Companies

NCLT slaps fine on CaratLane for Companies Act violation

TE Raja Simhan Chennai | Updated on April 22, 2019 Published on April 22, 2019

Jewellery e-tailer had not formed nomination & remuneration committee when its turnover crossed ₹100 cr in 2016

The Chennai Bench of the National Company Law Tribunal (NCLT) has imposed a fine on CaratLane Trading Pvt Ltd, a Tata Group company and subsidiary of Titan, its Managing Director and Company Secretary, for not constituting a nomination and remuneration committee in 2016 — as mandated under Section 178 of the Companies Act, 2013 — when the company’s turnover had crossed ₹100 crore.

The order, issued by a Single Bench consisting of Mohd Shariff Tariq, Member (Judicial), said the Assistant Registrar of Companies, in a report, had noted that CaratLane became Titan’s subsidiary on August 4, 2016, when its turnover had crossed ₹131 crore. The company should have constituted a nomination and remuneration committee by September 4, 2016, in compliance with the Companies Act. However, it constituted such a committee, and appointed an independent director, only on March 20, 2018.

CaratLane had constituted the committee on January 19, 2017, with non-executive directors. However, it did not fulfil the requirement of Section 178(1) of Companies Act, which stipulates the presence of independent directors in the committee. It was only on March 20, 2018, that the company appointed Neelam Chhiber and Mathrubootham Rathnagirish as independent directors, and the committee was reconstituted immediately.

Period of violation

The period of violation was from September 4, 2016, to March 19, 2018, the report by the Assistant Registrar said.

CaratLane pleaded for a lenient view on the grounds that it was a first offence, and this was confirmed by the concerned Registrar of Companies.

The NCLT imposed a fine of ₹3 lakh on the company and ₹50,000 each on Mithun Padamchand Sacheti, Managing Director, and Bharatraj Panchal, Company Secretary. The company was directed to pay the penalty from its accounts but the two officers shall pay from their own resources, the order said.

Published on April 22, 2019
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