Section 454- Adjudication Of Penalties
Updated: Oct 14
Section 454 of the Companies Act, 2013 states about the adjudication officers. This section of the Companies Act consists of 8 sub-sections.
As per Section 454 (1) of the Companies Act, 2013, the Central Government has the power to appoint as many officers as they want as adjudicating officers. The order to appoint the officers as adjudicating officers should be published in the official gazette.
The officers to be appointed should not be below the ranks of Registrar. The appointment of adjudicating officers is done to adjudge penalty as per the provisions of the Act.
Section 454 (2) of the Companies Act, 2013 states that while appointing adjudicating officers under sub-section (1) of the Act, the Central Government shall specify the jurisdiction of such officers.
As per Section 454 (3) of the Companies Act, 2013, when a company or any of its officers are in default for non-compliance with any of the provisions of the Act, the adjudicating officer can impose a penalty on such default being done.
Section 454 (4) of the Act says that before imposing any penalty, the adjudicating officer must give the defaulting company or the officer(s), as the case may be, a reasonable opportunity of being heard. This sub-section is beneficial as it allows those companies or officers who have been wrongly accused.
Section 454 (5) of the Companies Act, 2013 states that any person or company who has been aggrieved by the order of adjudicating officer under sub-section 3 shall appeal to the Regional Director who has the jurisdiction in that case.
The sub-section 6 of Section 454 provides the time limit within which an appeal under sub-section 5 has to be filed. As per Section 454 (6) of the Act, an appeal under subsection 5 is to be made within 60 days of receiving an order made by the adjudicating officer. Also, the appeal shall be made in such manner, form, and along with such fees as may be prescribed.
The sub-section 7 of Section 454 states the order to be given by the Regional Director. As per the said sub-section, the Regional Director, after hearing the parties, may pass such an order as he thinks fit. The order may modify, confirm, or set aside the order for which the appeal has been made.
The sub-section 8 of Section 454 states about the default made by the company or any officer, as the case may be.
As per Section 454 (8) (I), if any company fails to pay the penalty imposed on it by the Adjudicating Officer or the Regional Director, as the case may be, within 90 days from receipt of such order, the company would be punishable with a fine of Rs.25,000. This fine may extend up to Rs. 5,00,000.
Section 454 (8) (II), of the Act, talks about the default made by an officer. It states that when an officer fails to pay the penalty imposed on it by the Adjudicating Officer or the Regional Director, as the case may be, within 90 days from receipt of such order, the company would be punishable with imprisonment of up to 6 months or with a fine of Rs.25,000 which may extend up to Rs. 5,00,000, or with both imprisonment and fine.