Section 143(3)(e) Violation Penalised for Failure to Report Related Party Disclosure Non-Compliance: ROC Chennai
The content is an adjudication order issued by the Registrar of Companies, Chennai under Section 454 of the Companies Act, 2013 for violation of Section 450 arising from non-compliance with Section 143(3)(e) of the Companies Act, 2013. During an inquiry under Section 206(4), it was observed that the company’s balance sheet for the financial year 2015-16 disclosed related party loans of ₹5,59,960 but did not disclose the required particulars of related party transactions under Section 129 read with AS-18 of the Companies (Accounting Standards) Rules, 2006, including loans from directors. The order states that the auditor failed to report these non-compliances in the auditor’s report, resulting in a violation of Section 143(3)(e). Show cause and hearing notices were issued, but no reply was received and no appearance was made, leading to ex-parte proceedings. The Adjudicating Authority imposed a penalty of ₹10,000 on the auditor, directed rectification of the default and payment of the penalty within 90 days, specified payment through the MCA e-Adjudication facility from the auditor’s personal sources, and informed the noticee of the right to appeal before the Regional Director, Chennai.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Chennai
Registrar Of Companies, Block No.6,B Wing 2nd Floor, Shastri Bhawan 26, Haddows Road, Chennai, Tamil Nadu, India,
600034
Phone: 044-28276652/28276654
E-mail: roc.chennai@mca.gov.in
Order ID: PO/ADJ/06-2026/CN/02363 Dated: 24/06/2026
ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (‘THE ACT’) FOR VIOLATION OF SECTION 450 OF THE COMPANIES ACT, 2013.
A. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette notification number S.O. 831(E) dated 24/03/2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 [herein after known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
B. Company details:
In the matter relating to CRYO SCIENTIFIC SYSTEMS PRIVATE LIMITED [herein after known as Company] bearing CIN U36999TN1998PTC039872, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at NO. 2/628, RAPID NAGAR, KUNRATHUR HIGH ROAD, GERUGAMBAKKAM, CHENNAI GERUGAMBAKKAM SRIPERUMBUDUR KANCHIPURAM TAMIL NADU INDIA 600122
Individual details:
C. Provisions of the Act:
If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be 1[liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person]
D. Facts about the case:
1. Default committed by the officers in default/noticee – Pursuant to the observations made by the authorized inquiry officer during the inquiry that was conducted on the affairs of the Company under Section 206(4) of the Companies Act, 2013, the ministry has directed the Office of ROC, Chennai to initiate prosecution proceedings against the subject company for the observed violations. The legal cell of this office has transferred the matter for adjudication u/s 454 of the Companies Act, 2013 for violation of Section 143(3)(e) of Companies Act, 2013; which reads as follows;
143(3) The auditor’s report shall also state- (e) whether, in his opinion, the financial statements comply with the accounting standards;
The observations of the Inquiry officer are as follows: In Schedule 5 of the Balance Sheet of the subject company as on 31.03.2016, the Company has disclosed loans from related parties amounting to Rs. 5,59,960/-. However, the details of related party transactions such as name of the related party, nature of relationship, nature of transactions, and amount of transactions were not disclosed as required under Section 129 of the Companies Act, 2013 read with AS-18 of the Companies (Accounting Standards) Rules, 2006.
Further, the Company has failed to disclose the Related party transactions pertaining to loans from directors for the Financial Years 2015-16 in its financial statement, as mandated under AS-18.
However, the Auditor has not made any reporting on the above non-compliances. Therefore, the Auditor has violated the provisions of Section 143(3)(e) of the Companies Act, 2013. Hence, the Auditor in default is liable for action under Section 450 of the Companies Act, 2013.
2. The Adjudicating Authority has issued notice for e-Adjudication vide SCN/ADJ/01-2026/CN/03368 for defaults under the section 450 of the Companies Act, 2013 on 07.01.2026, but no reply has been received from the Officer in default or their authorized representatives. Further, the Adjudicating Authority had issued notice dated 17.02.2026 for e-Hearing, scheduled on 20.02.2026. Neither the Officer in default nor their authorized representative attended the hearing scheduled on 20.02.2026. Therefore, as per Rule 3(8) of the Companies (Adjudication of Penalties) Rules 2014, the matter is being proceeded with in the absence of such person (ex-parte).
E. Order:
1. It is noticed that upon conducting inquiry under Section 206(4) of the Companies Act, 2013 the Company has shown in the Schedule 5 of the Balance Sheet of the subject company as on 31.03.2016, the company disclosed loans from the related parties amounting to Rs. 5,59,960/-. However, the details of the related party transactions such as name of the related party, nature of the relationship, nature of the transactions and amount of transactions were not disclosed under Section 129 of the Companies Act, 2013 read with AS-18 of the Companies (Accounting Standards) Rules, 2006. Further, the company has failed to disclose the related party transactions pertaining to loans from the directors for the Financial year 2015-16 in its Financial Statement, as mandated under AS-18. In view of the above, it is evident that the auditor has violated the provision of 143(3) (e) of the companies Act, 2013. Hence, the Auditor in default is liable under Section 450 of the Companies Act, 2013.
2. The details of penalty imposed on the company, officers in default and others are shown in the table below:
| (A)
|
Name of person on whom penalty imposed (B) | Rectification of Default required (C) | Penalty Amount (D) | Additional Penalty (E) (*Per day of continuing default i.e. date of rectification of default less order issue date) | Maximum limit for Penalty (F) |
| 1 | SRIRAM V having as – |
10000 | 0 | 50000 |
3. The notified officers in default/noticee shall rectify the default mentioned above and pay the penalty, so applicable within 90 days of receipt of the order.
4. The notified officers in default/noticee shall pay the penalty amount via ‘e-Adjudication’ facility which can be accessed through the respective login IDs on the website of Ministry of Corporate Affairs and upload the copy of paid challan / SRN of e-filing (if applicable) on the ‘e-Adjudication’ portal itself. It is also directed that the penalty so imposed upon the officers in default shall be paid from their personal sources/income.
5. Appeal against this order may be filed in writing with the Regional Director, RD Chennai within a period of sixty days from the date of receipt of this order, in Form ADJ setting for the grounds of appeal and shall be accompanied by a certified copy of this order [Section 454 (5) & 454 (6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014].
6. For penal consequences of non-payment of penalty within the prescribed time limit, please refer Section 454(8) of the Companies Act, 2013.
B SRIKUMAR,
Registrar of Companies
ROC Chennai
