Company Directors Face Penalties Under Section 203(5) for Non-Compliance with Managerial Appointment Rules Despite COVID Period

HC ruled on penalty imposition under Companies Act s.203(5) for non-compliance with managerial appointment requirements. Authority's discretionary power in penalty assessment was confirmed, including ability to consider mitigating circumstances. While mens rea is irrelevant for establishing contravention, adjudicating authority retains discretion in quantum determination within statutory limits (1-5 lakhs for company, up to 50,000 for directors, plus continuing penalties). Authority's calculation excluding COVID period was deemed reasonable exercise of discretion. Court upheld penalty assessment as neither illegal nor arbitrary, finding no grounds for interference with authority's discretionary determination. Petition challenging penalty quantum dismissed. .....

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