On August 1, 2024, the Ministry of Corporate Affairs (MCA) issued an adjudication order imposing a penalty of ₹2.16 crore on Stanley Black & Decker India Private Limited. This penalty was levied due to the company’s non-compliance with Corporate Social Responsibility (CSR) provisions outlined under the Companies Act, 2013.
For the financial years 2020-21 and 2021-22, Stanley Black & Decker India was obligated to spend ₹1,20,04,439 and ₹1,27,83,102.26 respectively on CSR initiatives. However, due to the COVID-19 pandemic and related procedural delays, the company failed to meet these spending requirements within the stipulated time frames. The unspent CSR funds were retained in the company’s regular operational account rather than being transferred to a designated CSR account as mandated by law.
The MCA’s adjudication process began with the issuance of notices to the company. The company was given an opportunity to present its case. During the hearing, the company acknowledged the default and provided explanations for the delay. Despite the company’s explanations, the failure to adhere to CSR fund transfer requirements was deemed a serious compliance issue.
The penalty of ₹2.16 crore represents twice the unspent amount that should have been transferred to the CSR Fund, or ₹1 crore, whichever is less. This penalty is imposed on both the company and its officers, reflecting the severity of the non-compliance and the need to enforce CSR regulations strictly.
MINISTRY OF CORPORATE AFFAIRS
GOVERMENT OF INDIA
PCNTDA Green Building, BLOCK A 1st & 2nd Floor, Near Akurdi Railway Station, Akurdi Pune
Adjudication Order No. RoCP/ADJ/ order/4/135/ SBDIPL/24/1069 to 1074 Date: 1 AUG 2024
Adjudication Order of penalties in the matter of STANLEY BLACK & DECKER INDIA PRIVATE LIMITED HAVING CIN U28991PN1993PTC148186 under Section 454(3) r/w section 135 of the Companies Act, 2013.
Please Read:
- Companies (Adjudication Of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019 (G.S.R.131(E) ).
- Provisions of Section 135 of the Companies Act, 2013.
- Gazette Notification of Ministry of Corporate Affairs vide No. A-42011/112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015)
In respect of:
STANLEY BLACK & DECKER INDIA PRIVATE LIMITED having CIN U28991PN1993PTC148186 is a company governed by the provisions Act, and registered with this office having its office GAT No 135,136,137 and 157, Mahalunge, Chakan – Talegaon Road, Chakan, Pune, Pune, Maharashtra, 410501,India and its officers.
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.03.2015 (see SO 831(E), dated 24.03.2015) appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) r/w Rule 3(1) of Companies (Adjudication of Penalties) Rules, 2014 Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company:
STANLEY BLACK & DECKER INDIA PRIVATE LIMITED having CIN U28991PN1993PTC148186 (herein after referred as Company) is a registered company with this office under the provisions of section 7 of the Companies Act, 2013 having its registered office as per MCA21 Registry at address GAT No 135,136,137 and 157, Mahalunge, Chakan – Talegaon Road, Chakan, Pune, Pune, Maharashtra, 410501, India.
3. Facts about the Case:
a) As per Section to section as per the provisions of section 135 of Companies Act, 2013, (1) Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during [the immediately preceding financial year] shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more Directors, out of which at least one director shall be an independent director.
[Provided that where a company is not required to appoint an independent director under sub-section (4) of section 149, it shall have in its Corporate Social Responsibility Committee two or more Directors.]
(2) The Board’s report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.
(3) The Corporate Social Responsibility Committee shall,—
(a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company [in areas or subject, specified in Schedule
(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and
(c) monitor the Corporate Social Responsibility Policy of the company from time to time.
(4) The Board of every company referred to in sub-section (1) shall,—
(a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company’s website, if any, in such manner as may be prescribed; and
(b) ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company.
(5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years 71–or where the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years], in pursuance of its Corporate Social Responsibility Policy:
Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:
Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section. (3) of section 134, specify the reasons for not spending the amount 1–and, unless the unspent amount relates to any ongoing project referred to in sub-section (6), transfer such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year].
[Provided also that if the company spends an amount in excess of the requirements provided under this sub-section, such company may set off such excess amount against the requirement to spend under this sub-section for such number of succeeding financial years and in. such manner, as may be prescribed.]
[Explanation.—For the purposes of this section “net profit” shall not include such sums as may be prescribed, and shall be calculated in accordance with the provisions of section 198.]
[6) Any amount remaining unspent under sub-section (5), pursuant to any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in pursuance of its Corporate Social Responsibility Policy, shall be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year.
[(7) If a company is in default in complying with the provisions of subsection (5) or sub-section (6), the company shall be liable to a penalty of twice the amount required to be transferred by the company to the Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be, or one crore rupees, whichever is less, and every officer of the company who is in default shall be liable to a penalty of one-tenth of the amount required to be transferred by the company to such Fund specified in Schedule VII, or the Unspent Corporate Social Responsibility Account, as the case may be, or two lakh rupees, whichever is less.]
b) AND WHEREAS an application has been submitted by the Company vide GNL-1 vide SRN F90489451 dated 17.01.2024, stating that during the FY 2020-21 and 2021-22, the company was required to spend INR 1,20,04,439 and INR 1,27,83,102.26 towards its CSR obligation respectively, however spending could not be carried out due to various restrictions on account of the COVID-19 pandemic. Due to various reasons the accompany has delayed the opening of the Unspent Corporate Social Responsibility Bank Account and thus delay in the transfer of unspent funds to the said account. The following table represents the details of the delay of the transfer to the unspent account.
c) Accordingly, the adjudication officer has issued adjudication notice vide ROCP/ADJ/ 135/SBDIPL/24/2/ 114 to 118 dated 19.04.2024 (herein after referred as Adjudication Notice) under Section 454(4) read with 135 of the Companies Act, 2013 read with Rule 3(2) of Companies (Adjudication of Penalties), 2014 to the company and its officers in default for the violation of the provisions of the act as mentioned in para “a 86 b ” above;
d) A reply to the Adjudication notice has been received dated 08.05.2024 from the company. The relevant paras of reply stated that
“The provisions of Section 135 of the Companies Act, 2013 i.e., Corporate Social Responsibility are applicable to the Company by virtue of its net profit crossing the prescribed threshold for the financial years 2020-21 and 2021-22 as evidenced also in our application for Adjudication filed with your good office vide form GNL-1 bearing SRN F90489451 dated 17.01.2024,
During the FY 2020-21, the Company was required to spend 1NR 1,20,04,439 towards its CSR obligation. Although ongoing projects were identified by the Company, the spending could not be carried out due to various restrictions on account of the COVID-19 pandemic. The Unspent CSR amount (including that of previous financial years) was transferred to an Unspent Corporate Social Responsibility Bank Account and the Company will spend the amount on approved ongoing projects or a multi-year project as per the CSR Amendment Rules, 2021. During the FY 2021-22, the company was required to spend 1NR 1,47,83,102.26 towards its CSR obligation. The Company had transferred the unspent portion of CSR with respect to ongoing projects plus an excess to an Unspent Corporate Social Responsibility Bank Account and the Company will spend the amount on approved ongoing projects or a multi-year project as per the CSR Amendment Rules, 2021.
On-going projects were approved by the Board of Directors of the Company for FY 2020- 21 and 2021-22.
(vi) The Company had identified the ongoing projects and were keen on spending its CSR on these projects. However, as there were amounts that remained unspent as of the financial year ending 31′ March 2021 and 31″ March 2022 the Company was required to open a separate bank account and deposit the unspent in the said Unspent Corporate Social Responsibility Account.
Regrettably due to various reasons the Company has delayed the opening of the Unspent Corporate Social Responsibility Bank Account and thus a delay in the transfer of unspent funds to the said account. The following table represents the details of the delay of the transfer to the unspent account:
The nation was hit with the deadly second wave of COVID-19 during the FY 2020-21 as a result of which numerous restrictions were imposed by the Government of India, keeping in mind the safety of its people.
The Company is a Private Limited company and a Wholly Owned Subsidiary of a foreign entity. The Board of Directors of the Company comprises of professional directors on its Board and all major operational/ transactional/ business decisions are taken at a global level. In order to open any additional bank account, the Company has to get approvals from its head office, corporate treasury team, and tax team, who are all located around the globe. Due to such intricate internal procedural requirements, it has taken substantial time to obtain the necessary approvals to open the UNSPENT CSR Bank account and as sitch there Tias been a procedural delay in opening the said bank account in India thus unable to comply with the provisions of Section 135(6) the Companies Act, 2013 for FY 2020-21 and 2021-22. Moreover, the signatories to the banking accounts, the Company Directors, the members of the corporate treasury and tax team were and are all primarily working remotely from different parts of the world. Further, during the FY 202021, the bank employees where the Company had proposed to open the Unspent CSR account were also functioning remotely. All this significantly contributed to an inadvertent delay in opening the account.
The Unspent CSR funds however during such time were safely parked in the Company’s regular current account and there has been a delay only in pushing the amounts into the UNSPENT bank accounts.
The Applicant Company despite several challenges has continued to uphold its corporate values of the betterment of the society and has ensured that it undertook its CSR activities /programmes as per its CSR implementation schedules especially during COVID-19.
There has been, an unintentional lapse on the part of the Company and Directors/ KM P and officers in complying with provisions of subsection (6) of Section 135 of the Companies Act, 2013 read with the relevant rules made thereunder only in respect of the transfer of unspent amount of CSR but Company has not defaulted in respect of its spending on CSR, which it intends to carry out as per the timelines for the projects as listed in point (v) of the facts in this application.
There is no wilful default committed by the Company or its Directors/ KMP and a Suo-moto application for adjudication, after admitting its default has been filed with your good office as stated above.
The Company, the Directors/ KMP and officers further pray that since there was no wilful default and a Suo-moto application is being filed in the said matter, considering all the facts listed above, not to impose penalty or take action/ prosecution against the Company and the Directors/ KMP and its officers, as applicable, under Section 135 (7) of the Companies Act, 2013 and under these circumstances request that a 100% waiver on the penalty be granted to the Company and its Directors/ KMP and its officers.”
e) Accordingly, under section 454(4) of the Act read with Rule 3(5) of the Companies (Adjudication of Penalties) Rules, 2014, Noticec(s) were given an opportunity to be heard before Adjudicating Authority through hearing held on 17.05.2024.
f) The authorized representatives appeared before Adjudicating Authority on behalf of noticee(s) through physical hearing on 17.05.2024 and submitted the reasons for the default and admitted the offence submitted further reply.
g) Accordingly, after considering the reply and submission of the Company and its officers, it has been observed that that the company and officers have admitted default and they are in default of section 135 of Companies Act, 2013.
4. Relevant provisions of the Companies Act, 2013:
a) As per Section to section as per the provisions of section 135 of Companies Act, 2013, (1) Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during [the immediately preceding financial year] shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more Directors, out of which at least one director shall be an independent director.
[Provided that where a company is not required to appoint an independent director under sub-section (4) of section 149, it shall have in its Corporate Social Responsibility Committee two or more Directors.]
(2) The Board’s report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.
(3) The Corporate Social Responsibility Committee shall,—
(a) formulated and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company [in areas or subject, specified in Schedule VII];
(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and
(c) monitor the Corporate Social Responsibility Policy of the company from time to time.
(4) The Board of every company referred to in sub-section (1) shall,—
(a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company’s website, if any, in such manner as may be prescribed; and
(b) ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company.
(5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years 7[or where the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years], in pursuance of its Corporate Social Responsibility Policy:
Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:
Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount [and, unless the unspent amount relates to any ongoing project referred to in sub-section (6), transfer such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year].
[Provided also that if the company spends an amount in excess of the requirements provided under this sub-section, such company may set off such excess amount against the requirement to spend under this sub-section for such number of succeeding financial years and in such manner, as may be prescribed.]
[Explanation.—For the purposes of this section “net profit” shall not include such sums as may be prescribed, and shall be calculated in accordance with the provisions of section 198.]
[ 6) Any amount remaining unspent under sub-section (5), pursuant to any ongoing project, fulfilling such conditions as mail be prescribed, undertaken by a company in pursuance of its Corporate Social Responsibility Policy, shall be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial near in any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial –years from the date of such transfer, failing which, the company/ shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year.
[(7) If a company is in default in complying with the provisions of subsection (5) or sub-section (6), the company shall be liable to a penalty of twice the amount required to be transferred by the company to the Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be, or one crore rupees, whichever is less, and every officer of the company who is in default shall be liable to a penalty of one-tenth of the amount required to he transferred by the company to such Fund specified in Schedule VII, or the Unspent Corporate Social Responsibility Account, as the case may be, or two lakh rupees, whichever is less.]
5. ORDER:
a. Considering the above facts of the case and the relevant provisions; the undersigned now hereby pronounces the order. Further, the delay in issuance of the order is on account of examination of reply; checking MCA21 records; other administrative reasons.
b. The company and its officers, who have defaulted the provisions of section 135 (6) of the Act as the company has failed to transfer the amount remaining unspent under sub-section (5), pursuant to any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in pursuance of its Corporate Social Responsibility Policy, within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account. Hence, the Company has violated the section 135 (5) of the Companies Act,2013 and Company and its officers in default are liable for penalty u/s 135 (7) of the Companies Act, 2013.
c. In exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the facts and circumstances of the case, I do hereby impose the penalty on the company and its officers in default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, 2014 and the proviso of the said Rule and Rule 3(13) of Companies (Adjudication of Penalties) Rules, 2014 r/w General Circular No. 1/2020 dated 02.03.2020; as per table below for violation of section 135 (7) of the Act:-
For the Financial Year 2020-21 amount required to be transferred by the company is Rs. 1,20,04,439/,
| Penalty imposed on Company/Officer in default | Designation | Penalty as per section 135 (7) (For company- twice of the amount required to be transferred or Rs.1 cr whichever is less) (for every officer- one-tenth of the amount required to be transferred or Rs. 2 lakh whichever is less) | Total / maximum penalty imposed (In Rs) as per section 135 (7). |
| Stanley Black & ecker India Private Limited (Company) | Company | 2,40,08,878/- | 1,00,00,000/- |
| MILIND RAGHUNATH WALGAON KAR Director) |
Director | 12,00,443.9/- | 2,00,000 |
| SUNIL RISHNAMURTHY Director) | Director | 12,00,443.9/- | 2,00,000 |
| Radbesh Chandra Verma Director | Director | 12,00,443.9/- | 2,00,000 |
| Piyush Suresh Soliwal Company Secretary) | Company Secretary | 12,00,443.9/- | 2,00,000 |
For the Financial Year 2021-22 amount required to be transferred by the company is Rs.1,27,83,102.26/-.
| Penalty imposed on Company/Officer in default | Designation | section 135 (7) (For company- twice of the amount required to be transferred) (for every officer- one-tenth of the amount required to be transferred |
Total / maximum penalty imposed (In Rs) as per section 135 (7). |
| Stanley Black & ecker India Private Limited (Company) | Company | 2,55,66,204.52 /- | 1,00,00,000/- |
| MILIND RAGHUNATH WALGAON KAR Director) |
Director | 12,78,310.226/- | 2,00,000/- |
| SUNIL RISHNAMURTHY Director) | Director | 12,78,310.226/- | 2,00,000/- |
| Radbesh Chandra Verma Director | Director | 12,78,310.226/- | 2,00,000/- |
| Piyush Suresh Soliwal Company Secretary) | Company Secretary | 12,78,310.226/- | 2,00,000/- |
d. I am of the opinion that penalty so imposed is commensurate with the aforesaid failure committed by the notice(s).
e. The Noticee(s)/applicant(s) shall pay the penalty so imposed through Ministry of Corporate Affairs portal only as per rule 3(14) of Companies (Adjudication of Penalties) Rules, 2014.
f. Appeal against this order may be filed under section 454(5) of the Act, in writing with the Regional Director (Western Region), Ministry of Corporate Affairs100, Everest, 5th Floor, Netaji Subhash Road, Marine Drive, Mumbai-400002, 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 of the Act read with Companies (Adjudication of Penalties) Rules, 2014 as emended by Companies (Adjudication of Penalties) Amendment Rules, 2019.
g. Your attention is also invited to section 454(8)(ii) of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order in terms of the provisions of section 454(8)(i) of the Act.
h. 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 Stanley Black 86 Decker India Private Limited and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Western Region) and Ministry of Corporate Affairs at New Delhi.
(Mangesh Jadhav, ICLS)
Adjudicating Officer
Registrar of Companies
Maharashtra, Pune.
