IMPACT OF LABOUR CODES EFFECTIVE 21-11-2025

 INDIA'S NEW LABOUR CODE 2025

Appointment Order is to be issued to every employee by the employer. This include AO for contract labour by the contractor.

Threshold limit of applicability of the Factory Chapter is 20 and 40 workers for the establishment using power or without power respectively having a manufacturing process

Independent Director cannot be appointed as Occupier of the Factory. If any already appointed then this need to be revised immediately.

Leave eligibility has been brought down to 180 days from 240 days in a calendar year

Applicability of the Contract Labour Chapter is 50 or more contract workers for both Principal Employer and Contractor.

Engagement of contract workers in the Core Activity is prohibited

Welfare facilities to be provided by the Principal Employer only

Canteen applicability is 100 or more workers

Appointment of Safety Officer while engaging 500 or more workers

Appointment of Welfare Officer while engaging 250 or more workers

Applicability of Inter State Migrant workers chapter increased from 5 to 10

Applicability of Inter State Migrant workers chapter would also be applicable for direct employees from other States having wages less than Rs. 18000/- per month

REVISED SMALL COMPANY THRESHOLDS AND THEIR IMPLICATIONS

 REVISED SMALL COMPANY THRESHOLDS

 AND THEIR IMPLICATIONS

R V SECKAR , FCS,LLB 79047 19295

THE COMPANIES AMENDMENT ACT, 2025 INTRODUCED CSR LOWER APPLICABILITY THRESHOLDS, MANDATORY EXPERTISE IN CSR COMMITTEES, AND STRICTER CSR COMPLIANCE/REPORTING NORMS

 

THE COMPANIES AMENDMENT ACT, 2025  INTRODUCED CSR LOWER APPLICABILITY THRESHOLDS, MANDATORY EXPERTISE IN CSR COMMITTEES, AND STRICTER CSR COMPLIANCE/REPORTING NORMS

The Companies Amendment Act, 2025, along with related Amendment Rules effective from July 14, 2025, has introduced substantial changes to India's CSR framework, focusing on lower applicability thresholds, mandatory expertise in CSR committees, and stricter compliance/reporting norms.

AMENDMENT PROVIDES LOWER LIMITS SO THAT NOW MANY COMPANIES HAVE TO ADHERE CSR PROVISIONS.

MANDATORY CSR EXPERTISE IN COMMITTEES

The CSR Committee must now include at least one director with extensive experience in CSR-related matters.

This aims to ensure more informed decision-making and move CSR from a mere compliance exercise to a strategic function.

STRICTER RULES FOR IMPLEMENTING AGENCIES (EFFECTIVE JULY 14, 2025)

KEY CHANGES TO THE REVISED E-FORM CSR-1 INCLUDE

Thus, these CSR amendments aim to enhance transparency, accountability, and the overall effectiveness and impact of corporate social responsibility activities across India.

R V SECKAR , FCS, LLB 79047 19295

ROC CUTTACK IMPOSED PENALTIES ON MAGNUM SEA FOODS LIMITED FOR PAYMENT OF EXCESS MANAGERIAL REMUNERATION

 ROC CUTTACK IMPOSED PENALTIES ON MAGNUM SEA FOODS LIMITED FOR PAYMENT OF EXCESS MANAGERIAL REMUNERATION

ROC CUTTACK Vs MAGNUM SEA FOODS LIMITED

FACTS OF THE CASE

The Registrar of Companies (ROC) Cuttack imposed a total penalty of ₹10 lakh on Magnum Sea Foods Limited and five of its directors for paying managerial remuneration in excess of the limits prescribed under Section 197 of the Companies Act, 2013

WHY PENALTY WAS LEVIED BY ROC

The penalty was imposed because the company paid remuneration to its directors that exceeded the maximum limits permitted by Section 197 of the Companies Act, 2013, without following the correct procedure for obtaining approval.

KEY REGULATIONS UNDER THE ACT STATE THAT:

·      The total managerial remuneration payable by a public company in a financial year must not exceed 11% of its net profits.

·      Remuneration in excess of this limit can be paid if approved by the shareholders via a special resolution.

·      The company is also required to refund any excess remuneration drawn or received without the necessary approvals

CONTENTION BY MAGNUM SEA FOODS LIMITED

·      Magnum Sea Foods Limited had claimed that a special resolution had been passed to authorize the remuneration

·      Payments were transparently disclosed in the Board’s Report and statutory filings.

·      The company was profit-making and acted in good faith

However, the Adjudicating Officer found this submission insufficient to negate the violation, leading to the penalties.

PAYMENT OF PENALTY TIMELINE

Penalties must be paid within 90 days, failing which further consequences under Section 454(8) may apply.

RELIEF TO INDEPENDENT DIRECTORS:

Independent Directors were exempted from penalty, citing MCA’s SOP (General Circular No. 1/2020), as there was no evidence of  their involvement in day-to-day management or consent to the violation .

WHAT THIS CASE SIGNIFIES?

This case highlights the strict enforcement by the Ministry of Corporate Affairs (MCA) regarding compliance with the rules on managerial remuneration, emphasizing the need for proper governance and timely filings.

Even with shareholder approval and disclosures, director remuneration must strictly comply with statutory limits. Governance lapses—even perceived ones—can attract heavy penalties.

APPEAL TO REGIONAL DIRECTOR

MAGNUM SEA FOODS LIMITED may apply to Regional director  within 90 days to waive the penalty imposed by arguing

•   Magnum Sea Foods Limited had claimed that a special resolution had been passed to authorize the remuneration

•   Payments were transparently disclosed in the Board’s Report and statutory filings.

•   The company was profit-making and acted in good faith

R V SECKAR , FCS, LLB 79047 19295

COMPANY AND PRACTISING COMPANY SECRETARY WAS FINED FOR FILING E-FORM STATING SECRETARIAL AUDIT IS NOT APPLICABLE IN THE AOC-4 FORM

 COMPANY AND PRACTISING COMPANY SECRETARY WAS FINED FOR FILING E-FORM STATING SECRETARIAL AUDIT IS NOT APPLICABLE IN THE AOC-4 FORM

SLICE SMALL FINANCE BANK LIMITED VS ROC, GWAUHATI

BACKGROUND OF THE CASE

AOC-4

In the Annual Filing (AOC-4) for the Financial Year 2016–17, Slice Small Finance Bank Limited was required to indicate whether secretarial audit was applicable for that period.

Form MR-3

In the e-form, the company mistakenly selected “NO” for the field “Whether secretarial audit is applicable”, even though the Secretarial Audit Report (Form MR-3) was actually prepared and attached both with the Board’s Report and the AOC-4 filing.

MAKING A FALSE STATEMENT IN A STATUTORY FILING (E-FORM):

THE DEFAULT:

By ticking "Not Applicable" for the Secretarial Audit requirement in a statutory e-form (like MGT-7/MGT-7A - Annual Return) or in AOC-4 when it was actually mandatory, the Company Secretary and other certifying professionals are deemed to have made a false statement or filed an incorrect return.

PENAL PROVISION:

This attracts penalties under Section 448 (Punishment for false statement) read with Section 447 (Punishment for fraud), or Section 204(4) for contravention of the Secretarial Audit provisions.

PENALTY IMPOSED

·      ₹10,000 penalty on the Company

·      ₹10,000 on the Managing Director

·      ₹10,000 on the Company Secretary (Practising CS)

KEY TAKEAWAYS FOR PROFESSIONALS

✔ Every tick/selection in MCA e-forms must accurately reflect the underlying facts, not just the attachments submitted.

R V SECKAR, FCS, LLB 79047 19295

 

boAt AUDIT REVELATION

 boAt AUDIT REVELATION

boAt

boAt is a well-established Indian consumer electronics company that specializes in manufacturing headphones, earphones, speakers, and other audio accessories

boAt AUDIT REVELATION

The audit of boAt revealed some discrepancies in the company's financial statements. The audit found instances of overstated revenues, excessive expenses, and inadequate disclosure of related party transactions. Additionally, the audit raised concerns about the company's internal controls and processes.

It is recommended that boAt take necessary steps to address these issues and improve transparency in their financial reporting.

THE 2025 IndiGo DISASTER –HOW TO AVOID IT IN FUTURE ?

 THE 2025 IndiGo DISASTER –HOW TO AVOID IT IN FUTURE ?

WHAT HAPPENED ?

Since late November 2025, IndiGo has cancelled thousands of flights nationwide — by December 7 the total cancelled flights were reported to be over 3,800.

On some days, more than 750 flights were cancelled across major airports (Delhi, Mumbai, Chennai, Bengaluru, Hyderabad etc.).

The collapse in reliability was dramatic: on-time performance dropped to as low as 19.7 %.

REASONS FOR THE CRISIS

The crisis was caused largely by a shortage of available cockpit crew — triggered by newly implemented and stricter rules for pilot rest and duty time (the Directorate General of Civil Aviation (DGCA) “Flight Duty Time Limitation” norms that increased mandatory rest hours for pilots, limited night-landings, and capped duty hours).

OUTCOMES AND WHAT WENT WRONG

The widespread cancellations left thousands of passengers stranded — complaints of long delays, last-minute cancellations, lack of communication or alternate flights, even basic support (food, rebooking) in many cases.

DGCA issued a show-cause notice to IndiGo’s top management for the operational failure.

 IndiGo reportedly processed refunds amounting to ₹610 crore under government direction

WHAT IndiGo SHOULD DO TO PREVENT FUTURE DISASTERS?

IndiGo Should Build sufficient staffing buffers and plan proactively for regulatory changes.

To Avoid over-reliance on “lean scheduling” or just-in-time crew deployment. Some slack/buffer must be built into scheduling so disruptions (weather, sickness, fatigue, leave) don’t cascade into systemic collapse.

ADOPT RISK-AWARE OPERATIONAL MODELS OVER PURELY COST-EFFICIENT MODELS

IndiGo should use scenario-based capacity planning: simulate what happens with moderate crew-shortage / flight-demand surges / weather disruptions / regulatory shifts — and build contingency plans.

When new regulations come from DGCA, the airline should communicate transparently to the regulator and public about its readiness: crew counts, roster planning, compliance status.

Periodic audits (internal and external) of crew-rosters, fatigue-management, crew-availability vs route schedule should be undertaken.

BETTER PASSENGER-CENTRIC CONTINGENCY PLANNING & COMMUNICATION

During IndiGo fiasco, majority of the IndiGo passengers complained that they have informed by the  IndiGo well in advance about the cancellation of flight.

Transparent communication through all possible channels (app, SMS, social media, airport announcements) to reduce confusion and distress among travellers.

5-POINT REFORM ROADMAP FOR INDIA’S AVIATION SECTOR (POST-INDIGO CRISIS)

·      Mandatory Crew-Capacity Planning & Stress-Testing

·      Regulatory Early Warning System (EWS)

·      Strengthening Competition & Market Resilience

·      Standardized Passenger Protection & Crisis Protocol

·      Technology-Driven Fatigue & Operations Management

POINTS JOSTLING IN OUR MIND

Is there any Risk Management committee is existing in IndiGo. If yes, why  it has not reviewed the DGCA ‘s “Flight Duty Time Limitation” norms that increased mandatory rest hours for pilots, limited night-landings, and capped duty hours and come out with the proper solution .

Why this fiasco cantered around IndiGo only – Why Air India, Vistara, Akasa Air, and SpiceJet were not affected is a million dollar question?

R V SECKAR,  FCS, LLB  79047 19295