The Ministry of Corporate Affairs (MCA) recently levied a penalty of Rs. 2 lakhs on M/s. D P F Textiles Pvt Ltd for incorrectly disclosing the value of a related party transaction. This article delves into the details of the case, the implications of the penalty, and the provisions of the Companies Act, 2013 violated by the company.
The case revolves around a discrepancy in the reporting of a related party transaction by M/s. D P F Textiles Pvt Ltd. The company, along with its directors, voluntarily approached the Registrar of Companies, Coimbatore, seeking adjudication of the penalty for violating Section 134 of the Companies Act, 2013. During the hearing, it was revealed that the company had inaccurately reported the Related Party Transaction value in its Board’s Report for the Financial Year 2018-19.
Section 134(3)(h) of the Companies Act, 2013 mandates companies to attach a report by the Board of Directors to the statements laid before the general meeting, including particulars of contracts or arrangements with related parties. Failure to comply with this provision incurs a penalty under Section 454 of the Act.
The Adjudicating Officer, considering the facts and submissions, imposed a penalty of Rs. 1,50,000 on M/s. D P F Textiles Pvt Ltd and Rs. 25,000 each on its directors, Mr. Martin Santiago and Mr. Sellam Nadar Ravi. The company and its directors were directed to rectify the defect promptly and pay the penalties through the Ministry of Corporate Affairs portal.
Furthermore, the order highlights the appeal process, consequences of non-payment of penalty, and the dissemination of the order to relevant authorities.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES
TAMILNADU – COIMBATORE
No.7 A G T BUSINESS PARK, PHASE II, 1ST FLOOR,
PEELAMEDU, COIMBATORE – 641014
e-Mail [email protected]
Ref: ROC/CBE/A.O./134/0048/2024
Date: 28.03.2024
Order for Penalty under Section 454 for violation of Section 134 of the Companies Act, 2013 read with the Companies (Adjudication of Penalties) Rules, 2014
IN THE MATTER OF M/s. D P F TEXTILES PRIVATE LIMITED.
CIN: U70100TZ2009PTC00048
Appointment of Adjudicating Officer:
1. Ministry of Corporate Affairs vide its Gazette Notification No.A-42011/112/2014-Ad.II dated 24.3.2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by Section 454 of the Companies Act, 2013 (herein after known as Act) read with Companies (Adjudication of penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
Company:
1. Whereas Company M/s. D P F TEXTILES PRIVATE LIMITED (hereinafter Known as Company) is a company registered with this office under the provisions of Companies Act, 2013 having its registered address at 54, Mettupalayam Road, G N Mills Post, Coimbatore – 641 029.
Facts of the case:
2. The company and its directors have filed suo-moto application in this office on 01.11.2023 for adjudication of the penalty for violation of section 134 of the Companies Act, 2013.
3. The undersigned in exercise of power conferred under sub section 4 of section 454 of the Companies Act, 2013 with a view to give a reasonable opportunity of being heard before imposing any penalty, fixed the date of hearing on 28/03/2024 at 11.30 AM to adjudicate the penalty for violation of provision of section 134 of the Companies Act, 2013.
4. Board of Directors of the Company vide their resolution dated 31/08/2023 authorized Ms. M. Jayasree , Chartered Accountant to act as authorized representative of the company before the Registrar of Companies, Coimbatore, to carry out the formalities for the Adjudication of Penalties under Section 454 of the Companies Act, 2013.
5. During the hearing on 28/03/2024 , Ms. M. Jayasree, Chartered Accountant and authorized representative of the Respondent made submissions that the Company had reported in its Board’s Report for the Financial Year 2018-19 that the company had disclosed incorrect transaction value in respect of one transaction.
Provisions of the Companies Act, 2013
6. Sub-Section (3)(h) of Section 134 of the Act provides that there shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include particulars of contracts or arrangements with related parties referred to in subsection (1) of section 188 in the prescribed form.
7. Sub-section (8) provides that 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 rupees.
ORDER
8. Having considered the facts and circumstances of the case and the submissions made by the authorized representative of the Respondent, being a small company the Adjudicating officer do hereby impose penalty under section 446 B of the Act on Company and. its director as per Table below for violation of Section 134 (3) (h) of the Companies Act, 2013.
|
S. No |
Name of the Respondents | Amount(In Rupees) |
| 1. | M/s. D P F Textiles Private Limited. | 1,50,000 |
| 2. | Shri. Martin Santiago | 25,000 |
| 3. | Shri. Sellam Nadar Ravi | 25,000 |
| TOTAL | 2,00,000 |
9. The penalties imposed as under should be paid by the Respondents as per Law and submit the copies of Challan to this office. The company should file the INC 28 with attachment of this order and copy of aforesaid Challan.
10. The company and its directors are hereby directed to rectify the defect immediately on receipt of copy of this order.
11. The penalty imposed shall be paid through the Ministry of Corporate Affairs portal only.
12. Appeal, if any against this order may be filed in writing with the Regional Director, Southern Region, Ministry of Corporate Affairs, 5th Floor, Shastri Bhavan, 26, Haddows Road, Chennai-600 006 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 Companies Act, 2013 read with the Companies (Adjudicating Of Penalties) Rules, 2014).
13. Your attention is also invited to Section 454(8) of the Act regarding consequences of non-payment of penalty.
14. In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, a copy of this order is being sent to Company M/s. D P F Textiles Private Limited and its directors.
Also to:-
1. Regional Director, Southern Region, Ministry of Corporate Affairs, Chennai.
2. Director, Legal Section, Ministry of Corporate Affairs, 5th Floor, ‘A’ Wing, Shastri Bhawan, Dr. R. P. Road, New Delhi-110001.
3. E Governance Cell, Ministry of Corporate Affairs, Shastri Bhawan, 5th Floor, ‘A’ Wing, Dr. R. P. Road, New Delhi-110001.
Place: Coimbatore
Date: 28.03.2024
(BRIJESH KUMAR KAIN), ICLS
REGISTRAR OF COMPANIES
TAMILNADU, COIMBATORE
