Non-Filing of DIR-3 KYC- Violation of Rule 12A – MCA levied ₹1 Lakh Penalty

On July 26, 2024, the Registrar of Companies, Uttar Pradesh, issued an order penalizing Dethat Trading Private Limited for violating Rule 12A of the Companies (Appointment and Qualification of Directors) Rules 2014. This order highlights the importance of compliance with statutory requirements, specifically the submission of DIR-3 KYC, and the consequences of non-compliance under the Companies Act, 2013.

Background and Legal Framework

The Ministry of Corporate Affairs (MCA) has stringent requirements to ensure transparency and accountability in corporate governance. One such requirement is the submission of DIR-3 KYC by all directors, as mandated by Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014. The rule states that every individual with a Director Identification Number (DIN) as of March 31st of a financial year must submit e-form DIR-3 KYC by April 30th of the following financial year.

Violation by Dethat Trading Private Limited

Dethat Trading Private Limited, incorporated on April 23, 2019, with its registered office in Noida, Uttar Pradesh, failed to comply with this requirement. During an inquiry, it was found that the KYC status of both directors, Mr. Gu Yang (DIN: 8431109) and Mr. Liang Daoping (DIN: 8431108), was deactivated due to non-filing of DIR-3 KYC. Despite receiving a show-cause notice (No. 07/03/Adj/2024/Dethat Trading/7455 to 7457 dated March 4, 2024), the directors did not respond or rectify the non-compliance.

Penal Provisions and Order

Under Section 450 of the Companies Act, 2013, any company or officer in default is liable for a residual penalty when no specific penalty is provided for an offense. The penalty is ₹10,000, and in case of a continuing contravention, an additional ₹1,000 per day, subject to a maximum of ₹200,000 for the company and ₹50,000 for each officer in default.

In this case, the default period started from September 30, 2019. Given the continued non-compliance, the adjudicating officer, Ms. Seema Rath, imposed the maximum penalty of ₹50,000 each on Mr. Gu Yang and Mr. Liang Daoping, totaling ₹100,000.

Compliance and Appeal

The penalty must be paid by Demand Draft in favor of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi,” within 90 days of the order receipt. An appeal can be filed with the Regional Director (Northern Region), Ministry of Corporate Affairs, within 60 days from the date of receipt of this order, accompanied by a certified copy of the order.

Conclusion

The order against Dethat Trading Private Limited serves as a stern reminder to all companies and their directors about the importance of adhering to compliance requirements under the Companies Act, 2013. Non-compliance not only attracts financial penalties but also tarnishes the credibility and operational integrity of the company. It is imperative for companies to ensure timely filing of statutory documents to avoid such punitive actions.

*****

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF
COMPANIES, Uttar Pradesh
37/17, Westcott Building, The Mall,
Kanpur — 208001 (U.P.)
Phone : 0512 — 2310443/2310227

ORDER FOR VIOLATION OF RULE 12(A) OF THE COMPANIES (APPOINTMENT AND QUALIFICATION OF DIRECTORS) RULES 2014 AND READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES 2014 & COMPANIES (AMENDMENT) ACT, 2020

IN THE MATTER OF DETHAT TRADING PRIVATE LIMITED.

1. The Ministry of Corporate Affairs vide its Gazette notification no A-42011/112/2014-Ad.11 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 DETHAT TRADING PRIVATE LIM ITED(CIN-U93090UP2019PTC116158) has been registered under the provisions of the Companies Act, on 23.04.2019, and is having its registered office situated at F-15 ,Site 4 kasna, Greater Noida shopping plaza, Noida, Gautam Buddha Nagar, Uttar Pradesh,201310,India. The authorized capital of the Company is Rs. 1,000,000.00/-

3. During Inquiry it was observed that the KYC status of both the directors of the Company, namely, Mr. Gu Yang (DIN: 8431109) and Mr. Liang Daoping (DIN: 8431108) is deactivated due to non-filing of DIR-3 KYC and the director has not resigned till date.

Therefore, it is non-compliance of Rule 12A of Companies (Appointment and Qualification of Directors) Rules 2014 punishable under Section 450 of the Companies Act, 2013.

4. Provisions of the Act:-

Rule 12(A) of the Companies (Appointment and Qualification of Directors) Rules 2014 reads as under: –

“Every individual who has been allotted a Director Identification Number (DIN) as on 31st March of a financial year as per these rules shall, submit e-form DIR-3-KYC to the Central Government on or before 30th April of immediate next financial year.”

Section 450 of the Act reads as under:-

“Residual punishment to company and every officer of the company who is in default or such other person when no specific penalty or punishment provided.

Penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.”

5. This office has issued show cause notice No. 07/03/Adj/2024/Dethat Trading/7455 to 7457 dated 04.03.2024 was issued to its officer in default under Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014. The officer in default has not furnished any reply to the said Show Cause Notice,.

6. Further, neither the defaulting director nor any representative of the director has either furnished his reply or filed the said documents which has further strengthened the apprehension that the Director of the company has failed to comply with the provisions of Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014, thereby attracting the penal provisions mentioned under Section 450 of the Act.

7. The date of default in the matter has been taken as 09.2019, i.e. when the DIR-3KYC was to be filed.

8. Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose a penalty as mentioned in the table on the defaulting Directors under section 450 of the Companies Act, 2013 for failure to make compliance of Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014. It is of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee.

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, ithin 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. Your attention is also invited to section 454(8) of the Companies Act, 2013, in the event of non-compliance of this order. In Case appeal is made 0/o Registrar of Companies, U.P. may be informed alongwith the penalty imposed & the payments made.

(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur.

No.07/03/Adj/2024/Dethat Trading/2786 to 2789

Dated 26.07.2024