Introduction: In a recent development, the Ministry of Corporate Affairs (MCA) has issued a penalty of ₹3.50 lakh against M/S PEARCE SERVICES GLOBAL PRIVATE LIMITED for failing to file e-Form INC-20A on time. This article delves into the details of this penalty and its implications.
Detailed Analysis:
Section 454 Violation: The penalty was imposed under Section 454 of the Companies Act, 2013, for a violation related to Section 10A of the same Act. Section 10A pertains to companies with share capital and their ability to commence business. It mandates the filing of a declaration within 180 days of incorporation.
Company Details: PEARCE SERVICES GLOBAL PRIVATE LIMITED, based in Mohali, Punjab, India, was found to have initiated business operations before filing the required declaration. The delay in filing the e-Form INC-20A was 131 days.
Company’s Response: The company claimed that there was no explicit prohibition on starting operations before filing the INC-20A declaration, and the delay was unintentional due to a lack of knowledge.
Penalties Imposed: Despite the company’s explanation, the penalty imposed was significant. The penalty for the company amounted to ₹50,000, and the officers involved, namely Sh. BENJAMIN KRICK, Sh. MICHAEL WOLF, and Sh. PRABJOT KHOSLA, each faced a penalty of ₹1,00,000.
Payment and Appeal: The penalties are to be paid from the personal sources/income of the officers. The order stipulates that the penalties should be paid through the Ministry of Corporate Affairs portal. The company and the officers have the option to appeal this order within 60 days from its receipt.
Conclusion: The penalty imposed by the MCA serves as a stern reminder of the importance of complying with statutory requirements and deadlines. Companies must ensure that they adhere to the timelines and regulations set forth in the Companies Act to avoid such financial penalties. The case of PEARCE SERVICES GLOBAL PRIVATE LIMITED underlines the need for vigilance and timely compliance in the corporate world, as violations can result in significant financial consequences. It is crucial for companies and directors to be aware of their obligations and seek expert guidance when in doubt to prevent such penalties in the future.
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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 27-B, CHANDIGARH
PHONE NO.172-2639415, 2639416
No. ROC CHD/2023-24/10A/055586/ 544
Dated: 31/10/23
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 M/S PEARCE SERVICES GLOBAL PRIVATE LIMITED
CIN: U74999PB2022FTCO55586
1. 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. Whereas PEARCE SERVICES GLOBAL PRIVATE 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 801- B, C, D and E, 8th Floor, Block B, Bestech Business Tower, Sector-66, Mohali, Punjab, India, 160059. 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 on date (Equity and Preference shares) | 1,00,000 |
| 2. | Date of Incorporation | 04/04/2022 |
| 3. | Turnover:
(Revenue from operations as per Balance sheet’filed on MCA-21 Portal for the F.Y 2022-23) |
First Year, Balance sheet not filed yet |
| 4. | Holding Company | Subsidiary of company incorporated outside India NA |
| 5. | Subsidiary Company | |
| 6. | Whether company registered under section 8 of the Act. | NA |
| 7. | Whether company registered under any other special Act? | NA |
| 8. | Whether Company is small company | No |
| 9. | Whether Section 446B is applicable to the company (Lesser penalties for Certain companies) | No |
3. Provisions of Section 10A of the Act: –
(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,
4. Facts about the Case: –
That, a complaint against the affairs of the company was received from Shri Tarun Sadana, CEO Kimoha Technologies Private Limited regarding violations of various provisions of the Companies Act, inter alia alleging that the Company has commenced business before filing declaration of business in Form 20A required under Section 10A of the Companies Act, 2013. Complaint Matter was taken up with the company and company replied that ” In terms of Section 10-A, a company has to file the declaration with in a period of 180 days from the date of incorporation in Form INC-20A and there is no bar/prohibition on the company commencing business prior to filing the said form”. Thereafter, company and its directors have Suo-moto filed application vide GNL 1 (SRN No. F64184500) for adjudication of penalty under the provision of Section 454 of the Act and rules thereunder and stated therein inter alia:
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 17.05.2022. However, Declaration by Director in e-form INC-20A was filed on 24.09.2022 with a delay of 131 days thereby violating the provisions of Section I OA of the Companies Act, 2013 punishable under Section 10A(2) of the Companies Act, 2013.
5. Submission by the Company: –
The Applicant Company has stated that the default was caused inadvertently and unintentionally due to lack of knowledge and penalty may be imposed upon the Company and its directors as per the Companies Act, 2013.
6. Findings and observations: –
As per application by the Company, it is observed that the Company has commenced its business and operation as on 17.05.2022. However, Declaration by Director in eform INC-20A was filed on 24.09.2022 with a delay of 131 days thereby violating the provisions of Section 10A of the Companies Act, 2013 punishable under Section 10A(2) of the Companies Act, 2013.
7. Adjudication of Penalty:
That an opportunity of being heard in the matter was given to company and its Directors and accordingly Authorized Representative of the Company and Directors Sh. Rahul Malhotra, CS appeared before the undersigned regarding his submissions in the case on 27.10.2023 and he made submissions to impose minimum penalty in the case. However, maximum penalty prescribed in the Act has been imposed on the company and the Directors. Further, having considered the facts and circumstances of the case and after considering the factors above and submissions of the Applicant/Representative, I hereby impose a penalty as prescribed under Sub-Section (2) of Section 10A of the Companies Act, 2013. – The details of the penalty imposed on the company and officers in default are as under:
|
Nature of Default |
Violations under Companies Act,201 3 | Name of person on whom penalty imposed | No. of days of default | Per day penalty for default (Rs) | Total Default amount (Rs) | Maximum Limit for penalty (Rs) | Final penalty Imposed (Rs) |
| Default in Filing of E- Form | 10A | On Company | 131 | — | 50,000 | 50,000 | 50,000 |
| Sh. BENJAMIN KRICK | 131 | 1000 | 131*1000 =1,31,000 | 1,00,000 | 1,00,000 | ||
| INC 20A Within Stipulate d time | Sh. MICHAEL WOLF | 131 | 1000 | 131*1000 =1,31,000 | 1,00,000 | 1,00,000 | |
| Sh. PRABJOT KHOSLA | 131 | 1000 | 131*1000 =1,31,000 | 1,00,000 | 1,00,000 |
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee and penalty so imposed upon the Officers-in-default shall be paid from their personal sources/income.
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.
8. 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.
9. 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.
10.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 (1) M/s PEARCE SERVICES GLOBAL PRIVATE LIMITED at 801- B, C, D and E, 8th Floor Block B, Bestech Business Tower, Sector-66, Mohali, Punjab, India, 160059 (2) Sh. PRABJOT KHOSLA, Director_____ (3) Sh.Benjamin Krick______ (4) Sh.Michael Wolf______ and 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.
(Katnna Sharma)
Registrar of Companies & Adjudication officer
Punjab & Chandigarh
Copy to:‑
Regional Director (NR), Ministry of Corporate Affairs, New Delhi for information and record.
