On February 28, 2024, the Ministry of Corporate Affairs, Office of the Registrar of Companies in West Bengal, issued an adjudication order against Nipponzone Securities Pvt Ltd for non-compliance with Section 134(3)(f) of the Companies Act, 2013. This section mandates that companies provide explanations or comments on adverse remarks made by auditors in their reports. Nipponzone Securities, incorporated on April 5, 1994, failed to address such remarks in their Directors’ Report dated August 31, 2022. This omission, although claimed to be unintentional, led to the company facing a penalty.
The adjudicating officer, appointed under Section 454 of the Companies Act, 2013, reviewed the case where the company had also made a Suo-moto compounding application. Despite the omission being deemed unintentional, the company and its directors are found liable for penalties. A total fine of ₹4 lakh was imposed: ₹3 lakh on the company and ₹50,000 each on two directors, Shiksha Agrawal and Ashok Kumar Agrawal. The penalty must be paid within 90 days, and the company has the right to appeal the order within 60 days. Non-payment within the stipulated time could result in further consequences as outlined in the Companies Act.
GOVERNMENT OF INDIA
Ministry of Corporate Affairs
Office of the Registrar of Companies, West
“Nizam Palace”,
2nd M. S. 0. Building, 2nd Floor
234/4, Aeharya J. C. Bose Road
Kolkata — 700 020
Order No :ROC/ADJ/365/062847/2023/13061 Date 28.02.2024
ADJUDICATION ORDER FOR PENALTY U/S 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 3(2) OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 AS AMENDED BY THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 IN MATTER OF NON-COMPLIANCE OF THE PROVISIONS OF SECTION 134(3)(F) OF THE COMPANIES ACT, 2013
In respect of: NIPPONZONE SECURITIES PVT LTD
(CIN: U65191WB1994PTC062847)
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No A-42011/112/2014-Ad. 1 dated 24.03.2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by Section 454(1) read with Section 454(3) of the Companies Act, 2013 [herein after known as Act] read with the Companies (Adjudication of Penalties) Rules, 2014 for adjudicating penalties under the provisions of this Act. The undersigned vide the Companies (Amendment) Ordinance, 2019 is entrusted to adjudicate penalties under provisions of the Companies Act, 2013 with effect from 02.11 2018.
2. Company: –
NIPPONZONE SECURITIES PVT LTD [herein after known as Company] is a registered company with this office incorporated on 05.04.1994 under the provisions of the Companies Act, 1956 having its registered office as per MCA21 Registry at address 33/1 N S ROAD344 MARSHALL HOUSE, KOL, West Bengal, India, 700001.
3. Facts about the Case: –
The company made a Suo-moto application and stated the following facts:
CONTRAVENTION OF SECTION 134(3)(F) OF THE COMPANIES ACT, 2013.
The company has filed the Financial Statement for the financial year ending 31.03.2022, where in inadvertently, the explanation or comments with respect to adverse remarks made by the Statutory Auditor of the company stated in the Audit Report under the heading ‘Report on other Legal and Regulatory Requirements’ that the company is required to be registered under section 45-IA of the Reserve Bank of India Act, 1934, was omitted in the Directors Report dated 31.08.2022. However, the company has made an application to the Reserve Bank of India seeking prior approval for amalgamation of Nipponzone Securities Pvt Ltd (Non-Banking Financial Company) with and into Sinki Commodities Private Limited (Non-NBFC). And the approval has been granted.
As per the provisions of section 134(3)(f) of the Companies Act, 2013,
(3) There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include—
(f) explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made—
(i) by the auditor in his report; and
(ii) by the company secretary in practice in his secretarial audit report;
Thus, the captioned company and directors in default are liable for penal action under Section 134(8) of the Companies Act, 2013 for violation of Section 134(3)(f) (in an instance) of the said Act.
However, the company in its application made has stated that the violations took place unintentionally and there were no mala fide intentions per se.
Section 134(8) of the Companies Act 2013 provides inter alio:
(8) if a company is in default in complying with the provisions of this section, 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.
4) As per the record available with this office, it has been found that the company has filed Suo-moto compounding application in GNL- 1 vide SRN: F63143143 dated 14.08.2023 since the provisions of Section 134(8) has been decriminalized with penalty for adjudicating the violations under section 134(3)(f) of the Companies Act, 2013.
5) Further, Mrs. Madhuri Pandey, a Practicing Company Secretary, appeared on 15.02.2024 for hearing on behalf of the company and its directors and appraised that company has made a Suo Moto compounding application for adjudication of offence under section 134(3)(f) of the Companies Act, 2013. However, as the offence has been decriminalized the offence to adjudicate under section 454 read with 134(3)(F) of the Act. it is stated that the company inadvertently left out to reply for the adverse remark pointed out by the Statutory Auditor and the same was omitted to be mentioned in the Directors Report which is purely unintentional and unwillingly on part of the company. As the financial condition of the company is not sound, the matter may be considered leniently while imposing penalty. Therefore, matter is heard, and order is passed as under:
ORDER
1. The applicant company and its directors, who have defaulted on the provisions of section 134(3)(f) of the Companies Act, 2013 are liable for penalties under section 134(8) of the Companies Act, 2013.
2. In exercise of the powers conferred vide Companies (Amendment) Ordinance, 2019, the undersigned is entrusted to adjudicate penalties under section 134(8) of the Companies Act, 2013 with effect from 02.11.2018. I do hereby impose the penalty of Total Rs. 4,00,000/- (Rupees Four Lakhs only) i.e., Rs. 3,00,000/- (Rupees Three Lakh only) on the Company, and Rs. 50,000/- (Rupees Fifty Thousand only) on each of its directors-in-default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, as per table below for violation of section 134(3)(f) of the Act:
| Name of the Applicant Company/ Director | Total maximum Penalty (in Rs.) | |
| 1. | NIPPONZONE SECURITIES PRIVATE LIMITED | 3,00,000/- |
| 2. | SHIKSHA AGRAWAL (Director) |
50,000/- |
| 3. | ASHOK KUMAR AGRAWAL (Director) |
50,000/- |
| Total Penalty Amount | 4,00,000/- | |
3. The noticee(s) shall pay the said amount of penalty individually for the company and its directors (out of own pocket) by way of e-payment [available on Ministry website mca.gov.ini under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 days of receipt of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this Office Address.
4. Appeal against this order may be filed in writing w–th the Regional Director (ER), Ministry of Corporate Affairs, Kolkata located at Nizam Palace, 2nd M. S. 0. Building, 3rd Floor, 234/4, A.J.C. Bose Road, Kolkata-700020, West Bengal within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website www.mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of the this order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudication of Penalties) Rules, 20141.
5. Your attention is also invited to Section 454(8)(i) and (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.
6. 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 NIPPONZONE SECURITIES PRIVATE LIMITED and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Eastern Region) and Ministry of Corporate Affairs at New Delhi.
Date: 28th February 2024
[A. K. Sethi, ICLS]
Adjudicating Officer & Registrar of Companies,
West Bengal
