Introduction: The Ministry of Corporate Affairs (MCA) has taken punitive action against Shri Ram Nidhi Limited for a delay in filing MGT-14, an essential requirement under the Companies Act, 2013. This article explores the intricacies of the penalty, the legal breaches involved, and the implications for the company and its directors.
Detailed Analysis: Shri Ram Nidhi Limited, registered under the Companies Act on 26th September 2018, has its registered office located at Vill Sofipur, Meerut, Uttar Pradesh. The company operates with an authorized capital of Rs. 5,00,000/-. The issue at hand revolves around the company’s non-compliance with the provisions of the Companies Act, 2013. To address this, the company and its directors were contacted through an inquiry letter (TC/TECH/NIDHI/SHRI RAM) dated 25th November 2020. Unfortunately, neither the company nor its directors provided a response to the inquiry.
Subsequently, summons were issued under section 207 of the Companies Act, 2013, for their appearance on 27th January 2021. Show Cause Notices (01/24//Inq/Nidhi/Shri Ram-2021/1959-1964 and 01/24//Inq/Nidhi/Shri Ram-2021/3533-3568) were also sent on 6th December 2021 and 11th March 2022. Despite these efforts, none of the directors appeared for the hearing. The report submitted to the Regional Director, Northern Region, indicated non-compliance with section 117 of the Companies Act, 2013.
Section 117(1) of the Companies Act, 2013 requires the filing of a copy of every resolution or agreement, along with the explanatory statement, with the Registrar within thirty days of its passing or making. The penalty for failure to do so is outlined in Section 117(2).
As per Section 117(2), if a company fails to file the copy of a resolution or agreement specified in subsection (3), along with the explanatory statement, it shall be liable to a penalty of ten thousand rupees. In the case of a continuing failure, an additional penalty of one hundred rupees for each day during which the failure persists, up to a maximum of two lakh rupees. The same penalty applies to officers of the company in default, including the liquidator if applicable, with a maximum of fifty thousand rupees.
A Show Cause Notice (07/01/Adjudication-117/SHRI RAM NIDHI) dated 23rd May 2023 was issued to the company and its officers under Section 117 of the Companies Act, 2013, read with Companies (Adjudication of Penalties) Rules, 2014. No response was received, and no hearing was scheduled.
The continuous non-compliance with Section 117(1) of the Companies Act, 2013 led to the identification of a default date as 2nd October 2018, marking the day from which the failure to file MGT-14 continued.
Conclusion: In light of the facts and circumstances surrounding this case, the MCA has imposed a penalty of Rs.1,78,000 (one lakh seventy-eight thousand rupees) on Shri Ram Nidhi Limited and a maximum penalty of Rs.50,000 (fifty thousand rupees) on each of the three directors ie. Rs. 1,50,000. The penalty has been imposed under Section 117(2) of the Companies Act, 2013, for their failure to comply with Section 117(1). It is crucial for companies and their directors to adhere to the legal obligations outlined in the Companies Act to avoid such penalties. Appeals are available to challenge these penalties, as stipulated in the Companies Act.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES,
UTTAR PRADESH,
37/17, Westcott Building, The Mall,
Kanpur — 208001
Phone : 0512 — 2310323/2310443
No.07/01/Adjudication-117/ SHR1 RAM NIDHI/3440 to 3443
Dated: 23/08/2023
ORDER FOR VIOLATION OF SECTION 117 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014.
IN THE MATTER OF M/s. SHRI RAM NIDHI LIMITED
Appointment of Adjudicating Officer: –
1. The Ministry of Corporate Affairs vide its gazette notification no A-42011/112/2014-AD 11 dated 24.03.2015, has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 under the provisions of this Act.
2. Whereas the Company M/s SHRI RAM NIDHI LIMITED has been registered under the provisions of Companies Act on 26.09.2018, and is having its registered office situated at VILL SOFIPUR, Meerut, Uttar Pradesh,250001. The authorized capital of the company is Rs. 5,00,000/-
3. Whereas on scrutiny of the records, it is found that the company is not conducting its business as per the provisions of the Companies Act, 2013. Therefore, the matter was taken up with the company and its directors vide Inquiry letter no.TC/TECH/NIDHI/ SHRI RAM /2378 to 2383 dated 25.11.2020. Further, neither the company nor the directors furnished any reply to the same. Thereafter, summons under section 207 of the Companies Act, 2013 vide letter no.TC/TECH/NIDHI/ SRI RAM/3034 to 3036 dated 08.01.2021 for appearance on 27.01.2021. and Show Cause Notice No.01/24//Inq/Nidhi/Shri Ram-2021/1959-1964 dated 06.12.2021 and No.01/24//Inq/Nidhi/Shri Ram-2021/3533-3568 dated 11.03 .2022. Further none of the Directors of the company appeared on the said date of hearing. The report in this regard furnished to the Regional Director, Northern Region wherein non-compliance of section 117. The Directorate vide its letter No.Inquiry/206(4)/Shri Ram Nidhi/RD(NR)/2022/3312 dated 10.06.2022 has accorded the penal action under section 117 of the Companies Act, 2013. Thus, it is evident that the company and its Directors have failed to comply with the provisions of section 117 of the Companies Act, 2013, in filing the copy resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed. And are thus liable for penal provisions.
Section 117(1) of the Companies Act, 2013 provides that: –
“A copy of every resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed within the time specified under section 403: Provided that the copy of every resolution which has the effect of altering the articles and the copy of every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement.”
Section 117(2) of the Companies Act, 2013 provides that —
“If a company fails to file the copy resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of two lakh rupees., and every Officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of fifty thousand rupees.”
4. Accordingly, a Show Cause Notice No.. 07/01/Adjudication-117/ SHRI RAM NIDHI/2224-2227 dated 23.05.2023 was issued to the company and its officers in default under section under Section 117 of the Companies Act, 2013, read with Companies (Adjudication of Penalties) Rules, 2014 by this office. This office has not received the said letter undelivered also.
5. The company and its officers in default have failed to furnish any reply to the said Show Cause Notice, hence no hearing was fixed for this matter.
6. Further, neither any representative of the company nor its directors have either furnished their reply or have appeared before the undersigned which has further strengthened the apprehension that the company and its Directors have failed to comply with the provisions of section 117 of the Companies Act, 2013, in filing of copy of resolution, in prescribed e-form MGT-14 for the year ending on 31.03.2018 for approval of accounts as mandated under section 117(1) read with 179 (3)(g) of the Companies Act,2013 with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed within the time specified under section.
7. The date of default in the matter has been taken as 02.10.2018, i.e. the date upto a copy of resolution in prescribed e-form MGT-14 for approval of accounts as mandated under section 117(1) read with 179 (3)(g) of the Companies Act,2013 with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed within the time specified under section. The default has been continuing since then.
8. Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose a penalty of Rs.1,78,000/-(Rupees one lakh seventy-eight thousand only) as per section 117(2) of the Act) on the company and penalty of Rs. 50,000/- maximum on each Director (3), total penalty Rs. 1,50,000/- (Rupees four Lakh only) under section 117(2) of the Companies Act, 2013 for failure to make compliance of section 117(1) of the Companies Act, 2013. It is of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee.
(Penalty calculation for company)
|
Date of board meeting in which financial statements approved (1) |
Due date of filing of the MGT-14
(2) |
Per day penalty for non-filing of the MGT-14 within due date (In Rs.)
(3) |
Total no. of days of default as on date
(4) |
Total Penalty (In Rs.) (5=3X4) |
| 03.09.2018 | 02.10.2018 | 100 | 1780 | 178000 |
| Total: | 178000 |
9. The Noticee shall pay the amount of penalty by way of Demand Draft in favour of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days receipt of this order. The Demand Draft shall be forwarded to this office Address.
10. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodi 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].
11. Attention is also invited to section 454(8) of the Companies Act, 2013, in the event of non-compliance of this order. In Case appeal is made 0/o Registrar of Comp U.P. maybe informed alongwith the penalty imposed & the payments made.
(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur
No.07/01/Adjudication-117/ SHR1 RAM NIDHI/3440 to 3443
Dated: 23/08/2023
1 M/s SHRI RAM NIDHI LIMITED,
VILL SOFIPUR, MEERUT, Meerut, Uttar Pradesh,250001
2. NAGENDRA BHUSHAN,
652, PILNA SOPHIPUR, ROORKEE ROAD MEERUT,250001
3. MEENA BHUSHAN,
652 PILNA SOFIPUR, ROORKEE ROAD, MEERUT-250001
4. DURLABH DARSHAN SHARMA,
1/1 OFFICER COLONY, NATESHPURA NAGAR NIGAM, SAHARANPUR
Copy for Information to:
No.07/01/Adjudication-117/ SHR1 RAM NIDHI/3440 to 3443
Dated: 23/08/2023
1. Regional Director, Northern Region, Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi.
