An appeal was filed by CA Sanjay Kumar Khetan, representing Supreme Gridtech Pvt. Ltd., against a penalty imposed by the Registrar of Companies (ROC), West Bengal, for non-compliance with Section 143 of the Companies Act, 2013. The penalty, originally set at ₹70,000, was related to the auditor’s failure to comply with provisions concerning financial statements for the years 2017-2020. During the appeal, the authorized representative presented financial documents claiming that the company met the criteria of a “Small Company” under Section 2(85) of the Companies Act, which affects the penalty provisions under Section 446B. After reviewing the submission and applying the relevant laws, the appellate authority reduced the penalty to ₹35,000. The revised penalty must be paid by the auditor within 90 days, failing which further action will be taken as per Section 454(8)(i) and (ii) of the Companies Act, 2013. The appeal was concluded on 11th November 2024.
BEFORE THE REGIONAL DIRECTOR, EASTERN REGION
MINISTRY OF CORPORATE AFFAIRS, KOLKATA.
Application No. RD/ER/454/48/2024/Appeal/6803 -65 Date: 11 Nov 2024
IN THE MATTER OF
THE COMPANIES ACT, 2013
-AND-
IN THE MATTER OF
CA SANJAY KUMAR KHETAN (M. NO: ____)
M/S S N KHETAN & ASSOCIATES
For the Company: SUPREME GRIDTECH PRIVATE LIMITED
(CIN: U29248WB2007PTC117160)
-AND-
IN THE MATTER OF
Application under section 454 of The Companies Act, 2013 for preferring an appeal against the penalty order dated 31 / 10/ 2023 of Registrar of Companies, West Bengal passed for violating the provisions of section 143 of the Companies Act, 2013.
-AND-
IN THE MATTER OF
CA SANJAY KUMAR KHETAN (M. NO: _____)
MIS S N KHETAN & ASSOCIATES
59-B, CHOWRINGHEE ROAD, 4TH FLOOR
KOLKATA- 700020, WEST BENGAL, INDIA
……………….. APPELLANTS
In the matter of : Sanjay Kumar Khetan, CA
3. Considering the above facts and circumstances of the case, the Adjudicating Authority had imposed Penalty for violation of section 143 of the Act as per table below:
| Name of the Applicant Company/ Director | Contravention of Section and AS |
No. of years | Default (in Rs.) | Total maximum Penalty (in Rs.) |
| CA S K KHETAN (M. NO: 058510) | (i) Sec 143 r/w sec 129 | 2017-18 2018-19 2019-20 | 10,000*3 years | 30,000/- |
| (ii) Sec 143 r/w sec 129 | 2017-18 | 10,000*1 years |
10,000/- | |
| (iii) Sec 143 r/w sec 129 and AS-18 | 2017-18 2018-19 2019-20 | 10,000*3 years | 30,000/- |
4. Having considered the facts and circumstances of the case and after taking into account the factors above, ROC, West Bengal imposed a penalty of Rs. 70,000/- (Rupee Seventy thousand Only) on the concerned Auditor in default for failure to make compliance of the Act u/s. 143 of the Act.
5. The appeal was heard on 18/09/2024 Authorised Representative was asked to make submission regarding any infirmity in the order of Registrar of Companies. The Authorised Representative had submitted the Certified true copy of the Financial Statements and Profit & Loss Account for 2017-18, 2018-19 & 2019-20 for claiming the Company as a “Small Company”.
As per the new amendment, definition of a small company provided under section 2(85) of the Companies Act, 2013 states that The Act defines a small company as a company that is not a public company and has: paid up share capital equal to or below Rs 4 crore or such higher amount specified not exceeding more ten Rs 10 crores. A turnover equal to or bellow Rs 40 crore or such a higher amount specified not exceeding more than Rs 100 crore. ” Based on the submissions made by the Authorised Representative and Balance Sheet and Annual Return filed in the MCA Portal for the F.Y 2017-18, 2018-19 84 201920, the Appellate Authority is of view that the Company is falls under the definition of a Small Company u/s 2(85) of the Companies Act, 2013 and as per section 446B of Companies Act 2013 which states that “Notwithstanding anything contained in this Act, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be” . Thus the Auditor of the Company is liable for penalty u/s 446B of the Companies Act, 2013 for violation of section 143 of the Companies Act, 2013 Hence, the order of ROC is modified as cogent ground was made out by Authorised Representative. The undersigned by virtue of the power vested in Regional Director under section 454(7) of the Companies Act, 2013 read with the Companies (Adjudication of Penalties) rules, 2014 modifies the order of the Registrar of Companies, West Bengal dated 31/10/2023 as under:
| Name of the Applicant Company/ Director | Contravention of Section and AS |
No. of years | Default (in Rs.) | Total maximum Penalty (in Rs.) |
Penalty imposed by the Appellate Authority u/s 446B of the |
| CA S K KHETAN (M. NO: 058510) | (i) Sec 143 r/w sec 129 | 2017-18 2018- 19 2019- 20 | 10,000*3 years | 30,000/- | Companies Act, 2013 15,000/- |
| (ii) Sec 143 r/w sec 129 | 2017- 18 | 10,000*1y ears | 10,000/- | 5000/- | |
| (Hi) Sec 143 r/w sec 129 and AS-18 | 2017-18 2018- 19 2019- 20 | 10,000*3 years | 30,000/- | 15,000/- |
6. Having considered the facts and circumstances of the case and after taking into account the factors above, the appellate authority imposed a penalty of Rs. 35000/- (Rupee Thirty five thousands Only) on the concerned Auditor for failure to make compliance of the Act u/s. 143 of the Act.
7. The Auditor of the company shall pay the amount of penalty from out of his own pocket. The amount of penalty shall be paid within a period of 90 days from the date of receipt of the copy of the order.
8. Further, if the Auditor fails to deposit the penalty amount within the prescribed time limit action under section 454(8)(i) and (ii) of the Companies Act, 2013 shall be initiated against the Auditor.
9. Hence the instant Appeal stands disposed of accordingly.
(P. Sridhar)
REGIONAL DIRECTOR (ER)
Signed this the 11th day of November, 2024.
