Financial Statement signed by Disqualified Directors: MCA Imposes Penalty

The Ministry of Corporate Affairs (MCA), through the Registrar of Companies (ROC) in Uttar Pradesh, Kanpur, has imposed penalties on CMB INDIA NIDHI LIMITED for non-compliance with Section 134 of the Companies Act, 2013.

CMB INDIA NIDHI LIMITED, registered under the Companies Act on 24.11.2015, was scrutinized following directives to examine Nidhi Companies’ operations in various cities. The ROC Kanpur identified discrepancies in the financial reporting of CMB INDIA NIDHI LIMITED for the fiscal year ending 31.03.2018. Despite disqualification under Section 164(2) of the Companies Act, 2013, directors Mr. Shivendra Chauhan and Mr. Prem Chandra signed the financial statements. This violation prompted an inquiry, leading to penal actions outlined in the Inquiry Report of 30.03.2023.

Subsequently, a Show Cause Notice (No. 07/01/Adj-134 / CMB INDIA/6704-6708 dated 12.01.2024) was issued to address the breach under Section 134. The company responded through its authorized representative, Shri Shivansh Tiwari, but failed to provide essential documentation during the hearing process, exacerbating the non-compliance issue.

The penalty imposition followed due consideration of Sections 134(6) and 134(8) of the Companies Act, 2013, which stipulate penalties for failure to file financial statements duly signed by authorized directors. The penalty amounts were reduced as per Section 446B, considering the company’s status as a Small Company.

Registrar of Companies and Adjudicating Officer, Seema Rath, issued the final order on 31/05/2024, imposing penalties on CMB INDIA NIDHI LIMITED and its officers in default. The order mandates payment through the MCA21 portal within 90 days and invites appeals to be filed within 60 days from the date of receipt. Non-compliance with this order could lead to further legal consequences under Section 454(8) of the Companies Act, 2013.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF
COMPANIES,
UTTAR PRADESH,
37/17, Westcott Building, The Mall,
Kanpur — 208001 (U.P.)
Phone : 0512 — 2310323/2310443

Order No. 07/01/ADJ-134/CMB INDIA/ 320 to 322 DATED 31/05/2024.

ORDER FOR VIOLATION OF SECTION 134 (ACCOUNTS OF COMPANIES) OF COMAPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES 2014 & COMPANIES (AMENDMENT) ACT, 2020

IN THE MATTER OF “CMB INDIA 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.

Company: –

2. Whereas the Company “CMB INDIA NIDH1 LIMITED “has been registered under the provisions of Companies Act on 24.11.2015 and is having its registered office situated at 14-C, CHAK DAUD NAGAR, NAINI, Allahabad, Uttar Pradesh,211008. The authorized capital of the company is Rs. 25,00,000/-

3. Whereas one of the meetings where Regional Directors were directed to conduct an in-depth examination and submit a report on the surge of Nidhi Companies in Kanpur, Jaipur and Patna by the Secretary of Corporate Affairs vide minutes dated 10.04.2020. This being one of the Nidhi Company identified by ROC, Kanpur on suo-moto basis consequent upon the discussions in the ROC Review workshops with reference to Nidhi Companies. The Inquiry Officer (I0) has observed that the Company has filed financial statement and board report for the financial year ending on 31.03.2018 signed by Mr. Shivendra Chauhan and Mr. Prem Chandra even after being disqualified by ROC under section 164(2) of the Companies Act, 2013 . Accordingly, the Inquiry officer has reported the said violation in the Inquiry Report dated 30.03.2023. The Directorate vide its letter No. Inquiry/206(4)/Anant Vikas Mutual /RD(NR)/2022/3302 dated 10.06.2022 has accorded the penal action for said non-compliance. Thus, it is evident that the company and its Directors have failed to comply with the provisions of section 135 of the Companies Act, 2013, in filing the financial statement duly signed by the directors of the company. And are thus liable for penal provisions.

4. Accordingly, a Show Cause Notice No. 07/01/Adj-134 / CM B INDIA/6704-6708 dated 12.01.2024 was issued to its officer in default under section 134 by this office. This office has not received the said letter undelivered also.

5. The Company furnished a reply received in this office on 12.02.2024 to the said Show Cause Notice, hence a hearing was fixed in this matter on 14.03.2024. The hearing in the matter was concluded on 14.03.2024 in the presence of authorized representative of the company Shri Shivansh Tiwari, Practicing Company Secretary. The authorized representative did not carry the original copy of the authorization and relevant documents in support of the submission. Accordingly next hearing date was fixed on 10.04. 2024. Further, neither the defaulting director nor any representative of the director has either furnished his reply or has appeared before the
undersigned which has further strengthened the apprehension that the Director of the company has failed to comply with the provisions of Section 134(6) of the Companies Act, 2013 thereby attracting the penal provisions mentioned under Section 134(8) of the Act.

Provisions of the Act: –

6. Section 134(1) of the Companies Act, 2013 provides that: –

“The financial statement, including consolidated financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board at least by the chairperson of the company where he is authorized by the Board or by two directors out of which one shall be managing director and the Chief Executive Officer, if he is a director in the company, the Chief Financial Officer and the company secretary of the company, wherever they are appointed, or in the case of a One Person Company, only by one director, for submission to the auditor for his report thereon”.

Section 134(6) of the Companies Act, 2013 provides that: –

“The Board ‘s report and any annexures thereto under sub-section (3) shall be signed by its chairperson of the company if he is authorized by the Board and where he is not so authorized, shall be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director”.

Section 134(8) of the Companies Act, 2013 provides that —

“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.”

7. As per provisions of section 446B of the Companies Act, 2013 provides that “Notwithstanding anything contained in this act, if penalty is payable for non-compliance of any of the provisions of this act by a One Person Company, Small Company, start-up company or producer company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other persons, as the case maybe be, shall be liable to a penalty which shall not be more than one half of the penalty specified in such provisions subject to a maximum of two lakh ropes in case of a company one lakh rupees in case of an officer who is in default or any other person, as the case may be”.

8. Order:

Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose penalty as prescribed under section 134(8) of the Act. The default of the penalty imposed on the company (Being Small Company as per section 2(85) of the Act) and officers in default are shown in the table below:

I am of this opinion that penalty is commensurate with the aforesaid failure committed by the notice(s).

9. The Noticee shall pay the amount of penalty so imposed through MCA21 portal only as per rule 3(14) of Companies (Adjudication of Penalties) 2014. within 90 days receipt of this order. The company needs to file InC-28 as per the provisions of the act, attaching a copy of adjudication order alongwith payment challans.

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 non­compliance of this order. In Case appeal is made 0/o Registrar of Companies, U.P. maybe informed alongwith the penalty imposed & the payments made.

(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur

No. 07/01/ADJ-134/CMB INDIA/ 320 to 322

Dated: 31/05/2024