Penalty Imposed on Subway Finance & Investment Co Ltd. for Annual Return Non-Compliance
The Government of India, Ministry of Corporate Affairs, has taken stringent action against Subway Finance and Investment Co Ltd for violations of Section 92 of the Companies Act, 2013. This regulatory action underscores the importance of adhering to statutory obligations and maintaining transparency in corporate governance.
Subway Finance and Investment Co Ltd failed to file its annual return within the prescribed timeframe, as mandated by Section 92 of the Companies Act, 2013. The company was required to submit the annual return within sixty days from the date of the annual general meeting, yet it neglected to do so for the fiscal year ending on March 31, 2019.
Upon examination, it was revealed that Subway Finance and Investment Co Ltd delayed the filing of its annual return for 331 days. Instead of meeting the deadline of November 29, 2019, the company failed to file its annual return for the fiscal year 2018-19.
In response to the company’s non-compliance, the Ministry of Corporate Affairs issued a show cause notice to Subway Finance and Investment Co Ltd and its officer in default on October 26, 2020, under Section 454 of the Companies Act, 2013.
Despite the issuance of the show cause notice, neither the company nor its officer in default responded to the allegations, thereby failing to provide any explanation or defense.
Given the absence of a response and the established violation based on the MCA 21 database, the adjudicating officer, in accordance with Section 454 of the Companies Act, 2013, imposed penalties on the company and its officer in default.
The penalty was levied on Mayur Kantilal Shah, who served as the Chief Financial Officer (KMP) during the period of violation. Mr. Shah was fined Rs. 83,100 for his role in the non-compliance, with the total penalty payable by the company amounting to Rs. 83,100.
The penalty was deemed commensurate with the gravity of the offense and the duration of the violation, considering the legal complexities involved in the matter.
Subway Finance and Investment Co Ltd and its officer in default are directed to remit the penalty amount through the Ministry of Corporate Affairs portal within 90 days of receiving the order. Failure to comply may result in further punitive action, including fines and potential prosecution under the Companies Act, 2013.
The order also provides avenues for appeal against the imposed penalties, allowing the concerned parties to present their case before the Regional Director, Ministry of Corporate Affairs, within sixty days from the date of receipt of the order.
This regulatory action underscores the government’s commitment to upholding corporate governance standards and ensuring compliance with statutory requirements. It serves as a reminder to companies and their officers of the importance of fulfilling regulatory obligations in a timely and responsible manner to maintain the integrity of the corporate governance framework.
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GOVERNMENT OF INDIA
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)/SFICL/ADJ-ORDER/6126 to 6128
Date: 20 DEC 2023
Order for Penalty under Section 454 for violation of Section 92 of the Companies Act, 2013.
IN THE MATTER OF SUBWAY FINANCE AND INVESTEMENT CO LTD
(L65990MH1983PLCO29350).
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 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.
Company: –
2. The Company SUBWAY FINANCE AND INVESTEMENT CO LTD bearing CIN: L65990MH1983PLCO29350 (herein after known as ‘Company’) is a registered company with this office under the provisions of the Companies Act, 1956 having its registered office as per MCA master data at address EASTERN COURT, B 101, 1st FLOOR, JUNCTION OF TEJPAL & PARLESHWAR ROAD, VILE PARLE, Mumbai City, MUMBAI, Maharashtra, India, 400057.
Relevant Provisions of the Companies Act, 2013
3. Section 92= Annual return. — (1) Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as- they stood on the close of the financial year regarding —
(a) its registered office, principal business activities, particulars of its holding, subsidiary and associate companies;
(b) its shares, debentures and other securities and shareholding pattern;
(c) its indebtedness;
(d) its members and debenture-holders along with changes therein since the close of the previous financial year;
(e) its promoters, directors, key managerial personnel along with changes there in since the close of the previous financial year;
(f) meetings of members or a class there of Board and its various committees along with attendance details;
(g) remuneration of directors and key managerial personnel;
(h) penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment;
(i) matters relating to certification of compliances, disclosures as may be prescribed;
(j) details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors indicating their names, addresses, countries of incorporation, registration and percentage of shareholding held by them; and
(k) such other matters as may be prescribed,
and signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice:
Provided that in relation to One Person Company and small company, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.
(2) The annual return, filed by a listed company or, by a company having such paid-up capital or turnover as may be prescribed shall be certified by a company secretary in practice in the prescribed form, stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act.
(3) An extract of the annual return in such form as may be prescribed shall form part of the Board’s report.
(4) Every company shall file with the Registrar a copy of the annual return, within sixty days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within sixty days from the date on which the annual general meeting should have been held together with the statement specifying the reasons for not holding the annual general meeting, with such fees or additional fees as may be prescribed, within the time as specified, under section 403 .
(5) If any company fails to file its annual return under sub-section (4), before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of fifty 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 five latch rupees.
(6) If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
Facts about the case: –
4. In terms of provisions of Section 92 of the Companies Act, 2013, the Company was required to file the Annual Return within sixty days from the date of Annual General Meeting held in pursuance of Section 96 of the Companies Act, 2013.
5. It was observed as per the MCA21 database, that the Company has defaulted in filing its Annual Return for the Financial Year 2018-2019. The company is in noncompliance of provisions of Section 92 of the Companies Act, 2013 for non-filing of Annual Return for the financial year ended 31.03.2019 with a delay of 331 days. The due date of filing was 29.11.2019, however, the Company failed to file its Annual Return for the Financial Year 2018-19.
6. This office had issued a Show Cause Notice to the Company and its Officers in default on 26.10.2020 under Section 454 of the Companies Act, 2013 for adjudication of offence under Section 92(5) of the Companies Act, 2013.
Reply of the Company: –
7. No reply has been received by this office from the Company and its Officers in default till date.
FINDINGS: –
8. As observed from the MCA21 database, the Company has failed in filing Annual Return within the time prescribed by the provisions of Section 92 of the Companies Act, 2013.
9. It is also observed that no reply has been received from the Company and its Officers in Default to the Show Cause Notice till date.
10. As per Section 454 of the Companies Act, 2013 read with Rule 3(11) of Companies (Adjudication of Penalties) Rules, 2014, if the Company and Officers in default fail to reply or neglect or refuse to appear as required, the adjudicating officer may pass an order imposing the penalty in the absence of such person after recording the reasons for doing so.
11. As no reply has been received till date and the violation of the said provision has been established from the MCA21 database, the following Order is being passed.
12. Further, as per the provisions of Section 2(60) Read with Section 2(51) of the Companies Act, 2013 KMPs are being considered as Officers in Default. Hence, penalty is being levied on Mr. Ishan Rahul Shah (Managing Director) and not on the other noticees viz Mr. Sandeep Padmakant Parikh (Director), Mr Dilip Madhu bhai Keralia (Director), Ms. Janki Nehal Shah (Director). Ms. Bhavana Suketu Shah (Director) and Ms. Sangita Kalpesh Shah (Director).
ORDER
13. In exercise of the powers conferred on me vide Notification dated 24.03.2015 and having considered the facts and circumstances of the case and after taking into account the factors mentioned in the relevant Rules, I am of the opinion that penalty shall be imposed for the default related to non-compliance of section 92 of the Act. The delay, if any, in passing of the order is due to the legal complexities involved in the matter.
14. Having considered the facts and circumstances of the case and after taking into consideration the above-stated factors, I hereby impose a penalty of Rs. 83,100/-(Rupees Eighty-Three thousand and One Hundred only) on the Company and its Officer in default, each, as per table given below for violation of provisions of Section 92 of the Companies Act, 2013.
|
No. of |
Penalty imposed on Company/ KMP | First default Penalty in (Rs.) | Default continues Penalty in (Rs.) | Total Penalty Levied in (Rs.) | Maximum Penalty in (Rs.) |
|
331
|
A. Company SUBWAY FINANCE AND INVESTMENT CO LTD
[CIN: L65990MH1983PLCO29350] |
50,000/- | 331 x 100 = 33,100/-
|
50,000 + 33,100 = 83,100/-
|
5,00,000
|
| B. Directors /KMP MAYUR KANTILAL SHAH CFO (KMP) | 50,000/- | 331 x 100 = 33,100/-
|
50,000 + 33,100 = 83,100/- | 5,00,000 | |
| TOTAL | 1,66,200/- | 10,00,000 | |||
TOTAL PENALTY PAYABLE: – Rs. 1,66,200/-
(•) The period of violation of provisions under Section 92 of the Companies Act, 2013 is from 30.11.2019 till 25.10.2020. As per signatory details available on MCA21 portal, the abovementioned individual was the Officer in default during the period of violation.
(•) Due date of filing was 29.11.2019 and Annual Return has not been filed till the dispatch of the Show Cause Notice being 26.10.2020. Default period is thus calculated to be at a total of 331 days till 25.10.2020.
15. I am of this opinion that, the penalty is commensurate with the aforesaid failure committed by the Noticee/s.
16. The Noticee/ s 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.
17. Please note that as per Section 454(8)(i) of the Companies Act, 2013, where the Company does not pay the penalty imposed by the Adjudicating Officer or the Regional Director within a period of 90 days from the date of 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.
18. Where an Officer of a Company, who is in default, does not pay the penalty within a period of 90 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.
19. 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.
20. Further, the company and its officers are hereby direct that the penalty amount shall be remitted from their own sources through MCA21 portal within 60 days from the date of receipt of order. The company needs to file INC-28 as per the provisions of the Act, attaching the copy of the adjudication order along with payment challans.
21. As per Section 454 of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, appeal, if any, against this order may be filed in writing with the Regional Director, Western Regional, Ministry of Corporate Affairs, 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 the certified copy of this order.
22. 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 the Company and Noticee/s and also to Office of the Regional Director, Western Region, Ministry of Corporate Affairs.
(B MISHRA)
Adjudication officer and Registrar of Companies,
Maharashtra, Mumbai.
