Introduction: The Ministry of Corporate Affairs (MCA) has taken stern action against M/s Shri Narayani (Kumbakonam) Nidhi Limited for a violation related to Director Identification Numbers (DIN). Failing to mention DIN in financial statements has led to the imposition of penalties. Let’s delve into the details of the adjudication, its background, and the repercussions.
Detailed Analysis:
1. Background and Jurisdiction:
- M/s Shri Narayani (Kumbakonam) Nidhi Limited, incorporated in 2017, is under the jurisdiction of the Registrar of Companies, Chennai.
- The case revolves around the inadvertent failure to mention Director Identification Numbers (DIN) in financial statements for the fiscal years 2017-18 and 2018-19.
2. Violation and Due Diligence:
- The company conducted due diligence to ensure compliance with the Companies Act and Nidhi Rules, 2014.
- Management identified the non-disclosure of DIN in the financial statements, prompting further action.
3. Adjudication Hearing and Penalty Imposition:
- Adjudication Hearing Notice was issued on 13.09.2023, and Shri P. Sriram (Practicing Company Secretary) appeared before the adjudicating officer.
- The violation was admitted, leading to the imposition of penalties on both the company and its Managing Director.
4. Sections Involved and Penalty Details:
- The violation falls under Section 158 of the Companies Act, 2013, which mandates the mention of DIN in returns, information, or particulars related to directors.
- Section 172 of the Companies Act, 2013 outlines penalties for default, amounting to Rs. 50,000 for each fiscal year.
5. Penalty Breakdown:
- M/s Shri Narayani (Kumbakonam) Nidhi Limited faces a penalty of Rs. 50,000 for each of the fiscal years 2017-18 and 2018-19.
- Shri. Subramaniyan Karthikeyan, the Managing Director, incurs a similar penalty for the mentioned fiscal years.
6. Appeal Process and Default Consequences:
- The aggrieved parties have the option to appeal to the Regional Director within sixty days of receiving the order.
- Section 454(8) outlines consequences for non-payment, including fines and potential imprisonment for defaulting officers.
Conclusion: The case of M/s Shri Narayani (Kumbakonam) Nidhi Limited serves as a cautionary tale for companies regarding the importance of adhering to regulatory requirements, particularly the disclosure of Director Identification Numbers. The MCA’s imposition of penalties underscores the gravity of non-compliance and the need for meticulous adherence to statutory provisions. Businesses should conduct thorough due diligence to avoid inadvertent lapses and mitigate the risk of penalties and legal repercussions.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES,
TAMIL NADU, ANDAMAN & NICOBAR ISLANDS, CHENNAI
II FLOOR, C- WING, SHASTRI BHAVAN,
26, HADDOWS ROAD, NUNGAMBAKKAM, CHENNAI- 6
F.NO.ROC/CHN/SHRI NARAYANI (Kumbakonam) /ADJ/S.158/2023
Date: 16 OCT 2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 FOR VIOLATION OF PROVISIONS OF SECTION 158 OF THE COMPANIES ACT, 2013 IN THE MATTER OF M/S. SHRI NARAYANI (KUMBAKONAM) NIDHI LIMITED
1. In the matter of M/s SHRI NARAYANI (KUMBAKONAM) NIDHI LIMITED (CIN U74999TN2017PLC120244) incorporated on 28.12.2017 under the jurisdiction of Registrar of Companies, Chennai with the registered office situated at No.41/41-A, “Shri Narayani Anugraha” Gandhi Park North, (Sarangapani East Vadampokki street), Kumbakonam, Thanjavur, Tamil Nadu, 612001, India.
2. Whereas pursuant to Section 158 of the Companies Act 2013, which read as under:
158. Obligation to Indicate Director Identification Number
“Every person or company, while furnishing any return, information or particulars as are required to be furnished under this Act, shall mention the Director Identification Number in such return, information or particulars in case such return, information or particulars relate to the director or contain any reference of any director.”
3. Whereas the applicant. company had conducted due diligence to ensure Compliance of all Provisions of the Companies Act read with Nidhi Rules, 2014. Upon Diligence. the Management of the company had noted that the Company has inadvertently failed to mention the Director Identification Number (DIN) of the Directors, who has signed in the Financial Statements in accordance of Section 158 of the Companies Act, 2013 for the financial year 2017-18 and 2018-19
4. On the basis of the e-form GNL-1 vide SRN F62818547 dated 02.08.2023 and the Physical application of the company and its officers dt. 03/08/2023 this office had issued Adjudication Hearing Notice to the Company and its Directors on 13.09.2023 fixing the hearing date as 22/09/2023 at 02.30 P.M
5. Pursuant to hearing notice issued to the company and its directors on 13.09.2023, Shri P. SRIRAM (Practicing Company Secretary), Authorized by the company and directors appeared before the undersigned and made submissions that, “the said violation may be adjudicated and accepted to pay the penalty as prescribed u/s 172 of the Companies Act, 2013.”
6. Whereas on the basis of Suo-motto application received for Adjudication of offences u/s 454 of the Act 2013 r/w Companies (Adjudication of Penalty), Rules 2014, has been verified in the light of the latest Companies Amendment Act, 2020 wherein, Section 454 of the Companies Act, 2013, particularly sub section 3 and its proviso states that;
“The adjudicating officer may, by an order —
(a) Impose the penalty on the company, the officer who is in default, or any other person, as the case may be, stating therein any non-compliance or default under the relevant provisions of this Act; and
(b) Direct such company, or officer who is in default or any other person, as the case may be, to rectify, the default, wherever he considers fit.”
7. Whereas as per section 172 of the Companies Act, 2013, which read as under:-
” If a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of. continuing failure. with a further penalty of five hundred rupees for each day during which such failure continues„ subject 10 a maximum of three lakh rupees in case of a company and one lakh rupees in case of officer who is in default
8. Shri P. Sriram (PCS), Authorized Representative admitted the violation and hence following penalty referred to in Para No.7 is imposed on the applicants for not mentioned the DIN in the financial statements for the financial years 2017-18 and 2018-19,
| S. No | Name of the Company and Officers in default | Period Offence | Total Penalty Imposed U/s 172 of the Companies Act 2013 |
| 1. | M/s Shri Narayani (Kumbakonam) Nidhi Limited -Company | 2017-2018 | Rs. 50,000/- |
| 2018-2019 | Rs. 50,000/- | ||
| 2. | Shri. Subramaniyan Karthikeyan – (Managing Director) | 2017-2018 | Rs. 50,000/- |
| 2018-2019 | Rs. 50,000/- |
Therefore in view of the above said violation of Section 158 of the Companies Act, 2013 the undersigned in exercise of the powers vested to him under Section 454(1) & (3) of the Companies Act, 2013. Hereby impose a penalty of Rs.1,00,000/- to the company and Rs.1,00,000 /- to the Managing Director (Totaling Rs.2 00 000/- as penalty amount)
9. Whereas sub-section (5) of section 454 of the Companies Act,2013 provides that any person aggrieved by an order made by the adjudicating officer under sub-section(3) may prefer an appeal to the Regional Director having jurisdiction in the matter and further sub-section(6) provides that every appeal under sub-section(5) shall be filed within sixty days form the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person and shall be in such form, manner and be accompanied by such fees as may be prescribed.
10. Please note that as per Section 454(8) (i) of the Companies Act, 2013, Where company does not pay the penalty imposed by the adjudicating officer or the Regional Director within a period of ninety days from the date of the receipt of the copy of the order, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees.
(ii)Where an officer of a company who is in default does not pay the penalty within a period of ninety days from the date of the receipt of the copy of the order, such officer shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.
In case of default in payment of penalty, prosecution will be filed under section 454(8) (i) and (ii) of the Companies Act, 2013 at your own costs without any further notice. Along with the penalty to be imposed and the same should be submitted.
B. SRIKUMAR,
ICLS REGISTRAR OF COMPANIES
TAMILNADU, CHENNAI.
ADJUDICATING OFFICER
