The Companies (Adjudication ofPenalties) Amendment Rules, 2019

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 19th February, 2019

G.S.R. 131(E).—In exercise of the powers conferred by section 454 read with section 469 of the
Companies Act, 2013, the Central Government hereby makes the following rules, to amend the Companies
(Adjudication of Penalties) Rules, 2014, namely:-
1. Short Title and Commencement.-(1) These rules may be called the Companies (Adjudication of
Penalties) Amendment Rules, 2019.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Companies (Adjudication of Penalties) Rules, 2014, for rule 3, the following rule shall be
substituted, namely:-
4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
“3. Adjudication of Penalties. – (1) The Central Government may appoint any of its officers, not
below the rank of Registrar, as adjudicating officers for adjudging penalty under the provisions of the Act.
(2) Before adjudging penalty, the adjudicating officer shall issue a written notice in the specified
manner, to the company, the officer who is in default or any other person, as the case may be, to show cause,
within such period as may be specified in the notice (not being less than fifteen days and more than thirty days
from the date of service thereon), why the penalty should not be imposed on it or him.
(3) Every notice issued under sub-rule (2), shall clearly indicate the nature of non-compliance or
default under the Act alleged to have been committed or made by such company, officer in default, or any
other person, as the case may be and also draw attention to the relevant penal provisions of the Act and the
maximum penalty which can be imposed on the company, and each of the officers in default, or the other
person.
(4) The reply to such notice shall be filed in electronic mode only within the period as specified in the
notice :
Provided that the adjudicating officer may, for reasons to be recorded in writing, extend the period
referred to above by a further period not exceeding fifteen days, if the company or officer in default or any
person as the case may be, satisfies the adjudicating officer that it or he has sufficient cause for not responding
to the notice within the stipulated period or the adjudicating officer has reason to believe that the company or
the officer or the person has received a shorter notice and did not have reasonable time to give reply.
(5) If, after considering the reply submitted by such company, its officer, or any other person, as the
case may be, the adjudicating officer is of the opinion that physical appearance is required, he shall issue a
notice, within a period of ten working days from the date of receipt of reply fixing a date for the appearance of
such company, through its authorised representative, or officer of such company, or any other person, whether
personally or through his authorised representative :
Provided that if any person, to whom a notice is issued under sub-rule (2), desires to make an oral
representation, whether personally or through his authorised representative and has indicated the same while
submitting his reply in electronic mode, the adjudicating officer shall allow such person to make such
representation after fixing a date of appearance.
(6) On the date fixed for hearing and after giving a reasonable opportunity of being heard to the
person concerned, the adjudicating officer may, subject to reasons to be recorded in writing, pass any order in
writing as he thinks fit including an order for adjournment :
Provided that after hearing, adjudicating officer may require the concerned person to submit his reply
in writing on certain other issues related to the notice under sub-rule (2), relevant for determination of the
default.
(7) The adjudicating officer shall pass an order,-
(a) within thirty days of the expiry of the period referred in sub-rule (2) or of such extended period as
referred therein, where physical appearance was not required under sub-rule (5);
(b) within ninety days of the date of issue of notice under sub-rule (2), where any person appeared
before the adjudicating officer under sub-rule (5):
Provided that in case an order is passed after the aforementioned duration, the reasons of the delay
shall be recorded by the adjudicating officer and no such order shall be invalid merely because of its passing
after the expiry of such thirty days or ninety days as the case may be.
(8) Every order of the adjudicating officer shall be duly dated and signed by him and shall clearly
state the reasons for requiring the physical appearance under sub-rule (5).
(9) The adjudicating officer shall send a copy of the order passed by him to the concerned company,
officer who is in default or any other person or all of them and to the Central Government and a copy of the
order shall also be uploaded on the website.
(10) For the purposes of this rule, the adjudicating officer shall exercise the following powers,
namely:-
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(a) to summon and enforce the attendance of any person acquainted with the facts and
circumstances of the case after recording reasons in writing;
(b) to order for evidence or to produce any document, which in the opinion of the adjudicating
officer, may be relevant to the subject matter.
(11) If any person fails to reply or neglects or refuses to appear as required under sub-rule (5) or subrule (10) before the adjudicating officer, the adjudicating officer may pass an order imposing the penalty, in
the absence of such person after recording the reasons for doing so.
(12) While adjudging quantum of penalty, the adjudicating officer shall have due regard to the
following factors, namely:-
(a) size of the company;
(b) nature of business carried on by the company;
(c) injury to public interest;
(d) nature of the default;
(e) repetition of the default;
(f) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a
result of the default; and
(g) the amount of loss caused to an investor or group of investors or creditors as a result of the
default:
Provided that, in no case, the penalty imposed shall be less than the minimum penalty prescribed, if
any, under the relevant section of the Act.
(13) In case a fixed sum of penalty is provided for default of a provision, the adjudicating officer shall
impose that fixed sum, in case of any default therein.
(14) Penalty shall be paid through Ministry of Corporate Affairs portal only.
(15) All sums realised by way of penalties under the Act shall be credited to the Consolidated Fund of
India.
Explanation 1.- For the purposes of this rule, the term “specified manner” shall mean service of
documents as specified under section 20 of the Act and rules made thereunder and details in respect of address
(including electronic mail ID) provided in the KYC documents filed in the registry shall be used for
communication under this rule.
Explanation 2.- For the purposes of this rule, it is hereby clarified that the requirement of submission
of replies in electronic mode shall become mandatory after the creation of the e-adjudication platform.”

[F. No. 1/25/2013-CL-V]
K. V. R. MURTY, Jt. Secy.

Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3,
Sub-section (i) vide number G.S.R. 254(E), dated the 31st March, 2014.