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The Ministry of Corporate Affairs (MCA) has once again demonstrated its commitment to enforcing corporate governance norms by imposing a penalty of ₹3.65 lakh on a director for non-compliance with the Director Identification Number (DIN) regulations. This action, documented under Order No: ROC/ADJ/326/223465/2023 dated February 22, 2024, signals the importance of adherence to the legal requirements under the Companies Act, 2013. The case involves M/S. Octacle Integration Private Limited, a company registered in West Bengal, which found itself in violation of Section 152(3) of the Act.

Background of the Violation

The crux of the matter lies in the appointment of Mr. Sandeep Kumar as an additional director of the company on August 17, 2021, without a valid DIN. This came to light following an inquiry carried out under Section 206(4) of the Companies Act, 2013, which revealed that the DIN provided (06762192) belonged to another individual with the same name, thereby constituting a clear breach of Section 152(3).

The Importance of DIN

The DIN system was introduced to enhance the transparency and accountability of directors of companies registered under the Companies Act. It serves as a unique identifier, preventing identity theft and ensuring that directors’ records are easily accessible for regulatory purposes. According to Section 152(3), no individual shall be appointed as a director without being allotted a DIN, underscoring the critical nature of this requirement.

The Adjudication Process

Upon discovering the violation, the MCA, through its appointed adjudicating officer, issued a notice to Octacle Integration Private Limited, seeking an explanation and compliance. Despite being given multiple opportunities to present their case, the company and the concerned director failed to appear before the adjudicating officer, leading to an ex parte conclusion of the hearing.

The adjudication officer, considering the gravity of the violation and the duration of non-compliance, imposed a penalty totaling ₹3.65 lakh on Mr. Sandeep Kumar. This amount included a base fine of ₹50,000, supplemented by a daily penalty accruing from the date of the erroneous appointment to the date of obtaining a valid DIN, covering a period of 631 days.

Lessons and Implications

This case serves as a potent reminder of the MCA’s vigilance in upholding the provisions of the Companies Act, particularly concerning the appointment of directors and the mandatory requirements associated with it. It underscores the need for companies and their officers to exercise due diligence in complying with statutory obligations, especially in matters as fundamental as obtaining a DIN before appointment.

Compliance as a Priority

The significance of this enforcement action extends beyond the immediate financial penalty. It highlights the broader implications of non-compliance, including potential reputational damage and the impact on a company’s credibility with regulators, investors, and other stakeholders. Therefore, companies must prioritize compliance with all aspects of corporate governance, including the accurate and timely procurement of DINs for their directors.

Navigating Corporate Governance

For companies seeking to navigate the complexities of corporate governance, this case emphasizes the importance of maintaining accurate records, understanding regulatory requirements, and regularly reviewing compliance protocols. Investing in compliance not only mitigates the risk of penalties but also reinforces a company’s commitment to ethical business practices and good governance.

In conclusion, the MCA’s action against Octacle Integration Private Limited and its director, Mr. Sandeep Kumar, is a clear indication of the government’s resolve to enforce corporate governance standards rigorously. Companies are advised to take heed of this case, ensuring strict adherence to the legal requirements to avoid similar repercussions.

***

GOVERNMENT OF INDIA
Ministry of Corporate Affairs
Office of the Registrar of Companies, West Bengal
“Nizam Palace”
2nd M. S. O. Building, 2nd Floor
234/4, Acharya J. C. Bose Road
Kolkata – 700 020

Order No : ROC/ADJ/326/223465/2023/12320-12325 Date: 22.02.2024

ADJUDICATION ORDER FOR PENALTY U/S 454(3) OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 AS AMENDED BY THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2019 IN MATTER OF NON COMPLIANCE OF THE PROVISIONS OF SECTION 152(3) OF THE COMPANIES ACT, 2013

In respect of : M/S. OCTACLE INTEGRATION PRIVATE LIMITED

CIN: U52100WB2017PTC223465

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 [herein after known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 for adjudicating penalties under the provisions of this Act.

2. Company:-

WHEREAS Company M/S. OCTACLE INTEGRATION PRIVATE LIMITED [herein after known as Company] is a registered company with this office incorporated on 14.11.2017 under the provisions of Companies Act, 2013 having its registered address at 5/3/1 M M FEEDER „, ROAD ARIADAHA KOLKATA- 700057, Kolkata, KOLKATA, West Bengal, India, 700057, as per MCA website.

3. Facts about the Case: –

1. On the basis of Inquiry carried out u/s 206(4) of the Companies Act, 2013 the following violation are pointed out in the inquiry report:

CONTRAVENTION OF SECTION 152(3) OF THE COMPANIES ACT, 2013

AND WHEREAS Upon examination of the facts of the said case, it was observed that the company has filed DIR-12 vide SRN 138215273 on 27.08.2021 and approved on 28.08.2021, in respect of appointment of Shri Sandeep Kumar, mentioned DIN as 06762192 for the post of Additional Director from 17.08.2021. In this regard. it is pertinent to mention that company has changed its name from AIS Online Private Limited to Octacle Integration Private Limited on and from 10.03.2022. Further, on careful examination of DIN details of the director available on MCA B/O portal and E-form DIR-12, following facts against the said director has been derived, which is presented in tabular format in below:

Particulars

DIN details of IAS, Sandeep Kumar (Delhi), available on MCA B/O portal DIN details of the director Sandeep Kumar, West Bengal available in the E-form DIR-12
Name Sandeep Kumar Sandeep Kumar
Father’s name Suraj Prasad Suraj Prasad
Present residential address 4 EAC, 16-A Rajpura Road Near MCD Office Civil Lines, Delhi, Delhi, India PIN- 110054 21, Gouri Pada Mukherjee Lane, Haora-1, Haora Corporation, Haora West Bengal, PIN-711101
Email Id Sandeep.kgupta@hotmail.com Sandeep.kol@hotmail.com
Mobile No. 9825678400 6289792913
D.O.B 12.09.1972 20.02.1993
Income Tax PAN AFLPP1434R EPEPK6612F
Occupation Business
Educational Qualification M.TECH (ELE, ENGG), IAS
DIN Status Deactivated due to non-filing of DIR-3 KYC
Nationality Indian Indian
Aadhaar No. 549680835674

From above table, it is seen that there are differences in the data in respect of address, PAN, Email id and mobile no. of the director also DIN status of the company is shown as de-activated.

AND WHEREAS the notice under section 206(1) of Companies Act, 2013 was issued to the company on 27.04.2023 and reply received on 12.05.2023. In the reply dated 12.05.2023, Mr. Sandeep Kumar, residing in the state of West Bengal has submitted the following facts by way of an Affidavit, which is reproduced hereunder in brief:

a) At the time of appointment, he was not holding any DIN and inadvertently DIN 06762192 of Sandeep Kumar, IAS officer was used for his appointment in the above stated

b) He had applied in Form DIR-3 for obtaining DIN in his name and got the DIN 10159546 vide SRN AA2411309 dated 11.05.2023.

c) Inadvertently DIN-06762192 of Sandeep Kumar, IAS officer (New Delhi) was used by him.

NOW THEREFORE as per the provisions of Section 152(3) of the Companies Act, 2013 states that “No person shall be appointed as a director of a company unless he has been allotted the Director Identification Number under section 154″of the Companies Act, 2013.Here from above facts in respect of the said company , it is revealed that the said director in the company has obtained DIN-010159546 vide SRN AA2411309 dated 11.05.2023 but the appointed as a director w.e.f 17.08.2021 in the company.

Hence, he has violated the section 152(3) of the Companies Act, 2013.

Reply of the Company:

No adequate reply has been received from the company.

2. Section 152(3): (3) No person shall be appointed as a director of a company unless he has been allotted the Director Identification Number under section 154 7(or any other number as may be prescribed under section 153.

Section 159 of the Companies Act, 2013 inter alio provides that “If any individual or director of a company makes any default in complying with any of the provisions of section 152, section 155 and section 156, such individual or director of the company shall be liable to a penalty which may extend to fifty thousand rupees and where the default is a continuing one, with a further penalty which may extend to five hundred rupees for each day after the first during which such default continues.”.

3. Accordingly the adjudication officer has issued adjudication notice vide No. ROC/ADJ/326/223465/2023/9329-9331 doted 12.12.2023 (herein after referred as Adjudication Notice) under Section 454(4) read with Section 152(3) of the Companies Act, 2013 read with Rule 3(2) of Companies (Adjudication of Penalties). 2014 as amended in Amendment Rules. 2019, to any individual or director of a company in default for the violation of the provisions of the Act as mentioned in para “1 & 2” above giving on opportunity to submit a reply as to why the penalty should not be imposed under the provisions of Section 159 of the Act against any individual or director of a company in default for the above stated violation, followed by a hearing fixed on 10.01.2024 vide hearing notice No. ROC/ADJ/326/223465/2023/9813-9815 dated 29.12.2023 and further second hearing on 15.02.2024 vide hearing notice No. ROC/ADJ/326/223465/2023/1 1243-11245 dated 06.02.2024.

4. On 15″ February 2024 (the second hearing date), neither the director nor their authorised representative, if any, appeared before the Adjudicating Officer for the hearing. Inspite of several opportunities, the noticee foiled to appear or respond to the Notices issued. Hence the hearing was concluded ex parte, and the order is reserved.

ORDER

1. The concerned director Mr. Sandeep Kumar, who has defaulted the provisions of Section 152(3) of the Companies Act, 2013 shall be liable under Section 159 of the Companies Act. 2013.

2. In exercise of the powers conferred vide Companies (Amendment) Ordinance, 2019, the undersigned is entrusted to adjudicate penalties under section 159 of the Companies Act, 2013. After taking into account the facts mentioned herein above. I do hereby impose the penalty of Total Rs. 3,65,500 (Rupees Three Lakhs and Sixty-Five Thousand and Five Hundred only) on its Director-in-default namely Mr. Sandeep Kumar having (DIN 10159546) pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, as per table below for violation of section 152(3) of the Act:

Name of the defaulted Director Amount of Default (in Rs.) Total maximum Penalty imposed (in Rs.)
Mr. Sandeep Kumar (director) (DIN 10159546) 50,000 + (500*631 days) ** = 3,65,500 3,65,500

**the days of default are calculated from the date of appointment as the director i.e., 17.08.2021 till the date of allotment of new DIN i.e. 10.05.2023

3. The noticee shall pay the said amount of penalty individually for himself (out of own pocket) by way of e-payment [available on Ministry website mca.gov.in] under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 days of receipt of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this Office Address.

4. Appeal against this order may be filed in writing with the Regional Director (ER), Ministry of Corporate Affairs, Kolkata located at Nizam Palace, 2nd M. S. Building, 3rd Floor, 234/4, A.J.C. Bose Road, Koikata-700020, West Bengal within a period of sixty days from the date of receipt of this order. in Form ADJ [available on Ministry website www.mca.gov.in) setting forth the grounds of appeal and shall be accompanied by a certified copy of the this order. (Section 454(5) & 454(6) of the Act read with the Companies (Adjudicating of Penalties) Rules, 2014].

5. Your attention is also invited to section 454(8)(i) & (ii) of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order.

6. In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to Mr. Sandeep Kumar (director) of Octacie Integration Private Limited and the director in default mentioned herein above and also to Office of the Regional Director (Eastern Region) and Ministry of Corporate Affairs at New Delhi.

Date : 22nd February 2024

[A. K. Sethi, ICLS]
Adjudicating Officer & Registrar of Companies,
West Bengal

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