Failure to Disclose ICC Compliance under Sexual Harassment Act in Board Report: MCA Imposes ₹3 Lakh Penalty on Company and ₹50K Each on Directors [Read Order]

The Ministry of Corporate Affairs (MCA) has imposed Rs 3 lakh penalty on a company and Rs 50,000 penalty on each of its directors on account of its failure to disclose on whether it has compiled with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal)Act, 2013 in the board report.

The adjudication order arose from the inspection of Books and accounts of the company, Mylapore Hindu Permanent Fund Nidhi Limited that was conducted by the Inspecting Officer.

In the inspection it was observed that " during the financial years 2018-19 to 2019-20, the Board's report which is a part of the financial statements has not given any disclosure on whether the company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal)Act, 2013 as mandated under Rule 8(5)(x) of the Companies

(Accounts) Rules, 2014.

This was in violation of Section 134(3)(q) of the Companies Act, 2013 read with Rule 8(5)(x) of

Companies ( Accounts) Rule, 2014.

Section 134(3)(q) of the Companies Act, 2013 provides- Financial Statement, Boards Report, etc. (3)There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include

(q) such other matters as may be prescribed.

Rule 8(5)(x) of Companies ( Accounts) Rules, 2014 provides- Matters to be Included in Board's Report

(5) In addition to the information and details specified in sub-rule (4), the report of the Board shall also contain

(x) a statement that the company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

A show-cause notice was issued, but there was no response to it. It was ruled that the omission constitutes a violation, making the company liable under section 134(8). Therefore, an adjudication proceeding was initiated against the company & its officers in default for the above contravention and imposed a penalty for contravention.

Thus, Rs 3 lakhs was imposed on the company, whereas Rs 50,000 was imposed on two of its directors, namely, Parthasarathy Y Arumugam and Dhevanathan Yadav

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