Company Failed to submit extract of Annual Return with ROC & Failed to provide additional details relating to CSR in Directors Report: MCA Imposes Penalty
In a recent development, the Ministry of Corporate Affairs (MCA) in India has imposed penalties on LA-FIN FINANCIAL SERVICES PRIVATE LIMITED for violations of Section 136 of the Companies Act, 2013. The penalties are a consequence of the company’s failure to submit the extract of its annual return with the Registrar of Companies (ROC) and its failure to provide additional details related to Corporate Social Responsibility (CSR) in its Directors’ Report. Let’s delve into the details of this case and understand the implications.
1. Appointment of Adjudicating Officer: The MCA appointed Benudhar Mishra as the Adjudicating Officer under Section 454 of the Companies Act, 2013. This empowers him to adjudicate penalties for violations of the Act.
2. About the Company: LA-FIN FINANCIAL SERVICES PRIVATE LIMITED is a registered company under the provisions of the Companies Act, 1956, located in Mumbai, Maharashtra, India.
3. Facts About the Case:
- The company failed to submit the extract of its annual return for the year ending March 31, 2015, with the ROC, which was required by Section 136 of the Companies Act, 2013.
- Additionally, the company did not provide additional details related to CSR in its Directors’ Report.
- The company later refilled the incomplete/erroneous attachments filed earlier, but the oversight had already led to non-compliance.
4. Section 136 of the Companies Act, 2013: Section 136 outlines the right of members to receive copies of audited financial statements. It specifies the timeframes for sending these documents to members and the consequences of non-compliance.
5. Factors Considered by the Adjudicating Officer:
- The Adjudicating Officer must consider factors such as the disproportionate gain or loss caused to investors when determining the penalty.
- In this case, there is no record of such gains or losses, making it challenging to quantify the impact of the default.
6. Hearing: The Company and its officers were given an opportunity to be heard, and they consented to the adjudication process under Section 454 of the Companies Act, 2013.
7. Nature of Default: The default involved failing to submit the annual return extract and provide CSR details, falling under the jurisdiction of the ROC, Mumbai.
8. Order:
- Penalties have been imposed on the company and its directors for violating Section 136 of the Companies Act, 2013. The total penalty is Rs. 35,000.
- The company and its directors are instructed to pay the penalty through the MCA portal within 90 days.
- There is an option to file an appeal within 60 days if they disagree with the order.
Conclusion: This case serves as a reminder of the importance of complying with statutory provisions and regulations under the Companies Act, 2013. Failure to adhere to these regulations can result in penalties that impact a company’s financial health and reputation. It’s crucial for companies to fulfill their legal obligations to avoid such repercussions.
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MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES
100, “EVEREST”, MARINE DRIVE,
MUMBAI – 400 002
Website: www.mca.gov.in
e-Mail ID : roc.mumbai@mca.gov.in
No. ROC(M)/ASB/ADJ-ORDER/4737-HD/RD-41/4738/4739
Date: 18 OCT 2023
Order of Adjudication of Penalty under Section 454 for violation of
Section 136 of the Companies Act, 2013
IN THE MATTER OF LA-FIN FINANCIAL SERVICES PRIVATE LIMITED.
(CIN: U99999MH1996PTC102913)
Adjudicating Officer: – Benudhar Mishra, ICLS, ROC, Mumbai, Maharashtra
Presenting Officer: – Sai Sankar Landa, ICLS, Dy. ROC, Mumbai, Maharashtra
Authorized person on behalf of Company: – Abdul Karim Kazi, Company Secretary.
Shri R. Murlimohan, Company Secretary.
1. Appointment of Adjudicating Officer: –
Ministry of Corporate Affairs vide its Gazette Notification No.A-42011/112/2014-Ad.I1 dated 24.03.2015 appointed the 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.
2. Company: –
Whereas the Company LA-FIN FINANCIAL SERVICES PRIVATE LIMITED) [herein after known as Company] is a registered company with this office under the provisions of Companies Act, 1956 having its registered address — R-Square, Plot No. 29, Jai Hind CHS. Ltd. N. S. Road No. 12, JVPD Scheme, Vile Parle (W), Mumbai, Maharashtra- 400 049. India, as per the MCA portal.
3. Facts about the Case: –
The company has filed Company. The applicant states that while uploading the Directors report along with the financial statements for the year ended March 31, 2015, the said extract was erroneously missed out due to oversight. Further, the entire set of financial statements, including MGT 9 along with the Directors report for the financial year ended March 31, 2015, was refiled online vide GNL 2 thereby requesting for replacing the incomplete / erroneous attachments filed in the eform AOC 4 by the Company earlier.
4. Section 136 of the Companies Act, 2013 are reproduced as under: –
136. Right of member to copies of audited financial statement.— (1) a copy of the financial statements, including consolidated financial statements, if any, auditor’s report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to all persons other than such member or trustee, being the person so entitled, not less than [twenty-one days] before the date of the meeting
Provided that if the copies of the documents are sent less than twenty-one days before the date of the meeting, they shall, notwithstanding that fact, be deemed to have been duly sent if it is so agreed by members-
(a) holding, if the company has a share capital, majority in number entitled to vote and who represent not less than ninety-five per cent. of such part of the paid-up share capital of the company as gives a right to vote at the meeting; or
(b) having, if the company has no share capital, not less than ninety five percent. of the total voting power exercisable at the meeting:
Provided further that in the case of a listed company, the provisions of this sub-section shall be deemed to be complied with, if the copies of the documents are made available for inspection at its registered office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents, as the company may deem fit, is sent to every member of the company and to every trustee for the holders of any debentures issued by the company not less than twenty-one days before the date of the meeting unless the shareholders ask for full financial statements:
Provided also that every listed company having a subsidiary or subsidiaries shall place separate audited accounts in respect of each of subsidiary on its website, if any: Provided also that a listed company which has a subsidiary incorporated outside India (herein referred to as `foreign subsidiary’)—
(a) where such foreign subsidiary is statutorily required to prepare consolidated financial statement under any law of the country of its incorporation, the requirement of this proviso shall be met if consolidated financial statement of such foreign subsidiary is placed on the website of the listed company;
(b) where such foreign subsidiary is not required to get its financial statement audited under any law of the country of its incorporation and which does not get such financial statement audited, the holding Indian listed company may place such unaudited financial statement on its website and where such financial statement is in a language other than English, a translated copy of the financial statement in English shall also be placed on the website.
(2) A company shall allow every member or trustee of the holder of any debentures issued by the company to inspect the documents stated under sub-section (1) at its registered office during business hours.
Provided that every company having a subsidiary or subsidiaries shall provide a copy of separate audited or unaudited financial statements, as the case may be, as prepared in respect of each of its subsidiary to any member of the company who asks for it.
(3) If any default is made in complying with the provisions of this section, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.
5. Factors to be considered by the Adjudicating Officer: –
While adjudging quantum of penalty under Section 203(5) of the Act, the Adjudicating Officer shall have due regard to the following factors, namely:
With regard to the above factors to be considered while determining the quantum of penalty, it is noted that the disproportionate gain or unfair advantage made by the Noticee or loss caused to the investor as a result of the delay on the part of the Noticee to redress the investor grievance are not available on record. Further, it may also be added that it is difficult to quantify the unfair advantage made by the Noticee or the loss caused to the investors in a default of this nature.
6. Hearing: –
The undersigned in exercise of power conferred under sub-Section 3 of Section 454 of the Companies Act, 2013 has issued hearing notice dated 26.09.2023 to the Company and Officers in default for giving an opportunity to be heard and for submissions in the matter, if any. In response to the hearing notice, representative of the Company, CS Abdul Karim Kazi and Shri R. Murlimohan appeared and gave consent to adjudicate and pass necessary orders for adjudicating the penalty as per the provisions of the Companies Act, 2013.
Thus, the presenting officer is of the opinion that the matter in issue for non-compliance of the provisions of section 136 of the Companies Act, 2013 shall be taken up for adjudication under section 454 of the Companies Act, 2013.
7. Nature of default: –
Whereas the company was required to file financial statements along with the required annexures in accordance with the relevant provisions of the Companies Act, 2013. However, the company failed to submit extract of annual return for the year ended March 31, 2015, with the registrar of companies. Also, the company has failed to provide additional details relating to CSR in their directors’ report. The matter in issue falls under the jurisdiction of the Registrar of Companies, Mumbai and the default is of civil nature thereby attracting penalties under the provisions of Companies Act, 2013 and the rules made thereunder.
8. ORDER:–
a) Having considered the facts and circumstances of the case and after considering the factors above, I hereby impose a penalty on Company and every director and key managerial personnel of the company who is in default as per table below for violation of provisions of section 136 of the Companies Act, 2013. I am of thic nnininr,
| Sr. No | Penalty imposed on the Company/ Director(s) | First Default Penalty (in Rs) | Total Penalty (In Rs) Maximum | Penalty (In Rs) |
| 1. | LA-FIN FINANCIAL SERVICES PRIVATE LIMITED | 25,000 | 25,000 | 25,000 |
| 2 | JIGNESH PRAKASH SHAH, Director | 5,000 | 5,000 | 5,000 |
| 3 . | SUNIL PRAVINCHANDRA BRAHMBHATT, Director | 5,000 | 5,000 | 5,000 |
| TOTAL PENALTY | 35,000 | |||
b) The Noticee shall pay the said amount of penalty through “Ministry of Corporate Affairs” portal and proof of payment be produced for verification within 90 days of receipt of this order.
c) Appeal against this order may be filed in writing with the regional Director (Western Region) within a period of 60 days from the date of receipt of this order in Form ADJ setting forth the grounds of appeal and shall be accompanied by a certified copy of this order.
d) Your attention is also invited to section 454 (8) (ii) of the Companies Act, 2013, 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. Regarding consequences of non-payment of penalty within the prescribed time limit of ninety days from the date of receipt of this order in terms of the provisions of Section 454(8) (i) of the Companies Act 2013, 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.
e) Therefore, 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.
(Benudhar Mishra)
Registrar of Companies and Adjudicating Officer,
Maharashtra, Mumbai.
