Ministry of Corporate Affairs (MCA), through its Registrar of Companies-cum-Official Liquidator (ROC) in Jharkhand, has imposed a penalty on Kross Limited for failure to transfer its securities to a dematerialized form as required under Section 29 of the Companies Act, 2013. The adjudication order, dated September 10, 2024, details penalties on both the company and its officers for non-compliance with the legal requirements.
The order was issued by the Adjudicating Officer, K.C. Meena, ROC-cum-Official Liquidator, after considering the facts of the case and the company’s admission of non-compliance. The penalty is based on the company’s failure to meet the provisions of Section 29 of the Companies Act, which mandates that companies issue securities only in dematerialized form in accordance with the Depositories Act, 1996.
Background of the Case
Kross Limited, incorporated in 1991 as Kross Manufacturing (India) Private Limited, was converted into a public limited company in 2017. The company’s registered office is located in Jamshedpur, Jharkhand. On February 13, 2024, the company filed an application with the ROC, acknowledging non-compliance with Section 29 of the Companies Act and Rule 9A of the Prospectus and Allotment of Securities Rules, 2014.
The company admitted that it failed to transfer its shares into a dematerialized form, as required by law, from October 1, 2018, to October 20, 2022, a total of 1,479 days. In response to a show-cause notice issued by the ROC on August 29, 2024, Kross Limited requested leniency, stating that it had acted immediately to rectify the non-compliance upon discovering the issue.
Legal Provisions Involved
Section 29 of the Companies Act, 2013, mandates that public companies must issue securities only in dematerialized form. Companies making a public offer, or other classes of public companies as prescribed, are required to comply with the provisions of the Depositories Act, 1996.
Under Section 450 of the Companies Act, if a company or its officers contravene any provisions of the Act for which no specific penalty is prescribed, they are subject to a fine. The fine may extend up to ₹10,000, with an additional ₹1,000 for each day the contravention continues, subject to a maximum of ₹200,000 for the company and ₹50,000 for each officer in default.
Penalty Imposed
After reviewing the case, the Adjudicating Officer determined that Kross Limited had violated Section 29 of the Companies Act. The officer imposed a penalty of ₹2,00,000 on the company and ₹50,000 on each of its six officers in default. The total penalty on the officers amounted to ₹3,00,000. The officers penalized were Sudhir Rai, Anita Rai, Sumit Rai, Kunal Rai, Rahul Rungta, and Mukund Kedia.
The company and its officers have been directed to pay the penalty within 90 days of receiving the order. Payment is to be made via e-payment on the MCA’s official website under the “Pay miscellaneous fees” category. Proof of payment must be submitted to the ROC’s office. The company has also been instructed to immediately rectify the default if it has not done so already.
Right to Appeal
Kross Limited and the officers in default have the right to appeal the order within 60 days. Any appeal must be filed with the Regional Director, Eastern Region, Ministry of Corporate Affairs, in Kolkata. The appeal should be in the prescribed Form ADJ and must include a certified copy of the order.
Consequences of Non-Payment
Failure to pay the penalty within the specified timeframe could result in further legal consequences. Section 454(8) of the Companies Act outlines the potential outcomes of non-payment, which could include additional fines or legal action.
Conclusion
The MCA’s penalty on Kross Limited serves as a reminder of the importance of complying with statutory requirements under the Companies Act, 2013. Companies that fail to adhere to these regulations, including the requirement to maintain securities in dematerialized form, may face significant penalties.
Government of India
Ministry of Corporate Affairs
Office of the Registrar of Companies-cum-Official Liquidator, Jharkhand
Mangal Tower, 4th Floor, Old Hazaribagh Road
Near Kanta Toli Chowk
Ranchi, Jharkhand-834001
Adjudication Order No.- ROC/Kross/ADJ Order/Se 29/04465/516 to 522 Dated-10/09/2024
BEFORE THE ADJUDICATING OFFICER
ROC —CUM -OL, JHARKHAND
ORDER
UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH THE
COMPANIES (ADJUDICATIOAN OF PENALTIES) RULES, 2014
KROSS LIMITED
U29100JH1991PLC004465
1. Appointment of Adjudicating Officer: –
The Ministry of Corporate Affairs vide its Gazette Notification No, A-42011/112/2014-Ad. 11 dated 24.03.2015 appointed the undersigned as Adjudicating Officer (hereinafter referred to as “the A.0”) in exercise of the powers conferred under Section 454 of the Companies Act, 2013 (herein after known as The Act) read with Companies (Adjudication of Penalties) Rules, 2014 for _Adjudicating penalties under the provisions of the Companies Act 2013.
2. Company:-
Whereas the company VIZ M/S KROSS LIMITED (hereinafter referred to as “the Company”) was incorporated in the state of Jharkhand as Kross Manufacturing (India) Private Limited as Private company limited by shares on the ninth day of May 1991 under the provisions of Companies Act, 1956 and consequently upon conversion of the Company from Private limited to Public Limited Company on 17.01.2017 and the name was changed to Kross Limited. The Company is registered with the Registrar of Companies, Jharkhand. The company CIN is U29100JH1991PLC0044665. The registered office address is at M-4, Phase-VI, Gamharia, Adityapur Industrial Area, Jamshedpur,Ghamharia, Seraikela-Kharsawan, Seraikella Kharsawan, Jharkhand-832108.
3. FACT OF THIS CASE:
That the application was filed by the company on 13.02.2024 before the ROC, Jharkhand for non-compliance of section 29 of the Companies Act, 2013 with Rule 9A (Prospectus and allotment of Securities) Rules, 2014 where allegation of non-compliance non-transfer of shares into dematerialized form, were made.
Based on the aforesaid application a show cause notice was issued to the company and its officers vid this office notice No. ROC/Kross/ADJ Notice/Section 29/Ranchi/460 to 473 dated 29/08/2024
ii) The company has submitted its response, vide letter dated 09.09.2024 and they have admitted the non-compliance was made and requested from the undersigned to take a lenient view in the imposition of penalties as because the company has immediately acted as soon as the noncompliance came to the knowledge of the company.
4. Provisions of the companies Act, 2013:
AND WHEREAS, Section 29 of the Companies Act, 2013 (hereinafter referred to as “the Act”) provides inter alia that:
“(1) Notwithstanding anything contained in any other provisions of this Act, —
(a) every Company making public offer; and
(b) such other class or classes of public companies as may be prescribed, shall issue the securities only in dematerialized form by complying with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder.
(2) Any company, other than a company mentioned in sub-section (1), may convert its securities into dematerialized form or issue its securities in physical form in accordance with the provisions of this Actor in dematerialized form in accordance with the provisions Depositories Act, 1996) (22 of 1996) and the regulation made thereunder.”
AND WHEREAS, “As per Section 29 of the Companies Act, 2013 the company was required to maintain its securities in dematerialized form.
AND WHEREAS„ ” As Per Section 450 of the Companies Act, 2013 Punishment where no specific penalty or punishment is provided — If a. company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition„ limitation or restriction subject to which any approval, sanction, consent., confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees, and where the contravention is continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues subject to maximum of two lakhs rupees in case of a company and fifty ‘thousand rupees in case of an officer who is in default or any other person.”
ORDERS
05 Having considered the facts, circumstances and documentary evidence of the case, and after taking into account of the factors above, the A.O. is of the considered view that the company has violated the provisions of section 29 of the Companies Act, 2013. Hence, the A.O do hereby impose penalty upon the Company and its Officer-in-Default as per table below, for violating the provisions of section 29 of the Companies Act, 2013, keeping in view that the company is registered as Company limited by shares ‘ [as per the document meets filed by the company MCA portal ]
06 For the purpose of determination of penalty, under section 29 the following table is to be considered.
| Documents required to be filed | No. of days of Default | Maximum penalty on the company in INR (as per law) | Maximum Penalty in 1NR (as per law) on Officers in default i.e,
1.Sudhir Rai |
| Company to maintain its securities in dematerialized from as required under section 29 of the Companies Act, 2013 | 1479 days from 01.10.2018 to 20.10.2022 | Rs.2,00,000 | Rs.50,000 on each officer in default.
(50,000×6) = 3,00,000 |
| Total | 2,00,000 | 3,00,000 i.e. 50,000 x 6 (officers in default) each |
07 The company and its officers in default are hereby directed to rectify the default immediately, if not done earlier.
08 The notices against whom this order has been issued, shall the said amount of penalty individually for the company and its officers in default (out of own pocket) by way of e-payment (available on Ministry website www.mca.gov.in) 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.
09 Appeal if any against this order may be filed in writing with the Regional Director, Eastern Region, Ministry of Corporate Affairs, Nizam Palace, 3rd Floor, 234/4, A.J.C. Bose Road, Kolkata: 700020 within a period of sixty days from the date 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 of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014].
10 Attention is also invited to Section 454(8) of the Act regarding the consequence of non-payment of penalty.
11 The company is required to serve a copy of this order to the directors/officers in default mentioned above in terms of provisions of section 20 of the Companies Act, 2013
Place: Ranchi
Dated: 10th September 2024
(K.C. MEENA)
Adjudication Officer
ROC-cum-OL, Jharkhand
