J U D G M E N T

~ ~ ~ ~ ~ ~ ~ ~ ~ Dated this the 19 th day of February, 2021 [WP(C) Nos.7510, 7995 & 8334 of 2020]

The petitioners, who are Companies incorporated with the Registrar of Companies, Kerala, have filed these writ petitions seeking to direct the respondents to permit the petitioners to file e-form ACTIVE, INC-22A without insisting on appointment of a whole-time Company Secretary. The petitioners have also sought to declare that the restriction imposed in filing e-form ACTIVE, INC-22A with regard to non- compliance of Section 203 of a whole-time Company Secretary or Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is arbitrary and illegal.

2. The petitioners submit that the 1 st respondent- Union of India, in exercise of its powers under Section 469 of the Companies Act, 2013 amended the Companies (Incorporation) Rules, 2014 as per Notification dated

21.02.2019. As per the new added Rule 25A, every Company incorporated on or before 31.12.2017 shall file the particulars of the Company and its registered office in e-form ACTIVE (Active Company Tagging Identities and Verification) on or before 25.04.2019. It is the contention of the petitioners that the website of the Ministry of Corporate Affairs is not accepting e-form ACTIVE submitted by the petitioners for the reason that the paid up capital is more than ₹5 Crores and still the petitioners-Companies have not appointed whole-time Company Secretary.

3. It is the case of the petitioners that as per Section

203(5), if any Company makes any default in complying with the provisions, such Company shall be liable for a penalty of ₹5 lakhs and Directors and Key Managerial Personnel are personally liable for a penalty of ₹50,000/- and if the default is a continuing one, with a further penalty of ₹1,000/- for each day.

4. The petitioners contend that they have part-time Company Secretaries and Auditors to properly look after the affairs of their Companies and for the last so many years, they have been functioning well within the provisions of the Act without giving any room for initiating any penalty proceedings. On these premises, the petitioners contend that they should not be forced to appoint a whole-time Company Secretary and should be permitted to file e-form ACTIVE, INC-22A without insisting on the appointment of a whole-time Company Secretary.

5. When these writ petitions came up for admission, interim orders were passed by this Court permitting the petitioners to file e-form ACTIVE, INC-22A, Form PAS-03 (change in paid up capital) and Form DIR-12 (change in Director except cessation) without insisting on appointment of a whole-time Company Secretary provisionally, pending further orders in these writ petitions.

6. When these writ petitions came up for hearing today, the Central Government Counsel representing the respondents argued that as per the existing rules, the petitioners are bound to appoint whole-time Company Secretaries, as their paid up capital is more than ₹5 Crores. The petitioners cannot be granted any exemption from the Rules.

7. The Central Government Counsel further argued that non-appointment of Company Secretary by petitioners- Companies is an offence under Section 383A (1A) vide Companies (Amendment) Act, 1988 with effect from

01.12.1988. If a Company fails to comply with the requirement regarding the appointment of Company Secretary, the Company and every officer of the Company who is in default shall be punishable with fine which may extend to ₹500/- per every day during which the default continues.

8. Heard learned counsel for the petitioners and learned Central Government Counsel appearing for the respondents.

9. As things stand now, the petitioners have been permitted to file e