDUSTRIES PVT. LTD. V. UNION OF INDIA — DELHI HIGH COURT

The Delhi High Court held that a writ petition is maintainable against an RD order where:

·      the order is non-speaking,

·      principles of natural justice are violated,

·      or the authority fails to exercise jurisdiction properly

2. MUKUT PATHAK & ORS. V. UNION OF INDIA — DELHI HIGH COURT

This is one of the leading cases on ROC disqualification actions under Sections 164 and 167.

The Court entertained writ petitions directly against ROC actions because:

·      the dispute involved statutory violations,

·      civil remedies were ineffective,

·      and fundamental procedural safeguards were allegedly breached.

3. Madras Techno Marine Enterprises Ltd. v. Regional Director — Madras High Court

The Madras High Court entertained a writ against actions/circulars involving ROC and RD under the Companies Act.

Principle Where:

·      the challenge concerns ultra vires exercise of power,

·      unconstitutional circulars,

·      or arbitrary administrative action,

the High Court can exercise writ jurisdiction notwithstanding alternative remedies.

4. THE DELHI HIGH COURT  STAYED PENALTY ORDERS OF ₹27.1 LAKH IMPOSED BY ROC NEW DELHI AGAINST MICROSOFT & LINKEDIN OVER ALLEGED VIOLATIONS OF SIGNIFICANT BENEFICIAL OWNERSHIP (SBO) DISCLOSURE NORMS.

ROC NEW DELHI VS MICROSOFT & LINKEDIN

Yes. A stay can be obtained from the High Court against an ROC order or Regional Director (RD) order by filing a writ petition under Article 226 of the Constitution of India.

However, grant of stay is discretionary and depends on the facts of the case.

Situations Where High Courts Commonly Grant Stay

High Courts are more likely to grant interim stay where:

·      the ROC/RD acted without jurisdiction,

·      principles of natural justice were violated,

·      no proper hearing was granted,

·      the order is ex facie illegal,

·      penalty is disproportionately imposed,

·      the authority ignored statutory provisions,

·      serious civil consequences arise,

·      recovery/coercive steps are imminent.

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