Non-completion of formalities for increase in Authorised and issued Capital: MCA Imposes penalty of ₹4 Lakh
The Ministry of Corporate Affairs (MCA) recently imposed a penalty on JKJM Infrastructure Private Limited for failing to comply with statutory requirements under the Companies Act, 2013. This penalty pertains specifically to the company’s lapses in formalities related to the increase in authorized capital. Here’s a detailed analysis of the case and its implications.
JKJM Infrastructure Private Limited, registered under the Companies Act, 2013, undertook an increase in its authorized capital from Rs 5 lakh to Rs 6.05 crore. However, the company did not adhere to the necessary legal procedures required by Section 39(4) of the Companies Act, 2013. Specifically, it failed to file the requisite return of allotment with the Registrar of Companies.
An inspection initiated by the Central Government revealed these lapses during the financial year ending March 31, 2014. Despite a show cause notice issued to the company and its directors, no response was received within the stipulated time frame. Consequently, JKJM Infrastructure Private Limited and its directors were found in violation of Section 39(4) read with Section 39(5) of the Companies Act, 2013.
The penalty imposed by the MCA amounts to Rs 4,00,000, reflecting the seriousness of the non-compliance and the duration of the default. This penalty is calculated based on the number of days of default and the provisions outlined in the Companies (Adjudication of Penalties) Rules, 2014.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATEAFFAIRS
OFFICE OF REGISTRAR OF COMPANIES,
UTTAR PRADESH,
37/17, Westcott Building, The Mall,
Kanpur — 208001 (U.P.)
Phone 0512 — 2550688/2540383
Fax 0512 — 2540423
Email: roc.kanpur@mca.gov.in
ORDER FOR VIOLATION OF SECTION 39(4) OF THE COMPANIES ACT, 2013 READ WITH SECTION 39(5) READ WITH COMPANIES (ADJUDICATION OF PENALTIES} RULES, 2014 AND COMPANIES (ADJUDICATION OF PENALTIES) AMENDMENT , RULES, 2019.
IN THE MATTER JKJM INFRASTRUCTURE PRIVATE LIMITED.
1. The Ministry of Corporate Affairs vide its Gazette notification no A-42011/112/2014-AdJI dated 24.3.2015, 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 JKJM INFRASTRUCTURE PRIVATE LIMITED has been registered under the provisions of the Companies Act, on 13.03.2012 and is having its registered office situated at 84/49, Zarib Chauki, Kalpi Road, Kanpur-208012. The authorized capital of the Company is Rs.500,000/-
3. That an inspection under section 206(5) of the Companies Act, 2013 has been ordered by the Central Government against JKJM Infrastructure Private Limited and during the course of inspection of the company , it was observed by the Inspecting Officer from Para No. 2.13 of “Notes forming integral part of financial statements for the year ended 31.03.2014” given by the Company with the Balance Sheet for the year ending 31.3.2014 that the legal formalities in regard to increase in authorised capital from Rs 5 lakh to Rs 605 lakhs and corresponding issue of said 60 lakh share as per the sale deed has not been complied with the Registrar of Companies, as required under section 39(4) of the Companies Act, 2013 and thus, the company and its Directors have violated the provision of section 39(4) of the Companies Act, 2013.
4. That provision of section 39(4) of the Companies Act, 2013 states that : Whenever a company having a share capital makes any allotment of securities , it shall file with the Registrar a return of allotment in such manner as may be prescribed.
(2) That provision of section 39 (5) of the Companies Act, 2013 states that in case of any default under sub-section (3) or sub-section (4), the company and its officers who is in default shall be liable to a penalty for each default of one thousand rupees for each day during which such default continues or one lakh rupees, whichever is less.
5. This office has issued show cause notice No. 07/18/ADJ/2024/JKJM INFRA/667 TO 670 dated 26.04.2024 to the company and its directors giving 15 days time to reply. However inspite of elapse of the said time period neither the company nor its directors have furnished their reply. Thus, violated provisions of Section 39(4) r/w section 39(5) of the Companies Act,2013.
6. Further, neither the company nor its directors or their representatives have either furnished reply or filed the said documents with this office. Thus making the company and its directors liable to penalty as per Section 39(5) of the Companies Act, 2013.
7. That definition of section 2 sub section (85) of the Companies Act, 2013 is as follows:
“small company” means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees 3 [and]
(ii) turnover of which [as per profit and loss account for the immediately preceding financial year] does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
However, JKJM Infrastructure Private Limited does not fall under the definition of Small Company as, it is subsidiary of Geo Jute Limited (holding company) (as per Balance Sheet as at 31.3.2023) under the proviso of sub clause ii(A) of clause 85 of sub section 2 of the Companies Act, 2013.
8. The date of default in the matter as under:
(a). It was observed by the Inspecting Officer from Para No. 2.13 of “Notes forming integral part of financial statements for the year ended 31.03.2014” given by the Company with the Balance Sheet for the year ending 31.3.2014 that the legal formalities in regard to increase in authorised capital from Rs 5 lakh to Rs 605 lakhs and corresponding issue of said 60 lakh share as per the sale deed has not been complied with the Registrar of Companies in Form PAS-3 , as required under section 39(4) of the Companies Act, 2013 . The company in its reply dated 02.07.2020 furnished financial statement for the year ending 31.3.2015 in which company has shown its Authorised Share Capital of Rs 6,05,00,000/- and Issued Capital of Rs 6,01,00,000/-in the year 2013-2014 and 2014-2015 respectively. There period of default commence from 01.04.2013 to 26.04.2024 (date of issue of show cause notice) .
9. Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose a penalty on each of the Noticee of Show Cause Notice dated 26.04.2024 under section 39(5) of the Companies Act, 2013 for failure to make compliance of the section 39(4) of the Act . I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee. The details of penalty imposed is as under :-
| Nature of default and period from which started | Section of the Companies Act. | Name of the company/direct ors/defaulters | Penalty imposed details (No. of days of default x penalty) |
| The company and its Directors have failed to comply with the requirement of section 39(4) of the Companies Act, 2013. | Section
39(4) read with section 39(5) of the Companies Act, 2013 |
1. JKJM Infrastructure Private Limited 2. Mr Dipak Mohta | (i). Rs 4043000/- (Continuing default ( 4043 days X Rs 1000)
(iii) Maximum Penalty = Rs. 100000/- |
| 3. Sashi Kanta Jha | (i). Rs 4043000/- (Continuing default ( 4043 days X Rs 1000)
(iii) Maximum Penalty = Rs. 100000/- |
||
| 4. Ravishankar Prabhakar | (i). Rs 4043000/- (Continuing default ( 4043 days X Rs 1000)
(iii) Maximum Penalty = Rs. 100000/- (i). Rs 4043000/- (Continuing default ( 4043 days X Rs 1000) (iii) Maximum Penalty = Rs. 100000/- Total maximum penalties on each noticee Rs 4,00,000/- |
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the notice(s).
10. The Noticee shall pay the amount of penalty so imposed through MCA21 Portal only as per Rule 3(14) of Companies (Adjudication of Penalties) 2014 within 90 days receipt of this order . The company needs to file INC-28 , as per the provisions of the Act attaching the copy of the Adjudication order alongwith payment challans.
11. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO 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. Your attention is also invited to section 454(8) of the Companies Act, 2013, in the event of non-compliance of this order. In Case appeal is made 0/o Registrar of Companies, U.P. may be informed alongwith the penalty imposed & the payments made.
(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur
No. 07/22/ADJ/2024/JKJM INFRA/1870 to 1874
Dated 27.6.2024
