Vishnupriya Hotels and Resorts Private Limited filed an appeal under Section 454(5) of the Companies Act, 2013, challenging the penalties imposed by the Registrar of Companies (ROC), Karnataka, for non-compliance with CSR provisions under Sections 135 and 134(3)(o). The violations included failure to adopt a CSR policy for FY 2020-21 to 2022-23, non-constitution of a CSR committee, non-utilization of CSR funds, and lack of disclosures in board reports. The company eventually transferred the unspent CSR funds to the Clean Ganga Fund on March 4, 2024.
After a hearing on December 11, 2024, before the Regional Director, the company admitted to the violations, citing oversight and challenges posed by the COVID-19 pandemic. The original penalty imposed by ROC included significant fines for both the company and its directors, Ajith Padival and Chitra Padival and same were Rs. 1,58,91,752 in total. Considering the facts presented, the Regional Director reduced the penalties, setting aside certain fines and lowering others. The, revised penalties totaled ₹32,72,000, which the company and directors paid on December 18, 2024.
With compliance confirmed, the appeal was disposed of, and the order was issued on January 8, 2025, to all relevant authorities, including the ROC, Karnataka, and the Ministry of Corporate Affairs.
F.No:9/24/ADJ/SEC.135 & 134 (3)(o) CA, of 2013/KARNATAKA/RD(SER)/2024
BEFORE THE REGIONAL DIRECTOR, SOUTH EAST REGION
MINISTRY OF CORPORATE AFFAIRS, HYDERABAD
IN THE MATTER OF COMPANIES ACT, 2013 /5632
IN THE MATTER OF VISHNUPRIYA HOTELS AND RESORTS PRIVATE LIMITED
1. M/s. Saddles International Automotive & Aviation Interiors Private Limited
2. Ajith Padival, Director
3. Chitra Padival, Director ………………………………………… Appellants
Date of hearing: 11.12.2024
Present: Mr. Navrang Saini, PCS,
Appellants
ORDER
This is an appeal filed under section 454(5) of the Companies Act, 2013(hereafter referred as Act) by the above appellants in e-form ADJ vide SRN F95965166 dated 05.06.2024 against the adjudication order passed by the Registrar of Companies, Karnataka in F No. ROC(B)/Adj.Ord.454-135 & 134 (3) (o)/Saddles International/Co.No.122245/2024/ dated 19.04.2024 under section 454 of the Act, for default in compliance with the requirements of Section 135 & 134 (3)(o) of the Companies Act, 2013.
2. The Registrar of Companies in his order of adjudication has stated that:
i. Failure to adopt CSR Policy, non – adoption of the CSR Policy for the financial year 2020-21, 2021-22 and 2022-23, Therefore the company has violated the provisions of section 135 and 134(3)(o) of the Act by not constituting the CSR Committee as prescribed and constituted the same only on 31.01.2024.
ii. Failure to spend the required CSR Obligation on specified CSR Activities and non-transfer of the unspent CSR amount to fund specified in Schedule VII of the Act within 6 months of closure of the financial year 2020-21, 2021-22 and 2022-23. The company ought to have spent Rs.35,64,089 for the FY 2020-21, Rs.19,30,521 for the FY 2021-22 and .2. Rs.1325646 for the FY 2022-23 towards CSR activities. Therefore, the company has violated the provisions of Section 135(5) of the Act. However, the company has transferred the unspent CSR amount on 04.03.2024 to Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga, as specified in Schedule VII of the Act.
iii. Non-reporting or failure to disclose the adequate reasons in the Board Report of the FY 2020-21, 2021-22 & 2022-23. Therefore, the company has violated the provisions of Section 134(3)(o) of the Act.
iv. It is seen from the application submitted by the company that during FY 2023-24, Samvardhana Motherson International Limited (formerly known as Motherson Sumi Systems Limited) acquired 51% stake in the subject company and the board was reconstituted on 13.07.2023.
3. The hearing was held before the Registrar of Companies on 22.03.2024 and after hearing the authorized representative had levied a penalty as below:
A. Penalty imposed under section 450 of the Act for violation of Section 135(1) of the Act.
| S.No. | Particular | Calculation of Penalty | Penalty Imposed (In Rs. |
||
| 2020-21 | 2021-22 | 2022-23 | |||
| 1 | Company | 2,00,000 (Max Penalty) | 2,00,000 (Max Penalty) | 2,00,000 (Max Penalty) | 6,00,000 |
| 2 | Ajith Padival, Director | 50,000 (Max
Penalty) |
50,000 (Max
Penalty) |
50,000 (Max Penalty) | 1,50,000 |
| 3 | Chitra Padival, Director | 50,000 (Max
Penalty) |
50,000 (Max
Penalty) |
50,000 (Max Penalty) | 1,50,000 |
B. Penalty imposed under section 135(7) of the Act for violation of Section 135(5) of the Act.
| S.No. | Particular | Calculation of Penalty | Penalty Imposed (In Rs. | ||
| 2020-21 | 2021-22 | 2022-23 | |||
| 1 | Company | 71,28,178
(35,64,089 x 2) |
38,61,042 (19,30,521 x 2) | 26,51,298 (13,25,649 x 2) | 1,36,40,518 |
| 2 | Ajith Padival, Director |
2,00,000 (Max Penalty) (35,64,089 / 10 = 3,56,409) | 1,93,052 (19,30,521/ 10) | 1,32,565 (13,25,649 / 10) | 5,25,617 |
| 3 | Chitra Padival, Director | 2,00,000 (Max Penalty) (35,64,089 / 10 = 3,56,409) | 1,93,052 (19,30,521 / 10) | 1,32,565 (13,25,649 / 10) | 5,25,617 |
C. Penalty imposed under section 134(8) of the Act for violation of Section 134(3)(o) of the Act.
| S.No. | Particular | Calculation of Penalty | Penalty
Imposed (In Rs. |
||
| 2020-21 | 2021-22 | 2022-23 | |||
| 1 | Company | 3,00,000 | 3,00,000 | 3,00,000 | 9,00,000 |
| 2 | Ajith Padival,
Director |
50,000 | 50,000 | 50,000 | 1,50,000 |
| 3 | Chitra Padival, Director | 50,000 | 50,000 | 50,000 | 1,50,000 |
4. Aggrieved by the adjudication order, the appellants, i.e. Company and 2 directors, Mr. Ajith Padival and Mrs. Chitra Padival have filed the above appeal. An opportunity of being heard was given to the Appellants on 11.12.2024.
5. The authorized representative Mr. Navrang Saini, Practicing Company Secretary appeared for hearing on 11.12.2024 on behalf of the company 2 directors, Mr. Ajith Padival and Mrs. Chitra Padival and reiterated the submissions made in the appeal and also stated that
a) The company incorporated under the provisions of the Act, on March 11, 2019. Further, it is submitted that as per Section 135(5) of the Act the company was required to spend, in every financial year, at least two percent of the average net profits of the company made during three immediately preceding financial years 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 CSR Policy. However, inadvertently and/ or due to oversight, Appellant Company has not spent aforesaid amount aggregating to INR 68,20,259 (Indian Rupees Sixty-Eight Lakhs Twenty Thousand Two Hundred and Fifty Nine Only) for the financial years 202021, 2021-22 and 2022-23 on CSR activities and has further not transferred the same to the fund specified in Schedule VII of the Act within 6 months of expiry of relevant financial year. The following non-compliances have been admitted by the Appellant Company:
(i) Failure to adopt the CSR Policy.
(ii) Failure to spend the required CSR obligation on specified CSR activities.
(iii) Non transfer of the unspent CSR amount to fund specified in Schedule VII of the Act within 6 months of closure of the relevant Financial Year.
(iv) Non reporting or failure to disclose the adequate reasons in the Board Report.
b) During the Financial Year 2023-24, samvardhana Motherson International Limited (formerly Motherson Sumi Systems Limited) acquired 51% stake of the Appellant Company and the board of the company was reconstituted on July 13, 2023. The old board of the company consists of Mr. Ajith Padival and Mrs. Chitra Padival. However, it is submitted that the Board of the Appellant Company in its meeting held on January 31, 2024, have approved the following items:
(i) Adoption of CSR Policy;
(ii) Transfer of the unspent CSR amount in Clean Ganga Fund Set-up by the Central Government for rejuvenation of river Gana.
c) The company transferred the unspent CSR amount on 04th March 2024 to Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga, as specified in Schedule VII of the Act. Further the CSR Policy was also adopted in the meeting held on January 31, 2024
d) Further submitted by all appellants that delay in compliance happened due to inadvertent and / or oversight of provisions of Section 135 of the Act and the said delay in compliance is neither intentional nor wanton and further was never intended to prejudice the interests of the members or creditors or other dealing with the company.
e) The application is being filed bona fide and in the interest of justice and due to unprecedented challenges posed by the Covid-19 pandemic and the subsequent nationwide lockdown.
6. In view of the above, taking into consideration the facts of the appeal and the submissions made by the authorized representative the then Regional Director had to meet the end of justice reduced the penalty imposed by the Registrar of Companies is reduced as below:
| S. No. | Particular | Penalty imposed for violation of Section 135(1) of the Act [in Rs.) |
Penalty imposed for violation of Section 135(7) of the Act (in Rs.) |
Penalty imposed for violation of Section134 (3)(o) of the Act (in Rs.) |
Total (in Rs.) |
| 1 | Company | Set-aside | 28,00,000 | 2,00,000 | 30,00,000 |
| 2 | Mr. Ajith Padival, Director |
Set-aside | 1,06,000 | 30,000 | 1,36,000 |
| 3 | Mrs. Chitra Padival, Director |
Set-aside | 1,06,000 | 30,000 | 1,36,000 |
| Total | 32,72,000 | ||||
7. Accordingly, the appellants have paid the penalty as under
| S.No | Name of the Appellants | Date of Payment | SRN details | Penalty Paid |
| 1 | Company | 18/12/2024 | X89417901 | 30,00,000 |
| 2 | Mr. Ajith Padival, Director | 18/12/2024 | X89415905 | 1,36,000 |
| 3 | Mrs. Chitra Padival, Director | 18/12/2024 | X89416697 | 1,36,000 |
| Total | 32,72,000 | |||
8. In view of the compliance reported, the appeal is accordingly disposed off, and this order is issued to the Appellants with a copy to the Registrar of Companies, Karnataka and Joint Secretary, E-Governance Cell, Ministry of Corporate Affairs, New Delhi for information and necessary action.
Issued under my hand and seal on this 08th day of January 2025.
(RICHA KUKREJA)
Regional Director, SER
Ministry of Corporate Affairs, Hyderabad
