Introduction of E-Adjudication Portal by MCA: A Significant Step Towards Digital Penalty Adjudication under the Companies Act, 2013

March 26, 2025 | Blog

On September 9, 2024, the Ministry of Corporate Affairs (MCA) introduced a transformative initiative via notification No. (G.S.R. 476E) under Section 454 of the Companies Act, 2013 (“the Act”), thereby launching the e-adjudication portal. This digital platform facilitates the electronic adjudication of penalties for non-compliance with the provisions of the Act, marking a significant shift towards streamlined and efficient enforcement of corporate compliance.

(Ref: MCA September 2024 Notification for E-Adjudication: Notifications ;

MCA October 2024 Notification for E-Adjudication: Notifications)

Overview of Section 454 of the Companies Act, 2013

Section 454 of the Act, serves as the legal foundation for the imposition of penalties and adjudication of defaults by designated adjudicating officers. This section empowers the Central Government to appoint adjudicating officers (not below the rank of a Registrar of Companies) who are responsible for handling offences related to procedural and reporting defaults under the Act.

The e-adjudication portal further enhances the enforcement mechanism by allowing companies, their directors, promoters, officers, authorized representatives, and professionals to participate in adjudication proceedings electronically, thereby ensuring a more efficient and transparent process.

e-Adjudication under the MCA21 V3 Portal

The e-adjudication process, as implemented under the Act, focuses on addressing procedural and compliance-related offences for which penalties are prescribed under the Act. The MCA administers this process through the MCA21 V3 portal, which ensures a comprehensive and fully digital handling of cases. The platform allows for the filing, submission of documents, hearings, and resolution of cases all through an integrated electronic framework, simplifying the entire adjudication journey.

Progress of e-Adjudication: Statistical Overview

Since the inception of the e-adjudication portal in September 2024, the Registrar of Companies (ROCs) across various states have adjudicated over 100 cases under the Companies Act, 2013, by November 20, 2024. This represents approximately 15% of the cases typically adjudicated by the ROCs on an annual basis. Moreover, in the case of appeals before Regional Directors, approximately 20% of the over 100 cases disposed of in 2024 have been adjudicated online. This steady rise in the number of cases adjudicated via the e-adjudication portal highlights the growing acceptance and effectiveness of the digital platform. As the system continues to streamline processes and reduce administrative burdens, the number of cases handled through this mode is expected to rise significantly in the years ahead.

Focus Areas: Sections with Increased Adjudication Activity

There has been a notable surge in adjudication cases related to certain sections of the Companies Act, 2013. Stakeholders are urged to exercise heightened vigilance and compliance with the provisions of the Act, including the following sections which have seen a significant increase in enforcement:

Section 134 – Financial Statements and Directors’ Report
Section 165 – Number of Directorships
Sections 89 and 90 – Declaration of Beneficial Interest and Investigation of Beneficial Ownership
Section 62 – Further Issue of Share Capital
Section 203 – Appointment of Key Managerial Personnel (KMP)

A detailed list of adjudication orders passed by the ROCs and Regional Directors can be accessed at the following link: ROC Adjudication Orders

Future of E-Adjudication: A Step Towards Digital Transformation of the LLP Act

Given the significant impact and efficiency achieved through e-adjudication under the Companies Act, 2013, it is anticipated that the Limited Liability Partnership Act, 2008 (LLP Act) will soon follow suit. The 2022 amendment to the LLP Act hints at the possibility of digital adjudication for defaults under this legislation as well, which would further streamline the compliance framework for LLPs in India.

Additionally, the increasing integration of artificial intelligence (AI) in the corporate governance space promises to enhance the efficiency and accuracy of the adjudication process. AI can assist in identifying non-compliant entities, issuing notices, and managing administrative aspects related to litigation and adjudication. This technological advancement will further expedite the process of corporate compliance and enforcement in the digital era.

Conclusion

The launch of the e-adjudication portal is a landmark development in corporate compliance and governance, bringing about increased efficiency, transparency, and ease of access for stakeholders. With the continued expansion of digital platforms for compliance and the potential inclusion of the LLP Act in the near future, the future of corporate adjudication in India looks increasingly digital and efficient also in a way fostering the trust on a global arena. It is critical for all stakeholders to stay vigilant in adhering to compliance requirements, as non-compliance may now lead to swift electronic adjudication and the imposition of penalties.

The views and opinions expressed in this post are those of Bhat Joshi & Co. LLP and are intended for informational purposes only. This content should not be interpreted as legal advice. For personalized legal guidance, we recommend consulting with a qualified professional.

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