Default in Filing of MGT-14 (Violation of Section 117(1): MCA imposes ₹4 Lakh Penalty

Introduction: The Ministry of Corporate Affairs has taken strict action against Social Growth Nidhi Limited for defaulting in filing MGT-14, leading to violations under the Companies Act. This article delves into the details of the case and the penalties imposed.

Detailed Analysis: Social Growth Nidhi Limited, incorporated under the Companies Act, 2013, failed to comply with the requirement of filing MGT-14 for the financial year 2017-2018. This default led to a violation of Section 117(1) of the Companies Act, attracting penalties as per Section 117(2). Despite receiving a notice from the authorities, neither the company nor its directors responded, aggravating the situation.

As per the provisions, the penalty for such defaults includes a base amount along with additional charges for each day of continued non-compliance. In this case, the penalty imposed on the company and its directors amounts to a substantial sum, reflecting the seriousness of the offense.

It’s noteworthy that being a Nidhi Company, Social Growth Nidhi Limited doesn’t fall under the definition of a small company, rendering it ineligible for lesser penalties under section 446B.

Conclusion: The order from the Ministry of Corporate Affairs underscores the importance of timely compliance with statutory requirements under the Companies Act. Social Growth Nidhi Limited and its directors are obligated to pay the penalties within the stipulated timeframe. Failure to do so may lead to further legal consequences. This case serves as a reminder for companies to adhere to regulatory norms to avoid financial liabilities and maintain corporate governance standards.

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Government of India
Ministry of Corporate Affairs
Office of the Registrar of Companies,
4th Floor, ‘A’ Wing, Maurya Lok Complex
Dakbunglow Road, Patna-800001
(0612)- 2216150/2950121

Order No. ROC/PAT/Inquiry/35898/ 01 Dated:01.04.2024

Order for penalty for violation of section 117 r. w. section 179(3)(g) of the Companies Act, 2013

SOCIAL GROWTH NIDHI LIMITED CIN: U67190BR2017PLC035898

Company:-

1. Whereas, Company M/ s. Social Growth Nidhi Limited, CIN: U67190BR2017PLC035898 (herein after known as Company) is a company incorporated on 03.10.2017 under the provisions of Companies Act, 2013 in the state of Bihar and having its registered office situated at Singhwara Post + P.S. Singhwara Darbhanga Bihar Keosh Samastipur, Bihar 847106, India as per MCA website.

Facts about the case:-

2. Whereas, during the course of inquiry it has been noticed that the company has defaulted in filing MGT-14 in respect of the resolutions under the provision of section 117 r. w. 179(3)(g) of the Companies Act, 2013 for the financial year 2017­2018 leading to violation of the provisions of section 117(1) r. w. section 179(3)(g) of the Companies Act, 2013.

3. This office has issued notice under section 117 r. w. section 179(3)(g) of the companies Act, 2013 to the company and its directors vide letter dated 22.02.2024, for which no reply has been received.

4. Hence, it appears that the provisions of Section 117(1) of the Companies Act, 2013 has been contravened by the company and its directors/ officers in default and therefore they are liable for penalty under section 117(2) of the Companies Act, 2013.

Section 117(2):- In any company fails to file the resolution or the agreement under sub- section (1) before the expiry of the period specified therein, such 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 after the first during which such failure continues, subject to a maximum of two lakh rupees and every officer of the company who is in default 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 after the first during which such failure continues, subject to a maximum of fifty thousand rupees.

5. It is seen that, the company being a Nidhi Company does not fall under the definition of small company as per provision of section 2(85) of the companies Act, 2013. Therefore the provision of imposing lesser penalty as per section 446B shall not be applicable in this case.

ORDER

6. Therefore, having considered the facts and circumstances of the case, and after taking into account the factors above, I hereby impose a penalty on Company, and its Directors as per table Below under section 117(2) of the Act for failure in compliance of section 117(1) r.w. 179(3)(g) of the Companies Act, 2013.

7. The noticee shall pay the amount of penalty individually for the company and its directors (out of own pocket) by way of e-payment (available on Ministry website mca.gov.in) under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 (ninety) days of this order. The Challan/ SRN generated after payment of penalty through online mode shall be forwarded to this office.

8. Appeal against this order may be filled in writing with the Regional Director (ER), Ministry of Corporate Affairs, Kolkata, within a period of 60 (sixty) days from the date of receipt of this order, in Form ADJ (available on Ministry website mca.gov.in) setting forth the grounds of appeal and shall be accompanied by a certified copy of this order {Section 454(5) and 454(6) of the Act read with Companies (Adjudication of Penalties) Rules, 2014.

9. Your attention is also invited to section 454(8) of the Act in the event of non­compliance of this order.

(Aparajit Barua)
Adjudicating Officer &
Registrar of Companies-Cum-
Official Liquidator, Patna.