The Ministry of Corporate Affairs (MCA), in a significant enforcement action, has levied a hefty penalty of Rs. 3.41 lakh against a director of Subhangini Industries Private Limited for non-compliance with the Director Identification Number (DIN) regulations under the Companies Act, 2013. This case underscores the critical importance of adhering to corporate governance norms and the consequences of their violation.
Background of the Case
On February 22, 2024, the Registrar of Companies, West Bengal, issued an adjudication order penalizing a director for not having a valid DIN at the time of their appointment. This decision comes under Section 454(3) of the Companies Act, 2013, read with the Companies (Adjudication of Penalties) Rules, 2014, and its 2019 amendment.
Subhangini Industries Private Limited, incorporated on June 11, 2020, faced scrutiny after an inquiry under Section 206(4) of the Act revealed a contravention of Section 152(3), concerning the appointment of directors without a DIN. The investigation uncovered that Mr. Sandeep Kumar was appointed as a director on October 5, 2021, using an incorrect DIN that belonged to another individual with the same name.
The Inquiry Findings
The inquiry highlighted discrepancies in the DIN details provided for Mr. Sandeep Kumar, leading to the conclusion that the DIN used for his appointment had been deactivated due to non-filing of DIR-3 KYC, among other inconsistencies. This misrepresentation came to light when Mr. Kumar, realizing the mistake, applied for and obtained a new DIN (10159546) on May 11, 2023.
Legal Framework and Violation
Under Section 152(3) of the Companies Act, 2013, no person shall be appointed as a director of a company without being allotted a DIN. This provision ensures that directors of companies are properly identified and accountable, enhancing the transparency and governance of corporate entities in India.
The case of Subhangini Industries highlights a breach of this critical requirement, as Mr. Kumar served as a director without a valid DIN for a period extending from his appointment date until the allotment of his new DIN. This oversight not only violated Section 152(3) but also attracted penalties under Section 159, which prescribes fines for non-compliance with the provisions related to DIN.
Adjudication and Penalty
The adjudicating officer, vested with the authority by the MCA, considered the violation’s seriousness and imposed a penalty of Rs. 3.41 lakh on Mr. Kumar. This penalty reflects the default’s extent, calculated from the date of his appointment as a director until the date of the new DIN allotment.
Implications for Corporate Governance
This case serves as a stark reminder of the critical importance of compliance with corporate governance norms in India. The enforcement of DIN regulations by the MCA emphasizes the need for accuracy and honesty in corporate disclosures. Directors and companies must ensure that all appointments and regulatory filings are in strict adherence to the Companies Act to avoid penalties and legal complications.
Compliance Takeaways
- Diligence in Director Appointments: Companies must meticulously verify the DINs of their directors at the time of appointment to ensure compliance with Section 152(3) of the Companies Act.
- Regular KYC Updates: Directors should regularly update their KYC details to prevent DIN deactivation, ensuring continuous compliance.
- Awareness and Education: Corporates should educate their boards about the legal requirements and implications related to DINs and other governance norms.
Conclusion
The MCA’s action against Subhangini Industries Private Limited and its director, Mr. Sandeep Kumar, underlines the government’s commitment to enforcing corporate governance standards in India. It is a clear message to the corporate world that non-compliance with legal obligations, especially those as fundamental as the possession of a valid DIN for directors, will not be taken lightly. Companies and their directors must prioritize compliance to foster transparency, accountability, and trust in India’s corporate ecosystem.
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GOVERNMENT OF INDIA
Ministry of Corporate Affairs
Office of the Registrar of Companies, West Bengal
“Nizam Palace”,
2nd M. S. 0. Building, 2nd Floor
234/4, Acharya J. C. Bose Road
Kolkata — 700 020
No : ROC/ADJ/327/237443/2023/12314-12319
Date: 22.02.2024
ADJUDICATION ORDER FOR PENALTY U/S 454(3) OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 AS AMENDED BY THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2019 IN MATTER OF NONCOMPLIANCE OF THE PROVISIONS OF SECTION 152(3) OF THE COMPANIES ACT, 2013
In respect of: SUBHANGINI INDUSTRIES PRIVATE LIMITED
CIN: U24230WB2020PTC237443
1. Appointment of Adjudicating Officer: –
Ministry of Corporate Affairs vide its Gazette Notification No A-42011/112/2014-Ad.II dated 24.03.2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act. 2013 [herein after known as Act] read with Companies (Adjudication of Penalties) Rules. 2014 for adjudicating penalties under the provisions of this Act.
2. Company:-
WHEREAS Company SUBHANGINI INDUSTRIES PRIVATE LIMITED [herein after known as Company] is a registered company with this office incorporated on 11.06.2020 under the provisions of Companies Act, 2013 having its registered address at 5/3/1 M M FEEDER ROAD ARIADAHA KOLKATA- 700057, Kolkata, KOLKATA, West Bengal, India, 700057, as per MCA website.
3. Facts about the Case:
1. On the basis of Inquiry carried out u/s 206(4) of the Companies Act, 2013 the following violation are pointed out in the inquiry report:
CONTRAVENTION OF SECTION 152(3) OF THE COMPANIES ACT. 2013
AND WHEREAS The company hos filed DIR-12 vide SRN 757788671 (copy enclosed marked as Annexure-IV) on 08.11.2021 and approved on 09.11.2021, in respect of appointment of Shri Sandeep Kumar, mentioned DIN as 06762192 for the post of Director from 05.10.2021. Further, on careful examination of DIN details of the director available on MCA B/O portal and E-form DIR-12, following facts against the said director has been derive which is presented in tabular formal in below:
|
Particulars |
DIN details of IAS, Sandeep Kumar (Delhi), available on MCA B/O portal |
DIN details of the director Sandeep Kumar, West Bengal available In the E-form DIR-12 |
| Name | Sandeep Kumar | Sandeep Kumar |
| Father’s name | Suraj prasad | Suraj prasad |
| Present residential address | 4 EAC, 16-A Rajpura Road Near MCD Office Civil Lines, Delhi, Delhi, India, PIN-110054 | 21, Gouri Pada Mukherjee Lane, Haora-1, Haora Corporation, Haora West Bengal, PIN-711101 |
| Email Id | Sandeep.kgupta@hotmail.com | Sandeep.kol@hotmail.com |
| Mobile No. | 9825678400 | 6289792913 |
| D.O.B | 12.09.1972 | 20.02.1993 |
| income Tax PAN | AFLPP1434R | EPEPK6612F |
| Occupation | – | Business |
| Educational Qualification |
M.TECH (ELE, ENGG), IAS | – |
–
| DIN Status | Deactivated due to non-filing of DIR-3 KYC | |
| Nationality | Indian | |
| Aadhaar No. | 549680835674 | 1487989363741 |
From above table, it is seen that there are differences in the data in respect of address. PAN. Email id and mobile no. of the director also DIN status of the company is shown as de-activated.
AND WHEREAS the notice under section 206(1) of Companies Act, 2013 was issued to the company on 27.04.2023 and reply received on 18.05.2023/17.05.2023. In the reply dated 18.05.2023/17.05.2023, Mr. Sandeep Kumar, residing in the state of West Bengal has submitted the following facts by way of an Affidavit, which is reproduced hereunder in brief:
a) At the time of appointment, he was not holding any DIN and inadvertently DIN 06762192 of Sandeep Kumar IAS officer was used for his appointment in the above stated companies.
b) He had applied in Form DIR-3 for obtaining DIN in his name and got the DIN 10159546 vide SRN AA2411309 dated 11.05.2023.
c) Inadvertently DIN-06762192 of Sandeep Kumar, IAS officer (New Delhi) was used by him.
NOW THEREFORE as per the provisions of Section 152(3) of the Companies Act, 2013 states that “No person shall be appointed as a director of a company unless he has been allotted the Director Identification Number under section 154″of the Companies Act, 2013.Here from above facts in respect of the said company , it is revealed that the said director in the company has obtained DIN-010159546 vide SRN AA2411309 dated 11.05.2023 but the appointed as a director w.e.f 05.10.2021 in the company.
Hence, he has violated the section 152(3) of the Companies Act, 2013.
Reply of the Company:
No adequate reply has been received from the company.
Section 152(3): (3) No person shall be appointed as a director of a company unless he has been allotted the Director Identification Number under section 154 7[or any other number as may be prescribed under section 153.
Section 159 of the Companies Act, 2013 inter alia provides that “If any individual or director of a company makes any default in complying with any of the provisions of section 152. section 155 and section 156, such individual or director of the company shall be liable to a penally which may extend to fifty thousand rupees and where the default is a continuing one, with a further penalty which may extend to five hundred rupees for each day after the first during which such default continues.”.
3. Accordingly, the adjudication officer has issued adjudication notice vide No. ROC/ADJ/327/237443/2023/9329327 dated 12.12.2023 (herein after referred as Adjudication Notice) under Section 454(4) read with Section 152(3) of the Companies Act. 2013 read with Rule 3(2) of Companies (Adjudication of Penalties), 2014 as amended in Amendment Rules, 2019, to any individual or director of a company in default for the violation of the provisions of the Act as mentioned in para “1 & 2” above giving an opportunity to submit a reply as to why the penalty should not be imposed under the provisions of Section 159 of the Act against any individual or director of a company in default for the above stated violations, followed by a hearing fixed on 10.01.2024 vide hearing notice No. ROC/ADJ/327/237443/2023/9810-9812 dated 29.12.2023 and further second hearing on 15.02.2024 vide hearing notice No. ROC/ADJ/327/237443/2023/11240-1 1242 dated 06.02.2024.
4. On 15th February 2024 (the second hearing date). neither the director nor their authorised representative, if any, appeared before the Adjudicating Officer for the hearing. Inspite of several opportunities, the noticee failed to appear or respond to the Notices issued. Hence the hearing was concluded ex parte, and the order is reserved.
ORDER
1. The concerned director Mr. Sandeep Kumar, who have defaulted the provisions of Section 152(3) of the Companies Act, 2013 shall be liable under Section 159 of the Companies Act, 2013.
2. In exercise of the powers conferred vide Companies (Amendment) Ordinance, 2019, the undersigned Is entrusted to adjudicate penalties under section 159 of the Companies Act, 2013. After taking into account the factors mentioned herein above, I do hereby impose the penalty of Total Rs. 3,41,000 (Rupees Three Lakhs Forty-One Thousand only) on its Director-in-default namely Mr. Sandeep Kumar having (DIN 10159546) pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, as per table below for violation of section 152(3) of the Act:
| Name of Defaulted Director | Amount of Default (in Rs.) | Total Maximum Penalty Imposed (in Rs.) |
| Mr. Sandeep Kumar (Director) (DIN 10159546) | 3,41,000 | 3,41,000 |
**the days of default are calculated from the date of appointment as the director I.e., 05.10.2021 till the date of allotment of new DIN i.e. 10.05.2023
3. The noticee shall pay the said amount of penalty individually for himself (out of own pocket) by way of e-payment [available on Ministry website mca.gov.in] under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 days of receipt of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this Office Address.
4. Appeal against this order may be filed in writing with the Regional Director (ER), Ministry of Corporate Affairs. Kolkata located at Nizam Palace, 2nd M. S. 0. Building, 3rd Floor, 234/4, A.J.C. Bose Road, Kolkata-700020, West Bengal within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website www.mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of the this order. [Section 454(5) & 454(6) of the Act read with the Companies (Adjudicating of Penalties) Rules, 2014].
5. Your attention is also invited to section 454(8)(i) & (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
6. 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 Mr. Sandeep Kumar (director) of SUBHANGINI INDUSTRIES PRIVATE LIMITED and the director in default mentioned herein above and also to Office of the Regional Director (Eastern Region) and Ministry of Corporate Affairs at New Delhi.
Date: 22nd February 2024.
A.K. Sethi, ICLS
Adjudicating Officer & Register Of Companies
West Bengal
