Introduction: The Ministry of Corporate Affairs (MCA) has recently taken stringent action against HOLITECH INDIA PRIVATE LIMITED for non-compliance with Section 134(3)(f) of the Companies Act, 2013. In an order dated 13/11/2023, the Registrar of Companies, Uttar Pradesh, imposed a penalty of INR 3.00 Lakh on the company and Rs. 50,000 each on 11 directors, totaling a penalty of Rs. 8.50 Lakh for the company and its directors. This article explores the background, the violation, and the imposed penalty in detail.
1. Background and Violation:
2. Show Cause Notice and Lack of Response:
3. Imposition of Penalty:
4. Payment and Appeal:
Conclusion: The penalty imposed on HOLITECH INDIA PRIVATE LIMITED underscores the significance of adherence to regulatory requirements, particularly in preparing Board Reports. Companies are reminded of their responsibilities under the Companies Act, 2013, and the severe consequences that can follow non-compliance. This case serves as a cautionary tale for corporate entities to ensure thorough compliance with statutory obligations to avoid legal repercussions.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTER OF COMPANIES,
37/17, Westcott Building, The Mall,
Phone : 0512-2310323/2310443
Order N0. 07/01/ADJ-134(3)(F)/ HOLITECH INDIA PRIVATE LIMITED/5428 DATED 13/11/2023
ORDER FOR VIOLATION OF SECTION 134(3)(F) OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014. & COMPANIES(AMENDMENT) Act 2020)
IN THE MATTER OF M/s. HOLITECH INDIA PRIVATE LIMITED
1. The Ministry of Corporate Affairs vide its gazette notification no A-42011/112/2014-AD 11 dated 24.03.2015, has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rutes, 2014 under the provisions of this Act.
2. Whereas the Company M/s HOLITECH INDIA PRIVATE LIMITED has been registered under the provisions of Companies Act on 11.04.2018 and is having its registered office situated at Plot No. 67, Ecotech-1 Extension- 1, Greater Noida, Gautam buddha Nagar, Greater Noida, Uttar Pradesh, 201310. The authorized capital of the company is Rs. I,00,00,00,000/-
3. The Directorate vide its letter no. Inq./Guard/2021/10971 dated 17.12.2021 and Ministry’s letter no. F.No. CL-I1-08/131/202 -DGCoA-MCA dated 13.12.2021 directed to conduct the inquiry u/s. 206(4) of the Companies Act, 2013. The Inquiry Officer (10) has observed from the audit report for the year 19-20 that auditor has given qualified report and mentioned that the company did not have appropriate system regarding receipt and issue of inventories for production, overheads, trade payable, Expenses which could potentially result in under statement and overstatement of financial. Board Report does not include the qualified opinion made by the auditor in his report. Hence it is a violation of Section 134(3) (0 of the Companies Act,2013… The reply furnished by the company in this regard was not appropriate/tenable. The Regional Director vide its letter dated 14.07.2022 has accorded the sanction to take action on the basis of Inquiry report dated 11.07.2022 in which said non-compliance was reported. Thus, it is evident that the company and its Directors have failed to comply with the provisions of section 134(3)(0 of the Companies Act, 2013. And are thus liable for penal provisions.
4 . Accordingly, a Show Cause Notice No. 07/01/Adjudication-85(1)/ HOLITECH INDIA PRIVATE LIMITED /4743-4754 dated 10.10.2023 was issued to the company and its officers in default under section under Section 134(3)(1) of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rutes, 2014 by this office. This office has not received the said letter undelivered also.
5. The company and its officers in default have failed to furnish any reply to the said Show Cause Notice, hence no hearing was fixed for this matter.
6 Further, neither any representative of the company nor its directors have either furnished their reply or have appeared before the undersigned which has further strengthened the apprehension that the company and its Directors have failed to comply with the provisions of 134(3)(0 of the Companies Act, 2013, in making the Board Report which does not include the qualified opinion made by the auditor in his report, thereby attracting the penal provisions mentioned under Section 134(8) of the Act.
Provisions of the Act: –
Section 134(3)(f) of the Companies Act, 2013 provides that: ‑
“There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include. Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made‑
(i) by the auditor in his report; and
(ii) by the company secretary in practice in his secretarial audit report”
Section 134(8) of the Companies Act, 2013 provides that ‑
“The company shall be liable to a penalty of three lakh rupess and Every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”
7. Having considered the facts and circumstances of the case and after taking into account the factors above, 1 hereby impose Rs. 3,00,000 (Rupees Three Lakh only) on company and penalty of Rs. 50,000/-(Rupees fifty thousand only) on each Director under section 134(8) of the Companies Act, 2013 for failure to make compliance of Section 134(3) (0 of the Companies Act, 2013. It is of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee.
The Noticee shall pay the amount of penalty by way of Demand Draft in favour of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days receipt of this order. The Demand Draft shall be forwarded to this office Address.
8. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodi Road, New Delhi, 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(5) & 454(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014].
9. Attention is also invited to section 454(8) of the Companies Act, 2013, in the event of noncompliance of this order. hi Case appeal is made 0/o Registrar of Companies, U. J. alongwith the apenalty imposed & the payments made.
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur,
NO.07/01/ADJ-134(3)(F)/ HOLITECH INDIA PRIVATE LIMITED/5428