Recent adjudication under Section 454 of the Companies Act, 2013, has led to the imposition of penalties on Tanu Mercantile Private Limited by the Ministry of Corporate Affairs (MCA). The company was found to have violated Section 12(3)(c) of the Companies Act, 2013, which mandates the use of proper company letterhead for board reports.
The Case Background
The Ministry of Corporate Affairs initiated an inquiry into Tanu Mercantile Private Limited under Section 206(4) of the Companies Act, 2013. The investigation revealed that the company had failed to use proper letterhead for its board reports from the fiscal years 2014-15 to 2017-18. The Registrar of Companies consequently issued an adjudication notice, with a hearing set for June 15, 2023.
The Violation
Section 12(3)(c) of the Companies Act, 2013, stipulates that every company must disclose its Corporate Identity Number (CIN) and other contact details on all its official publications, including board reports. Tanu Mercantile was found to have contravened this provision, making the company and its officers liable to penalties under Section 12(8) of the Act.
Defense and Rebuttal
In its defense, Tanu Mercantile, represented by its authorized company secretary, argued that the violations were not intentional and happened due to a lack of clarity in regulations. They also argued for leniency, citing that they are a small company falling under Section 446(B) of the Companies Act, 2013.
However, the presenting officer from the Registrar of Companies maintained that the law is clear and that Tanu Mercantile had accepted its default for the year 2016-17, therefore penalties should be imposed.
The Penalty
The adjudicating officer imposed penalties as follows:
- Tanu Mercantile Private Limited: Rs. 50,000
- Directors: Rs. 30,000 each
Conclusion
The case of Tanu Mercantile serves as an eye-opener for companies operating in India, emphasizing the importance of compliance with corporate laws. Failure to adhere to stipulated guidelines, even due to a lack of awareness or perceived ambiguity in the law, can result in severe penalties. Companies must invest in legal advice and internal reviews to ensure full compliance with the Companies Act, thereby avoiding potential legal troubles.
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Before the Registrar of Companies, Gujarat Dadra and Nagar Haveli.
In the Matter of Companies Act, 2013
and
In the Matter of Adjudication Under Section 454 of the Companies Act, 2013 R. W. Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014 for Violation of Section 12 (3) (c) of the Companies Act, 2013 in the Matter of Tanu Mercantile Private Limited.
Order No. 1694 to 1696 Dated: 04th July 2023
Date of hearing- 15.06.2023
Present
1. Shri R.C. Mishra, Registrar of Companies Adjudicating Officer
2. Shri Gajanan Kate, Asst. Registrar of Companies, Presenting Officer
3. Shri Niranjan Lal Yadav, Junior Technical Assistant Present staff
Company/ Officers/Directors/KMP/Authorized Representative:
CS Shri Ashish Doshi, Practicing Company Secretary -Authorised representative of the Company and its officers in default present before the Adjudicating Authority.
Appointment of Adjudicating Authority:-
Whereas, the Ministry of Corporate Affairs vide its Gazette notification No. S.O. 831. (E) dated 24th March 2015 the Govt. of India Ministry of Corporate Affairs has appointed the Registrar of Companies in exercise of the Power conferred by Section 454 of the Companies Act 2013 read with Companies (Adjudication of Penalties) Rules, 2014. as Adjudicating Officer with respect to all companies having its registered office within the State of Gujarat and Union territory of Dadra and Nagar Haveli. The Registrar of Companies vide the Companies (Amendment) Act, 2019 is entrusted with power to adjudicate penalty as provided under Section 12(8) of the Companies Act with effect 02.11.2018.
Fact about of the case
Whereas M/s TANU MERCANTILE PRIVATE LIMITED (herein after referred to as “company”) was incorporated on 19.01.2011 and as per record of this office presently the company is having its registered office situated at PLOT NO. 267, WARD 12-B, GANDHIDHAM, Kachchh, Gujarat, 370201, India. The CIN of the Company is U51909GJ2011PTC097019
Whereas, as per the provision of section 12(3) the Companies Act, 2013, every company is need to disclosed CIN and contact details on each and every letterhead and submission. Ministry vide letter No. F. No. 3/53/2017/CL-II dated 17.08.2017 has ordered to inquiry of the subject company u/s 206(4) of the Companies Act, 2013. During the course of Inquiry, it is observed from the financials submitted by the company for the FY 2014-15, 2015-16, 2016-17 and 2017-18 that the board reports submitted by the company to this office are not on appropriate letterhead of the company as prescribed under Section 12(3)(c) of the Act. The same is an established violation of section 12(3)(c) of the Companies Act, 2013. Hence, the company, its directors, officers in defaults are liable to be penalized under Section 12(8) of the Companies Act, 2013.
1) The office of the Registrar of Companies, Gujarat, Dadra and Nagar Haveli issued Adjudication notice under section 454 of the Companies Act 2013 for violation of section 12(3)(c) of the Companies Act, 2013 to the Company and Respondents Directors on 02.06.2023 and gave opportunity of being heard on 23.06.2023. The company vide letter dated 13.06.2023 requested to ROC Gujarat to pre-pone the date of hearing at the nearest possible dated.
2) The undersigned in exercise of power conferred under sub section 3 of section 454 of the Companies Act, 2013 fixed the date of hearing on 15.06.2023 at 12.30 PM for adjudicating penalty for violation of provision of section 12(3)(c) of the Companies Act, 2013.
Submission of Authorized representative of the Company
In response to the adjudication notice dated 02.06.2023 issued by the undersigned, the Company and its officer in default have authorized Shri Ashish Doshi (Practicing Company Secretary) appeared and represent before the adjudicating authority- Registrar of Companies, Gujarat on the above given date and time for oral and written submission and to all acts and things as may be necessary and incidentally in the matter.
Authorize representative further submitted written reply dated 15.06.2023 which is taken on record in response to the Adjudication Notice dated 02.06.2023. Further, submitted that the company submitted its Board Report for the year 2014-15, 2015-16 without letterhead as there is no requirement under the provisions of the Companies Act, 2013. However, the Director’s Report for the year 2016-17 which is a part of Annual Report wherein e-mail ID and Contact details are missing. But the company has duly complied the provisions of Section 12 of the Companies Act, 2013 for the year 2017-18 as due disclosure are submitted in the letterhead of the Company which is a part of Annual Report. It is further submitted that the company is a small company which falls under the ambit of section 446(B). The Violations occurred for the year 2016-17 is not intentional and without any motive. It is further submitted that the Adjudication Notice was sent to 04 directors and one company. However, Mr. Maulin Bhavesh Acharya and Mr. Dhaval Bhavesh Acharya has already resigned on 25.02.2014, hence, they are not officers in default and their name may be deleted without imposing any penalty to them. It is further submitted that lenient view may be taken being a small a company and no penalty may be imposed.
Submission of Presenting officer
The presenting officer submitted that the Inquiry Officer (10) while concluding his report this 206 of the Companies act, 2013 observed that the Financial submitted by the company for the year 2014-15 to 2017-18 the Board Report as attached therewith are not on appropriate letterhead of the Company as prescribed under 12(3)(c) of the Companies Act, 2013. The provisions of section 12(3)(c) is as under-
provides that Every Company shall get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications; and
It is further submitted by the presenting officer that the company has accepted its default for the year 2016-17 and the maximum penalty to be imposed. However, the company falls under the ambit of 446(B) of the Companies Act, 2013, accordingly the Adjudication Officer has empower to impose penalty under provisions of 454 r.w. Section 12(8) of the Companies Act, 2013. Accordingly penalty may be imposed.
Order
In view of the above facts the undersigned has reasonable cause to believe that the provision of Section 12(3)(c) of the Companies Act, 2013 has not been complied with by the Company and its officers in default. Thus, the Company and its officers in default have rendered themselves liable to be panel action as provided in sub-section (8) of section 12 of the ‘Companies Act, 2013.
Under the overall circumstances the eligible default of section 12(3)(c) in which incidence was occurred for the year 2016-17 considered as default period and accordingly the Adjudication officer has decided that the company and its officers in default shall be imposed penalty in accordance with Section 12 (8) of the Companies Act, 2013 as per the Table given below-
| Sr. No | Name of the Respondents | Maximum Penalty | Penalty as per Section 446(B) (In Rs.) |
| 1. | TANU MERCANTILE PRIVATE LIMITED | Rs. 100000 | Rs. 50000/- |
| 2. | MR. JAGDISH DUDI (Director) | Rs. 100000 | Rs. 30000/- |
| 3. | MR. BHUPENDRASINH
DALPATSINH RANA (Director) |
Rs. 100000 | Rs. 30000/ |
1. The noticee shall pay the amount of penalty by way of e-payrnent available on Ministry website mca.gov.in under “Pay miscellaneous fees” category in MCA fee and payment Services under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 within 60 days from the date of receipt of this order and copy of this adjudication order and ChallaniSRN generated after payment of penalty through online mode shall be filed in INC-28 under the MCA portal without further reference.
2. Appeal against this order may be filed in writing with the Regional Director, North Western Region, Ministry of Corporate Affairs, ROC BHAVAN, OPP. RUPAL PARK, NR. ANKUR BUS STAND, NARANAPURA, AHMEDABAD (GUJARAT)-380013 within a period of sixty days from the date of receipt of this order, in e-form ADJ (i.e. Memorandum of Appeal), setting forth the grounds of appeal and shall be accompanied by the certified copy of this order. [Section 454(5) & 454(6) of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019].
3. Your attention is also invited to Section 454(8)(i) and 454(8) (ii) of the Companies Act, 2013, which state that in case of non-payment of penalty amount, the company shalt be punishable with fine which shall not less than Twenty Five Thousand Rupees– but which may extend to Five Lakhs Rupees and officer in default shall be punishable with Imprisonment which may extend to Six months or with fine which shall not be less than Twenty Five Thousand Rupees by which may extend to one Lakhs Rupees or with both.
The adjudication notice stands disposed of with this order.
RC Mishra ICLS)
ADJUDICATING OFFICER,
REGISTRAR OF COMPANIES,
GUJARAT, DADRA AND NAGAR RAVEL!.
