Auditor Appointment Violation: Kosamattam Nidhi Limited Fined for Non-compliance with Section 158 of Companies Act, 2013 by non-inclusion of Director Identification Numbers (DIN) in their ADT-1 form for the appointment of their first statutory auditor.
In an adjudication order released on the 19th of May 2023, Kosamattam Nidhi Limited was fined for violating Section 158 of the Companies Act, 2013. The violation pertained to the non-inclusion of Director Identification Numbers (DIN) in their ADT-1 form for the appointment of their first statutory auditor. This analysis delves into the details of the order and its implications for the company and its directors.
Analysis The case pertains to the violation of Section 158 of the Companies Act, 2013, which mandates that all returns, information, or particulars related to or containing references to a director should include the Director’s Identification Number. Kosamattam Nidhi Limited, in their ADT-1 form, failed to include this crucial detail, leading to the current adjudication.
Upon review, the Registrar of Companies imposed a penalty on Kosamattam Nidhi Limited and the three directors involved. The company and each of the three directors, Mr. Mathew Kosamattam Cherian, Ms. Laila Mathew, and Mr. Jilu Saju Varghese, were each fined Rs 50,000, resulting in a total penalty of Rs 2,00,000.
The company argued that the violation was an event-based and one-time occurrence, not a continuing violation. They have since complied with the necessary requirements in all other filings. Despite this, the adjudicating authority maintained the imposed penalties, citing their jurisdiction under Section 454(1) & (3) of the Act.
The order also pointed out that failure to pay the fine within ninety days would lead to additional penalties, and potentially, imprisonment.
Ministry of Corporate Affairs
Registrar of Companies, Kerala & Lakshadweep
First Floor, Company Law bhavan, B.M.C. Road,
Thrikkakara, Kochi – 682 021, Kerala.
roc.ernakulam@mca.gov.in M 0484-2421626
ROCK/F No.09-53366/3139/Kosamattom/2101/2023
Dated: 19.05.2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT 2013 READ WITH SECTION 172 OF THE COMPANIES ACT 2013 FOR VIOLATION OF 158 OF TIIE COMPANIES ACT,2013 BY M/S KOSAMATTAM NIDHI LIMITED.
1. In the matter of M/s Kosamattam Nidhi Limited incorporated on 21.05.2018 under the jurisdiction of Registrar of Companies, Emakulam with the registered office situated at Room No.IV / 75 Ground Floor, Paikkattu Complex, Muttambalam Kottayam KL., 686004 India.
2. Whereas pursuant to section 158 of the Companies Act 2013, (herein after referred as the Act) Every person or company while furnishing any return, information or particulars as are required to be furnished under this Act, shall mention in case such return, information or particulars relate to the director or contain any reference of any director.
3. Whereas the company has submitted an adjudication application to this office seeking directions under section 454 of the Act for adjudication for violation of not mentioning the DIN of the directors in the documents attached with e-form ADT-I vide SRN: 691040352 for the first appointment of statutory auditor on Board Resolution and letter intimating auditor’s appointment pertaining, to section 158 of the Act which is one of the violations pointed out by the Ministry in its order dated 19.02.2021 rejecting the NDH 4 filed by the company SRN R 35005297 dated 07.03.2020. The offence pertains to the year 2018.
4. Whereas on the basis of the said application received for the adjudication of penalty a notice of hearing was issued by this office on 11.05.2023 and the authorized representative ofthe Company viz., Ms. 1 akshmi Ashok, Manager. Legal Department of Kosamattam Nidhi Limited attended for hearing on 05.2023 at 11 AM fixed for the purpose of adjudication. She submitted a resolution copy dated 12,05.2023 authorizing her to represent the company before the undesigned with reference to the petition filed under section 454 of the Act, for the Non Compliance specified in the Ministry of Corporate affairs vide order dt.19/02/2021 and to make appearance, submissions, representations, whether oral or written, on behalf of the Company and to make any corrections, changes, modifications as may he in the documents submitted by the company and to receive the order passed by the Honourable Registrar of Companies, Ernakulam on behalf of the Company and her action shall be binding on the company.
5. In the hearing at the time of making oral submissions, while admitting the said violations of the provisions of the Act in principle she had stated that it an event-based violation and it is a onetime violation and that therefore it is not a continuing violation. Further, in addition to the above oral submissions on 05.2023, the company vide letter dated 17/05/2023 had reiterated the above submissions and had further stated that it has violated sec.158 of the Act for non-disclosure of Director Identification Number in the return filed in E-form ADT-1 filed vide SRN: G91040352 and that it is an event based noncompliance of ADT-1 filed for appointment of Auditor which is filed on the basis of frequency or auditor’s appointment and that in the all filings of the company, the company has disclosed the Director Identification Number in all such return, information or particulars in case such return, information or particulars relate to the director or contain any reference of any director and requested for a lenient view in the matter.
6. Whereas pursuant to Section 172. if a company is in default in complying w ith any of the provisions of this chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.
7. The said violation of Section 158 of the Act is punishable with penalty as said in Section 1 72 of the Act and is adjudicatable by the undersigned in exercise of the powers vested to him under Section 454(1) & (3) of the Act.
8. In view of the above, after going through the application for adjudication and hearing the representative of the company and the subsequent letter dated 17.05.2023, since it is an event based onetime violation, I hereby impose the penalty on the company and the three directors who are the applicants in the adjudication application, as per the following details which shall be paid as said in Rule 3 (14) of the Companies (Adjudication of Penalties) Rules, 2014 within a period of ninety days from the date of the receipt of the copy of the order.
| Penalty on | Penalty |
| The Company | Rs 50,000 |
| Mr. Mathew Kosamattam Cherian, Director | Rs 50,000 |
| Ms. Laila Mathew, Director | Rs 50,000 |
| Mr. Jilu Saju Varghese, Director | Rs 50,001 |
| Total | Rs 2, 00.000 |
9. Whereas sub-section (5) of section 454 of the Companies Act, 2013 provides that any person aggrieved by an order made by the adjudicating officer under sub-section(3) may prefer an appeal to the Regional Director having jurisdiction in the matter and further sub-section (6 ) provides that every appeal under sub-section (5) shall be tiled within 60 days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person and shall be in such form, manner and be accompanied by such fees as may be prescribed
10. Please note that as per Section 458(8) (i) of the Act, where a Company does not pay the penalty imposed by the adjudicating officer or the Regional Director within a period of ninety days from the date of the receipt of the copy of the order, the company shall he punishable with fine which shall not he less than twenty-five thousand rupees, but which may extend to five lakh rupees and as per the clause (ii) where an officer of a company who is in default does not pay the penalty within a period of ninety days from the date of the receipt of the copy of the order, such officer shall be punishable with imprisonment which may extend to six months or with tine which shall not he less than twenty five thousand rupees but which may extend to one lakh rupees, or with both.
11. Therefore please note that in case of default in payment of penalty, prosecution 171: ill be Filed under section 454(8) (i) and (ii) of the Act at your own costs without any further notice.
(M. JAYAKUMAR)
Adjudicating Authority
Registrar of Companies
Kerala and Lakshadweep
