MCA Imposes Penalty as Form PAS-3 not contains PAN, Email & Class of security holder

The Registrar of Companies (ROC) in Chennai issued an adjudication order against M/s. Agniswari Nidhi Limited for non-compliance with Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014. The company failed to include mandatory details such as the Permanent Account Number (PAN) and email addresses of security holders in the list of allottees submitted with Form PAS-3. Despite being notified of this violation, the company and its directors did not provide a satisfactory response. After a hearing on March 12, 2024, the ROC determined that the company had breached the specified rules, leading to the imposition of a ₹40,000 penalty—₹10,000 each on the company and its three directors. The penalty must be paid within 90 days, and the decision is open to appeal under the Companies Act, 2013. This case highlights the importance of adhering to statutory requirements in corporate governance to avoid legal and financial repercussions.

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/ADJ/ AGNISWARI NIDHI /RULE 14(6) /2024 DATE : 11 JUL 2024

ADJUDICATION ORDER UNDER RULE 14(6) OF THE COMPANIES (PROSPECTUS AND
ALLOTMENT OF SECURITIES), RULES 2014
IN THE MATTER OF M/S. AGNISWARI NIDHI 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. Agniswari Nidhi Limited with CIN: U65990TN2022PIN153230 (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 No.208, North Main Road, Sethiyathope, Cuddalore, Bhuvanagiri, Tamil Nadu 608702. The financial & other details of the subject company as available on MCA-21 portal is stated as under:

3. Directors During the period of violation:

4. Section/Rule and Penal Provision as per Companies Act, 2013

Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014: 14

Private placement.

(6) A return of allotment of securities under section 42 shall be filed with the Registrar within fifteen  days of allotment in Form PAS-3 and with the fee as provided In the Companies (Registration offices and Fees) Rules, 2014 along with a complete list of all the allottees containing-

(i) the full name, address, permanent Account Number and E-mail ID of such security holder;

(ii) the class of security held;

(iii) the date of allotment of security ;

(iv) the number of securities herd, nominal value and amount paid on such securities; and particulars of consideration received if tire securities were issued for consideration other than cash.

Section 42. Offer or Invitation for Subscription of Securities on Private Placement

(i) A company may, subject to the previsions of this section, make a private placement of securities.

(ii) A private placement shall be made _:only to a select group of persons who have been identified by the Board (herein referred to as “identified persons”, whose number shall not exceed fifty or such higher number as may be prescribed [excluding the qualified institutional buyers and employees of the company being offered securities under a scheme of employees stock option in terms of provisions of clause (b) of sub-section (1) of section 62 in a financial year subject to such conditions as may be prescribed

Section 450. Punishment where no specific penalty or punishment is provided:

If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.

5. Issue of Adjudication Notice:

The Ministry vide letter dated 09.12.2022 rejected the form NDH-4 (Form for filing application for declaration as Nidhi and for updation of Status by Nidhi) filed by the company M/s. Agniswari Nidhi Limited (vide SRN: F38858080 Dt 02.11.2022) wherein it was mentioned that “the company has also violated Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, which reads as follows:

“A return of allotment of securities under section 42 shall be filed with the Registrar within fifteen days of allotment in Form PAS-3 and with the fee as provided in the Companies (Registration offices and Fees) Rules, 2014 along with a complete list of all the allottees containing-

(i) the full name, address, permanent Account Number and E-mail ID of such security holder;

(ii) the class of security held;

(iii) the date of allotment ofsecurity;

(iv) the number of securities herd, nominal value and amount paid on such securities; and particulars of consideration received if tire securities were issued for consideration other than cash.

After that the Adjudicating Authority had issued Adjudication Notice No. ROC/CHN/Agniswari/ADJ/2023 dated 31.08.2023 to the company.

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 dated 31.08.2023, the Adjudicating Authority has issued notice of hearing dated 04.03.2024 by fixing the hearing on 12.03.2024 at 11:30 AM. Pursuant to the notice dated 04.03.2024, Shri. Karunamoorthy, Advocate appeared before the Adjudicating Authority on behalf of the Company and its directors on 12.03.2024 and requested time to submit Vakalatnama and Reply to Notice. After that Shri. Karunamoorthy, Advocate vide letter dated 28th March 2024 submitted Vakalatnama and reply of the company. The company vide letter dated 27.03.2024 stated that the company was incorporated on 22.06.2022 with an object to carry on the business of Nidhi subject to necessary approval from the Central Government. Thereafter, the company had allotted shares to its promoters on 14.10.2022 on Right issue basis which was subsequently reported to ROC by filing e-form PAS 3 on 14.10.2022 vide SRN: F31142953. The 2^nd provision to Rule 3A says that in case a company does not comply with the requirements of this rule, it shall not be allowed to file Form No. SH-7 and PAS-3. The Rule 5 the threshold limit of members of 200 can be reached anytime within a period of 1 year from the date of incorporation. Per contra the proviso to Rule 3A provides that nothing in the first proviso shall prevent a Nidhi form filing Form NDH-4 before the period referred therein. Which means a company need not wait till the expiry is to take place for filing application in NDH-4 even when the company does not have that minimum of 200 members as contemplated in Rule 5 for the simple reason that such threshold limit can be achieved by the company any time within a period of 1 year from the date of incorporation. The Central Government has power to disallow the companies to file SH-7 and PAS-3 and not before the period contemplated in the Rule 3A. Further, submitted that the company is not carrying on any business as of now ever since the rejection of NDH-4. The promoters incurred preliminary expenses for incorporation of the company which they have already written off in their books as losses. Therefore, the Adjudicating Authority may please to take a very lenient view while adjudicating the issues.

8. Analysis of Non-compliance of Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014:

The company being a Nidhi company does not fall under the definition of small company as per provision of section 2(85) of the companies Act, 2013. Therefore, of imposing the provision lesser penalty as per section 446(b) shall not be applicable in this case.

A list of allottees is attached along with form PAS -3 filed (vide SRN: F31142953 dt 19.10.2022) by the company, but the Permanent Account Number, Email id of security holder and the class of security held are not mentioned in the list as required under Rule 14(6) of the Companies Prospectus and Allotment of Securities), Rules, 2014.

The submissions of the company are irrelevant in this case as the violation of Rule 14(6) of Companies Prospectus and Allotment of Securities), Rules, 2014 arises due to Email Ids & PANs were not mentioned in the list of allottees attached along with e-form PAS-3.

9. Decision:

Having considered the facts and circumstances of the case and after taking into account it is concluded that the company and directors have violated Rule 14(6) of (Companies Prospectus and Allotment of Securities), Rules, 2014.

Accordingly, I am inclined to impose a penalty as prescribed under Section 450 of the Companies Act, 2013. The details of the penalty imposed on the Company and Officers in default are shown in the table given below:

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.10,000/- (Rupees Ten thousand) is imposed on the Company and Rs.10,000/- (Rupees ten Thousand) is imposed on the Officers in default as mentioned above. Totally Rs.40,000/- (Rupees Forty Thousand) as penalty amount for violation of Rule 14(6) of the Companies (Prospectus and Allotment of Securities), Rules, 2014.

10. 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.

11. ‘Whereas Appeal against this order may be filed with the Regional Director (SR), Ministry of Corporate 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 order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].

12. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order, “(8)(i) Where company fails to comply with the order made under sub­section (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.

13. Where an officer of a company or any other person who is in default fails to comply with the order made wider 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