MCA Imposes Penalty on Quest Global Engineering Services Private Limited for Delay in Transfer of Unspent CSR Amount
The Registrar of Companies, Karnataka, has issued an order of adjudication of penalty under Section 454 of the Companies Act, 2013, read with Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014. The penalty is imposed on Quest Global Engineering Services Private Limited for the violation of provisions of Section 135 of the Companies Act, 2013.
Background: Quest Global Engineering Services Private Limited, a company incorporated on 05.09.2014, filed an adjudication application on 10.08.2023, acknowledging a violation. The violation pertains to the delay in transferring the unspent Corporate Social Responsibility (CSR) amount to a special account within the stipulated time frame.
Violation Details: For the financial year 2021-22, the company was required to spend Rs. 3,50,42,538.39 towards CSR activities. However, it contributed a sum of Rs. 2,29,34,000.39 towards CSR activities and identified an ongoing project. The unspent CSR amount of Rs. 1,23,39,138 was transferred to a special account on 25.08.2022, but with a delay, as it should have been transferred within 30 days from the end of the financial year.
Penalties Imposed: Considering the violation of non-compliance, penalties were imposed as follows:
- Quest Global Engineering Services Private Limited (Company): Penalty calculated at Rs. 2,46,78,276 (twice the unspent CSR amount), with a maximum penalty of Rs. 1,00,00,000. The imposed penalty is Rs. 1,00,00,000.
- Mr. Praveen Hegde, Company Secretary: Penalty calculated at Rs. 12,33,914 (one-tenth of the unspent CSR amount), with a maximum penalty of Rs. 2,00,000. The imposed penalty is Rs. 2,00,000.
- Mr. Kishore Rao, Director: Penalty calculated at Rs. 12,33,914 (one-tenth of the unspent CSR amount), with a maximum penalty of Rs. 2,00,000. The imposed penalty is Rs. 2,00,000.
- Mr. Raman Subramanian, Director: Penalty calculated at Rs. 12,33,914 (one-tenth of the unspent CSR amount), with a maximum penalty of Rs. 2,00,000. The imposed penalty is Rs. 2,00,000.
- Mr. Shrikant Durga Naik, Director: Penalty calculated at Rs. 12,33,914 (one-tenth of the unspent CSR amount), with a maximum penalty of Rs. 2,00,000. The imposed penalty is Rs. 2,00,000.
Payment and Appeal: The company and its directors/key managerial personnel are directed to pay the penalty amount within 90 days from the date of receipt of the order. The penalty is to be paid online through the MCA website, and the payment details, along with a copy of the order, are to be filed using Form INC-28.
An appeal against this order can be filed with the Regional Director (South East Region), Hyderabad, within 60 days from the date of receipt of the order.
Non-compliance with the order may result in further penal action, including fines and other legal consequences, as per the provisions of Section 454(8) of the Companies Act, 2013.
The company is also required to serve a copy of this order on the mentioned directors/officers as per the provisions of Section 20 of the Companies Act, 2013.
This order concludes the adjudication proceedings against Quest Global Engineering Services Private Limited for the specified violation.
*****
Registrar of Companies Karnataka
Kendriya Sedan, 2nd Floor, ‘E’-Wing
Koramangala, Bengaluru – 560 034
Phone: 080-23337049/25633105
Email ID: roc.bangalore@mca.gov.in
File No. ROC(B)/Adj.Ord.454-135/Quest Global/Co.No.76219/2023
Date: 15.11. 2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT,2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTY) RULES, 2014 FOR VIOLATION OF PROVISIONS OF SECTION 135 OF THE COMPANIES ACT, 2013 BY QUEST GLOBAL ENGINEERING SERVICES PRIVATE LIMITED
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter referred to as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of Companies Act, 2013.
2. The company, Quest Global Engineering Services Private Limited (hereinafter referred to as Company) having CIN: U74900KA2014PTC076219 was incorporated on 05.09.2014 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is situated at AEQUS Special Economic Zone. No.437/A Plot No. 2, Hattaragi Village Hukkeri Taluk, Belgaum. Karnataka – 591245.
3. The company has filed adjudication application on 10.08.2023 for violation of section 135 of the Act. It is seen that for the financial year 2021-22. the company ought to have spent Rs. 3,50,42,538.39 towards CSR activities However, it had contributed a sum of Rs. 2,29.34.00039 towards CSR activities and identified an ongoing project and transferred the unspent CSR amount of Rs. 1,23,39,138 to a special account opened by the company for this purpose on 25.08.2022 with a delay as the unspent amount pertaining to an ongoing project ought to have been transferred within a period of 30 days from the end of the financial year.
4. As per section 135(1) of the Act, every company having networth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.
5. As per section 135(5) of the Act, the board of every company referred to in sub-section (1) shall ensure that the company spends, in every financial year. at least two per cent of the average net profits of the company made during the three immediately preceding financial year. or where the company has not completed the period of three financial years since its incorporation, during such immediately, preceding financial years, in pursuance of its Corporate Social Responsibility Policy.
6. As per section 135(6) of the Act any amount remaining unspent under sub-section (5), pursuant to any ongoing project fulfilling such conditions as may be prescribed, undertaken by a company in pursuance of tis Corporate Social Responsibility Policy, shall be transferred by the company with a period of 30 days from the end of financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year.
7. As per section 135(7) of the Act if a company is in default in complying with the provisions of sub-section (5) or sub-section (6), the company shall be liable to a penalty of twice the amount required to be transferred by the company to the Fund specified in the Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be, or one crore rupees, whichever is less, and every officer of the company who is in default shall be liable to a penalty of one-tenth of the amount required to be transferred by the company to such Fund specified in Schedule VII, or the Unspent Corporate Social Responsibility Account, as the case may be, or two lakh rupees, whichever is less.
8. Pursuant to the adjudication application filed by the company on 10.08.2023. Notice of hearing was sent on 18.09.2023 and physical hearing was held on 27.09.2023 and it was attended by Mr. Kunjithapadham Jayachandran, practising company secretary who made submission on the same lines as provided in the application. The authorised representative was asked to give the details of the utilisation of unspent amount and the same was submitted by the company on 05.10.2023.
9. It is seen that the company is subsidiary company and does not fall under the definition of a small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provisions of imposing lesser penalty as per the section 446B of the Act shall not be applicable in this case.
10. Therefore, having considered the facts and circumstances of the case and the submissions made by the company / director / key managerial personnel through their authorised representative, in view of the above said violation under the provisions of section 135 of the Act, In exercise of the powers vested under Section 454(3) of the Companies Act 2013.1 do hereby impose penalty in the following manner on the company and all the officers in default:
|
S. No. |
Particulars | Calculation of Penalty | Maximum Penalty (in Rs.) |
Penalty imposed (in Rs.) |
| 1. | Company | Rs. 2,46,78,276 (1,23,39,138 X 2) | 1,00.00,000 | 1,00,00.000 |
| 2. | Mr. Praveen Hegde, Company Secretary | Rs. 12,33,914 (1,23,39,138 / 10) | 2.00,000 | 2.00,000 |
| 3. | Mr. Kishore Rao, Director | Rs. 12,33,914 (1,23,39,138/ 10) | 2.00,000 | 2.00,000 |
| 4. | Mr. Raman Subramanian, Director | Rs. 12,33,914 (1,23,39,138 / 10) | 2.00,000 | 2.00,000 |
| 5. | Mr. Shrikant Durga Naik, Director | Rs. 12,33.914 (1.23,39.138 / 10) | 2.00,000 | 2.00,000 |
11. The company and its directors / key managerial personnel are hereby directed to pay the penalty amount as tabulated above within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website www.mca.govin (Miscellaneous head) specifying the details of this Order and the notice who is paying the penalty
12. Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in Form ADJ setting forth the grounds of appeal and shall be accompanies by a certified copy of this Order.
13. Your attention is also invited to section 454(8) of the Companies Act, 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under 454(8)(i) and (ii) of the Companies Act. 2013 against the company and directors / key managerial personnel without further notice in the matter.
14. The company is required to serve a copy of this Order on the director(s)/ officer(s)-in- default mentioned above in terms of provisions of section 20 of the Companies Act 2013.
(Sanjay Sood)
Registrar of Companies, Karnataka
and Adjudicating Officer
