Penalty Reduced for River Mobility Pvt. Ltd. in Share Certificate Delay Case: River Mobility Pvt. Ltd. and its directors, Vipin George and Aravind Mani, appealed against a ₹3,00,000 penalty imposed by the Registrar of Companies (ROC), Karnataka, for delayed issuance of share certificates, violating Section 56(4) of the Companies Act, 2013. The company had allotted shares on 27.04.2023 and 12.06.2023 but issued the corresponding certificates on 28.06.2023 and 21.10.2023, exceeding the two-month statutory timeline. The company voluntarily reported the non-compliance and sought adjudication.
The company argued that the delay was unintentional, had no public impact, and occurred due to financial constraints as it was in an early operational stage. After reviewing the appeal, the Regional Director, South East Region, Hyderabad, reduced the penalty to ₹50,000 for the company and ₹25,000 each for both directors, totaling ₹1,00,000. The appellants complied with the revised penalty and the appeal was disposed of. The order also reminded them of further penalties under Section 454(8) in case of non-compliance.
F.No:9/39/ADJ/SEC.56(4) CA, of 2013/KARNATAKA/RD(SER)/2024
BEFORE THE REGIONAL DIRECTOR, SOUTH EAST REGION
MINISTRY OF CORPORATE AFFAIRS, HYDERABAD
IN THE MATTER OF COMPANIES ACT, 2013/7632
IN THE MATTER OF RIVER MOBILITY PRIVATE LIMITED
1. M/s. River Mobility Private Limited
2. Vipin George, Director
3. Aravind Mani, Director …. Appellants
Date of hearing: 18.12.2024
Present: Mr. Vinayak Hegde, PCS on behalf of the Appellants
ORDER
This is an appeal filed under section 454(5) of the Companies Act, 2013 (hereafter referred as Act) by the above appellants in e-form ADJ vide SRN AB1709981 dated 30.10.2024 against the adjudication order passed by the Registrar of Companies, Karnataka in F No. ROC(B) /Adj. Ord. 454-56(4) /River Mobility/ Co.No.158972/2024 dated 03.09.2024 under section 454 of the Act, for violation of provisions of Section 56(4) of the Companies Act, 2013.
2. The Registrar of Companies in his order of adjudication has stated that the company filed a suo-motu application on 28.06.2024 regarding non-compliance off Section 56(4)(b) of the Act. It has been stated that the company has allotted the shares on 27.04.2023 and 12.06.2023. Consequently, the company was unable to issue the share certificates within the statutory timelines prescribed under section 56(4) (b) of the Act. The company was required to issue the share certificates within 2 months from the date of allotment, i.e., on or before 27.06.2023 and 12.08.2023 respectively. However, the share certificates were issued by the company on 28.06.2023 and 21.10.2023 respectively. The hearing was held before the Registrar of Companies on 08.08.2024 and after hearing the authorized representative Registrar had levied a penalty of Rs.1,00,000/- each on the Company and 2 directors i.e., Mr. Vipin George and Mr. Aravind Mani (total aggregating to Rs.3,00,000/-).
3.1 Aggrieved by the adjudication order, the appellants have filed the above appeal and from the said appeal it has been stated that the company has made following shares allotment for which there was delay in issuing the share certificate to the respective allottees. The date of the allotment, date of issuance of share certificate and number of days delay is detailed in the below table.
| S.No | Date of Allotment | Date of Issuance of Share certificates |
Number of days delay |
| 1 | 27/04/2023 | 28/06/2023 | 2 |
| 2 | 12/06/2023 | 21/10/2023 | 71 |
The company is a closely held Wholly-owned subsidiary Private Limited Company. The Allottee to whom the shares were allotted is the holding company hence the impact of the delayed compliance is minimal. The violation incurred has been rectified and share certificates have been issued. The company has suo-moto filed the adjudication application in order to comply with the provisions of the Act. The Company is engaged in the manufacturing segment which involves huge capital investments. Company is presently in the establishment stage and full scale revenue generation is yet to begin hence facing financial crunch. The violation has not affected public interest and interest of any secured or unsecured creditors in any way
3.2 The authorized representative Mr. Vinayak Hegde, PCS appeared for hearing on 18.12.2024 on behalf of the appellants and reiterated the submissions made in the appeal and also stated that the offences were committed by the appellants due to unavoidable circumstances and was no intentional and further is not of such nature as to prejudice the interests of the members or creditors or other dealing with the company. The appellants unequivocally declares that the said default is such that it has not affected public interest in any way. Considering the grounds mentioned above, the quantum of penalty levied under adjudication order which is being appealed may be reduced to nominal amount which will encourage the company to be compliant in future.
4. In view of the above, taking into consideration the facts of the appeal and the submissions made by the authorized representative, the then Regional Director had reduced the penalty as imposed by the Registrar of Companies to Rs.50,000/-for the Company and Rs.25,000/- each for 2 directors i.e. Mr. Aravind Mani and Mr. Vipin George (total aggregating to Rs.1,00,000/-). The appellants were directed to comply with this order and were also reminded about the provisions of Section 454(8) of the Act, in case of failure to comply.
5. Accordingly, the appellants have paid the penalty as under
| S.No | Name of the Appellants | Date of Payment | SRN details | Penalty Paid |
| 1 | M/s. River Mobility Private Limited | 20/12/2024 | 000646030 | 50,000 |
| 2 | Mr. Aravind Mani | 21/12/2024 | X89722870 | 25,000 |
| 3 | Mr. Vipin George | 21/12/2024 | X89724173 | 25,000 |
| Total | 1,00,000 | |||
6. In view of the compliance reported, the appeal is accordingly disposed of, and this order is issued to the Appellants with a copy to Registrar of Companies, Karnataka and Joint Secretary, E-Governance Cell, Ministry of Corporate Affairs, New Delhi for information and necessary action.
Issued under my hand and seal on this 26th day of March 2025.
(Richa Kukreja)
Regional Director, SER
Ministry of Corporate Affairs, Hyderabad
