The Ministry of Corporate Affairs (MCA) has issued an order adjudicating a penalty of Rs. 36.25 Lakh on M/s Takraf India Private Limited and its directors for non-compliance with Section 135(6) of the Companies Act, 2013. The violation pertains to the failure to transfer Rs. 14.50 Lakh of unspent Corporate Social Responsibility (CSR) funds to a special account.
M/s Takraf India Private Limited was required to spend Rs. 16,33,276/- as part of its CSR obligations in 2020-21 but could only spend Rs. 1,83,276/-. The remaining amount of Rs. 14,50,000/- should have been transferred to the Unspent CSR Account within 30 days from the end of the financial year. However, the company failed to do so, resulting in a violation of Section 135(6) of the Companies Act, 2013. As per the act, the company is liable for a penalty of twice the unspent amount, i.e., Rs. 29,00,000/-, and its directors are liable for one-tenth of the unspent amount, i.e., Rs. 1,45,000/- each.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES, TAMIL NADU
SHASTRI BHAVAN, II FLOOR, 26, HADDOWS ROAD, CHENNAI-6.
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F.NO.ROC/ CHN/ TAKRAF/ADJ Order / S.135(6) /2023 Date: 11 JUL 2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITES) RULES 2014 FOR VIOLATION OF PROVISIONS OF SECTION 135(6) OF THE COMPANIES ACT, 2013 BY M/S TAKRAF INDIA PRIVATE LIMITED
1. In the matter of M/s TAKRAF INDIA PRIVATE LIMITED incorporated on 05.12.2008 under the jurisdiction of Registrar of Companies, Chennai with the registered office situated at 94/3, T.T.K .Road, Alwarpet, Chennai, Tamil Nadu, 600018, India.
2. Whereas pursuant to sub section (6) of Section 135 which read as under:-
“Any amount remaining unspent under sub-section (5), pursuant 10 any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in pursuance of its Corporate Social Responsibility Policy, shall be transferred by the company within a period of thirty days from, the end qt. the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to he called the Unspent Corporate Social Responsibility Account, and such amount shall he spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy .”
3. Whereas the Company was required to Spend Rs. 16,33,276/- in the year 2020-21 as part of its Corporate Social Responsibility requirements under section 135 of the Companies Act, 2013. But the Company had spent Rs. 1,83,276/- in the year 2020-21 on an ongoing project, duly identified by the Board, and could not spend the balance amount of Rs. 14,50,000/- on or before 31s1 March 2021. In this regard the Company required under section 135(6) to transfer its Unspent CSR Obligation of Rs. 14.50.000/- for the financial year 2020-21 to a Special Account to be opened in any scheduled bank to be called the Unspent Corporate Social Responsibility Account within a period of 30 days from the end of the Financial Year. However, the Company could not comply with the requirements of Section 135(6) of Opening a special bank account and transfer the unspent CSR Obligation within the timelines as prescribed therein. And its pertinent to place on record that the Company had subsequently in year 2021-22, spent the entire balance CSR Obligation of the year 2020-21111 the Ongoing Project. Since the Company had failed to comply with the requirement of opening a Special Bank Account and transfer the unspent CSR Obligation within 30 days, the company is in violation of Section 135(6) of the Companies Act, 2013 and therefore attracting the penal provisions of prescribed under section 135(7) of the Companies Act, 2013.
4. Whereas this office had issued Adjudication Hearing Notice to the Company and its Directors on 15.06.2023 fixing the hearing date as 23/06/2023 on the basis of the Suo-motto application submitted by the company and its officers on 28/02/2023. The Company and its Directors appeared before the undersigned on 23.06.2023.
5. Pursuant to hearing notice issued to the company and its directors vide letter dated 15.06.2023, Shri. Jayanth Vishwanathan (Practicing Company Secretary), Authorized Representative appeared on behalf of company and Shri. Shirish Raghuvir Shirvaikar, Director, Shri Rajagopalan, Managing Director, Shir. Kalyanakrishna Gopal, Managing Director, Shri. Sankar Ram, Company Secretary, Smt Andrea Biagio Pisco, Director, Shri. Heiko Teuber, Director, Shri. Hubrich Frank Rudolf, Director. The representative of the company appeared in person and admitted the violation and further averred in their reply letter stated that out of 7 director 3 directors resigned and one director is Non-executive director and further requested for three directors who are not liable for the said violation to take a lenient view”
6. Whereas the notice was served to all the directors of the company. In that Ramesh Mahadevan and Shri. Ramesh Karur Raghavendran have not attended the hearing, hence they have been set ex-parte and legal proceedings be initiated against the said directors. In respect of the remaining Seven (7) directors out of which Four (4) Directors namely Smt. Andrea Biagio Prisco, Shri. Shirish Raghuvir Shirvaikar Shri. Heiko Teuber and Shri. Hubrich Frank Rudolf have stated that, they are not liable for aforesaid Violation. It is observed from the records of the Company that Shri. Shirish Raghuvir Shirvaikar, Shri. Heiko Teuber and Smt Andrea Biagio Pisco were in the Board of Directors till the period of violation so, they are liable under the Section and Shri. Hubrich Frank Rudolf had ceased on 31.08.2020, and is not liable for the violation of Section 135(6) of the Companies Act, 2013 and Shri. Heiko Teuber is an Non-executive Director as per records available in the MCA records he is also not liable for the violation under section 135 (6) of the Companies Act, 2013.
7. Whereas on the basis of Suo-motu application received for Adjudication offences u/s 454 of the Act r/w Companies (Adjudication of Penalty), Rules 2014, has been verified in the light of the latest Companies Amendment Act, 2020 wherein, Section 454 of the Companies Act, 2013, particularly sub section 3 and its proviso states that;
“The adjudicating officer may by an order-
(a) Impose the penalty on the company. the officer who is in default, or any other person. as the case May be, stating therein any non-compliance or default under the relevant provisions of this Act; and
(b) Direct such company, or officer who is in default or any other person, as the case may be, to rectify the default, wherever he considers fit.
“Provided that in case the default relates to non-compliance of sub-section 4 of Section 92 or sub-section (1) or sub-section (2) of section 137 and such default has been rectified either prior to, or within thirty days of the issue of the notice by the adjudicating officer, no penalty shall be imposed in this regard and all proceedings under this section in respect of such default shall be deemed to be concluded.”
8. Whereas per section 135(7) of the Companies Act, 2013, which read as under:-“If a company is in default in complying with the provisions of sub-section (5) or sub-section (6), the company shall be liable to a penalty of twice the amount required to be transferred by the company to the Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be, or one Crore rupees, whichever is less, and every officer of the company who is in default shall be liable to a penalty of one-tenth of the amount required to be transferred by the company to such Fund specified in Schedule VII, or the Unspent Corporate Social Responsibility Account, as the case may be, or two lakh rupees, whichever is less.”
9. Therefore in view of the above said non-compliance for the violation of Section 135(6) of the Companies Act, 2013 the penal provision provided for the Company and the director’s under Section 135(7) of the Act, the Company is liable for penalty of twice the amount required to be transferred by the company to the Unspent Corporate Social Responsibility Account i.e.Rs.29,00,000/- and the director’s required to transfer the one-tenth of the Unspent Corporate Social Responsibility Account i.e. 1,45,000/- hereby impose a penalty:
| S. No. | Company and Officers in default | Amount of Unspent CSR amount | Twice or One tenth of the Unspent CSR by the Company | Total Amount of Penalty Imposed |
| 1. | M/S. Takraf India Private Limited -Company | Rs. 14,50,000 | (2* 14,50,000) =Rs. 29,00,000 | Rs. 29,00,000/- |
| 2. | Shri. Shirish Raghuvir Shirvaikar – Director | Rs. 14,50,000 | (14,50,000/10) =Rs. 1,45,000 | Rs. 1,45,000/- |
| 3. | Shri. Rajagopalan– Managing Director. | Rs. 14,50,000 | (14,50,000/10) =Rs. 1,45,000 | Rs. 1,45,000/ |
| 4. | Shri. Kalyanakrishna Gopal – Managing Director. | Rs. 14,50,000 | (14,50,000/10) =Rs. 1,45,000 | Rs. 1,45,000/ |
| 5. | Shri Sankar Ram– Company Secretary | Rs. 14,50,000 | (14,50,000/10) =Rs. 1,45,000 | Rs. 1,45,000/ |
| 6. | Shri. Andrea Biagio Prisco-Director | Rs. 14,50,000 | (14,50,000/10) =Rs. 1,45,000 | Rs. 1,45,000/ |
| 7. | TOTAL | Rs. 36,25,000/- |
(Totalling Rs.36,25,000/- as penalty amount) for non compliance of Section 135(6) of the Companies Act, 2013.
10. 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.” Further sub-section(6) provides that, “Every appeal under sub-section(5) shall be filed within sixty days form 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. “
11. Please note that as per Section 454(8) (i) of the Companies Act, 2013, which read as under:-
i. “where 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 be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees.”
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 fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.”
In case of default in payment of penalty, prosecution will be filed under section 454(8) (i) and (ii) of the Companies Act, 2013 at your own costs without any further notice. Along with the penalty to be imposed and the same should be submitted.
(K. LATHA PARIMALA VADANA, ICLS)
REGISTRAR OF COMPANIES
ADJUDICATING OFFICER
TAMILNADU, CHENNAI.
