Strong Infracon Private Limited and Elite Realcon Private Limited were identified as violators of Section 134(5)(a) of the Companies Act, 2013, following an inspection conducted under Section 206(5) of the Act. These violations date back to the fiscal years 2010-11 to 2015-16. The penalty imposed amounts to a total of INR 400,000, distributed between the Amalgamated company and the officers-in-default.
Despite the claims of the companies that the non-compliant company had been merged with Elite Realcon, rendering it non-existent, the penalties were imposed. This scenario is significant in enforcing the view that regardless of corporate changes such as mergers or acquisitions, companies are expected to remain compliant with the provisions of the Companies Act, 2013.
This decision sets a precedent for other companies in India, underlining the importance of abiding by the regulations and standards set forth by the Act. This verdict may lead to increased scrutiny on the part of companies to ensure compliance with the Act, to avoid facing similar penalties.
GOVERNMENT OF INDIA
Ministry of Corporate Affairs
Office of the Registrar of Companies (West Bengal)
Nizam Palace, 2nd M. S. 0. Building, 2nd Floor
Acharya Jagadish Chandra Bose Road
KOLKATA – 700 020
No. ROC/LEGAL/ADJ/2023/138312/penalty order/ 2184-2188 | Dated: 29-05-2023
ADJUDICATION ORDER FOR PENALTY U/S 454(3) OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 AS AMENDED BY THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2019 IN MATTER OF NON COMPLIANCE OF THE PROVISIONS OF SECTION 134 OF THE COMPANIES ACT, 2013
In respect of: STRONG INFRACON PRIVATE LIMITED (CIN: U45400WB2009PTC138312)
AMALGAMATED WITH
ELITE REALCON PRIVATE LIMITED (CIN: U45400WB2010PTC142960)
1. Appointment of Adjudicating Officer:-
1. Ministry of Corporate Affairs vide its Gazette Notification No A-42011/112/2014-Ad.II dated 24.03.2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 [herein after known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 for adjudicating penalties under the provisions of this Act. The undersigned is entrusted to adjudicate penalties under section 134(8) of the Companies Act, 2013 for the violation of Section 134(5) (a) of the Companies Act, 2013.
2. Company:-
STRONG INFRACON PRIVATE LIMITED [herein after known as the company] was a registered company incorporated on 09.09.2009 under the provisions of the Companies Act, 1956 having its registered office as per MCA21 Registry at address 6 & 6/3 SHASHI SEKHAR BOSE ROAD KOLKATA WB 700025 INDIA.
3. Facts about the Case:-
1) On the basis of Inspection carried out under Section 206(5) of the Companies Act, 2013 the following violations are pointed out in the Inspection report:
every officer of the company has contravened Section 217(2AA) of the Companies Act, 1956 and punishable under section 217(5) of the Companies Act, 1956 for the years 2010-11 to 2013-14 and the company and every officer of the company in default are liable to be prosecuted under Section 134(8) of the Companies Act, 2013 for the years 2014-15 and 2015-16.
2) The provisions of section 134(5) (a) of the Act, provides inter alia that:
“The Directors’ Responsibility Statement referred to in clause (c) of sub-section (3) shall state that – in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.”
Section 134(8) of the Act provides that “if a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”
3) Accordingly, the adjudication officer has issued adjudication notice vide No. LEGAL/ADJ/2022/138312 dated 13.09.2022 (herein after referred as Adjudication Notice) under Section 454(4) read with Section 134 of the Companies Act, 2013 read vyith Rule 3(2) of Companies (Adjudication of Penalties) Rules, 2014 as amended in Amendment Rules, 2019, to the company and its officers in default for the violation of the provisions of the act as mentioned in para “1 & 2” above giving an opportunity to submit a reply as to why the penalty should not be imposed under the provisions of 134(8) of the Act against the company and its officers in default for the above stated violations, followed by a notice of hearing scheduling a physical hearing on 07.02.2023 vide letter no. ROC/ADJ/2023/138312 dated 01.02.2023.
4) Reply to the Adjudication notice, as mentioned above in para 2, have been received from the amalgamated company vide letter dated 29.09.2022 as to why penalty shall not be imposed and whereas it was submitted that:
a) The company is non-existent as the same had been merged with Elite Realcon Private Limited being a transferee company w.e.f 01.04.2015 by the order of the Hon’ble High Court, Calcutta dated 06.01.2017 [CP No. 768 of 2016].
b) Oral representation is sought before the good self for the ends of justice.
5) Chanchal Kumar Jain, Advocate, being the Authorized Representative of the noticee(s) attended the hearing physically on 07.02.2023.
AND WHEREAS, the authorized representative submitted that Section 134 of the enactment shall have prospective effect from the date of notification relying upon the judgment of the apex court [SLP 459/2004] and not the retrospective effect. Further it is stated that the Ld. CJM, Special Court had also disposed of the cases directing the accused to take plea before the appropriate forum as the offence has been decriminalized.
6) Furthermore, the Authorized Representative requested to drop the adjudication proceedings on the ground that the company is already amalgamated by virtue of the Hon’ble High Court, Calcutta in the year 2017 w.e.f. 01.04.2015.
ORDER
1. For the company and its officers, who have defaulted the provisions of section 134(5)(a) of the Companies Act, 2013, the amalgamated company and the concerned officers in default are liable for penalties under section 134(8) of the Companies Act, 2013.
2. In exercise of the powers conferred, the undersigned is entrusted to adjudicate penalties under section 134(8) of the Companies Act, 2013. Therefore, I do hereby impose the penalty of Total 4,00,000/- (Rupees Four Lakh only) i.e., Rs. 3,00,000/- (Rupees Three Lakh only) on the Company and Rs. 50,000/- (Rupees Fifty Thousand only) on each of its officers-in-default namely, JADAB NAIYA [DIN: 06529460] and TAPOSI NAIYA [DIN: 06529583] pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, 2014 and the proviso of the said Rule and Rule 3(13) of Companies (Adjudication Of Penalties) Rules, 2014 for the violation of section 134 of the Act.
3. The noticee shall pay the said amount of penalty individually for the company and its directors (out of own pocket) by way of e-payment [available on Ministry website mca.gov.in] under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 days of receipt of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this Office Address.
4. Appeal against this order may be filed in writing with the Regional Director (ER), Ministry of Corporate Affairs, Kolkata located at Nizam Palace, 2nd M. S. 0. Building, 3rd Floor, 234/4, A.J.C. Bose Road, Kolkata-700020, West Bengal within a ‘period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of the this order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].
5. Your attention is also invited to section 454(8) (i) & (ii) of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order.
6. In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to ELITE REALCON PRIVATE LIMITED and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Eastern Region) and Ministry of Corporate Affairs at New Delhi.
7. Date of hearing: 07th February, 2023
Date of Pronouncement: 29th May, 2023
