Non-compliance in filing Form PAS-6: MCA imposes Rs. 3.5 Penalty

The Ministry of Corporate Affairs issued an order on October 29, 2024, regarding the adjudication of penalties against Ispat Sheets Limited for violations of specific provisions of the Companies Act, 2013. The company, which has been non-compliant in filing Form PAS-6 as required under Section 29(1A) and Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, faced scrutiny following an inquiry initiated in February 2020. Despite notifications and opportunities for hearings, the company and its directors failed to respond or appear, leading to the conclusion that no defense was presented on their behalf.

As a result of the non-compliance, a penalty of ₹2,00,000 was imposed on Ispat Sheets Limited. Each director, namely Naba Kumar Pal, Om Prakash Jha, and Dhiraj Pathak, received individual penalties capped at ₹50,000 each. The total penalty, including the company’s fine, amounts to ₹3,50,000. The order stipulates that the penalties must be paid within 90 days and that the company and its officers must rectify the defaults. The notice also warns that failure to comply could lead to more severe penalties, including fines or imprisonment for the officers in default, thus underscoring the importance of adherence to regulatory requirements in corporate governance.

The adjudicating officer emphasized that the company and its directors are required to take immediate action to resolve their compliance issues. Additionally, they were informed of their right to appeal the decision within sixty days, reinforcing the legal framework surrounding corporate compliance in India.

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GOVERNMENT OF INDIA
Ministry Of Corporate Affairs
Office of the Registrar of Companies, North Eastern Region
1st Floor, BSNL Bhawan, Pan Bazar
Guwahati- 781001

File No. ROC/GHY/ADJ /ISPAT/ 454/2024-25/501  Dated: 29/10/2024

ORDER IN THE MATTER OF ADJUDICATION OF PENALTY UNDER SECTION 454(3) OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 FOR VIOLATION OF SECTION VIOLATION OF SECTION 29(1A) READ WITH SUB RULE 8 OF RULE 9A OF THE COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014 OF THE COMPANIES ACT, 2013.

IN THE MATTER OF ISPAT SHEETS LIMITED
(CIN – U27107AS1988PLC002877)

Appointment of Adjudication Authority: –

1. The Ministry of Corporate Affairs vide its Gazette Notification No. A­42011/112/ 2014-Ad. II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred under section 454 of the Companies Act, 2013 [hereinafter known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 (Notification No. GSR 254(E) dated 31.03.2014) for adjudging penalties under the provisions of the Companies Act, 2013.

2. Company:

M/ s Ispat Sheets Limited (herein referred to as ‘the company’) is a company having its registered office at “HOUSE NO. 36, S. C. Road By Lane-3 Athgaon Pukuripar, Kamrup, Guwahati-781001, Assam” and is registered under the provisions of the Companies Act, 1956/2013 on 22.02.1988 The CIN of the Company is U27107AS1988PLC002877.

3. Relevant Provisions of the Companies Act, 2013

Section 29(1) of the Companies Act, 2013 states that:

(1) Notwithstanding anything contained in any other provisions of this Act, —

a. every company making public offer; and

b. such other class or classes of 1[public] companies as may be prescribed,

shall issue the securities only in dematerialised form by complying with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made there under.

2(1A) In case of such class or classes of unlisted companies as may he prescribed, the securities shall be held or transferred only in dematerialised form in the manner laid down in the Depositories Act, 1996 and the regulations made there under.]

Rule 9(A) of the Companies (Prospectus and Allotment of Securities), Rules, 2014 states that:

1) Every unlisted public company shall –

a. Issue the securities only in dematerialised form; and

b. Facilitate dematerialisation of all its existing securities

in accordance with provisions of the Depositories Act, 1996 and regulations made there under

Sub Rule 8 of Rule 9(A) of the Companies (Prospectus and Allotment of Securities), Rules, 2014 states that:

(8) Every unlisted public company governed by this rule shall submit Form PAS-6 to the Registrar with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 within sixty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice

Section 450 of the Companies Act, 2013: Punishment where no specific penalty or punishment is provided

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 there under, 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.

Facts About the Case

The Ministry vide letter dated 27.02.2020 has given instruction to conduct inquiry u/ s 206(4) of the Companies Act 2013, while conducting the inquiry the Inquiry Officer has pointed out that there was a violation of section 29(1A) read with sub rule 8 of Rule 9A of The Companies (Prospectus and Allotment of Securities) Rules, 2014.

Inquiry Officer/ROC has stated in its inquiry report- The company has not filed the Form PAS-6 under section 29(1A) read with sub rule 8 of Rule 9A of The Companies (Prospectus and Allotment of Securities) Rules, 2014.

As no reply has been received from the company or its directors, it may be considered that the company has nothing to say in the matter.

Since the company has not filed Form PAS-6 in FY 2019-20 and FY 2020-21, there is violation of section 29 (1A) read with sub rule 8 of Rule 9A of The Companies (Prospectus and Allotment of Securities) Rules, 2014.

4. Show Cause Notice reply and Personal Hearing

Registrar of Companies, Guwahati being an adjudicating authority had issued notice of hearing dated 31.08.2023 by fixing the hearing on 20.09.2023 at 11.30 am, however at the time of hearing, none appeared on behalf of the respondents.

Therefore, the competent authority has decided to give a last opportunity for hearing to the respondents vide notice dated 14.10.2024 and also fixed a date of hearing in the matter on 23.10.2024 at 11:30 AM.

Further, at the time of hearing no one appeared on behalf of the respondents. Accordingly, the Competent Authority has decided the matter on merits.

5. Order

Having considered the facts and circumstances of the case and after taking into accounts the factors above, the undersigned has reasonable cause to believe that the provision of section 29(1A) read with sub rule 8 of Rule 9A of The Companies (Prospectus and Allotment of Securities) Rules, 2014 have not been complied with by the company and its officers in default and therefore liable for penal action under section 450 of the Companies Act,2013

I hereby imposed penalty on company and its officer in default as prescribed under Section 450 of the Companies Act,2013. The details of the penalty imposed on the company and Officer in default are given in the table below:

A:

Number of days calculated from 01.06.2020 (due date of filing PAS 6 i.e. within sixty days from the conclusion of each half year.) to date of hearing i.e. 23.10.2024.

6. The company and its officers in default are hereby directed to rectify the default immediately, if not done earlier.

7. The noticee shall pay the amount of penalty individually for the company and its officers from their personal sources/income by way of e-payment available on Ministry website mca.gov.in under “Pay Miscellaneous Fees” category in MCA fees and Payment Services under Rule 3(14) of Company(Adjudication of Penalties) (Amendment) Rules, 2019 within 90 days from the date of receipt of this order and copy of this Adjudication order and Challan/ SRN generated after payment of penalty through online mode shall be filed in INC-28 under the MCA portal without further reference.

8. On deposit of penalty through online and filing of INC-28 under MCA21 Portal, all proceedings under this section in respect of such default shall be deemed to be concluded in terms of first proviso of Sub-section 3 of Section 454 of the Companies Act, 2013 as the case may be.

9. However, Appeal against this order may be filed in writing with the Regional Director, North Eastern Region, Ministry of Corporate Affairs, 1sT Floor, BSNL Bhawan, Pan Bazar, Guwahati-781001, Assam, 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 the certified copy of this order. [Section 454(5) & 454(6) of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudicating of Penalties) Amendment Rules, 2019].

10. Your attention is also invited to Section 454(8) (i) and 454(8) (ii) of the Companies Act, 2013, which state that in case of non-payment of penalty, the company shall be punishable with fine which shall not be less than Twenty five thousand rupees but which may extend to Five lakh rupees, and officer in default shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.

(DIP NARAYAN CHOWDHURY)
REGISTRAR OF COMPANIES &
ADJUDICATING OFFICER
MINISTRY OF CORPORATE AFFAIRS
GUWAHATI