Introduction: The Ministry of Corporate Affairs (MCA) recently imposed penalties on Hermes I Tickets Private Limited for discrepancies in its trade payable grouping, as per Section 134(5)(b) of the Companies Act, 2013. This article delves into the adjudication order, examining the violation, pro-ceedings, and the resultant penalties.
Detailed Analysis:
1. Appointment of Adjudicating Officer: The MCA, through a Gazette Notification, appointed the Registrar of Companies, Chennai, as the Adjudicating Officer to assess penalties under the Companies Act, 2013.
2. Company Overview: Hermes I Tickets Pvt Ltd, a reg-istered company, faced scrutiny for inconsistencies in its financial reporting.
3. Directors’ Responsibilities: Section 134(5)(b) man-dates directors to maintain consistent accounting policies for a true and fair view of the company’s fi-nancial status. Any deviation attracts penalties.
4. Adjudication Notice: An inquiry flagged discrepan-cies in Hermes I Tickets Pvt Ltd’s financial statements, prompting an adjudication process.
5. Company Response: Despite issuance of notices, the company and its directors failed to respond adequately.
6. Adjudication Hearings: The Adjudicating Authority held hearings, considering submissions from representatives of the directors.
7. Decision and Penalties: Following thorough evalua-tion, penalties were levied on the company and one of its directors, Mr. Manojkumar Sahu, for violating Section 134(5)(b).
8. Imposed Penalties: Hermes I Tickets Pvt Ltd and Mr. Sahu were fined Rs. 3,00,000 and Rs. 50,000, respectively, totaling Rs. 3,50,000.
9. Payment and Appeal: The order necessitates pay-ment within 90 days, with an option for appeal within 60 days to the Regional Director, Ministry of Cor-porate Affairs.
Conclusion: In conclusion, the imposition of penalties on Hermes I Tickets Pvt Ltd un-derscores the significance of adhering to accounting standards and maintaining transparency in financial reporting. The case serves as a reminder to companies and directors to exercise diligence in fulfilling statutory obligations to avoid legal repercussions.
By understanding the intricacies of this case, stakeholders can appreciate the importance of consistent financial reporting and the consequences of non-compliance with regulatory standards.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES, TAMIL NADU, ANDAMAN & NICOBAR ISLANDS, CHENNAI
II FLOOR, C- WING, SHASTRI BHAVAN, 26, HADDOWS ROAD, NUNGAMBAKKAM, CHENNAI- 6
F.NO.ROC/CHN/HERMES I/ADJ/S.134 /P.28/2024 DATE: 27 MAR 2024
ADJUDICATION ORDER UNDER SECTION 134 OF THE COMPANIES ACT, 2013
IN THE MATTER OF M/S HERMES I TICKETS PRIVATE LIMITED
1. Appointment of Adjudicating Officer:-
The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 has appointed Registrar of Companies, Chennai as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter referred as Act or Companies Act, 2013) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company: –
Whereas the company viz M/s. Hermes I Tickets Private Limited with CIN: U63040TN2006PTC082562 (herein after referred as company’ or ‘ subject company’) is a registered company with this office under the Companies Act, 2013 having its registered office as per MCA21 Registry at Sai Krupa Plot No. 30A (south phase) First floor SIDCO THIRU-VI-KA Industrial Estate Guindy, Chennai, Tamil Nadu 600032.
The financial & other details of the subject company as available on MCA-21 portal is stated as un-der:
| S. No. | Particulars | Details as per FY 2021-22 |
| 1. | Paid up Capital | Rs. 7,84,200/- |
| 2. | a. Revenue from Operation | Rs.34,67,80,951/- |
| b. Other Income | NIL | |
| c. Profit for the Period | ||
| 3. | Whether it is a Holding Company | No |
| 4. | Whether it is a Subsidiary Company | Yes |
| 5. | Whether company registered under Section 8 of the Act? | No |
| 6. | Whether company registered under any other special Act? | No |
3. Directors
| S. No. | Name of Director Default | Designation | Date of Appointment | Date of Cessation |
| 1. | Manojkumar Sahu |
Director | 30.09.2016 | ….. |
| 2. | Ramu Annamalai Ramsamy | I Managing Director | 25.11.2014 | 13.09.2016 |
| Director | 13.09.2016 | 11.03.2019 | ||
| 3. . | Palaniyapan Ramsamy | Director | 13.09.2016 | 11.03.2019 |
| Whole time Director | 25.11.2014 | 13.09.2016 | ||
| 4. | Anil Kapur | Director | 04.04.2018 | 18.07.2019 |
4. Section and Penal Provision as per Companies Act, 2013
Section 134 of the Companies Act, 2013
(5) The Directors’ Responsibility Statement referred to in clause (c) of sub-section (3) shall state that—
(a) in the preparation of the annual accounts, the applicable ac-counting standards had been followed along with proper explanation relating to material depar-tures;
(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
(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 ru-pees.
5. Issue of Adjudication Notice:
An inquiry was conducted under Section 206(4) of the Companies Act, 2013 in the matter of Hermes I Tickets Private Limited by an Officer authorized by the Central Government wherein the observations of the Inquiry Officer are as follows:
In continuation to Para No.12 of the Inquiry Report.- It is observed in the Balance Sheet as at March 31, 2018 under Note 7, the amount shown under Trade Payables for Supplies is Rs. 28,25,18,082 in the year ended at March 31, 2018, but in the Balance Sheet as at March 31, 2019, the amount of Trade Payables for Supplies is Rs. 31,27,87,721 for the previous reporting year, i.e., March 31, 2018. Also, the amount reflected under the head Other current Liabilities, in Note 8, in the year ended at March 31, 2018, is Rs. 24,77,54,248 in the Balance Sheet as at March 31, 2018 but the amount reflected under the head Other current Liabilities, for the previous reporting year, i.e., March 31, 2018, is Rs. 22,27,67,470 in the Balance Sheet as at March 31, 2019.
The Inquiry Officer has reported that, the subject company has done the Regrouping of accounts with-out giving proper disclosure in the notes to accounts. The figures shown in one Financial Year should ex-actly match when used as part of previous accounting period in the next Financial Year. However, the subject company has changed figures deliberately and has explained it as part of re-grouping, which is not acceptable Regrouping of Trade Payables in one year to Advances from customers and accrued ex-penses in another year is totally unacceptable.
According to section 134(5)(b) the directors responsibility statement shall state that the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the Financial Year and of the Profit & Loss of the company for the period 2018-2019.
As the Financial Statements do not give a true and fair view of the affairs of the company with respect to Trade Payables in one year to Advances from customers and accrued expenses in another year. Hence, the company has contravened the provision of Section 134(5)(b) of the Companies Act, 2013 and com-pany and officers in default are liable for punishment under Section 134 (8) of the Companies Act, 2013.
Accordingly, on submission of the Inquiry Report by the officer, Regional Director, Ministry of Corporate Affairs, Chennai has directed this office to initiate necessary action against the defaulters of the provi-sions of the Companies Act, 2013.
After this office has issued Show Cause Notice for Adjudication under Section 134 of the Companies Act vide Notice No. ROC/CHN/082562/S.134/P.28/INQUIRY FOLLOW UP/2022 dated 15.09.2023.
6. Reply of Company and Directors for Adjudication Notice issued:
No reply has been received from the company and its directors.
7. Adjudication Hearing:
Since no reply has been received from the company and its directors for the Adjudication notice, this office had issued Adjudication Hearing Notice to the subject company and Officers in default by fixing the hearing date as 24.01.2024 at 11:30 AM. Pursuant to the hearing notice Shri. Naresh G, PCS has appeared on behalf of the directors namely Shri. Ramu Annamalai Ramasamy, Shri. Palaniyapan Ramsamy and made submission that the violation may be adjudicated. Other directors, namely Mr. Manoj Kumar Sahu and Mr. Anil Kapur were absent on the said date and no one appeared on behalf of the company. Further, the Adjudicating Authority has issued another notice of hearing to Mr. Manoj Kumar Sahu and Mr. Anil Kapur Directors of the company on 05.02.2024 by fixing the hearing on 13.02.2024 at 11:30AM. Pursuant to the hearing notice, Shri. Jatin Gupta, FCS has appeared before the Adjudicating Authority on behalf of the Mr. Anil Kapur and made submissions that Mr. Anil Kumar was not in the directorship of the company at the time of filing the balance sheet however, the violation for the concerned FY could be adjudicated. Since Mr. Manoj Kumar Sahu was absent in the last two hear-ings, the Adjudicating Authority has issued final notice to him by fixing the hearing on 29.02.2024 at 12:45PM. Shri. M Rathnakumar, PCS has appeared before the Adjudicating Authority on 29.02.2024 on behalf of Mr. Manoj Kumar Sahu and made submission that the violation may be adjudicated.
8. Decision
Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that the company and director Mr. Manojkumar Sahu are liable for penalty as pre-scribed under Section 134(8) of the Act as the other directors were not in the directorship of the com-pany at the time of filing of balance sheet for the FY 2018-19.
Accordingly, I am inclined to impose a penalty as prescribed under Sub-section 8 of Section 134 of the Companies Act, 2013. The details of the penalty imposed on the company and Officer in default are giv-en in the table given below:
I. FY 2018-19
| Name of Company/ person on whom penalty im-posed | Penalty for default (Rs) | Maximum Limit for penalty (Rs) | Penalty Imposed (Rs) |
| M/s. Hermes I Tickets Private Limited | Rs.3,00,000/- | Rs.3,00,000/- | Rs.3,00,000/- |
| Manojkumar Sahu | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.3,00,000/- (Rupees Three lakhs) is imposed on the Company and Rs.50,000/- (Rupees Fifty thousand) is imposed on Officer in default. Totally Rs. 3,50,000/- (Rupees Three lakhs fifty thousand) as penalty amount for violation of Section 134 of the Companies Act, 2013 for the FY 2018-19.
9. The said amount of penalty shall be paid through online by using the website mca.gov.in(Misc. head) within 90 days of receipt of this order, and intimate this office with proof of penalty paid.
10. Whereas Appeal against this order may be filed with the Regional Director (SR), Ministry of Corpo-rate Affairs, 5th Floor, Shastri Bhavan, 26 Haddows Road, Chennai-600006, Tamil Nadu within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of this or-der. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].
11. your attention is also invited to section 454(8) of the Act in the event of non-compliance of this or-der, “(8)(i) Where company fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be within a period of ninety days from the date of the receipt of the copy of the order, the company shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to five lakh rupees.
(ii) Where an officer of a company or any other person who is in default fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be within a period of ninety days from the date of the receipt of the copy of the order, such officer shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.”
(B. SRIKUMAR, ICLS)
REGISTRAR OF COMPANIES
TAMILNADU, CHENNAI.
ADJUDICATING OFFICER
