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Introduction: Explore an in-depth analysis of a case involving penalties imposed by the Ministry of Corporate Affairs for the omission of crucial contact information on a company’s letterhead, in accordance with the Companies Act, 2013.

Analysis: In a recent case, the Ministry of Corporate Affairs undertook adjudication proceedings against Riverdale Foundation, a registered company under the Companies Act, 2013. The case pertains to the violation of section 12(3) of the Act, which mandates that companies display essential information, including their name, registered office address, Corporate Identity Number, and contact details, on various official documents and communications.

The specifics of the case are as follows:

Background: The Ministry of Corporate Affairs appointed an Adjudicating Officer to oversee the case under the powers granted by section 454 of the Companies Act, 2013, and the Companies (Adjudication of Penalties) Rules, 2014.

Violation: Riverdale Foundation, registered with CIN: U80101CT2017NPL008058, allegedly failed to include its email id and phone number on a resolution attached to form GNL-1. This omission directly contravened section 12(3)(c) of the Companies Act, 2013.

Penalties Imposed: The omission of contact information led to penalties being imposed under section 12(8) of the Act. The penalty amounted to Rs. 28,000 per day of default, not exceeding Rs. 1,00,000. The company, as well as the directors, Satija Nikish and Akshat Goyal, were deemed liable for the penalty.

Company’s Response: In response to the show-cause notice, the company admitted the oversight but argued that it was unintentional and that steps had been taken to rectify the mistake. Despite this explanation, penalties were still levied.

Adjudication and Order: The case went through an adjudication process. A “Notice of Inquiry” was issued, but the company and its directors did not appear for the hearing. The absence of their presence resulted in the case proceeding in their absence.

The Adjudicating Officer concluded that the company’s failure to print its email id and phone number on the resolution attached to form GNL-1 constituted a violation of section 12(3) of the Act. As a result, penalties were confirmed and imposed.

Conclusion: This case serves as a cautionary tale for companies, emphasizing the importance of adhering to the legal requirements outlined in the Companies Act, 2013. Omitting critical contact information on official documents can lead to severe penalties. The analysis underscores the significance of compliance and the consequences of failing to meet statutory obligations. It further highlights the process of adjudication and the meticulous examination of evidence before penalties are imposed by regulatory authorities.

BEFORE THE ADJUDICATING OFFICER
REGISTRAR OF COMPANIES CUM OFFICIAL LIQUIDATOR, CHHATTISGARH

In the matter of Companies Act, 2013
And
In the matter of adjudication proceeding under Section 454
And
Sub-section (3) of Section 12 of the Companies Act, 2013.
And

In the matter of RIVERDALE FOUNDATION
(CIN: U80101CT2017NPL008058)

1. M/s. Riverdale Foundation
Pitiyajhar Road, Mahasamund
Chhattisgarh Raipur Ct 493445 IN

2. Satija Nikish

3. Akshat Goyal

…… Respondents

1. Appointment of Adjudicating Officer:-

Ministry of Corporate Affairs vide its Gazette Notification No A-42011/112/2014-Ad.II dated 24.03.2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Company:

a) Whereas Company Riverdale Foundation (CIN: U80101CT2017NPL008058) (herein after known as Company] is a registered company with this office under the provisions of Companies Act, 2013 having its registered address at Pitiyajhar Road, Mahasamund Chhattisgarh Raipur CT 493445 IN

Further, financial and other details of the subject company for immediately preceding financial year as available on MCA-21 Portal is as under:

S. No.

Particulars Details
1. Paid up capital as on date 1,00,00,000
2. Turnover:

(Revenue from operations and other income as per Balance sheet filed on MCA-21 portal for FY 2021-22)

1,67,69,160
0. Whether any holding company NO
1. Whether any subsidiary company NO
2. Whether company registered under Section 8 of the ACT? YES
3. Whether company registered under any other Special Act? NO
4. Whether company is a small company? NO
5. Whether Section 446B is applicable to the company? (Lesser penalties for certain companies) NO

3. Facts about the case: –

a) Whereas as per section 12(3) of Companies Act, 2013, every company shall—

(a) Paint or affix its name, and the address of its registered office, and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters, and if the characters employed therefor are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages;

Penalty for Omitting Email and Phone

(b) Have its name engraved in legible characters on its seal, if any.

(c) Get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail, and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications; and

(d) Have its name printed on hundies, promissory notes, and bills of exchange and such other documents as may be prescribed:

b) Whereas as per section 12(8) of 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.

c) Whereas the company has filed form GNL-1 vide SRN No. F61681615 in this office on 02.06.2023, during examination of this work item, it is found, that company has not get printed its email id and phone number on its resolution attached to the SRN in compliance of section 12(3) (c) of the Companies Act, 2013, Hence, the company has violated section 12(3) (c) of the Companies Act, 2013 which attracted penal provisions of Section 12(8) of The Companies Act, 2013.

Show cause notice, reply and personal hearing: –

4. Therefore, for the above-mentioned violation, this office has issued Show cause notices vide this office letter No. ROC-cum-OL-C.G./SCN/Sec.12 (3)/ 008058/2023/464 to 466 dated 06/07/2023 u/s 12(8) of the Companies Act, 2013.

5. Thereafter, company has submitted its reply dated 18/07/2023, duly signed by Shri Akshat Goyal (director of the company), received in this office on 31/07/2023 to the afore-mentioned Show cause notice which is reproduced as under:

“Firstly, we apologize and would like to submit that while drafting and printing the resolution, we ensured that our company’s name, address of our registered office, and Corporate Identification Number were clearly indicated in our letterhead. Since the company do not have any website and Fax number of the company so we have not added that in the letter head of the company used for resolution printing and due to running short of printed letter head we used this computer made letter head wherein we mistakenly missed to add phone no and mail id on letter head prepared on computer.

However, this all was unintentional and inadvertently we failed to include our E­mail Id and Telephone no and mail id on letter head of the resolution, more to we always use printed letter head which has all requisite information for our company with clients and third party (copy attached), For your kind acknowledgement we do not have intention to conceal information from anyone and moving forward we always ensure that we shall disclose properly all these information in our letterheads, billheads, or in any other notice and other official publications by complying the section 12(3)(c) and any other relevant provisions of the Companies Act 2013.

At the end we would like to request your good office to kindly take lenient view and consider that our company is always following and complying all law provisions to all possible extent and ready to adopt and rectify short compliance with this again request your good office not to initiate any penal action under section 12(8) or any other sections of the Companies Act 2013 if any proposed to be taken against the Company or any of its officers.”

6. Thereafter, for providing an opportunity of being heard, a “Notice of Inquiry” vide. letter No. ROC-cum-OL C.G./Adj/Sec.12(3)/008058/2023/557 to 559 dated 24/07/2023 was issued to the Company and its officers in default and the date of hearing was fixed on 04th August,2023, in the 0/0 Registrar of the Companies, Chhattisgarh, Ist Floor, Late Shri Ashok Pingley Bhawan of Municipal Corporation Nehru Chowk, Bilaspur, Chhattisgarh-495001.

7. None appeared for the Company and its officers in default on the date so fixed, despite providing them reasonable opportunities of being heard. Hence as per Rule 3(11), Companies (Adjudication of Penalties) Rules 2014, the matter is being proceeded with in the absence of such persons.

8. As it is evident from record that email, and phone no of the company were not get printed on the resolutions attached to the form GNL-1 and company itself has admitted its mistake in reply dated 18/07/2023. Therefore, it is concluded that company and its officer in default has not complied with the requirement of section 12(3) of the Act and are liable for penalty as prescribed under section 12(8) of the Act.

Order

In view of the above, it is concluded that company and its officers in default are liable for penalty as prescribed under section 12(8) of the Act for noncompliance of section 12(3) of the Companies Act, 2013 for 28 days i.e., with effect from 22/04/2023 (date of notice for calling of EoGM and date of Board meeting) to 19/05/2023 (date of EoGM) in terms of Section 12(8) of the Companies Act, 2013.

Accordingly, I am inclined to impose a penalty as prescribed under Section 12(8) of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are shown in the table below:

Nature of
Default
Relevant section under the Companies Act,2013 Name of persons on whom penalty is imposed No. of
days of
default
Penalty for default as per sec 12(8) Total
default
amount
Maximum Penalty Final Penalty imposed
Non printing of email id & phone no. 12(3)(c) & 12(8) ON COMPANY 28 1000 per
day
28000 1,00,000 28000
SATIJA NIKISH (DIRECTOR) 28 1000 per
day
28000 1,00,000 28000
AKSHAT GOYAL (DIRECTOR) 28 1000 per
day
28000 1,00,000 28000

I. I am of the opinion that penalty is commensurate with the aforesaid failure committed by the Noticees and penalty so imposed upon them shall be paid from their personal sources/ income.

II. The company and officers in default shall pay the said amount of penalty through online mode by using the website www.mca.gov.in (Misc. head) in favour of “Pay & Accounts Officer, Ministry of Corporate Affairs, Mumbai, payable at Mumbai, within 90 days of receipt of this order, and file form INC-28 attaching a copy of order and payment challans. The notice shall pay the said amount of penalty online by using website www.mca.gov.in (miscellaneous head) specifying the details of this order and the name of the noticee who is paying the penalty. It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only pursuant to Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019.

III. Appeal against this order may be filed in writing with the Hon’ble Regional Director (NWR), Ministry of Corporate Affairs, Ahmedabad 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).

IV. 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 amount ,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 both.

In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to:

1. M/s. Riverdale Foundation

2. Satija Nikish

3. Akshat Goyal

4. Regional Director (NWR), Ahmedabad

5. And will also be uploaded on MCA Website.

The adjudication notice stands disposed of with this order.

Sitaram Sharan Gupta
Adjudicating officer
Registrar of Companies Chhattisgarh-
Bilaspur (C.G.)

Signed on this 14th day of August 2023
Place: Bilaspur, Chhattisgarh.

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One Comment

  1. Narayan Tibrewal says:

    Dear CS Ritika,
    Please examine the case for it’s constitutional validity for levy of penalty and the next forum against the order passed by the Regional director confirming the penalty.

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