The Ministry of Corporate Affairs (MCA) recently imposed a penalty on MIS Sandal Nidhi Limited due to an error in their auditor appointment letter.
1. Violation Identification: The issue stemmed from a discrepancy in the company name mentioned in the auditor appointment letter attached in ADT-1. Instead of “M/s Sandal Nidhi Limited,” the letter referred to the company as “M/s Sandal Commercial & Financial Services Limited.”
2. Legal Framework: The MCA cited Section 12(3)(c) of the Companies Act, 2013, which mandates the inclusion of the company’s name in all official communications. Furthermore, Section 12(8) outlines penalties for non-compliance, ranging from daily fines to a maximum of one lakh rupees.
3. Chronology of Events: The MCA initiated inquiries, issuing show-cause notices to the company and its directors regarding the violation. Despite receiving responses, the company admitted to the error, leading to the imposition of penalties.
4. Penalty Imposition: Considering the severity of the violation and the duration of non-compliance, the MCA imposed a penalty of Rs. 1,00,000/- on each party involved. The penalty was deemed proportional to the offense committed.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES,
UTTAR PRADESH,
37/17, Westcott Building, The Mall,
Kanpur — 208001 (U.P.) Phone : 0512 — 2550688/2540383
Fax : 0512 — 2540423
No.07/01/Adj-sec12/ Sandal Nidhi /23/ Dated: 3/07/2023
ORDER FOR VIOLATION OF SECTION 12 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014.
IN THE MATTER MIS SANDAL NIDHI LIMITED.
1. The Ministiy 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 known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. The Company MIS SANDAL NIDHI LIMITED has been registered under the provisions of the Companies Act, 2013 on 12.01.2015, and is having its registered office situated at 486, LUCKNOW NAKA„WARD- MEJORGANJ„SULTANPUR, Uttar Pradesh-228001. The authorized capital of the Company is Rs. 15,00,0001-.
3. On the basis of Inquiry under section 208 of the Companies Act, 2013. This office has issued a show cause notice letter No. 01/25/Inq/Nidhi/Sanda1/2021/3106 to3109 dated 17.02.2022 and again show cause notice letter No. 01/25/1nqiNidhi/Sanda1/2021/14208 to 14211 dated 03.03.2022 with reference to appointment letter of auditor attached in ADT-1 Vide SRN-H99184665 dated 01.10.2019 that the company has stated its name as “M/s Sandal Commercial & Financial Services Limited” instead of M/s Sandal Nidhi Limited” on the letter head of the company. Thus it is evident that the Company and its Directors including Key Managerial Personnel have failed to comply with the provision of Section 12(3) (c) of the Companies, Act, 2013, in printing its name in the letter, thereby attracting the penal provisions mentioned under Section 12(8) of the Act. The Company and its directors, including Key Managerial Personnel are officers in default, as per section 2(60), of the Companies Act, 2013, and are thus liable for penal provisions.
4. Section 12(3)(c) of the Act reads as under:-
Every Company shall, 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.
Section 12(8) of the Act further provides that If any default is made in complying with the requirement 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.
5. Accordingly, a Show Cause Notice No 07/01/Adj-sec12/Sandal Nidhi/23/2020 to 2023 dated 02.05.2023 was issued to the company and its directors for initiating inquiry under section 12(8) of the Companies Act, 2013, for not maintaining registered office of the company, The Company through its director Shri Sanjeev Kumar Srivastav has sent an email alongwith letter dated 12.05.2023 as reply to the said show cause notice.
6. The reply furnished by the company has been taken on record and seen that the company has admitted its default with reference to appointment letter of auditor attached in ADT-1 Vide SRN-H99184665 dated 01.10.2019 that the company has stated its name as “M/s Sandal Commercial & Financial Services Limited” instead of “M/s Sandal Nidhi Limited” on the letter head of the company. The company has filed rectified ADT-1 on 10.05.2023 vide SRN-F61271151.
7. Further, it is noticed that before filing of rectified ADT-1 on 10.05.2023 vide SRN-F61271151, the default was continuing one. Thus, making the company and its directors are liable to penalty as per section 12(8) of the Companies Act, 2013.
8. The date of default in the subjected matter has been taken as 01.10.2019 ie. the date on which the company has filed ADT-1 with documents attached under a different name of the company for the contravention of provision of Section 12(3) (C) of the Companies, Act, 2013 and the default has been continuing since 01.10.2019 to 09.05.2023.
9. Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose a penalty of Rs.1,00,000/- (Rupees one lakh only) each under section 12(8) of the Act on each of the Noticee of Show Cause Notice dated 17.02.2022 under section 12(8) of the Act, for failure to make compliance of the Act, U/s 12(1) r./w provision of Section 12(3)(C) of the Companies, Act, 2013,of the Act. I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee.
10. The Noticee shall pay the amount of penalty by way of Demand Draft in favour of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days receipt of this order. The Demand Draft shall be forwarded to this office Address.
11. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, COO Complex, Lodi 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].
12. Attention is also invited to section 454(8) of the Companies Act, 2013, in the event of noncompliance of this order. In Case appeal is made 0/o Registrar of Companies, U.P. maybe informed alongwith the penalty imposed & the payments made.
(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur
No. 07/01/Adj-sec12/ Sandal Nidhi /23/ 3036 to 3039
