MCA Imposes Penalty for Inadequate Office Setup, Lacking Operations, Staff & Documentation

The Ministry of Corporate Affairs (MCA) has imposed a penalty on Rhino Finance Private Limited for violating Section 12 of the Companies Act, 2013. The company, with its registered office at R Dutta Market, A.T. Road, Guwahati, was found to have maintained an inadequate office lacking essential business operations, personnel, and documentation.

This decision was formalized by an order from the Registrar of Companies (RoC), Guwahati, after an inquiry revealed that the company was not complying with the requirements of maintaining a functional registered office. The case highlights the Ministry’s efforts to ensure that companies adhere to the basic statutory obligations concerning their registered offices.

Inquiry Triggered by Ministry of Corporate Affairs

The investigation into Rhino Finance Pvt Ltd began following a letter from the Ministry of Corporate Affairs dated January 19, 2022. The letter directed an inquiry under Section 206(4) of the Companies Act, 2013, based on inputs from the Ministry of Home Affairs (MHA). The inquiry uncovered that the company had only a skeleton presence at its registered office in Guwahati.

The office was reportedly maintained only in name, with a caretaker employed to handle correspondence. No business activities were being conducted, nor were essential components like books of accounts, computers, or employees present at the location. These findings pointed to a clear violation of Section 12 of the Companies Act, 2013, which mandates that a company must maintain a functional registered office capable of receiving and acknowledging all communications.

Legal Proceedings and Hearing

Following the inquiry, the RoC Guwahati issued a notice under Section 454(4) of the Companies Act, summoning the company and its officers to a hearing on June 27, 2024. The hearing, originally scheduled for that date, was later adjourned to July 30, 2024, to allow further submissions.

During the hearing, Advocate Vinayak Trivedi represented the company and submitted that the company was not in violation of the law. However, based on the inquiry’s findings, the adjudicating officer concluded that the company had violated Section 12(1) of the Companies Act.

Penalties Imposed

The adjudicating officer, Shri Dip Narayan Chowdhury, Registrar of Companies, Guwahati, concluded that the company and its officers had failed to maintain an adequate registered office as required by law. As a result, penalties were imposed on the company and its officers under Section 12(8) of the Companies Act, 2013.

The penalties are as follows:

The penalty was calculated based on the period of non-compliance, which spanned from February 1, 2022, to June 7, 2024, totaling 858 days.

Compliance and Further Action

The company and its officers have been directed to pay the penalties individually through the MCA’s online portal within 90 days. They are required to file the payment receipts in Form INC-28 on the MCA21 portal. Failure to comply with the penalty payment could result in additional fines or imprisonment, as stipulated under Sections 454(8)(i) and 454(8)(ii) of the Companies Act, 2013.

In case of dissatisfaction with the decision, Rhino Finance Pvt Ltd has the right to appeal the order before the Regional Director, North Eastern Region, within 60 days of receiving the order. The appeal must be submitted in writing using Form ADJ, accompanied by a certified copy of the order.

Conclusion

The MCA’s action against Rhino Finance Pvt Ltd underscores the importance of maintaining a functional registered office as mandated by law. The case serves as a reminder to companies that failure to comply with the provisions of the Companies Act, particularly those related to maintaining a proper registered office, can result in significant penalties. Rhino Finance Pvt Ltd and its officers now face financial consequences for their failure to meet these statutory obligations.

GOVERNMENT OF INDIA
Ministry Of Corporate Affairs
Office of the Registrar of Companies, North Eastern Region
1st Floor, BSNL Bhawan, Pan Bazar
Guwahati- 781001

Order FILE NO. ROC/GHY/ADJ/RHIN0/454/2024-25/963 Dated: 17/10/202

BEFORE THE ADUDICATING OFFICER
REGISTRAR OF COMPANIES, GUWAHATI

ORDER IN THE MATTER OF ADJUDICATION OF PENALTY UNDER SECTION 454(3) OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES)RULES, 2014 FOR VIOLATION OF SECTION 12 OF THE COMPANIES ACT, 2013.

IN THE MATTER OF M/S RHINO FINANCE PRIVATE LIMITED

(CIN —U67120AS1996PTC004705)

DATE OF HEARING —27.06.2024

PRESENT:

1. Shri Dip Narayan Chowdhury (ROC), Adjudicating Officer

2. ShriPfokriu (STA), Presenting Officer

Authorized representative of the Company: Advocate VinayakTrivedi

Appointment of Adjudication Authority: –

1. The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad. II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred under section 454 of the Companies Act, 2013 [hereinafter known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 (Notification No. GSR 254(E) dated 31.03.2014) for adjudging penalties under the provisions of the Companies Act, 2013.

Company:

2. M/S RHINO FINANCE PVT LTD (herein referred to as ‘the company’) is a company having its registered office at “R Dutta Market, Second Floor, A.T Road, Guwahati, Assam-781001” and is registered under the provisions of the Companies Act, 1956 on 29.02.1996. The CIN of the Company is U67120AS1996PTC004705.

Facts About the Case

a) That the Ministry of Corporate Affairs vide letter no. CL-II-08/131/2021— 0/o DGCoA-MCA dated 19.01.2022, in exercise of its power under Section 206(4) of the Companies Act, 2013, directed the inquiry of books and papers of M/s RHINO FINANCE PRIVATE LIMITED on the basis of input from MHA. During the course of inquiry, it was observed that the company has made following violations:

The company has not maintained a proper office at its registered address at R Dutta Market, Second Floor, A T Road Guwahati Assam-781001. The company is maintaining a skeleton office for name sake and no business activities is being carried out and no books of accounts, computers & employees are employed/ maintained at registered office at Guwahati. At the registered office only a watch man/caretaker type person is employed to accept the correspondence of the company. Thus, the company and its officers in default has violated Section 12 of the Companies Act, 2013.

b) A reasonable opportunity was given to the company and its directors vide notice under section 206(4) of the Companies Act, 2013 vide letter no .ROC/GHY/Rhino/97-103 dated 20.04.2022.However, the reply submitted by the company was not satisfactory and the competent authority has directed to adjudicate the matter.

c) Accordingly, The Registrar of companies, Guwahati, Adjudicating officer vide letter ROC/GHY/U/S454/313 dated 07.06.2024 issued notice under section 454(4) of the Companies Act,2013 in respect of hearing at 1st floor, BSNL Bhawan, Pan Bazar, Guwahati-781001, Assam on 27.06.2024 at 11:30 AM to the company and its officers in default for violation of the provisions of the act as mentioned in para “a” above.

Relevant Provisions of the Companies Act, 2013

Section 12(1) of the Companies Act, 2013 states that

A Company shall, within thirty days of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it.

Section 12(8) of the Companies Act, 2013

If any default is made in complying with the requirements of this section, the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding one lakh rupees.

Section 454(3) of the Companies Act, 2013 The adjudicating officer may, by an order-

(a) impose the penalty on the company, the officer who is in default, or any other person, as the case may be, stating therein any non-compliance or default under the relevant provisions of this Act; and

(b) direct such company, or officer who is in default, or any other person, as the case may be, to rectifi, the default, wherever he considers fit.

Provided that in case the default relates to non-compliance of sub-section (4) of section 92 or sub-section (1) or sub-section (2) of section 137 and such default has been rectified either prior to, or within thirty days of the issue of the notice by the adjudicating officer, no penalty shall be imposed in this regard and all proceedings under this section in respect of such default shall be deemed to be concluded.

Show Cause Notice reply and Personal Hearing

a) The provisions of section 454(3) of the Act and rules made there under inter alia stipulate the
manner for adjudging penalties for non-compliance of the relevant provisions of this Act. Accordingly, in the interest of natural justice, before imposing the penalty on the company, the officer who is in default, or any other person, as the case may be, a reasonable opportunity of being heard was given to them by issuing a Notice dated 07.06.2024 for hearing under sub-section 4 of Section 454 the Act on 27.06.2024. Further, the matter was adjourned and the final date of hearing was fixed on 30.07.2024.

b) Advocate Vinayak Trivedi, appeared and attended the hearing on behalf of the company and officer in default on 30.07.2024 and submitted the information, paper and made statement as may be deemed appropriate in the matter. He made the submission orally as well as through written submissions that company is not in violation of section 12 of the Companies Act, 2013.

c) As the said violation has already been concluded by I0 during the course of Inquiry, it is clear that there is violation of section 12(1) of the Companies Act, 2013.

ORDER

1. The applicant company and its officer in default has violated the provision of section 12 of the Companies Act,2013 and are liable for action u/s 12(8) of the Companies Act,2013. Having considered the facts and circumstances of the case and submissions made by the Presenting Officer and submission made by Advocate Vinayak Trivedi, the authorized representative of the company and its officer in default and after taking into accounts the factors above, it has been concluded that I hereby impose following:

Penalty on company and its officer in default for violation of section 12 of the

Companies Act,2013

A:-

(* No. of days have been calculated from 01.02.2022 (date of physical verification of registered office of the company) to till date of Adjudication notice i.e. 07.06.2024)

2. The noticee shall pay the amount of penalty individually for the company and its officers from their personal sources/income by way of e-payment available on Ministry website www.mca.gov.in under “Pay Miscellaneous Fees” category in MCA fees and Payment Services under Rule 3(14) of Company(Adjudication of Penalties) (Amendment) Rules, 2019 within 90 days from the date of receipt of this order and copy of this Adjudication order and Challan/SRN generated after payment of penalty through online mode shall be filed in INC-28 under the MCA portal without further reference.

3. On deposit of penalty through online and filing of INC-28 under MCA21 Portal, all proceedings under this section in respect of such default shall be deemed to be concluded in terms of first proviso of Sub-section 3 of Section 454 of the Companies Act, 2013 as the case may be.

4. However, Appeal against this order may be filed in writing with the Regional Director, North Eastern Region, Ministry of Corporate Affairs, 1s^t Floor, BSNL Bhawan, Pan Bazar, Guwahati-781001, Assam, 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 the certified copy of this order. [Section 454(5) & 454(6) of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudicating of Penalties) Amendment Rules, 2019].

5. Your attention is also invited to Section 454(8) (i) and 454(8) (ii) of the Companies Act, 2013, which state that in case of non-payment of penalty, 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, and officer in default 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.

The adjudication proceeding stands disposed of with this order.

(DIP NARAYAN CHOWDHURY)
REGISTRAR OF COMPANIES &
ADJUDICATING OFFICER
MINISTRY OF CORPORATE AFFAIRS
GUWAHATI