Registrar of Companies, Karnataka issued an order of adjudication of penalty against Toyota Tsusho Systems India Private Limited for violating Section 135 of the Companies Act, 2013. The company failed to comply with the provisions regarding Corporate Social Responsibility (CSR) expenditure within the specified timelines. The penalty has been imposed based on the violation, and the company and its directors/key managerial personnel have been directed to pay the penalty amount within 90 days.
According to Section 135(1) of the Companies Act, companies with a net worth of rupees five hundred crore or more, or a turnover of rupees one thousand crore or more, or a net profit of rupees five crore or more during the previous financial year are required to establish a Corporate Social Responsibility (CSR) Committee of the Board. Additionally, Section 135(5) of the Act mandates that the Board of such companies ensure an expenditure of at least two percent of the average net profits made during the three preceding financial years, for each financial year. If the company fails to spend this amount, unless it pertains to an ongoing project specified in Section 135(6), it must transfer the unspent amount to a Fund specified in Schedule VII within six months of the financial year’s end.
Failure to comply with the provisions of subsections (5) or (6) subjects the company to a penalty of either twice the required transfer amount to the specified Fund or Unspent Corporate Social Responsibility Account, whichever is less, or one core rupees, as specified under Section 135(7) of the Act. In addition, every officer of the company who is in default will be liable to a penalty of either one-tenth of the required transfer amount to the specified Fund or Unspent Corporate Social Responsibility Account, whichever is less, or two lakh rupees, as determined by the same section.
MCA imposes penalty of Rs. 24,46,116 on Company and its directors.
Registrar of Companies. Karnataka
Kendriya Sadan, 2nd Floor, ‘E’. Wing,
Koramangala, Bengaluru – 560034
E-mail ID: firstname.lastname@example.org
File No. ROC(B)/Adj.Ord.454-135/Toyota-Tsusho/Co.No.50429/2023 Date: 26.05.2023
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT 2013 READ WITH RULE3 OF THE COMPANIES (ADJUDICATION OF PENALITIES) RULES, 2014 FOR VIOLATION OF PROVISION OF SECTION 135 OF THE COMPANIES ACT, 2013 BY TOYATO SYSTEMS INDIA PRIVATE LIMITED
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 by section 454 of the Companies Act 2013 (hereinafter referred to as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of Companies Act 2013.
2. The company, Toyota Tsusho Systems India Private Limited (hereinafter referred to as Company) was incorporated on 20.07.2009 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is situated at No.34, Level-II, Embassy Diamante Vittal Mallya Road, Bangalore 560001.
3. As per section 135(1) of the Act, every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five acre or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee of the Board. Further, as per section 135(5) of the Act the Board of every company referred to in sub-section (1) shall ensure that the company spends, in every financial year. at least two per cent of the average net profits of the company made during the three immediately preceding financial year. The second proviso to this subsection provides that if the company fails to spend such amount unless the unspent amount relates to any ongoing project referred to in sub-section (6), it shall transfer such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year.
4. As per section 135(7) of the Act, if a company is in default in complying with the provisions of sub-section (5) or 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 the Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be, or one core 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 Schedule VII. or the Unspent Corporate Social Responsibility Account, as the case may be, or two lakh rupees, whichever is less.
5. The company has filed adjudication application on 18.07.2022 for violation of section 135 of the Act. As per the provisions of section 135 of the Act the company ought to have spent Rs. 11,11,871 towards CSR expenditure by 31.03.2021, or the unspent amount had to be transferred to a fund specified in Schedule VII of the Act by 30.09.2021. However, it is seen that the entire amount of Rs.11,11,871 was transferred to Prime Minister’s National Relief Fund on 20.12.2021 with a delay of 80 days.
6. Pursuant to the adjudication application filed by the company, Notice of hearing was sent on 21.02.2023 and physical hearing was held on 10.032023 which was attended by Mr. Rakesh HM, practising company secretary. The same submissions were made during the hearing and it was stated that the default in consideration was an occasional and technical one and was unintentional.
7. It is seen that the company is a subsidiary company and does not fall under the definition of a small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provisions of imposing lesser penalty as per the section 4466 of the Act shall not be applicable in this case.
8. Therefore, having considered the facts and circumstances of the case and the submissions made by the company / director / key managerial personnel through their authorised representative, in view of the above said violation under the provisions of section 135 of the Act, in exercise of the powers vested under Section 454(3) of the Companies Act 2013, I do hereby impose penalty in the following manner on the company and all the officers in default
9. The company and its directors / key managerial personnel are hereby directed to pay the penalty amount as tabulated above within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The notice shall pay the said amount of penalty online by using the website svww.mca.gov.in (Miscellaneous head) specifying the details of this Order and the noticee who is paying the penalty.
10. Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in form AD/ setting forth the grounds of appeal and shall be accompanied by a certified copy of this Order.
11. Your attention is also Invited to section 454(8) of the Companies Act. 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under section 454(8)(i) and 454(8)(i1) of the Companies Act, 2013 against the company and directors / key managerial personnel without further notice in the matter.
Registrar of Companies, Karnataka
and Adjudicating Officer
Toyota Tsusho Systems India Private Limited
No. 34, Level II, Embassy Diamante Vittal Mallya Road
Bangalore – 560 001.
Mr. Shinya Tamaoka
C/o Toyota Tsusho Systems India Private Limited
No. 34, Level II, Embassy Diamante Vittal Mallya Road
Bangalore – 560 001.
Mr. Siddeshwara Rao
No.812/A, 16th Main Road
Second Cross, 1st Stage
Mathekere, Bangalore – 560054