Non-adherence to CSR requirements: MCA imposes penalty on directors

The Ministry of Corporate Affairs has issued an adjudication order penalizing Lantiq Communications India Pvt Ltd for violations of CSR provisions under Sections 134 and 135 of the Companies Act, 2013, during fiscal years 2014-15 to 2017-18. The company, which has since rectified the issues, had its penalties compounded for other directors, except Mr. Ulf Schneider and Mr. Sascha Ronny Bucklitsch. These two former directors faced penalties for not adhering to CSR requirements and have been ordered to pay fines totaling ₹1,00,000 each for violations under Section 134(8) and Section 450. Additional penalties were imposed for non-compliance with Section 135(5) and 135(7). The company and the named directors are required to settle these penalties within 90 days and file the necessary forms. Appeals can be filed with the Regional Director within 60 days. Non-compliance may result in further legal action.

Government of India
Ministry of Corporate Affairs
Registrar of Companies, Karnataka
Kendriya Sedan, 2^nd Floor, ‘r Wing,
Koramangala, Bengaluru – 560 034
Phone: 080-25537449/25633105
E-mail ID: [email protected]

File No. ROC(8)/Adj.Ord. 454-1348135/Lantiq/Co.No.051049 /2024 Date: 09.07.2024

ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT. 2011 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITES1 RULES. 2014 FOR VIOLATION OF PROVISIONS OF SECTION 1M(31(0),J3511) and 13515) OF THE COMPANIES ACT. 2013 BY LANTIO COMM_UNICATIONS 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, Lantiq Communications India Private Limited (hereinafter referred to as Company) having CIN U72200KA2009FTC051049 was incorporated on 29.09.2009 and is presently registered under the jurisdiction of Registrar of Companies. Kamataka and the registered office of the company is situated at 23-56P, Devarabeesanahalli, Varthur Outer Ring Road, Bengaluru, Karnataka – 560103.

3. The company had violated the provisions of section 134(3)(o), 135(1) and 135(5) of the Act during the financial years 2014-15, 2015-16, 2016-17 and 2017-18, and got the offence compounded from NCLT for the company and its directors, except for Mr. Ulf Schneider and Mr. Sascha Ronny Bucklitsch. This adjudication order deals with the offences of the above-mentioned two directors who have filed adjudication / compounding applications and further informed this office vide letter dated 19.03.2024.1t is seen from the application that Mr. Sascha Buclditsch and Mr. Ulf Schneider, former directors of the company have not complied with the CSR provisions pertaining to section 134 and section 135 of the Act. The company has defaulted in complying with the said provisions during the financial years 2014-15. 2015-16, 2016-17 and 2017-18. It is also submitted by the company in its application that the company and other directors have already compounded for non-compliance under sections 134(3)(o), 135(1) and 135(5) of the Act and paid the fines / penalties, except for the two applicants viz., Mr. Ulf Schneider and Mr. Sascha Ronny Bucklitsch.

4. Further, it has been submitted in the application that the default of the non-compliance of the provisions of section 134(3)(o) of the Act has been made good as the company has made necessary disclosures in the Board report for the FY 2017-113. The default of the non- compliance of the provisions of section 135(1) of the Act has been made good as the company has constituted CSR Committee by passing board resolution dated 16.11.2017 by the board of directors and default of the non-compliance of the provisions of section 135(5) of the Act has been made good as the company has formulated CSR Policy and also spent cumulative CSR amount of Rs. 41,46,410 towards CSR programmes for FY 2014-15, FY 2015-16, FY 2016­17 and FY 2017-18 on 06.12.2017. The applicable CSR expenditure is Rs. 9,59,286 for FY 2014­-15, Rs. 10,52,044 for FY 2015-16, Rs. 9,21,862 for FY 2016-17 and Rs. 6,80,714 for FY 2017-18. However, both the applicants viz. Ulf and Sascha have ceased to be directors of the company w.e.f. 14.03.2016.

5. As per section 134(3)(o) of the Act, there shall be attached to statements laid before a company in general meeting, a report by its Board of Directors. which shall Include the details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year.

6. As per section 134(8) of the Act if a company is in default in complying with the provisions of this section. the company shall be liable to a penalty of three lath rupees and every officer of the company who Is in default shall be liable to a penalty of fifty thousand rupees.

7. As per section 135(1) of the Act, every company having networth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors. out of which at least one director shall be an independent director.

8. As per section 450 of the Act, if a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval sanction. consent, confirmation, recognition direction or exemption in relation to any matter has been accorded, given or granted. and for which no penalty or punishment is provided elsewhere in this Act the company and every officer of the company who is in default or such other person shall be liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.

9. 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 years, in pursuance of its Corporate Social Responsibility Policy. The second proviso to this subsection provides that if the company fails to spend such amount the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount.

110. 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 crore 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

11. A Notice of hearing was sent to the company and its directors, present and past on 03.05.2024 and physical hearing was held on 21.052024 which was attended by Ms Lekha Ashok, practicing company secretary and authorised representative who appeared on behalf of Mr. Ulf Schneider and Mr. Sascha Ronny Bucklitsch. Further, Mr. Karthick S S practicing company secretary and authorised representative of Ms. Priya Anne Manjooran was also present with her, the past director of the company. Mr Karthick S S made submissions that his client Ms. Prlya Manjooran, along with the company, has already got her offence compounded by NCLT and a letter to this effect was also provided to this office along with the NCLT Order. Ms Lekha Ashok submitted that Mr. Ulf and Mr. Sascha were the directors of the company during the duration of default and have filed for adjudication of the above-mentioned non-compliances. A letter dated 20.05.2024 from the company to this effect has also been submitted to this office

12. It is seen that the offences under sections 134(3)(o), 1350) and 135(5) of the Act have been compounded by company and all other directors except Mr. Ulf and Sascha vide NCLT Orders 10.01.2019 and 22.07.2019. Hence. penalty is being levied for these two directors only vide this Order.

13. 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 4468 of the Act shall not be applicable in this case.

14. 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 sections 134(3)(o), 135(1) and 135(5) 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:

A. Penalty imposed under section 134(8) for violation of section 134(3)(o) of the Act

B. Penalty Imposed under section 450 for violation of section 135(1) of the Act

C. Penalty imposed under sect on 135(5) for violation of section 135 (7)of the Act

15. 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 noticee shall pay the said amount of penalty online by using the website www.mca.govin (Miscellaneous head) specifying the details of this Order and the notice who is paying the penalty.

16. 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 accompanies by a certified copy of this Order.

17. 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 454(8)0) and (ii) of the Companies Act, 2013 against the company and directors / key managerial personnel without further notice in the matter.

18. The company is required to serve a copy of this Order on the director(s)/ ofker(s)-in-default mentioned above in terms of provisions of section 20 of the Companies Act. 2013.

(Sanjay Sood)
Registrar of Companies, Karnataka
and Adjudicating Officer