MCA imposes Rs. 92 Lakh penalty for delay in Transfer of Unspent CSR Fund

Violation of Section 135(6) of Companies Act, 2013 by M/S. Kony India Private Limited as company failed to transfer an unspent amount of Rs. 42,09,263/- to the Unspent Corporate Social Responsibility Account within the specified time frame. The company has since transferred the amount, but a penalty has been imposed. The penalty for the company is Rs. 84,18,526/- or one crore rupees, whichever is less, and the penalty for the officers in default is Rs. 2,00,000/-  per such office in default. ROC directs that penalty must be paid within 30 days, and an appeal can be filed within 60 days. Further it held that Failure to comply with the order may result in further fines or imprisonment. The order was issued on February 22, 2023, by the Registrar of Companies, Hyderabad.

F.NO. ROCH/U72200TG2007PTCO56014/TELANGANA/135 OF 2013/2023
BEFORE THE ADJUDICATING OFFICER I,e REGISTRAR OF COMPANIES, HYDERABAD
FOR THE STATE OF TELANGANA
2ND FLOOR, CORPORATE BHAWAN, THATTIANNARAM, G.S.I. POST, BANDLAGUDA,
NAGOLE, HYDERABAD-500 068

PETITION NO. ADJ. 135 OF 2023
IN THE MATTER OF SECTION – 135 OF COMPANIES ACT 2013
AND
IN THE MATTER OF
M/S. KONY INDIA PRIVATE LIMITED

A Company incorporated under the Companies Act, 1956 with CIN: U72200TG2007PTCO56014, having its Registered office situated at SEZ – UNIT II, Level 7, Building No.H06, Hitech City2 Phoenix Info City, Gachibowli, Serilingampally Hyderabad – 500081, India.

ORDER UNDER SECTION 454 READ WITH SECTION 135 (7)
OF COMPANIES ACT, 2013
FOR THE VIOLATION OF SECTION 135(6) OF THE COMPANIES ACT, 2013

1. Whereas M/s. KONY INDIA PRIVATE LIMITED (hereinafter referred as ‘Company’) is registered in the State of Telangana vide CIN No: U72200TG2007PTCO56014, having its registered office address at SEZ – UNIT II, Level 7, Building No.H06, Hitech City2 Phoenix Info City, Gachibowli, Serilingampally Hyderabad – 500081 along with its officers in default has filed a suo moto application for adjudication of violation of section 135(6) r/w section 135 (7) of the Act under section 454 of the Companies Act, 2013 (the Act) seeking necessary orders.

2. It is submitted by the Petitioners that the applicant company pursuant to section 135 (6) of the Act, was required to transfer the unspent amount of Rs. 42,09,263/- (Rupees Forty-Two Lakhs Nine Thousand Two Hundred and Sixty-Three Only) of ongoing CSR Projects to a special account to be opened by the company in a schedule bank to be called as to Unspent Corporate Social Responsibility Account, within a period of thirty days from the end of the financial year i.e., on or before 30^thApril 2021. However, the company has failed to transfer the said unspent amount to Unspent Corporate Social Responsibility Account of the company within a period of thirty days from the end of the financial year i.e., on or before 30^th April 2021 resulted in violation of Section 135(6) of the Companies Act, 2013 and liable for penal action of the Act under Section 135(7).

3. Further, the applicant company has submitted that it has transferred the unspent amount of Rs. 42,09,263/- to Unspent Corporate Social Responsibility Account on 30^thSeptember 2021. Since the company has made good the offence by transferring the unspent amount to Unspent Corporate Social Responsibility Account, the company has prayed to pass an order for adjudicating the offence committed u/s 135 (6) of the Companies Act, 2013.

4. Whereas as per Section 135(6) of the Companies Act, 2013 states the following:

“Any amount remaining unspent under sub-section (5), pursuant to any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in persuance of its Corporate Social Responsibility Policy, shall be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year.:”

5. Whereas Section 135(7) of the Companies Act, 2013 contemplates the following:

“if a company is in default in complying with the provisions of sub section (5) of sub section (6), the company shall be liable to a penalty of twice the amount required to be transferred by the company to the fund specified in Schedule VII or the unspent Corporate Social Responsibility Account, as the case may be, or one crore rupees, whichever is less, and every officer of the company who is in default shall be liable to a penalty of one-tenth of the amount required to be transferred by the company to such fund specified in the Schedule VII, or the unspent Corporate Social Responsibility Account, as the case may be, or to two lakh rupees, whichever is less”.

6. A reasonable opportunity of being heard was given to the applicants on 21^stFebruary 2023 at 01.00 m under Sub-section 4 of the Section 454 of the Companies Act, 2013. Mr. Thamizhuanan, Company Secretary in practice attended the personal hearing on behalf of the applicants on 21^st February 2023 at 01.00 pm and orally submitted that the company has complied with the provisions of Section 135 (6) of the Companies Act, 2013 by transferring the unspent amount of Rs. 42,09,263/- to Unspent Corporate Social Responsibility Account on 30^th September 2021. Since the company has made good the offence by transferring the unspent amount to Unspent Corporate Social Responsibility Account, the authorized representative has prayed to take a lenient view as the delay was not intentional and the application has been filed voluntarily.

7. After considering the submission made in the application and by the authorized representative and the facts of the case it is proved beyond doubt that the company and the officers of the company have defaulted in complying the provisions under Section 135(6) of the Act. In this regard, it is noticed that Adjudication Officer has no discriminating power to reduce the fixed penally provided under section 136(7) of the Act and therein the company, and its officers in default (within the meaning of section 2(60) of the Companies Act, 2013) are hereby directed to pay the following penalty from their own sources.

8. Having considered the facts and circumstances of the case besides oral submissions made by the representative of applicants at the time of hearing and after taking into the account the factors mentioned in the relevant Act/ Rules, I hereby impose a penalty on the company and its officers in default as per table below for the violation of Provision of Section 135 (6) of the Companies Act, 2013 for not transferring the amount with in 30days.

The penalty as indicated above, shall be paid within 30 days from the date of issue of this order by the defaulters (out of their own resources) and file e-Form INC-28, with the office of RoC, Hyderabad with copies of challan in proof of payment.

9. In this regard your attention is also drawn to the provisions of Section 454 (5) and (6) which contemplates that:

“(5) Any person aggrieved by an order made by the adjudicating officer under sub-section (3) may prefer an appeal to the Regional Director having jurisdiction in the matter.

(6) Every appeal under sub-section (5) shall be filed within sixty days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person and shall be in such form, manner and be accompanied by such fees as may be prescribed.”

10. In this regard attention is also drawn to the provisions of Section 454(8) (i) and (ii) of the Companies Act, 2013 which read as follows:

(i) Where company fails to comply with the order made under 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, 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

(ii) Where an officer of a company or any other person who is in default fails to comply with the order made under 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.

Issued under my hand and seal on this the 22^nd February 2023.

(JOSEKUTTY V.E)
REGISTRAR OF COMPANIES
HYDERABAD