₹ 64 Lakh penalty for non certification of list of allottees attached with Form PAS-3

Introduction: The Office of the Registrar of Companies in Maharashtra, Pune, has issued an adjudication order imposing a substantial penalty of 64 lakhs on N.S.J.L. NIDHI LIMITED for a breach of the Companies Act 2013. The violation relates to the company’s failure to certify the list of allottees attached to Form PAS-3 during the allotment of securities. In this article, we will delve into the details of the case, the relevant provisions of the Companies Act, and the implications of this adjudication order on the company and its officers.

Detailed Analysis:

1. Appointment of Adjudicating Officer: The Ministry of Corporate Affairs appointed an Adjudicating Officer under Section 454(1) of the Companies Act, 2013, to adjudicate penalties under the provisions of the Act.

2. Company Background: N.S.J.L. NIDHI LIMITED is a company registered in Pune, Maharashtra, governed by the Companies Act, 2013.

3. Facts of the Case: The case originated from an inspection by the Ministry of Corporate Affairs, during which it was discovered that the company had failed to certify the list of allottees in Form PAS-3 as required by law. Several instances of non-certification were identified in the submitted forms.

4. Relevant Provisions of the Companies Act, 2013: The Companies Act, 2013 specifies that when a company makes allotments of securities, it must file a return of allotment in Form PAS-3. This form should include a certified list of allottees’ names, addresses, occupations, and the number of securities allotted to each allottee.

Non-compliance with these provisions can result in penalties.

5. Penalty Imposition: The Adjudicating Officer found that the company had violated the provisions of Section 39(4) of the Act by failing to certify the list of allottees in Form PAS-3. The company had relied solely on the certification of the form itself, neglecting to certify the attached list.

Accordingly, the Adjudicating Officer imposed penalties on the company and its officers in default.

1. • The penalty was calculated in accordance with Rule 3(12) of Companies (Adjudication Of Penalties) Rules, 2014, and the provisions of the Act.
   • The penalty had to be paid through the Ministry of Corporate Affairs portal.

6. Appeal Process: The order informed the company of the right to appeal the decision under section 454(5) of the Act. The appeal had to be filed within sixty days from the date of receiving the order. Failure to pay the penalty within the prescribed time could lead to further consequences.

7. Copy Sent to Concerned Parties: As per the rules, a copy of the order was sent to N.S.J.L. NIDHI LIMITED, all directors/officers in default, the Office of the Regional Director (Western Region), and the Ministry of Corporate Affairs in New Delhi.

Conclusion: The adjudication order imposing a 64-lakh penalty on N.S.J.L. NIDHI LIMITED serves as a reminder of the importance of strict compliance with the Companies Act, 2013. The failure to certify the list of allottees as required by law resulted in substantial penalties. Companies must diligently adhere to legal provisions and ensure all required certifications are in place to avoid such financial repercussions. The article concludes with a strong emphasis on the need for companies to follow statutory regulations to avoid penalties and potential legal consequences.

*****

OFFICE OF THE REGISTRAR OF COMPANIES
MAHARASHTRA, PUNE
MINISTRY” OF CORPORATE AFFAIRS
GOVERNMENT OF INDIA

ROC (P)/ADJ/order/39(4)/23-24/12/1586

Date: 11/10/2023

ADJUDICATION ORDER

*****

Adjudication Order of ‘penalties in the matter N.S.J.L. NIDHI LIMITED
(CIN: U • 7200MH2018PLC310658) under Section 39(4) r/w
Section454131 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) ).
• The provisions of Section 39(4) r.w Rule 12 of the companies (Prospectus and allotment of securities) Rules, 2011, as amended.
• Gazette Notification of Ministry of Corporate Affairs vide No. A­42011/ 112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015)

In respect of:

N.S.J.L. NIDHI LIMITED CIN: U67200MH2018PLC310658 having its registered offic as per MCA21 Registry at address SR NO-21 NEAR MSEB OFFICE, MA KAL RD ALANDI, TAL- KHED 412105, PUNE, Pune , Maharashtra, 412105, India.

1. Appointment f 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 for adjudging penalties under the provisions of this Act.

2. Company:

N.S.J.L. NIDHI LIMITED having CIN: U67200MH2018PLC310658 is a company governed by the provisions Act, and registered with this office having its office at SR NO-21 NEAR MSEB OFFICE, MARKAL RD ALANDI, TAL- KHED 41105, PUNE, Pune,Maharashtra,412105,India.

3. Facts about the Case:

a) Whereas an inspection of the company under section 206 of the Companies Act, 2013 was conducted by IOs of Ministry of Corporate Affairs;

b) During the course of the Inspection the IOs observed that, the company has filed the PAS-3 forms wherein the list of allottees is not certified by the signatory of the PAS-3 Forms. whenever a company having a share capital makes any allotment of securities, it shall file with the Registrar a return of allotment in Form PAS-3 and there shall be attached to the form PAS-3, a list of allottees stating their names, address, occupation and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the Form PAS-3 as being corm late and correct as per the records of tile company. However, as per M A records, the company has filed the following PAS-3 forms wherein th list of allottees is not certified by the signatory of the Form PAS-3:

The JO has commented on the reply submitted by the company that, The provisions of Section 39(4) r.w. Rule 12 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 as amended clearly state that there shall be attached to the form PAS-3, a list of allottees stating their names, address, occupation and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the Form PAS-3 as being complete and correct as per the records of the company. The Company is relying on the certification of the form whereas the requirement is of certifying the list attached in the form too. Hence, the reply of the company is not satisfactory. Thus, the company and its officers have violated the provisions of Section 39(4) r.w. Rule 12 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 as amended and thus liable for action u/ s 39(5) of the Act for each default.

c) The matter was also taken up with the company during the course of the said inspection for which the Company has replied that As per section 39(4) read with Rule 12 of the Companies (Prospectus and Allotment of Securities) Rules, 2014,there shall be attached to the form PAS- 3, a list of allottees ,stating their names’ address’ occupation, and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the form PAS-3 as being complete and correct as per records of the company’ As per the said provision the Form PAS-3 was already digitally signed by signatory Mr’ Rohit Hhainburdekar, where the said declaration from signatory that, the fist is complete’ correct and legible as er the records of the company’, was already mentioned. Therefore, before filing the form PAS-3 director has verified 86 signed digitally by giving consent for all the contents 86 attachments of the said form. Furth r after read of instructions kit provided with the said form, the mandatory requirement of certification of attachment is not Mentioned’ however attachment in the prescribed format mandatorily is mentioned.

d) As per the JO, The provisions of Section 39(4) r.w. Rule 12 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 as amended clearly state that there shall be attached to the form PAS-3, a list of allottees stating their names, address, occupation and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the Form PAS-3 as being complete and correct as per the records of the company. The Company is relying on the certification of the form whereas the requirement is of certifying the list attached in the from too. Hence, the reply of the company is not satisfactory.

e) Accordingly, the as per the directions of the competent authority, the adjudication officer has issued adjudication notice vide ROCP/ADJ FS/22-23/964 to 967 dated 12.07.2023 (herein after referred as Adjudication Notice) under Section 454(4) read with 39 (4) of the Companies act, 2013 read with Rule 3(2) Of Companies (Adjudication of Penalties), 2 14 to the company and its officers in default for the violation of the provisions of the act as mentioned in para a 86 d above;

f) A reply to the Adjudication notice has been received dated 20.07.2023 from the company stating that ” The company has diligently observed the applicable provisions of the Companies Act, 2013 and rules thereto with respect to further allotment of equity shares made by the company; The minutes of each meeting were duly circulated and were signed. We are enclosing to this reply, certified true copies of the extract of each meeting wherein the resolution for further allotment of equity shares along with the list of allottees were tabled and approved (Annexure: Certified True Copy of Meeting Extracts for Allotment and List of Allottees). While filing the return of allotment in E-form PAS-3, we had no other option but to attach PDF copy of the list of allottees converted from software generated excel file to, ensure the legibility and comprehensibility of the list of allottees. It is evident from the list of allottees that each allotment had approximately 150 allottees and we had made multiple attempts to submit signed copy with each PAS-3. However the legibili of the list was compromised due to compression and due to size consents, we were compelled to attach PDF copy of the list of allottees converted from software generated excel file. We wish to state with utm st sincerity that there was no malafide intention on part of the management for the aforementioned arrangement; Further, during the course of inspection, we have verified the list of allottees attached to E-form PAS-3 and verified the lists to be complete and correct as per the records of the company, a matter that is also highlighted in the show cause notice issued by your good office; In light of the above, it is prudent to note that the certified list of allottees could not be attached to corresponding E-forms PAS-3 due to size and legibility issues, although the list of allottees were complete and correct as per the records of the company.

4. Relevant provisions of the Companies Act, 2013:

Allotment of securities by company- No allotment of any securities of a company offered to the public for subscription shall be made unless the amount stated in the prospectus as the minimum amount has been subscribed and the sums payable on application for the amount so state have been paid to and received by the company by cheque or other instrument t.

(2) The amount payable on application on every security shall not be less than five per cent. of the nominal amount of the security or such there percentage or amount, as may be specified by the Securities and Exchange Board by making regulations in this behalf

(3) If the stated minimum amount has not been subscribed and the sum payable on application is not received within a period of thirty days from the date of issue of the prospectus, or such other period as may be specified by the Securities and Exchange Board, the amount received under sub-section (1) shall be returned within such time and manner as may be prescribed.

(4) Whenever a company having a share capital makes any allotment of securities, it shall file with the Registrar a return of allotment in such manner as may be prescribed.

(5) In case of any default under sub-section (3) or sub-section (4), the company and its officer who is in default shall be liable to a penalty, for each default, of one thousand rupees for each day during which such default continues or one lakh rupees, whichever is less.

5. ORDER:

a. The company and its officers, who have defaulted n the provisions of section 39(4) of the Act it was observed that the{ attached to the form PAS-3, a list of allottees stating their names, address, occupation and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the Form PAS-3 as being complete and correct as per the records of the company. The Company is relying on the certification of the form whereas the requirement is of certifying the list attached in the form too.

b. 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 mentioned herein above, 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 provision 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 39(4) of the Act for each default as referred in para 3.b is stated hereunder: –

c) I am of the opinion that the penalty so imposed is commensurate with the aforesaid failure committed by the notice(s).

d) 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.

e) 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.

f) 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.

g) 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 N.S.J.L. NIDHI LI ITED grid 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.

(Manger Jadhav, ICLS)
Adjudication Officer
Registrar of Companies
Maharashtra, Pune