SEO Title: Company Penalized for not maintaining Register of Members Violating Section 88
SEO Meta Description: MCA imposes a ₹4.5 lakh penalty on Saptasatij Metatech Pvt Ltd for not maintaining a Register of Members as per Section 88 of the Companies Act, 2013.
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Detailed Article
Introduction
The Ministry of Corporate Affairs (MCA), through the Office of the Registrar of Companies (RoC), Maharashtra, Pune, has imposed a penalty of ₹4.5 lakh on Saptasatij Metatech Private Limited. This penalty was levied due to the company’s failure to maintain a Register of Members, as mandated by Section 88 of the Companies Act, 2013. This article delves into the case details, legal provisions, and the implications of this adjudication order.
Detailed Analysis
1. Background of the Case:
Saptasatij Metatech Private Limited, bearing CIN U29299PN1999PTC013412, is a registered entity under the Companies Act, 2013. An inquiry conducted under Section 206 of the Act revealed that the company did not maintain a Register of Members, a crucial requirement under Section 88.
2. Legal Provisions:
Section 88 of the Companies Act, 2013 mandates that every company must maintain specific registers, including:
- Register of Members
- Register of Debenture-Holders
- Register of Any Other Security Holders
Non-compliance with this section results in penalties. Specifically, the company faces a penalty of ₹3 lakh, while each officer in default faces a penalty of ₹50,000.
3. Inquiry Findings:
The inquiry revealed multiple violations:
- The auditor’s report for FY 2018-19, 2019-20, and 2020-21 highlighted the absence of correct shareholder details and the share capital’s correctness.
- Records of share allotments from the company’s incorporation until 2006 were unavailable.
- The company admitted to these violations and expressed willingness to rectify them.
4. Company’s Response:
Saptasatij Metatech Pvt Ltd acknowledged the violation and requested compounding of the offenses. They assured compliance with all relevant provisions of the Companies Act, 2013, moving forward. The company also mentioned ongoing efforts to rectify shareholding records.
5. Adjudication Process:
The adjudication officer issued a notice under Section 454(4) read with Section 88. Despite the company’s request to consolidate offenses and consider it a small company, the adjudicating authority imposed the penalties as follows:
- Saptasatij Metatech Pvt Ltd: ₹3,00,000
- Krupali Liladhar Warade: ₹50,000
- Saurabh Arun Warade: ₹50,000
- Tulika Shrawan Agrawal: ₹50,000
6. Implications and Compliance:
The penalty must be paid through the Ministry of Corporate Affairs portal. The company and its officers have 60 days to appeal the order to the Regional Director (Western Region). Non-payment within 90 days may lead to further consequences under Section 454(8)(ii).
Conclusion
The adjudication order against Saptasatij Metatech Pvt Ltd highlights the importance of maintaining statutory registers as per Section 88 of the Companies Act, 2013. This case serves as a reminder to all companies to adhere strictly to compliance requirements to avoid severe penalties. The MCA’s stringent actions underscore its commitment to ensuring corporate governance and transparency in India.
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OFFICE OF THE
REGISTRAR OF COMPANIES
MAHARASTRA, PUNE
MINISTRY OF CORPORATE AFFAIRS
GOVERMENT OGF INDIA
PCNTDA Green Building, BLOCK A 1st & 2nd Floor,
Near Akurdi Railway Station Akurdi, Railway Station Akurdi Pune- 411044
Phone: 020-27651375 Email: roc.pune@mca.gov.in
RoCP/ADJ/order/23/88/SMPL/24/785 to 789
Date: 28 JUN 2024
Adjudication Order of penalties in the matter of SAPTASATIJ METATECH PRIVATE LIMITED having CIN U29299PN1999PTC013412 under Section 454(3) r/w section 88 of the Companies Act, 2013.
Please Read:
- Companies (Adjudication Of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019 (G.S.R.131(E) ).
- Provisions of Section 88 of the Companies Act, 2013.
- Gazette Notification of Ministry of Corporate Affairs vide No. A-42011/112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015)
In respect of:
SAPTASATIJ METATECH PRIVATE LIMITED having CIN U29299PN1999PTC013412 is a company governed by the provisions Act, and registered with this office having its office Warade Paradise Gat No 52 Dehu Alandi Road, Chikali, Pune, Maharashtra 412114 India and its officers.
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A42011/ 112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015) appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) r/w Rule 3(1) of Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company:
SAPTASATIJ METATECH PRIVATE LIMITED having CIN U29299PN1999PTC013412 (herein after referred as Company) is a registered company with this office under the provisions of section 7 of the Companies Act, 2013 having its registered office as per MCA21 Registry at address “”Warade Paradise Gat No 52 Dehu Alandi Road Chikali Pune Maharashtra 412114 India.
3. Facts about the Case:
a) As per Section to section 88: (1) Every company shall keep and maintain the following registers in such form and in such manner as may be prescribed, namely:—
(a) register of members indicating separately for each class of equity and preference shares held by each member residing in or outside India;
(b) register of debenture-holders; and
(c) register of any other security holders.
(d) Every register maintained under sub-section (1) shall include an index of the names included therein.
(e) The register and index of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996 (22 of 1996), shall be deemed to be the corresponding register and index for the purposes of this Act.
(f) A company may, if so authorised by its articles, keep in any country outside India, in such manner as may be prescribed, a part of the register referred to in sub-section (1), called “foreign register” containing the names and particulars of the members, debenture-holders, other security holders or beneficial owners residing outside India.
(g) If a company does not maintain a register of members or debenture-holders or other security holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2), the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.
b) Whereas an Inquiry of the company under section 206 of the Companies Act, 2013 was conducted by an JO of this office this office; and it was observed that:-
“It is observed that the auditor has qualified the report for FY 2018-19, 19-20 and 20-21 as-
The details of the correct shareholders of the company as well as the correct value of the share capital issued was not available with the company. The records of allotment from the period of incorporation of the Company till the year 2006 could not be produced by the company for verification and accordingly the true picture of the shareholders of the Company could not be verified by us. We cannot comment on the correctness of the value share capital issued by the company as well as the shareholding pattern, and shareholder of the company. Considering the same, our opinion on share capital is qualified.
Further, as per Section 88(1) of the Companies Act, 2013, Every company shall keep and maintain the following registers in such form and in such manner as may be prescribed, namely: —(a) register of members indicating separately for each class of equity and preference shares held by each member residing in or outside India; (b) register of debenture holders; and (c) register of any other security holders.
In view of same, it is concluded that the Company has not maintained the Register of Members of the Companies as mandated by the Section 88 of the Companies Act, 2013.
Thus, the Company has violated the provisions of section 88 of the Companies Act, 2013 for which the company and officers in default are liable for penal action under section 88(5) of the Companies Act, 2013
c) The matter was also taken up with the company during the said Inquiry and the company had submitted its reply stating that;-
“The management is accepting the stated fact and agreeing to the Violation of the mentioned section for the said tenure as per the letter issues by authority. Considering the fact, and to remedy the noncompliance, the management wishes to go for compounding and ready to rectify this act of non-compliances by doing all such acts, deeds, things as are necessary and required by law under the guidance of the concerned authorities and willing to continue the business ahead by complying with all the sections of Companies Act, 2013 as applicable on the private companies.
The management has received the letter from the Existing Shareholder Mr. Liladhar Warade, dated 17th September, 2022 for inadvertently transfer of 67,875 equity shares of the Company to the vendors (Creditors) of the Company. He also confirms that that the No. of equity shares – 5,61,514 which is in the name of Saptasatij Industries Private Limited also belongs to him. The details of the correct Shareholders of the Company as well as the correct value of the share capital issued is not available with the Company. The records of physical allotment from the period of incorporation of the Company i.e from 12/ 03/ 1999 till the year 2006 could not be identified.
To remedy the non-compliances, the management is in process of rectifying of shareholding of the Company post verification of all the records available with the Company complying with all the requirement as per Companies Act, 2013.”
d) Accordingly, as per the directions of the competent authority, the adjudication officer has issued adjudication notice vide ROCP/ADJ/MV/SMPL/88/23-24/3306 to 3309 dated 07.03.2024 (herein after referred as Adjudication Notice) under Section 454(4) read with 88 of the Companies Act, 2013 read with Rule 3(2) of Companies (Adjudication of Penalties), 2014 to the company and its officers in default for the violation of the provisions of the act as mentioned in para “a, b 8v c” above;
e) A reply to the Adjudication notice has been received dated 26.03.2024 from the company. The relevant paras of reply stated that “…In this regard we would like to confirm you that the Company has already filed for compounding of offences under GNL-1 Vide SRN F90085465 dated 12.01.2024, status being pending for approval. Further, we request your kind authority to consider the same and not to impose any penalty against the Company and its officers as the matter is pending before the authority being subjudiced as on date. We would like to state the fact that all the sections regarding which company has received show cause notices i.e under section 88, 92 and 134 are interlinked and hence have related effects.
The multiple sections as mentioned above are attracted due to interconnections of the underlying issues. Therefore, we request that all the offences be clubbed together for a consolidated examination and complete resolution of the same and not to charge penalty separately under each section. As per the data the Company falls within the definition of small company and we request the kind authority to consider the same and penalize the Company accordingly.
We would request the kind authority to consider the above factors and if they deem fit, provide us an opportunity of being heard….”
f) Accordingly, under section 454(4) of the Act read with Rule 3(5) of the Companies (Adjudication of Penalties) Rules, 2014, Noticee(s) were given an opportunity to be heard before Adjudicating Authority through hearing held on 06.05.2024.
g) The authorized representatives appeared before Adjudicating Authority on behalf of noticee(s) through physical hearing on 06.05.2024 and submitted that the noticee(s) are admitting the offence and requested for considering the benefit u/s 446B of Companies Act, 2013.
h) Accordingly, after considering the reply and submission of the Company and its officers, it has been observed that that the company and officers have admitted default and they are in default of section 88 of Companies Act, 2013.
4. Relevant provisions of the Companies Act, 2013:
As per Section to section 88: (1) Every company shall keep and maintain the following registers in such form and in such manner as may be prescribed, namely:
(a) register of members indicating separately for each class of equity and preference shares held by each member residing in or outside India;
(b) register of debenture-holders; and
(c) register of any other security holders.
(d) Every register maintained under sub-section (1) shall include art index of the names included therein.
(e) The register and index of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996 (22 of 1996), shall be deemed to be the corresponding register and index for the purposes of this Act.
(f) A company may, if so authorised by its articles, keep in any country outside India, in such manner as may be prescribed, a part of the register referred to in sub-section (1), called ‘foreign register” containing the names and particulars of the members, debenture-holders, other security holders or beneficial owners residing outside India.
(g) If a company does not maintain a register of members or debenture-holders or other security holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2), the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees. (w.e.f 21. 12.2020).
5. ORDER:
a. Considering the above facts of the case and the relevant provisions; the undersigned now hereby pronounces the order. Further, the delay in issuance of the order is on account of examination of reply; checking MCA21 records; other administrative reasons.
b. The company and its officers, who have defaulted the provisions of section 88 of the Act as the company has not maintained register of members of the company as mandated by the Section 88 of the Companies Act, 2013. Hence, the Company has violated the section 88 of the Companies Act,2013 and Company and its officers in default are liable for penalty u/ s 88(5) of the Companies Act, 2013″.
c. Furthermore, as seen from the MGT-7 filed vide SRN F85015907 dated 28.11.2023 for the F.Y ended 31.03.2023 that the paid-up share capital of the Company is Rs. 10,41,00,000 / -. Hence, the company does not fall under the definition of small company as per the provision of section 2(85) of the Companies Act, 2013. Therefore, the provision of imposing lesser penalty as per the provision of section 446B of the Companies Act 2013 shall not be applicable in this case.
d. In exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the facts and circumstances of the case, I do hereby impose the penalty on the company and its officers in default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, 2014 and the proviso of the said Rule and Rule 3(13) of Companies (Adjudication Of Penalties) Rules, 2014 r/w General Circular No. 1/2020 dated 02.03.2020; as per table below for violation of section 88 of the Act:-
| Penalty imposed on company/director(s) | Total / maximum penalty (In Rs) |
| Saptasatij Metatech Private Limited | 3,00,000 |
| Krupali Liladhar Warade | 50,000 |
| Saurabh Arun Warade | 50,000 |
| Tulika Shrawan Agrawal | 50,000 |
e. I am of the opinion that penalty so imposed is commensurate with the aforesaid failure committed by the notice(s).
f. The Noticee(s)/applicant(s) shall pay the penalty so imposed through Ministry of Corporate Affairs portal only as per rule 3(14) of Companies (Adjudication of Penalties) Rules, 2014.
g. Appeal against this order may be filed under section 454(5) of the Act, in writing with the Regional Director (Western Region), Ministry of Corporate Affairs100, Everest, 5th Floor, Netaji Subhash Road, Marine Drive, Mumbai-400002, 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 of the Act read with Companies (Adjudication of Penalties) Rules, 2014 as emended by Companies (Adjudication of Penalties) Amendment Rules, 2019.
h. Your attention is also invited to section 454(8)(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 order in terms of the provisions of section 454(8)(i) of the Act.
i. 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 Saptasatij Metatech Private Limited and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Western Region) and Ministry of Corporate Affairs at New Delhi.
(Mangesh Jadhav, ICLS)
Adjudicating Officer
Registrar of Companies
Maharashtra, Pune.
