MCA reduces Additional DIN Surrender Delay Fine from Rs. 5.03 Lakh to 50,000

Editor4 12 Jan 2024 690 Views 0 comment Print Company Law | Featured, Notifications/Circulars, Orders

Introduction: The Ministry of Corporate Affairs (MCA) has made a significant move by reducing the penalty for the delayed surrender of a second Director Identification Number (DIN). SPS Motors Private Limited faced the impact of this decision, leading to a noteworthy case before the Regional Director in Chennai.

Detailed Analysis: SPS Motors Private Limited, incorporated on January 4, 2021, found itself in a regulatory dilemma concerning the Director Identification Numbers (DINs). The case unfolded when the company, through the Regional Director’s office, processed the surrender of the appellant’s second DIN.

According to Section 155 of the Companies Act, 2013, individuals with an allotted DIN should not apply for another. However, it was revealed that the appellant had acquired two DINs – the first one (DIN 03191514) dated August 23, 2010, and the second (DIN 09018479) dated January 4, 2021. The surrender of the second DIN was denied, citing violation of Rule 11(f) of the Companies (Appointment & Qualifications of Directors) Rules, 2014.

The Registrar of Companies in Chennai issued an Adjudication Order imposing a substantial penalty of Rs. 5,03,500 for the delay of 907 days, calculated at Rs. 500 per day.

The appeal against this order was filed promptly by SPS Motors Private Limited, citing no intentional violation and requesting a lenient view. The hearing took place on October 3, 2023, where the authorized representative reiterated the appeal’s submissions.

In a crucial development on October 31, 2023, the penalty imposed by ROC, Chennai, was reduced from Rs. 5,03,500 to Rs. 50,000. The appellant was directed to pay the revised penalty within 15 days from the date of the hearing.

The appellant complied with the directive, remitting the penalty and submitting the relevant receipt on November 7, 2023. As of January 12, 2024, the Regional Director has directed the appellant to file the order in Form No. INC-28 within 30 days with the MCA-21 Portal.

Conclusion: The reduction in the penalty for the delayed surrender of a second DIN by MCA reflects a balanced approach, considering the appellant’s plea and the absence of intentional wrongdoing. SPS Motors Private Limited successfully navigated the appeal process, resulting in a substantial reduction in the financial burden. This case serves as a notable example of regulatory responsiveness and fairness in addressing corporate compliance issues.

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ADJ/11 /RD (SR)/2023-24

BEFORE THE REGIONAL DIRECTOR
(SOUTHERN REGION)
MINISTRY OF CORPORATE AFFAIRS, CHENNAI
IN THE MATTER OF THE COMPANIES ACT 2016
SECTION 454(7) OF COMPANIES ACT 2013

IN THE MATTER OF SPS MOTORS PRIVATE LIMITED

1. Shri Thiyagarajan Parthasarathy
SPS Motors Private Limited
155, J.N. Road Oil Mill, Periyakuppam
Thiruvallur.

Appellant

Date of hearing : 31.10.2023

Present: Shri. M.Francis
Practicing Company Secretary

ORDER

M/ s. SPS Motors Private Limited (hereinafter referred to as the Company), was incorporated on 04.01.2021. As per Section 155 of CA 2013, “No individual who has already been allotted a Director Identification Number under Section 154, shall apply for, obtain or process another Director Identification Number”. Upon processing of DIR-5 by the 0/o. RD(NR) with respect to surrender of the appellants second DIN, it was observed that the applicant has applied and obtained two DINs viz. DIN 03191514 dated 23.8.2010 (First DIN) and DIN 09018479 dated 4.1.2021 (Second DIN). Further, applicant himself has admitted the same and as per e-records available the DIN which was surrendered (03191514) is still associated with M/s. SPS Hyundai Private Limited and the new DIN (09018479) was applied while incorporating M/s. SPS Motors Private Limited. The surrender of DIN cannot be allowed as per Rule 11(f) of the Companies (Appointment & Qualifications if Directors) Rules, 2014. As such the second DIN (09018479) was obtained in violation of Section 155 of the Companies Act, 2013.. The Registrar of Companies, Chennai on perusal of the said default, passed the Adjudication Order No. ROC/ CHN/THIYAGARAJAN/ ADJ Orders/S.155/ 2023 dated 10.7.2023 (impugned Order) for delay of 907 days under Section 454 (3) & (4) of the Act, 2013 and imposed a penalty of Rs. 5,03,500/- upon the Director viz. Shri [Thiyagarajan Parthasarath. [ @ Rs. 500/- per day].

2. That aggrieved by the said Order dated 10.7.2023 of ROC, Chennai , the present appeal was filed by the Appellants in terms of Section 454 (5) of the Act in Form ADJ on 08.09.2023 vide SRN: F64065378. The appeal was filed within the period of limitation.

3. That the appellant had requested to take a lenient view since there was no intentional or deliberate action on the part of the appellant to violate any provisions of law and also taking into consideration the fact that no prejudice is caused to the public interest. The appellant prayed for setting aside of the impugned order dated 10.07.2023.

4. That the hearing of the appeal was held on 03.10.2023. The authorized representative has reiterated the submissions made in the appeal.

5. That there is a ground in interfering with the impugned adjudication order dated 7.2023 of the Registrar of Companies to the extent of reducing the quantum of penalty. Accordingly, in the hearing held on 31.10.2023, the penalty imposed by ROC, Chennai is reduced from Rs. 5,03,500/- to Rs.50,000/-. The Appellant was directed to pay the penalty within 15 days from the date of hearing.

6. That pursuant to directions of the undersigned, the appellant has remitted the penalty amount and has submitted the relevant receipt evidencing payment of penalty as detailed below :