Ministry of Corporate Affairs (MCA), through its appointed adjudicating officer, imposed a penalty on Indu Bala, the auditor of Shri Ram Nidhi Limited, for violating Section 140(2) of the Companies Act, 2013. The violation involved the auditor’s failure to file Form ADT-3 within the stipulated 30 days after resigning on June 1, 2019, as mandated by law. Despite being issued a show cause notice on April 25, 2024, the auditor failed to respond or provide a valid explanation. Consequently, the penalty, calculated as Rs. 50,000 for the initial default and Rs. 500 per day for continuing non-compliance (up to the maximum limit of Rs. 2,00,000), was imposed.
The order highlighted that the default, deemed to have started on July 1, 2019, remained unaddressed for 1,751 days. The adjudicating officer emphasized that the penalty was proportionate to the non-compliance, with the maximum allowable penalty of Rs. 2,00,000 imposed. The auditor is required to pay the penalty within 90 days via the MCA portal and provide proof of payment. Failure to comply with this order or to file an appeal within 60 days may result in further legal consequences under the Companies Act. This case underscores the critical importance of adhering to regulatory timelines to avoid legal and financial penalties.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF
COMPANIES, Uttar Pradesh
37/17, Westcott Building, The Mall,
Kanpur-208001. (LLP.)
Phone : 0512 – 2310443/2310227
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 FOR VIOLATION OF PROVISONS OF SECTION 140(2) OF THE COMPANIES ACT, 2013 .
IN THE MATTER OF SHRI RAM NIDHI LIMITED
(CIN;U65991UP2015PLC074120)
1. The Ministry of Corporate Affairs vide its Gazette notification no A-42011/112/2014-Ad.11 dated 24.3.2015, has appointed the undersigned as Adjudicating Officer 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 the Company SHRI RAM NIDHI LIMITED, has been registered under the provisions of the Companies Act on 27.10.2015 and is having its registered office situated at VILL SOFIPUR, Meerut, Uttar Pradesh,250001,India. The authorized capital of the Company is 5,000,000.0-
3. During the course of Inquiry it was observed that the auditor had resigned from the position of Auditor on 01.06.2019 and had not filed form ADT-3 within thirty days from the date of resignation with the Registrar hence violating the provisions of Section 140(2) of the Companies Act,2013.Thus, it is evident that the Auditor has failed to comply with the provisions of section 140(2) of the Companies Act, 2013, thereby attracting the penal provisions mentioned under Section 140(3) of the
Section 140(2) of the Act reads as under:-
“The auditor who has resigned from the company shall file within a period of thirty days from the date of resignation, a statement in the prescribed form with the company and the Registrar, and in case of companies referred to in sub-section (5) of section 139, the auditor shall also file such statement with the Comptroller and Auditor-General of India, indicating the reasons and other facts as may be relevant with regard to his resignation.”
Section 140(3) of the Companies Act,2013 reads as under :-
“If the auditor does not comply with the provisions of sub-section (2), he or it shall be liable to a penalty of fifty thousand rupees or an amount equal to the remuneration of the auditor, whichever is less, and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a °maximum of two lakh rupees.”
4. Accordingly, a Show Cause Notice NO.07/18/ADI/2024/SHRI RAM NIDHI/629 DATED 25.4.2024 was issued to the Auditor under section under Section 140 of the Companies Act, 2013, read with Companies (Adjudication of Penalties) Rules, 2014 by this office.
5. The Auditor has 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 Auditor have either furnished their reply or have appeared before the undersigned which has further strengthened the apprehension that the Auditors have failed to comply with the provisions of section 140(2) of the Companies Act, 2013, thereby attracting the penal provisions mentioned under Section 140(3) of the Act.
7. The date of default in the matter has been taken as 01.07.2019 i.e. thirty days from the date of resignation of the auditor on 01.06.2019.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.2,00,000/- as per section 140(3) of the Act on the ex-auditor for failure to make compliance of section 140(2) of the Companies Act, 2013. It is of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee- Penalty for non — compliance of Section 140(2) of the Companies Act,2013
| Nature of default and period from which started | Section of the Companies Act. | Name of the Auditor | Penalty imposed details (No. of days of default x penalty) |
| Non filing of form ADT-3 within thirty days from the date of resignation with the Registrar. Date of default in the matter has been taken as 01.07.2019 |
Section 140 (2) of the Companies Act, 2013 punishable under Section 140(3) of Companies Act, 2013 | Indu Bala, Auditor Total Penalty | Rs.50,000 + 8,75,500 ( 1751 days x500) = Rs.9,25,500/-
Maximum Penalty [As per Section 140(3) of Companies Act, 2013] = Rs. 2,00,000/- |
9. The Noticee shall pay the amount of penalty by way of e-payment [available on Ministry website mca.gov.in] under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 days of receipt of this order and intimate this office with proof of penalty paid .
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. In Case appeal is made 0/o Registrar of Companies, U.P. maybe informed alongwith the penalty imposed & the payments made. Attention is also invited to section 454(8) of the Companies Act, 2013, in the event of non-compliance of this order.
(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur.
NO. 07/18/ADJ/2024/SHRI RAM NIDHI/34
DATED: 03/09/2024
