The Ministry of Corporate Affairs (MCA), through its Registrar of Companies (ROC) in Uttar Pradesh, has issued a significant penalty order against Dethat Trading Private Limited for non-compliance with the Companies Act, 2013. This article provides an in-depth analysis of the adjudication order under Section 454 of the Companies Act, 2013, and the Companies (Adjudication of Penalties) Rules, 2014. The penalty, amounting to ₹5 lakh, underscores the importance of adhering to legal requirements, particularly concerning the composition of the board of directors.
1. Background and Appointment of Adjudicating Officer
On March 24, 2015, the MCA appointed the undersigned Adjudicating Officer under the powers conferred by Section 454 of the Companies Act, 2013. This appointment followed the Companies (Adjudication of Penalties) Rules, 2014, to address violations of the Companies Act.
2. Company Details and Violation
Dethat Trading Private Limited, incorporated on April 23, 2019, is based in Greater Noida, Uttar Pradesh. The company’s registered capital stands at ₹1,000,000. An inquiry revealed that both current directors, Mr. Liang Daoping and Mr. Gu Yang, are foreign nationals. The absence of an Indian director violates Section 149(3) of the Companies Act, 2013, which mandates at least one director residing in India for a minimum of 182 days during the financial year.
3. Legal Provisions and Penalty Calculation
Section 149(3) of the Companies Act, 2013 stipulates that every company must have at least one director who fulfills the residency requirement. Section 172 provides for penalties in cases where compliance is not met, including a fine of ₹50,000 and additional penalties for continued non-compliance.
The default period was determined to start from February 2020, following the cessation of Ms. Radha Kashyap, the previous resident director. As per Section 172, the maximum penalty for non-compliance includes a fine of ₹50,000 plus ₹500 per day of default, up to a maximum of ₹3 lakh for the company and ₹1 lakh per director.
4. Show Cause Notice and Hearing
A Show Cause Notice was issued on March 4, 2024, to the company and its officers. Despite this, the company and its directors did not respond or attend the hearing, leading to the assumption of continued non-compliance.
5. Final Adjudication
The adjudicating officer imposed a total penalty of ₹5 lakh. This includes ₹1.5 lakh against Dethat Trading Pvt. Ltd. and ₹50,000 each against Mr. Liang Daoping and Mr. Gu Yang. This decision reflects the serious nature of the violation and aims to enforce compliance with the statutory requirements.
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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 — 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 149 OF THE COMPANIES ACT, 2013 .
IN THE MATTER OF DETHAT TRADING PRIVATE LIMITED
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 DETHAT TRADING PRIVATE LIMITED(CIN- U93090UP2019PTC116158) has been registered under the provisions of the Companies Act, on 23.04.2019, and is having its registered office situated at F-15 ,Site 4 Kasna, Greater Noida shopping plaza, Noida, Gautam Buddha Nagar, Uttar Pradesh,201310,India. The authorized capital of the Company is Rs. 1,000,000.00/-
3. During the course of Inquiry it was observed that as per the signatory detail of the company on MCA-21 Registry, both the current directors of the company namely, Mr. Liang Daoping and Mr. Gu Yang are foreign nationals (Chinese). At present, there is no Indian director in the Company . Therefore, it is non-compliance of Section 149(3) of the Companies Act, 2013.Thus, it is evident that the company and its Directors have failed to comply with the provisions of section 149 of the Companies Act, 2013, in maintaining atleast one Resident directors in the board of the company, thereby attracting the penal provisions mentioned under Section 172 of the Act.
Section 149(3) of the Companies Act, 2013 provides that: –
“Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days during the financial year:
Provided that in case of a newly incorporated company the requirement under this sub-section shall apply proportionately at the end of the financial year in which it is incorporated “
Section 149 read with 172 of the Companies Act, 2013 provides that —
“If a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.”
4. Accordingly, a Show Cause Notice No. No.07/03/Adj/2024/Dethat Trading/7451 to 7454 Dated 04.03.2024 was issued to the company and its officers in default under section under Section 149 of the Companies Act, 2013, read with Companies (Adjudication of Penalties) Rules, 2014 by this office.
5. The company and its officers in default have 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 company nor its directors have either furnished their reply or have appeared before the undersigned which has further strengthened the apprehension that the company and its Directors have failed to comply with the provisions of section 92 of the Companies Act, 2013, in filing of a copy of the annual return, within sixty days from the date on which the annual general meeting is held upto 30.11.2021, thereby attracting the penal provisions mentioned under Section 92(5) of the Act.
7. The date of default in the matter has been taken as 02.2020 i.e. the date of cessation of Ms.Radha Kashyap , the resident director of the company. Post the date of cessation , no resident director was appointed in the company, The default has been continuing since then.
8. In the present case it is evident that the company has made violation of section 149 of the Companies Act, 2013. However, since no penalty has been prescribed under section 149 of the Act, general penalty u/s 172 of the Act shall be Levied in this case.
9. Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose a penalty of Rs.1,50,000/- as per section 172 of the Act on the company and Rs.50,000/- on each Director under section 172 of the Companies Act, 2013 for failure to make compliance of section 149(3) 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 149(3) of the Companies Act,2013
| Nature of default and period from which started | Section of the Companies Act. | Name of the company/directors/ defaulters | Penalty imposed details (No. of days of default penalty) |
|
04.02.2020 |
Section 149 of the Companies Act, 2013 punishable under Section 172 of Companies Act, 2013 | 1. Dethat Trading Private Limited. | Rs.50000 + 745000 (1490 days x500) = Rs.7,95,000/- Maximum Penalty [As per Section 172] = Rs. 3,00,000/- |
| 3. Mr. Liang Daoping, Director | Rs.50000 + 745000 (1490 days x500) = Rs.7,95,000/-Maximum Penalty [As per Section 172] = Rs. 1,00,000/- | ||
| . Mr. Gu Yang, Director | Rs.50000 + 745000 (1490 days x500) = Rs.7,95,000/- Maximum Penalty [As per Section 172] = Rs. 1,00,000/- | ||
| Total Penalty | Rs.5,00,000/- |
10. The Noticee shall pay the amount of penalty by way of Demand Draft in favour of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days receipt of this order. The Demand Draft shall be forwarded to this office Address.
11. 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) the Act, read with Companies (Adjudication of Penalties) Rules, 2014].
12. 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. may be informed alongwith the penalty imposed & the payments made.
(Seema Rath)
Registrar of Companies & Adjudicating Officer-
Uttar Pradesh, Kanpur.
No.07/03/Adj/2024/Dethat Trading/2782 to 2785
Dated 26.07.2024
