Introduction: The Ministry of Corporate Affairs (MCA) has levied a significant penalty against Ujjwalbhavishya Mutual Nidhi Limited for its non-compliance with Section 137 of the Companies Act, 2013. This article delves into the specifics of the penalty, the underlying legal violations, and the repercussions for the company and its directors.
Detailed Analysis: Ujjwalbhavishya Mutual Nidhi Limited, registered under the Companies Act on 20th February 2015, maintains its registered office at Ahirauli Buzurg, Post-Padrauna, Kushinagar, Uttar Pradesh, with an authorized capital of Rs. 10,00,000/-. The case in question pertains to the company’s failure to conduct business in accordance with the provisions of the Companies Act, 2013.
The matter was initially brought to the company’s attention, along with its directors, through an inquiry letter (TC/TECH/NIDHI/UJJWALBHAVISHYA) dated 10th November 2020. Unfortunately, neither the company nor its directors responded. Subsequently, summons under Section 207 of the Companies Act, 2013, were issued for their appearance on 5th February 2021. Show Cause Notices (01/21//Inq/Nidhi/UJJWALBHAVISHYA-2021/2399-2403 and 01/21//Inq/Nidhi/UJJWALBHAVISHYA-2021/3602-3606) were sent on 24th February 2021 and 11th March 2022. However, none of the directors appeared for the hearing.
The report submitted to the Regional Director, Northern Region, highlighted the non-compliance of Section 137 for the years 2019, 2020, and 2021. As a result, the Directorate initiated penal action under the Companies Act, 2013.
Section 137(1) of the Companies Act, 2013 stipulates that a copy of the financial statements, including consolidated financial statements, if any, duly adopted at the annual general meeting, must be filed with the Registrar within thirty days of the annual general meeting.
Section 137(3) of the Companies Act, 2013 outlines the penalties for failing to file the financial statements in time. It includes a penalty of ten thousand rupees and, in the case of continuing failure, an additional penalty of one hundred rupees for each day during which such failure persists, subject to a maximum of two lakh rupees. The company’s managing director, Chief Financial Officer, and, in their absence, any other director responsible for compliance may also be penalized.
A Show Cause Notice (07/01/Adjudication-92/UJJWALBHAVISHYA MUTUAL NIDHI LIMITED) dated 23rd May 2023 was issued to the company and its officers in default under Section 137 of the Companies Act, 2013, read with Companies (Adjudication of Penalties) Rules, 2014.
Regrettably, the company and its officers in default did not respond to the Show Cause Notice, resulting in no hearing scheduled for the matter.
Additionally, neither the company’s representatives nor its directors furnished replies or appeared before the adjudicating officer, further substantiating their non-compliance with Section 137 of the Companies Act, 2013.
The date of default in the matter has been noted as 30th October 2019, 30th October 2020, and 30th October 2021. This corresponds to the last date up to which a copy of the financial statements, including consolidated financial statements, if any, duly adopted at the annual general meeting of the company, should have been filed with the Registrar within thirty days.
Conclusion: Taking into account the case’s facts and circumstances, the MCA has imposed a penalty of Rs. 10,000 plus a continuing default penalty of Rs. 3,00,200, amounting to a total penalty of Rs. 3,10,200 (three lakh ten thousand and two hundred rupees). This penalty is imposed on the company for its ongoing non-compliance with Section 137 of the Companies Act, 2013. Each of four director also faces a similar penalty, making the total penalty amount to Rs. 15,51,000 for company its 4 Directors.
Companies and their directors should ensure strict adherence to legal obligations, as outlined in the Companies Act, to avoid such penalties. The legal provision for appealing these penalties is also available as per the Companies Act.
*****
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES,
UTTAR PRADESH,
37/17, Westcott Building, The Mall,
Kanpur — 208001
Phone : 0512 — 2310323/2310443
NO.07/01/ADJ-137/ UJJWALBHAVISHYA MUTUAL NIDHI LIMITED/3971 to 3975
DATED: 22/08/2023
ORDER FOR VIOLATION OF SECTION 137 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014.
IN THE MATTER OF UJJWALBHAVISHYA MUTUAL NIDHI LIMITED.
1. The Ministry of Corporate Affairs vide its gazette notification no A-42011/112/2014-AdJI dated 24.3.2015, has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Whereas the Company M/s UJJWALBHAVISHYA MUTUAL NIDHI LIMITED has been registered under the provisions of Companies Act on 20.02.2015, and is having its registered office situated at AHIRAULI BUJURG, POST- PADRAUNA, Kushinagar, Uttar Pradesh-274304. The authorized capital of the company is Rs. 10,00,000/-
3. Whereas on scrutiny of the records, it is found that the company is not conducting its business as per the provisions of the Companies Act, 2013. Therefore, the matter was taken up with the company and its directors vide Inquiry letter no.TC/TECH/NIDHI/ UJJWALBHAVISHYA /2138 dated 10.11.2020. Further, neither the company nor the directors furnished any reply to the same. Thereafter, summons under section 207 of the Companies Act, 2013 vide letter no.TC/TECH/NIDHI/ UJJWALBHAVISHYA /3252 to 3254 dated 19.01.2021 for appearance on 05.02.2021. and Show Cause Notice No.01/21//Inq/Nidhi/UJJWALBHAVISHYA-2021/2399-2403 dated 24.02.2021 and No.01/21//Inq/Nidhi/ UJJWALBHAVISHYA -2021/3602-3606 dated 11.03.2022. Further none of the Directors of the company appeared on the said date of hearing. The report in this regard furnished to the Regional Director, Northern Region wherein non-compliance of section137 for the years 2019, 2020 and 2021 was also mentioned. The Directorate vide its letter No. Inquiry/206(4)/ UJJWALBHAVISHYA MUTUAL NIDHI /RD(NR)/2022/3298 dated 10.06.2022 has accorded the penal action under section of the Companies Act, 2013. Thus it is evident that the company and its Directors have failed to comply with the provisions of section 137 of the Companies Act, 2013, in filing of the financial statement of the company for year ending 31.03.2019,31.03.2020 and 31.03.2021 thereby attracting the penal provisions mentioned under Section 137(3) of the Act. The Company and its Directors are officers in default, as per section 2(60), of the Companies Act, 2013. And are thus liable for penal provisions.
4. Accordingly, a Show Cause Notice No.. 07/01/Adjudication-92/ UJJWALBHAVISHYA MUTUAL NIDHI LIMITED /2241-2245 dated 23.05.2023 was issued to the company and its officers in default under section under Section 137 of the Companies Act, 2013, read with Companies (Adjudication of Penalties) Rules, 2014 by this office. This office has not received the said letter undelivered also.
5. The company and its officers in default have failed to furnish any reply to the said Show Cause Notice, hence no hearing was fixed for this matter.
6. Further, neither any representative of the company nor its directors have either furnished their reply or have appeared before the undersigned which has further strengthened the apprehension that the company and its Directors have failed to comply with the provisions of section 137 of the Companies Act, 2013, in filing of a copy of the financial statement of the company, within thirty days from the date on which the annual general meeting is held upto 30.09.2019 , 30.09.2020 and 30.09.2021 thereby attracting the penal provisions mentioned under Section137(3) of the Act.
The date of default in the matter has been taken as 30.10.2019, 30.10.2020, 30.10.2021 , i.e. the date upto which a copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed. The default has been continuing since then.
Section 137(1) of the Companies Act, 2013 provides that:-
“A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed.”
Section 137(3) of the Companies Act, 2013 provides that —
“If a company fails to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the period specified, the company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of two lakh rupees., and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of fifty thousand rupees.”
7. Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose Rs. 10,000/-Penalty (mentioned in table “A” as on date) of Rs.3,00,200/-for continuing default total penalty Rs. 3,10,200/- (Rupees three Lakh ten thousand and two hundred only) and Rs. 10,000/-+Penalty (mentioned in table “B” as on date) of Rs.3,00,200/-for continuing default total penalty Rs. 3,10,200/- (Rupees three Lakh ten thousand and two hundred only) for continuing default on each Director under section 92(5) of the Companies Act, 2013 for failure to make compliance of section 92(4) of the Companies Act, 2013. It is of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee.
Table -“A”(Penalty calculation for company)
| Due date
of AGM (1) |
Due date of filing of the A/r
(2) |
Per day penalty for non-filing of the A/r within due date (In Rs.)
(3) |
Total no. of days of default as on date
(4) |
Total Penalty (In Rs.) (5=3X4) |
| 30.09.2019 | 30.10.2019 | 100 | 1369 | 136900 |
| 30.09.2020 | 30.10.2020 | 100 | 1004 | 100400 |
| 30.09.2021 | 30.10.2021 | 100 | 639 | 63900 |
| Total: | 300200 |
Table -“B”(Penalty calculation for eachDirectors)
|
Due date of AGM (1) |
Due date of filing of the A/r
(2) |
Per day penalty for non-filing of the A/r within due date (In Rs.)
(3) |
Total no. of days of default as on date
(4) |
Total Penalty (In Rs.) (5=3X4) |
| 30.09.2019 | 30.10.2019 | 100 | 1369 | 136900 |
| 30.09.2020 | 30.10.2020 | 100 | 1004 | 100400 |
| 30.09.2021 | 30.10.2021 | 100 | 639 | 63900 |
| Total: | 300200 |
9. The Noticee shall pay the amount of penalty by way of Demand Draft in favour of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days receipt of this order. The Demand Draft shall be forwarded to this office Address.
10. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodi Road, New Delhi, within a period of sixty 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. [Section 454(5) & 454(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014].
11. Attention is also invited to section 454(8) of the Companies Act, 2013, in the event of noncompliance of this order. In Case appeal is made 0/0 Registrar of Companies, U.P. maybe informed along with the penalty imposed & the payments made.
(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur
