On May 24, 2024, the Registrar of Companies, Karnataka, issued a penalty order under Section 454 of the Companies Act, 2013, against Jai Shree Krishna Steel Works Pvt Ltd for failing to maintain required statutory registers as per Section 170 of the Act. Despite the company’s claim that its records were inaccessible due to the seizure of its premises by an Asset Reconstruction Company (ARC) under the SARFAESI Act, the company did not demonstrate any efforts to secure or relocate the necessary documents. The company, along with its directors, was penalized a total of Rs. 5 lakh: Rs. 3 lakh for the company and Rs. 1 lakh each for its directors. The penalty must be paid within 90 days, and any appeals must be filed within 60 days. Non-compliance with the order could lead to further legal actions under Section 454(8) of the Act.
Registrar of Companies, Karnataka
Kendriya Sadan, 2nd Floor, `E- Wing,
Koramangala, Bengaluru – 560 034
Phone : 080-25537449/25633105
E-mail ID: [email protected]
F No. ROC(B)/Adj. Order/454-170/JSK Steel Works/ Co.No.050503/2024 Date: 24.05.2024
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITES) RULES, 2014 FOR VIOLATION OF PROVISIONS OF SECTION 170 (AS AMENDED TIME TO TIME) FRAMED THEREIN BY JAI SHREE KRISHNA STEEL WORKS PRIVATE LIMITED.
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter referred to as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of Companies Act, 2013.
2. The company, Jai Shree Krishna Steel Works Private Limited (hereinafter referred to as Company) having CIN: U27107KA2009PTC050503 was incorporated on 28.07.2009 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is situated at 565-A, KIADB Industrial Area, Samudravalli, Hobli, Shanthigrama, Hassan, Karnataka 573201.
3. It is seen that an Inspection under section 206 of the Act, was conducted on the company. It was noticed during the course of inspection under section 206(5) of the Act, no such register found/maintained by the company. When the matter was taken up with the company, the company replied that the office and factory premises have been taken in possession by Asset Reconstruction Company under SARFAESI Act. The company has not produced the statutory registers/records which as stated by the company could have been possessed of the factory premises particulars which are kept in the registered office of the company at Hassan, which is under the possession of Phoenix ARC Pvt Ltd. Moreover, the records of the company are in no way concerned with the possession of the plant and machinery taken by the Asset Reconstruction Company. However, the company has not produced any evidence in the matter. Therefore, the company and its officers have violated the provisions of section 170 (1) of the Act and are liable for penal action under section 172 Act. Hence an adjudication notice was issued by the Registrar of Companies on 26.04.2023 for violation of the provisions of section 170(1) of the Act and directed the company to file an adjudication application. Thereafter, the company has filed its adjudication application on 10.11.2023.
4. As per the provisions of section 170(1) of the Act, every company shall keep at its registered office a register containing such particulars of its Directors and key managerial personnel as may be prescribed, which shall include the details of securities held by each of them in the company or its holding, subsidiary, subsidiary of company’s holding company or associate companies.
5. As per Rule 17 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, every company shall keep at its registered office a register of its directors and key managerial personnel containing such particulars of its directors and key managerial pesonnel as prescribed in Rule 17 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
6. As per the provisions of section 172 of the Act, if a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.
7. Pursuant to the adjudication application filed by the company, Notice of hearing was sent on 24.01.2024 and physical hearing was held on 06.02.2024. It was attended by Mr. Shrinath Bhat, practicing company secretary who appeared on behalf of the company and directors and made his submissions. As stated in the application, he informed that the company had maintained the register containing such particulars of its directors from the date of its incorporation. However office premises is now under the possession of ARC Phoenix ARC Pvt Ltd under the SARFAESI Act. Further states that South Indian Bank Limited has assigned the loan due from the company in favour of Phoenix ARC Pvt Ltd vide agreement dated 06.01.2017 and Phoenix ARC Pvt Ltd took possession of secured asset under section 13(4) of the SARFAESI Act vide resolution no. 100/2018-19 dated 06.01.2017. Therefore, due to the above reasons, unable to produce the required documents.
8. As seen from the financial statements of the company and the criteria prescribed, the company does not fall under the definition of a “small company” as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, imposing lesser penalty as per the provisions of section 446B of the Companies Act, 2013 shall not be applicable to the company.
9 As stated by the company, even though the office premises may have been taken over under SARFAESI , the company ought to have taken remedial measures to have alternate registered office premises to ensure compliance of section 170 and relevant provisions of the Act. The company also has not produced anything on record to show that they made efforts to secure copies of the registers from secured creditor/ DRT or any other court of law. In any case, the compliance requirements of Companies Act cannot be dispensed with only because SARFAESI proceedings commenced against the company.
10 Therefore, having considered the facts and circumstances of the case and the submissions made by the company / director / key managerial personnel through their authorised representative, in view of the above said violation of non-compliance of provisions of section 170 of the Companies Act, 2013, in exercise of the powers vested under section 454(3) of the Act, I do hereby impose penalty in the following manner on the company and all the officers in default during the period of offence committed:
| S. No. | Particulars | Penalty imposed (maximum penalty) |
| 1 | Company | Rs. 3,00,000 |
| 2 | Mahesh Askarandas, Director | Rs. 1,00,000 |
| 3 | Kunal Mahesh, Director | Rs. 1,00,000 |
11. The company and its directors / key managerial personnel are hereby directed to pay the penalty amount as tabulated above within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website mca.gov.in (Miscellaneous head) specifying the details of this Order and the noticee who is paying the penalty.
12. Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad 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 accompanies by a certified copy of this Order.
13. Your attention is also invited to section 454(8) of the Companies Act, 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under 454(8)(i) and (ii) of the Companies Act, 2013 against the company and directors / key managerial personnel without further notice in the matter.
14. The company is required to serve a copy of this Order on the director(s)/ officer(s)-in-default mentioned above in terms of provisions of section 20 of the Companies Act, 2013.
(Sanjay Sood)
Registrar of Companies, Karnataka
and Adjudicating Officer
