Penalty for Non-Appointment of Independent Directors: ROC Kolkata Order Explained

The Registrar of Companies, Kolkata I, has passed an adjudication order under Section 454 of the Companies Act, 2013 imposing a monetary penalty on an officer in default for failure to ensure timely appointment of independent directors as mandated for a public company. The violation arises out of non-compliance with Section 149 read with Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014, and the punishment has been levied under Section 172 of the Companies Act, 2013.

This order, dated 17/02/2026, deals with the non-compliance in the case of REGAAL RESOURCES LIMITED and culminates in a penalty of ₹1,00,000 on the concerned officer, NAVNEET BAHETI, for a prolonged period of default in appointing the requisite number of independent directors after conversion of the company into a public limited company.

Adjudicating Officer under Section 454

The Ministry of Corporate Affairs, through Gazette notification number S.O. 831(E) dated 24/03/2015, has empowered the Registrar of Companies as an Adjudicating Officer under Section 454 of the Companies Act, 2013. This authority is exercised in conjunction with the Companies (Adjudication of Penalties) Rules, 2014.

Key Point: Under Section 454, the ROC can adjudicate and levy penalties for violations of specific provisions of the Companies Act, 2013 where so authorized by the Central Government.

In this case, the adjudication relates to the consequences of breach of Section 149 read with Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014, with the quantum and manner of penalty governed by Section 172 of the Companies Act, 2013.

Relevant Statutory Provisions

Requirement of Independent Directors – Section 149 and Rule 4

  • Section 149 of the Companies Act, 2013, along with Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014, mandates that certain classes of public companies must appoint at least two independent directors.
  • Once a private company is converted into a public company and meets the thresholds specified in Rule 4, it must comply with the independent director requirement within three months of such conversion or of meeting the prescribed criteria, whichever is later.

General Penalty Provision – Section 172

Where a default occurs in relation to a provision of the Chapter dealing with “Appointment and Qualifications of Directors” and no specific penalty is prescribed, Section 172 comes into play. It provides that:

If a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.

In this adjudication, the ROC has relied on Section 172 to determine the penalty for continuing non-compliance.

Background of the Company and Its Conversion

Chronology of Incorporation and Name Changes

The order traces the evolution of REGAAL RESOURCES LIMITED as follows:

  1. The company was initially incorporated as Regal Resources Private Limited on 02.01.2012 under the erstwhile Companies Act, 1956, with its registered office in Kolkata, West Bengal.
  2. Subsequently, its name was altered to Regaal Resources Private Limited vide fresh Certificate of Incorporation dated 26.10.2015 issued by the Registrar of Companies, West Bengal.