Introduction: The Ministry of Corporate Affairs (MCA) has issued a significant order under Section 454, penalizing PRISM ORGANIC GREENS LIMITED for non-compliance with Section 137 of the Companies Act, 2013. This article provides an in-depth analysis of the case, penalties imposed, and the appeal process.
Detailed Analysis:
1. Legal Background: The MCA, through its Adjudicating Officer, invoked Section 454 of the Companies Act, 2013, to penalize PRISM ORGANIC GREENS LIMITED for violations of Section 137. This section mandates the filing of financial statements within a specified period.
2. Company Profile: PRISM ORGANIC GREENS LIMITED, registered in Himachal Pradesh, failed to submit its financial statements since its inception. The violation was flagged through a Show Cause Notice, and responses from directors were considered, leading to the identification of the Managing Director, Sh. Navin Pratap Singh, as the responsible party.
3. Penalties Imposed: The order outlines penalties for each financial year, with the total default amount reaching significant figures. The penalties are deemed commensurate with the duration of non-compliance, emphasizing the responsibility of the Officers-in-default.
4. Payment Process: The order directs the payment of penalties through the Ministry of Corporate Affairs portal, ensuring adherence to Company (Adjudication of Penalties) (Amendment) Rules, 2019. Personal sources/income of the Officers-in-default are specified for penalty payment.
5. Appeal Process: Companies and Officers-in-default have the right to appeal the order within sixty days. The appeal should be filed in writing with the Regional Director (Northern Region), accompanied by a certified copy of the order, in Form ADJ.
6. Consequences of Non-Payment: The article emphasizes the consequences of non-payment, highlighting fines and potential imprisonment for both the company and Officers-in-default.
Conclusion: The MCA’s order against PRISM ORGANIC GREENS LIMITED serves as a stern reminder of the legal obligations under the Companies Act, 2013. This case study underscores the importance of timely filing of financial statements and the severe repercussions for non-compliance. Companies and Directors must remain vigilant to avoid penalties and legal consequences.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF
COMPANIES CUM OFFICIAL
LIQUIDATOR, HP,
CORPORATE BHAWAN
PLOT NO.4-B, SECTOR 27B,
CHANDIGARH PHONE NO.172-2639415, 2639416
Email roc.himachal@mca.gov.in
No. ROC/864
Dated: 26/12/2023
ORDER UNDER SECTION 454 FOR VIOLATION OF SECTION 137 OF THE COMPANIES ACT, 2013, READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014
IN THE MATTER OF MIs PRISM ORGANIC GREENS LIMITED
(CIN: U74140HP2014PLC000676)
1. The Ministry of Corporate Affairs vide its gazette notification no.S.0.831(E) dated 24.3.2015, has appointed the undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as an Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Whereas M/s PRISM ORGANIC GREENS LIMITED (hereinafter referred to as “the Company”) is a company registered with this office under the Provisions of the Companies Act, 2013/1956 (or previous Acts in force, as applicable) having its registered office situated at H.NO. 196-197 ROURA SECTOR, Bilaspur, BILASPUR, Himachal Pradesh, India, 174001 as per MCA website.
Provisions of the Act: –
3. Whereas as per Section 137(1) 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.
As per Section 137(3) 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 therein, the company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a 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 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 after the first during which such failure continues, subject to a maximum of fifty thousand rupees.
Facts about the case:
4. Whereas as per records, the company has not filed its Balance Sheet since incorporation. This office has issued Show Cause Notice for violation of section 137(1) of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014 to the company and its directors vide this office letter No. ROC/OL/HP/137/000676/124 to 127 dated 20.06.2023. However, two out of three directors have replied to the show cause notice, wherein Sh. Rajesh Kumar Aggarwal (Director) has stated vide letter dated 06.07.2023 that he was never a director in the subject company nor have any connection with the company and its officials. He further stated that his appointment was done without his knowledge and consent. Further Sh. Ramesh Chandra Mal (Director) has also replied vide letter dated NIL received on 18.07.2023 that he was illegally appointed as director of the company by the existing directors of the company without his consent on 19.12.2015 therefore he resigned in June 2016.
The replies of the directors were found to be satisfactory. However, Sh. Navin Pratap Singh, MD is appointed in the Company and is responsible for all compliances of the Companies Act, 2013.
5. Therefore, it is concluded that the company and its officers in default are liable for penalty as prescribed under Section 137(3) of the Act for non-filing of Financial Statements of the company viz PRISM ORGANIC GREENS LIMITED for: –
- Financial Year 2014-15 for 2887 days i.e., with effect from 31.10.2015(Last date of filing of financial statements was 30.01.2016) to 26.12.2023 (date of order).
- Financial Year 2015-16 for 2613 days i.e., with effect from 31.10.2016 (last date of filing of financial statements was 30.10.2016) to 26.12.2023 (date of order).
- Financial Year 2016-17 for 2248 days i.e., with effect from 31.10.2017 (last date of filing of financial statements was 30.10.2017) to 26.12.2023 (date of order).
- Financial Year 2017-18 for 1883 days i.e., with effect from 31.10.2018 (last date of filing of financial statements was 30.10.2018) to 26.12.2023 (date of order).
- Financial Year 2018-19 for 1518 days i.e., with effect from 31.10.2019 (last date of filing of financial statements was 30.10.2019) to 26.12.2023 (date of order).
- Financial Year 2019-20 for 1060 days i.e., with effect from 31.01.2021 (last date of filing of financial statements was 30.01.2021) to 26.12.2023 (date of order).
- Financial Year 2020-21 for 726 days i.e., with effect from 31.12.2021 (last date of filing of financial statements was 30.12.2021) to 26.12.2023 (date of order).
- Financial Year 2021-22 for 422 days i.e., with effect from 31.10.2022 (last date of filing of financial statements was 30.10.2022) to 26.12.2023 (date of order).
Accordingly, I am inclined to impose a penalty as prescribed under Sub-Section (3) of Section 137 of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are as under:
|
Nature of Default |
Violations under Companies Act,20 13 | Name of person on whom penalty imposed | No. of days of default | Penalty for default (Rs) | Total Default amount
(Rs) |
Maximum Limit for penalty (Rs) | Final penalty Impose d
(Rs) |
| Non- filing of financial statements F.Y. 2014-15 | SEC. 137(1) | On Company | 2887 | 10000+ 100/Day | 10000 + 10 0*2887 =298700 | 200000 | 200000 |
| Sh. Navin Pratap Singh | 2887 | 10000+ 100/Day | 10000 + 10 0*2887= 298700 | 50000 | 50000 | ||
| Non- filing of financial statements F.Y. 2015-16 | SEC. 137(1) | On Company | 2613 | 10000+ 100/Day | 10000 + 10 0*2613= 271300 | 200000 | 200000 |
| Sh. Navin Pratap Singh | 2613 | 10000+ 100/Day | 10000 + 10 0*2613 =271300 | 50000 | 50000 | ||
| Non- filing of financial statements F.Y. 2016-17 | SEC. 137(1) | On Company | 2248 | 10000+ 100/Day | 10000 + 10 0*2248= 234800 | 200000 | 200000 |
| Sh. Navin Pratap Singh | 2248 | 10000+ 100/Day | 10000 + 10 0*2248= 234800 | 50000 | 50000 | ||
| Non- filing of financial statements F.Y. 2017-18 | SEC. 137(1) | On Company | 1883 | 10000+ 100/Day | 10000 + 10 0* 1883 198300 | 200000 | 198300 |
| Sh. Navin Pratap Singh | 1883 | 10000+ 100/Day | 10000 + 10 0* 1883 = 198300 | 50000 | 50000 | ||
| Non- filing of financial statements F.Y. 2018-19 | SEC. 137(1) | On Company | 1518 | 10000+ 100/Day | 10000 + 10 0*1518 = 161800 | 200000 | 161800 |
| Sh. Navin Pratap Singh | 1518 | 10000+ 100/Day | 10000 + 10 0*1518 = 161800 | 50000 | 50000 | ||
| Non- filing of financial statements F.Y. 2019-20 | SEC. 137(1) | On Company | 1060 | 10000+ 100/Day | 10000 + 10 0*1060 = 116000 | 200000 | 116000 |
| Sh. Navin Pratap Singh | 1511 | 10000+ 100/Day | 10000 + 10 0*1060= 116000 | 50000 | 50000 | ||
| Non- filing of financial statements F.Y. 2020-21 | SEC. 137(1) | On Company | 726 | 10000+ 100/Day | 10000 + 10 0*726 =82600 | 200000 | 82600 |
| Sh. Navin Pratap Singh | 726 | 10000+ 100/Day | 10000 + 10 0*726 =82600 | 50000 | 50000 | ||
| Non- filing of financial statements F.Y. 2021-22 | SEC. 137(1) | On Company | 422 | 10000+ 100/Day | 10000 + 10 0*422 =52200 | 200000 | 52200 |
| Sh. Navin Pratap Singh | 422 | 10000+ 100/Day | 10000 + 10 0*422 =52200 | 50000 | 50000 |
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticees and penalty so imposed upon the Officers-in-default shall be paid from their personal sources/income.
It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.
6. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi 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].
7. Your attention is also invited to Section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013, which state that in case of non-payment of penalty amount, 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 and officer in default 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.
8. In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to: – (1.) M/s Prism Organic Greens Limited, H. No. 196-197, Roura Sector, Bilaspur, Himachal Pradesh,174001, India, (2.) Navin Pratap Singh S/o Sh. Nagendra Singh (3.) Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi and will also be uploaded on website.
(Kamna Sharma)
Registrar of Companies & Adjudicating Officer
Himachal Pradesh
Copy to: – The Regional Director (NR), Ministry of Corporate Affairs, New Delhi for information and record.
