Introduction : The Registrar of Companies (ROC) in Pune has recently issued an adjudication order against Kudos Finance And Investments Private Limited for failing to comply with the provisions of the Companies Act, 2013. This order highlights the significance of adhering to statutory filing requirements and the potential repercussions of non-compliance.
Background: The adjudication order was issued under the framework of the Companies Act, 2013, specifically Section 454(3) read with Section 137 and the Companies (Accounts) Rules, 2014. It addresses the company’s failure to file the AOC-4 NBFC form with the Ministry of Corporate Affairs (MCA) for the financial year 2020-2021.
Appointment of the Adjudicating Officer: The Ministry of Corporate Affairs appointed an Adjudicating Officer to oversee the proceedings, demonstrating the formal and structured approach taken by the government in enforcing compliance.
Non-Compliance by Kudos Finance: The core issue revolves around the company’s omission to submit the necessary financial statements as required for Non-Banking Financial Companies (NBFCs). This failure has led to the imposition of penalties, underscoring the importance of timely and accurate statutory filings.
The Company’s Defense: Kudos Finance argued that the Indian Accounting Standards (Ind AS), and consequently the AOC-4 NBFC filing requirement, were not applicable to them based on their net worth. This contention was a key aspect of their defense against the imposition of penalties.
Penalties Imposed: The Adjudicating Officer, after considering the facts, imposed penalties on the company and its directors for the non-filing of the AOC-4 NBFC. This decision reflects the consequences of disregarding statutory obligations and the meticulous nature of regulatory oversight.
Conclusion : The adjudication order against Kudos Finance And Investments Private Limited serves as a stark reminder of the critical need for companies to comply with the Companies Act, 2013. It illustrates the potential financial and reputational damages stemming from non-compliance. Companies must ensure they are fully aware of their filing obligations and adhere to them to avoid similar punitive actions. This case underscores the relentless efforts of regulatory bodies to maintain corporate governance standards and enforce compliance across the board.
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OFFICE OF THE
REGISTRAR OF COMPANIES MAHARASHTRA, PUNE
MINSTRY OF CORPORATE AFFAIRS
GOVERNMENT OF INDIA
RoCP/ADJ/ 137/ 23-24/ KUDOS /8(ii) /B/2852 to 2858 Dated: 09/02/2024
ADJUDICATION ORDER
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Adjudication Order of penalties in the matter of Kudos Finance And Investments Private Limited (U65910PN2009PTC148795) under Section 454(3) read with section 137 of the Companies Act, 2013 read with the rule 12(1A) of the Companies (Accounts) rules, 2014
Please Read:
- Companies (Adjudication Of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019 (G.S.R.131(E) ).
- Provisions of Sub-section (1) and (3) of Section 137 of the Companies Act, 2013.
- Gazette Notification of Ministry of Corporate Affairs vide No. A-42011/112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015)
- Companies (Amendment) Act, 2019.
- General Circular No. 1/2020 dated 02.03.2020.
In respect of:
Whereas KUDOS FINANCE AND INVESTMENTS PRIVATE LIMITED having CIN-(U65910PN2009PTC148795) 8s having its registered office as per MCA21 Registry at address “C/o, EFC Limited, 7th Floor, East Wing, Marisoft-3, Marigold Premises, Kalyani Nagar, Pune, Maharashtra,411014,India.” and its directors/KMPs.
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015) appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) r/w Rule 3(1) of Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act. The undersigned vide Companies (Amendment) Act, 2019 is entrusted to adjudicate penalties under section 137 of the Companies ACT, 2013 with effect from 02.11.2018.
2. Company:
KUDOS FINANCE AND INVESTMENTS PRIVATE LIMITED (U65910PN2009PTC148795) (herein after referred as Company) is a registered company with this office under the provisions of section 3(1)(iii) of the Companies Act, 1956 having its registered office as per MCA21 Registry at address “C/o, EFC Limited, 7th Floor, East Wing, Marisoft-3, Marigold Premises, Kalyani Nagar, Pune, Maharashtra,411014,India.”
3. Relevant provisions of the Companies Act, 2013:
Section 137(1) of the Act provides that “A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed;
Further, as per Section 137 of the Act read with the rule 12(1A) of the Companies (Accounts) rules, 2014, every NBFC has to file the AOC-4 NBFC with MCA.
Section 137(3) of the Act provides that If a company fails to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the period specified therein, the company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of two lakh rupees, and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the Directors of the company, 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 after the first during which such failure continues, subject to a maximum of fifty thousand rupees.;
4. Facts about the Case:
a) In terms provisions of section 137(1) Companies Act, 2013, “A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed;
b) Further, as per Section 137 of the Act read with the rule 12(1A) of the Companies (Accounts) rules, 2014, every NBFC has to file the AOC-4 NBFC with MCA.
c) In terms of the provisions of section 137(3) of the Act, If a company fails to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the period specified therein, the company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of two lakh rupees, and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the Directors of the company, shall be 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 after the first during which such failure continues, subject to a maximum of fifty thousand rupees.
d) An inquiry was conducted by the JO and during the Inquiry, it was observed that the Company has not filed the AOC-4 NBFC with MCA for FY 20-21. Thus, the Directors and Company have failed to comply with provisions of section 137 read with rule 12(1A) of the Companies (Accounts) rules, 2014.
A reasonable opportunity was given to company and its directors vide order under section 206(4) of the Companies Act, 2013 vide letter no. ROCP/INQ/2021/2045 to 2051 dated 18.02.2022. However, reply submitted by the Company was not satisfactory and the competent authority has now directed to adjudicate the matter.
e) Accordingly, the adjudication officer has issued adjudication notice vide ROCP/ADJ/Sec-137/23-24/742 to 747 dated 23.06.2023 (herein after referred as Adjudication Notice) under Section 454(4) read with 137 of the Companies Act, 2013 read with Rule 12(1A) read with Rule 3(2) Of Companies (Adjudication of Penalties), 2014 as amended in Amendment Rules, 2019, to the company and its officers in default for the violation of the provisions of the act as mentioned in para “a to c” above;
f) A reply to the Adjudication notice has been received on 28.07.2023 from the company and its Directors stating that as per the section 137 of the Companies Act read with Rule 12(1A) of the Companies Account Rules, 2014, every Non-banking Financial Company (NBFC) that is required to comply with Indian Accounting Standards (Ind AS) shall file the financial statements with Registrar together with Form AOC-4 NBFC ( Ind AS) and the consolidated financial statements, if any, with Form AOC-4 CFS NBFC (Ind AS). And that as per applicability norms of Indian Accounting Standards (Ind AS), From 1st April, 2019 Ind AS are only applicable to the companies that are unlisted having net worth between 250 crores and 500 crores referring to the MCA Press Release No. 11/10/2009 CL-V dated 18th January, 2016. But, in our case, the Net worth of the Company for FY 202021 is INR 12,67,07,816 (Rupees Twelve Crores Sixty-Seven Lakhs Seven Thousand Eight Hundred Sixteen) only. And hence, Ind AS are not applicable to our Company and consequent to which, filing of Form AOC-4 NBFC is not applicable to our Company. Thus, Form AOC-4 NBFC are not filed by the Company because it is not applicable to the Company. Accordingly, no penalty should be imposed under the provisions of Section 137(3) of the Act against the Company and its officers in default for non-filing of Form AOC-4 NBFC for FY 2020-21.
g) Further, under section 454(4) of the Act read with Rule 3(2) of the Companies (Adjudication Of Penalties) Rules, 2014, Noticee(s) were given an opportunity to submit a reply by issuing an Adjudication Notice vide ROCP/ADJ/Sec-137/23-24/742 to 747 dated 23.06.2023 (herein after referred as Adjudication Notice) to why the penalty should not be imposed under the provisions of 137(3) of the Act against the Company and its officers in default for the above stated violations.
h) Hence, as the said violation has already been concluded by IO during the course of Inquiry :- no further hearing in physical is required to ascertain the violation of the said section.
Furthermore, the Noticee(s) are at liberty to file appeal against this order as per Para. 5.(e) of this order. Hence the Order-
5. ORDER:
a. The applicant company and its officers, who have defaulted the provisions of section 137(1) read with rule 12(1A) of the Act for non-filling of the AOC-4 NBFC with MCA for FY 20-21.
b. In exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and after taking into account the factors mentioned herein above, I do hereby impose the penalty on the company and its officers in default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, 2014 and the proviso of the said Rule and Rule 3(13) of Companies (Adjudication Of Penalties) Rules, 2014 r/w General Circular No. 1/2020 dated 02.03.2020; as per table below for violation of section 137(1) read with rule 12(1A) of the Act:-
Nature of default |
Violation of Section of the Companies Act, 2013 |
Company/Officers to whom penalty
|
No. of Days in default* |
Penalty For defaults (Rs.) as Per Section 137(3) of the Act |
Total Penalty (Rs.) |
Penalty Imposed (Rs.) |
Non filling of the form AOC-4 NBFC with MCA for FY 20-21 |
Section 137(1) |
Kudos Finance And Investments Private Limited |
547 |
Rs. 10000+1oo /per day |
10000+ 100 x 547=64,700 |
Rs. 64,700/- |
Pavitra Pradip Walvekar |
547 |
Rs. 10000+100 /per day |
10000+100 x 547=64,700 |
Rs. 50,000/- |
||
Swati Jindal |
547 |
Rs. 10000+100/per day |
10000+100 x 547=64,700 |
Rs. 50,000/- |
||
Naresh Vigh |
547 |
Rs. 10000+100 /per day |
10000+100 x 547=64,700 |
Rs. 50,000/- |
||
Audumbar Dattatray Raut |
547 |
Rs. 10000+100/per day |
10000+100 x547=64,700 |
Rs. 50,000/- |
||
Rizwan Hasan Shaikh (from date of appointment i.e. 30.04.2022) |
419 |
Rs. 10000+100 /per day |
10000+100 x 419 =51,900 |
Rs. 50,000/- |
(* No of days have been calculated from 23.12.2021(date of filling of Form AOC-4 for FY 2020-21) to till date of Notice, i.e.,23.06.2023 for FY 2020-2021)
c. I am of the opinion that penalty so imposed is commensurate with the aforesaid failure committed by the notice(s).
d. The noticee shall pay the amount of penalty individually for the company and its directors (out of its own pocked) by way of form No INC-28 of E-payment (available on Ministry Website mca.gov.in) under “Pay miscellaneous fees” category in MCA fee and payment Service within 90 (ninety) days of this order and the Challan/ SRN generated after payment of penalty through online mode shall be forwarded to this office along with the copy of Form INC- 28.
e. Appeal against this order may be filed under section 454(5) of the Act, in writing with the Regional Director (Western Region), Ministry of Corporate Affairs 100, Everest, 5th Floor, Netaji Subhash Road, Marine Drive, Mumbai-400002, 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 of the Act read with Companies (Adjudication of Penalties) Rules, 2014 as emended by Companies (Adjudication of Penalties) Amendment Rules, 2019.
f. Your attention is also invited to section 454(8)(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 in terms of the provisions of section 454(8)(i) of the Act.
g. 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 KUDOS FINANCE AND INVESTMENTS PRIVATE LIMITED and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Western Region) and Ministry of Corporate Affairs at New Delhi.
(Mangesh Jadhav, ICLS)
Adjudicating Officer
Registrar of Companies
Maharashtra, Pune
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