May 25th, 2026

Retrospective Appointment of KMP

[A] Cover Story

Can Key Managerial Personnel (KMP) be appointed by the board with a retrospective effect?

Answer: No, it will be a violation of section 179(3) r/w r. 8 of the Companies (Meetings of Board and its Powers) Rules, 2014. As there is no specific penalty provided under the Act, the violation shall be punishable under section 450.

For example, if a board makes an appointment of a non-executive director as a whole time director through a board’s resolution dated 06 February 2026 but with effect from 01 February 2026, then the company and its directors shall be liable for a five-day penalty under section 450.

[B] Case Laws

[B.1] Filing an Appeal Before NCLAT Without an NCLT-Certified Copy is No Filing in the Eyes of Law

In Angelwoods Apartment Allottees Association v. M Lalitha (2026 INSC 479), a financial creditor e-filed an appeal before the NCLAT on the final day of limitation to challenge an approved resolution plan but failed to accompany it with a certified copy of the NCLT order.

Even after a massive 150-day delay in rectifying registry defects, the certified copy was never produced.

The Supreme Court of India ruled that compliance with Rule 22(2) of the NCLAT Rules, which requires filing of a certified copy at the time of presentation of an appeal, is mandatory. Thus, the court declared the defective filing entirely null and void in law and set aside the appellate proceedings.

For corporate litigants and legal practitioners, this underscores that strict timelines are non-negotiable. Merely e-filing to hit a deadline without applying for a certified copy signals a lack of due diligence.

[B.2] NCLT Favours Compounding Over Prosecution in Offences Involving Accounting Discrepancies Without any Malafide intent

In a significant relief for corporate officers, the National Company Law Tribunal (NCLT), Ahmedabad Bench, in Rajat Kumar Singh v. Registrar of Companies [April 10th, 2026] allowed the compounding of technical accounting violations under Sections 129 and 133 of the Companies Act, 2013.

The case involved the CFO of Adani Power Limited, who faced prosecution for several financial reporting lapses, including disputed accounting treatments of a merger and related party disclosures. The NCLT observed that the defaults were interpretational rather than deliberate, especially as the company relied on an NCLT-approved Scheme of Arrangement.

Consequently, the Tribunal imposed a compounding fee of 150% of the minimum penalty (totalling ₹5.25 lakhs) and directed the discharge of the pending criminal prosecution.

This ruling underscores that where accounting discrepancies lack mala fide intent or direct prejudice to stakeholders, the judiciary prefers monetary compounding over protracted criminal litigation. For companies, this reinforces the importance of maintaining detailed trails for interpretational accounting decisions, as these records can serve as a primary defence to shield officers from personal criminal liability.

[B.3] Dominance Alone is not Abuse: CCI Clears Arthur Flury in Railway Procurement Dispute

The Competition Commission of India (CCI) has closed a case against M/s Arthur Flury India Private Limited, reinforcing that holding a dominant market position does not automatically equate to antitrust violations.

As the sole approved indigenous supplier of Short Neutral Section Assemblies (SNSA) for Indian Railways under the Make in India policy, the company was accused of abusing its dominance through discriminatory pricing.

The CCI dismissed the claims, noting that the technical and design specifications were strictly mandated by the Railway Designs and Standards Organisation (RDSO), not influenced by the supplier. Furthermore, the entry of a new competitor naturally drove market prices down, proving the market remained competitive.

For legal practitioners and corporate strategists, this ruling clarifies that sole-supplier status that is driven by strict regulatory standards and state procurement policies shall not be deemed abusive. There must be clear evidence of anti-competitive conduct or market foreclosure.