The Ministry of Corporate Affairs (MCA) has recently issued an order, bearing Order No. ROC-CHD/2023-24/10A/051420/1009, dated 30/01/2024, under Section 454 for the violation of Section 10A of the Companies Act, 2013, read with the Companies (Adjudication of Penalties) Rules, 2014. This order pertains to Tridib Industries Limited, CIN: U29309PB202OPTC051420. The adjudication officer, Ms. Kamna Sharma, Registrar of Companies in Punjab & Chandigarh, has imposed penalties on the company, its promoters, and directors for non-compliance with Section 10A of the Companies Act, 2013.
1. Appointment of Adjudicating Officer
The Ministry of Corporate Affairs appointed Ms. Kamna Sharma as the Adjudicating Officer under Section 454 of the Companies Act, 2013, read with the Companies (Adjudication of Penalties) Rules, 2014.
2. Relevant Provisions
Section 10A. Commencement of Business
A company with a share capital incorporated after the commencement of the Companies (Amendment) Act, 2019, shall not commence business unless certain conditions are met, including filing a declaration within 180 days of incorporation.
Penalty under Section 10A(2)
In case of default, the company is liable to a penalty of fifty thousand rupees, and every officer in default is liable to a penalty of one thousand rupees per day, not exceeding one lakh rupees.
3. Facts about the Case
Tridib Industries Limited filed an application under Section 454 for the adjudication of non-compliance with the provisions of the Companies Act, 2013. The company, incorporated on 18.07.2020, received subscription money from one subscriber on 15.09.2020. Business transactions were conducted before receiving subscription money from another subscriber, which was received on 19.09.2020. Form 20A for commencement of business was filed on 10.11.2020, with a delay of 56 days.
4. Submission by the Company
During the personal hearing on 25.01.2024, the company argued that the defaults were inadvertent and procedural. It emphasized being a small company and cited Section 446B, Rule 3(12), and Rule 3(13) of Companies (Adjudication of Penalties) Rules, 2014.
5. Findings and Observations
The company violated Section 10A by filing Form 20A with a delay of 56 days. The violations were deemed inadvertent. The adjudicating officer considered the small company status and relevant rules.
6. Adjudication of Penalty
Penalties were imposed under Section 10(2) read with Section 446B of the Act read with Rule 3(12) of Companies (Adjudication of Penalties) Rules, 2014:
- Nature of Default: Violation of Section 10A of Companies Act
- Penalty Imposed on Company/Director(s):
- Tridib Industries Limited: Rs. 25,000
- Ms. Minakshi Bhasin (Ex-Director): Rs. 28,000
- Mr. Davinder Bhasin (Ex-Director): Rs. 28,000
7. Conclusion and Actions
The penalties imposed must be paid through the Ministry of Corporate Affairs portal. The company has 60 days to appeal to the Regional Director (Northern Region). Non-payment of penalties may result in fines or imprisonment as per Section 454(8) of the Companies Act, 2013. The order will be communicated to relevant stakeholders and uploaded on the MCA website.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES,
PUNJAB AND CHANDIGARH,
CORPORATE BHAWAN,
PLOT NO.4-B, SECTOR 27B, CHANDIGARH
PHONE NO.172-2639415,2639416
Order No. ROC-CHD/2023-24/10A/051420/1009 Dated:30/01/2024
Order under Section 454 for Violation of Section 10A of the Companies Act, 2013 read with Companies (Adjudication of Penalties Rules, 2014
IN THE MATTER OF WS. TRIDIB INDUSTRIES LIMITED
CIN: U29309PB202OPTC051420
1. Appointment of Adjudicating Officer
The Ministry of Corporate Affairs vide its gazette notification no S0.831(E) dated 24.3.2015, has appointed the undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company
TRIDIB INDUSTRIES LIMITED (herein after referred to as “the company”) is a company registered with this office under the Provisions of the Companies Act, 2013 (or previous Acts in force, as applicable) having its registered office situated at Munish Forge Limited, Village Gobindgarh, Adj. Phase VII and Focal Point Ludhiana, Punjab — 141 010. The financial and other details of the subject company for immediately preceding financial year as available on MCA-21 Portal is as under: –
| S No. | Particulars | Details |
| 1. | Paid Up Capital as per latest Audited Financial Statement | Rs. 1,00,000 |
| 2. | Date of Incorporation | 18.07.2020 |
| 3. | Turnover as per latest Audited Financial Statement | Rs. 13,40,47,000 |
| 4. | Holding Company | NA |
| 5. | Subsidiary Company | NA |
| 6. | Whether company registered under section 8 of the Act | No |
| 7. | Whether company registered under any other special Act? | No |
| 8. | Whether Company is small company | Yes |
| 9. | Whether Section 446B is applicable to the company (Lesser penalties for Certain companies) | Yes |
3. RELEVANT PROVISIONS WHICH ARE APPLICABLE IN THE PRESENT CASE OF THE COMPANIES ACT, 2013
Section 10A. Commencement of business, etc.—
(1) A company incorporated after the commencement of the Companies (Amendment) Act, 2019 and having a share capital shall not commence any business or exercise any borrowing powers unless—
(a) a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and
(b) the company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.
(2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.
(3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.]
4. FACTS ABOUT THE CASE
Whereas the company and its director(s) have Suo-moto filed the present application under section 454 vide e-form GNL-1 vide SRN F90635160 for Adjudication of noncompliance (technical-default) of provisions under the Companies Act, 2013.
The company was incorporated on 18.07.2020 with two subscribers to the company. The applicant company had received subscription money from one of the subscribers of the company on 15.09.2020, whereas the subscription money from the other subscriber was pending. Before receiving the subscription money from the other subscriber, the applicant company made certain business transactions from 15.09.2020 onwards. The Subscription money from the other subscriber was duly received on 19.09.2020. Subsequently the applicant company filed Form 20A for commencement of business on 10.11.2020 vide SRN: R70682661 which was within the 180 days of the incorporation of the company as provided in the law.
As per Section 10A, a company incorporated after the commencement of the Companies (Amendment) Act, 2019 and having a share capital shall not commence any business or exercise any borrowing powers unless-
(a) a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration: and
(b) the company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.
As per application by the Company, it is observed that the Company has commenced its business on 15.09.2020. However, Declaration by Director in e-form INC-20A was filed on 10.11.2020 and thus there is a delay of 56 days and the same amounts to non-compliance of the provisions of Section 10A of the Companies Act, 2013 for which penalty is provided under Section 10A (2) of the Companies Act, 2013.
5. SUBMISSION BY THE COMPANY
The personal hearing was granted to the Applicant Company on 25.01.2024, the Applicant Company submitted that the default committed were technical defaults and were committed inadvertently and unintentionally and are simply procedural laps and thus a lenient view may be taken for the same.
I. The Applicant Company has submitted that under the provision of Companies Act, 2013, the Adjudicating Officer has power to levy a penalty based on the facts and circumstances of the present case. It is submitted that the provisions of the Companies Act, 2013 inter-alia provides only for the upper limit up-to which penalty can be imposed but it does not provide the minimum amount of penalty which can be imposed and therefore, Sh. Ravi Shanker on behalf of the Applicant Company submitted that the Adjudicating Officer that Applicant Company is a small company in terms of the definition provided under Section 2(85) of the Companies Act, 2013 as per the latest Financial Statement of the Applicant Company and company is at its very nascent stage of developing business and in case if such heavy penalties are imposed upon the same would amount to disrupting the entire business.
II. It was further submitted that the company is a small company therefore the provisions of section 4468 of the act stands attracted in view of which in case if any penalty is payable for non-compliance of any of the provisions of this act by a one person company, small company, startup company or producer company, or by any officers in default, or any other person in respect of such company then such company, its officer in default or any other person, as the case may be, shall be liable to penalty which shall be not more than one half of the penalty specified in such provisions subject to a maximum of two lakh rupee in case of company and one lakh rupee in case of an officer who is in default. Or any other person, as the case, may be.
III. Shanker has further emphasised upon the provision of Rule 3(12) and Rule 3 (13) of Companies (Adjudication of Penalties) Rules, 2014 which reads as under:
Rule 3(12) of Companies (Adjudication of Penalties) Rules, 2014
While adjudging quantum of penalty, the adjudicating officer shall have due regard to the following factors, namely.-
a) size of the company
b) nature of business carried on by the company,
c) injury to public interest,
d) nature of the default,’
e) repetition of the default,’
f) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the deflate: and
g) (the amount of loss caused to an investor or group of investors or creditors as a result of the default.
Provided that, in no case, the penalty imposed shall be less than the minimum penalty prescribed, if any, under the relevant section of the Act.
Rule 3 (13) of Companies (Adjudication of Penalties) Rules, 2014 which read as under:
In case a fixed sum of penalty is provided for default of a provision, the adjudicating officer shall impose that fixed sum, in case of any default therein.
IV Mr. Shanker submitted that the Company is a small company in terms of the definition provided under Section 2(85) of the Companies Act, 2013 as per the latest Financial Statement of the Applicant Company and is at its very nascent stage of developing business and in case if such heavy penalties are imposed upon the same would amount to disrupting the entire business of Applicant Company.
V The aforesaid defaults made are neither prejudicial to the interest of the public at large nor to any investor/stakeholder. It may be further noted that all the aforesaid investors of Applicant Company have also rendered/issued their unconditional, unequivocal declaration stating that they do not wish to take their subscription amount back with interest and have supported the company to this effect.
VI That the company has not repeated such default till date.
VII He further submitted that since the the company satisfies all the aforesaid ingredients set out in Rule 3(12) of Companies (Adjudication of Penalties) Rules, 2014 and the penalty prescribed under Section 446B of the Act is neither fixed nor minimum. Hence aforesaid factors may be taken into consideration while adjudging the quantum of penalty under Section 446B of the Act.
6. FINDINGS AND OBSERVATIONS
As per the application submitted by the Company, it is observed that the Company has commenced its business and operation as on 15.09.2020. However, Declaration by Director in E-form INC-20A was filed on 10.11.2020 with a delay of 56 days therefore, the company has violated the provisions of Section 10A of the Companies Act, 2013 which is punishable under Section 10A (2) of the Companies Act, 2013.
7. ADJUDICATION OF PENALTY:
1. Therefore, having considered the facts and circumstances of the case and after hearing the submissions made by the company through its Authorized Representative namely Sh. Ravi Shankar, I am of the considered view that the aforesaid violations have been committed by the company inadvertently and because the company is a small company in terms of the definition provided under Section 2(85) of the Companies Act, 2013 therefore, penalty is being levied on the company along with its promoters and directors in terms of Section 446B of the Companies Act, 2013 read with Rule 3(12) of Companies (Adjudication of Penalties) Rules, 2014.
2. Now in exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the reply submitted by the subject company and hearing in the matter held on 25.01.2024, hereby impose the penalties on the company, promoters and directors as under.
Penalty imposed under Section 10(2) read with Section 446B of the Act read with Rule 3(12) of Companies (Adjudication of Penalties) Rules, 2014 for the violation of Section 10A of Companies Act, 2013: –
As the company had filed E- Form INC 20 A on 10.11.2020 but commence business on 15.09.2020, thus there is a delay of 56 days, thereby violating the provisions of Section 10A of the Companies Act, 2013 punishable under Section 10A (2) of the Companies Act, 2013.Therefore, penalty is levied on the subject company, along with its promoters and directors in terms of the provision of Section 10A (2) of the Companies Act, 2013.
|
Nature of Default |
Penalty imposed on company/ director(s) | Period of defaults (Days) | Calculation of Penalty u/s 10 (2) of the Companies Act, 2013 (in Rs.) |
Maximum Limit for penalty |
Total Penalty imposed in terms of Section 10 (2) of the Companies Act, 2013 (in Rs.) |
Final Penalty imposed as company is small company |
| Violation of Section 10(A) of Companies Act | Tridib Industries Limited | 56 Days | 1000 X 56 = 56,000 | 50,000 | 50,000 | 25,000 |
| Ms. Minakshi Bhasin (Ex-Director) Mr. | 56 Days | 1000 X 56 = 56,000 | 1,00,000 | 56,000 | 28,000 | |
| Davinder Bhasin (Ex- Director) | 56 Days | 1000 X 56 = 56,000 | 1,00,000 | 56,000 | 28,000 |
3. It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.
4. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi 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].
5. 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 shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to five lakh 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 but which may extend to one lakh rupees or with both.
6. In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to the following as under:
a. M/s TRIDIB INDUSTRIES LIMITED at Munish Forge Limited, Village Gobindgarh, Adj. Phase VII and Focal Point Ludhiana, Punjab — 141 010
b. Ms. Minakshi Bhasin, Ex-Director
c. Sh. Davinder Bhasin, Ex-Director
d. Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi and will also be uploaded on website of Ministry of Corporate Affairs.
(Kamna Sharma)
Registrar of Companies & Adjudication Officer
Punjab & Chandigarh
