MCA Penalizes Company for Failing to Approve Financial Statements & Board Reports

Ministry of Corporate Affairs (MCA), through its Registrar of Companies for Punjab and Chandigarh, issued an adjudication order against BCL Homes Limited for violating Section 179(3) of the Companies Act, 2013. The company, incorporated in 2005, failed to approve financial statements and Board’s reports for FY 2021 and FY 2022 via Board resolutions, a requirement under the Act. Despite notices and summons issued in 2023 and 2024, the company and its directors failed to provide necessary responses or records. Following an inspection, penalties were imposed for the lapses, amounting to Rs. 2,00,000 for the company and Rs. 50,000 each for three directors.

Under Section 450 of the Act, penalties account for 1249 days of default at a daily fine rate, capped by statutory limits. The adjudicating officer determined the penalties based on the company’s size, the nature of the violation, and its impact on public interest. The company and its directors are required to pay these penalties through the MCA portal. They retain the right to appeal within 60 days to the Regional Director, Northern Region. Failure to comply with the order could result in further penalties or imprisonment for responsible officers, as outlined in Section 454(8) of the Act.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF
COMPANIES PUNJAB AND CHANDIGARH,
CORPORATE BHAWAN
PLOT NO.4-B, SECTOR 27B, CHANDIGARH
PHONE NO.172-2639415, 2639416

Order No. ROC CHD/Adj/ 994 to 998 Dated: 08/01/2025

ORDER UNDER SECTION 454 FOR VIOLATION SECTION 179(3) OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014

IN THE MATTER OF WS BCL HOMES LIMITED (CIN: U00082CH2005PLCO29291)

1. Appointment of Adjudicating Officer

The Ministry of Corporate Affairs vide its gazette  notification no. S.O. 831(E) dated 24.3.2015, has appointed the undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudicating penalties under the provisions of this Act.

2. Company: –

Whereas the Company M/s BCL HOMES LIMITED (hereinafter referred to as “the Company”) is a company registered with this office under the Provisions of the Companies Act, 2013/1956 (or previous Acts in force, as applicable) having its registered office situated at Shop No 140, Village Dariya, Chandigarh, India, 160002. As per data available at MCA website, the other details as on 31.03.2022 are as under:

3. Relevant Provisions of the Companies Act, 2013 which are applicable in the present case

Provision of Section 179(3) of the Companies Act, 2013 are as under: –

173. Meetings of Board.

(3) A meeting of the Board shall be called by giving not less than seven days’ notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means: Provided that a meeting of the Board may be called at shorter notice to transact urgent business subject to the condition that at least one independent director, if any, shall be present at the meeting:

Provided further that in case of absence of independent Directors from such a meeting of the Board, decisions taken at such a meeting shall be circulated to all the Directors and shall be final only on ratification thereof by at least one independent director, if any.

Provision of Section 450 of Companies Act, 2013 is as under:-

“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”

Relevant Rules are as under:-

(i) Rule 3(12) of Companies (Adjudication of Penalties) Rules, 2014

“While adjudging quantum of penalty, the adjudicating officer shall have due regard to the following factors, namely-

a. size of the company

b. nature of business carried on by the company,

c. injury to public interest,

d. nature of the default,’

e. repetition of the default,’

f. the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default: and

g. the amount of loss caused to an investor or group of investors or creditors as a result of the default

Provided that, in no case, the penalty imposed shall be less than the minimum penalty prescribed, if any, under the relevant section of the Act.”

(ii) Rule 3 (13) of Companies (Adjudication of Penalties) Rules, 2014 which read as under:

“In case a fixed sum of penalty is provided for default of a provision, the adjudicating officer shall impose that fixed sum, in case of any default therein.”

4. Facts about the case: –

That the Central Government has directed this office to conduct the inspection of books and papers of the Company. The Show cause Notice cum Preliminary Finding Letter was issued to the company and directors on 28.02.2023. A summon was sent to the directors of the company seeking information with regard to various points on 15.3.2024. However, no reply has been received from the company or directors.

Accordingly, an Inspection report was prepared by the Inspecting officer and submitted the same to RD-NR vide Letter No. ROC-CHD/Inspection /BCL Homes/1002 dated 26.03.2024. During the inspection, it was found that the Board of directors of the company have not approved financial statements and Board’s report for the financial year ending on 31.03.2021 & 31.3.2022 by means of passing a Board resolution as the same have not been filed with the Registry.

5. Adjudication of penalty:

Now, in exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the facts of the case, I hereby impose the penalties for violation of section 179(3) of the Companies Act, 2013 on the company and its directors under Section 450 of the Companies Act, 2013 as under :-

I am of this opinion that penalty is commensurate with the aforesaid failure committed by the addressee and penalty so imposed upon the Officers-in-default shall be paid from their personal sources/income.

It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Companies (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.

6. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi, 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(5) & 454(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014].

7. Please note that as per Section 454(8):

(i), where a 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, and

(ii) in case of an officer of a company who is in default, 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.

8. 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 the following as under:

No. ROC CHD/Adj /994 to 998 

Dated: 08/01/2025