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July 2022

CORPORATE LAW CORNER

By Pramod Prabhudesai | Vikash Jain
Chartered Accountants
Kaushik M. Jhaveri
Company Secretary
Reading Time 12 mins
ADJUDICATION MECHANISM UNDER THE COMPANIES ACT, 2013

Adjudication mechanism is covered under the Jurisdiction of Regulator to impose penalty on the defaulting Companies and its officers for non-compliance with the provisions of the Companies Act, 2013.

The reason for the introduction of the in-house Adjudication Mechanism is to promote ease of doing business, to reduce the burden of National Company Law Tribunal (NCLT) and Special Court. Since adjudication mechanism is handled by the bureaucrats, the Central Government (CG) has delegated its power to respective Registrar of Companies (RoC) who are acting as Adjudication Officers (AO).

The provisions of Section 454 of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Amendment Rules, 2019 provide for adjudication mechanism.

Companies (Amendment) Act, 2019 and 2020, has recategorized various sections/ provisions which were punishable with “Fines” with “Penalties”.

The  Difference between “Fine” and “Penalty” is as under:-

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