Introduction: The Ministry of Corporate Affairs, through the Office of the Registrar of Companies (West Bengal), issued an adjudication order imposing penalties under Section 454(3) of the Companies Act, 2013. The case involves M/S. MARS MERCANTILES PRIVATE LIMITED and pertains to non-compliance with the provisions of Section 158 of the Companies Act, 2013.
Detailed Analysis: The Adjudication Officer, appointed by the Ministry of Corporate Affairs, initiated the penalty proceedings against M/S. MARS MERCANTILES PRIVATE LIMITED based on an inquiry under Section 206(4) of the Companies Act, 2013. The violation highlighted was the contravention of Section 158, specifically related to the non-disclosure of Director Identification Numbers (DIN) in the financial statements for the years 2018-19 to 2019-20.
In response, the company explained the omission, attributing it to an inadvertent error. The Directors’ DINs were mentioned in the FORM AOC-4 but were missed when attaching the statements. The company clarified that there was no intention to hide the DIN, and the error was unintentional.
The penalty proceedings progressed with adjudication notices and hearings, wherein the company’s director presented supporting documents and requested a lenient view. Considering the factors, the Adjudication Officer imposed a total penalty of Rs. 3,00,000—Rs. 1,00,000 on the company and Rs. 1,00,000 on each director in default.
Conclusion: The adjudication order signifies the regulatory response to violations of corporate compliance. MARS MERCANTILES PRIVATE LIMITED is directed to pay the imposed penalties within 90 days. The order also outlines the appeal process and highlights the consequences of non-payment within the stipulated time.
Understanding such adjudication orders is crucial for companies to ensure compliance with the Companies Act, 2013. It serves as a reminder for entities to diligently disclose required information, avoiding penalties and legal repercussions. The case of MARS MERCANTILES PRIVATE LIMITED stands as an instructive example in the corporate regulatory landscape.
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GOVERNMENT OF INDIA
Ministry of Corporate Affairs
Office of the Registrar of Companies (West Bengal)
Nizam Palace, 2nd M. S. 0. Building, 2nd Floor
234/4, Acharya Jagadish Chandra Bose Road
KOLKATA – 700 020
Order No. ROC/ADJ/105/097223/2023/10412-10419 Dated: 11.01.2024
ADJUDICATION ORDER FOR PENALTY U/S 454(3) OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 AS AMENDED BY THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2019 IN MATTER OF NON COMPLIANCE OF THE PROVISIONS OF SECTION 158 OF THE COMPANIES ACT, 2013
In respect of: M/S. MARS MERCANTILES PRIVATE LIMITED
CIN: U50102WB I 993PTC097223
1. Appointment of Adjudicating Officer: –
Ministry of Corporate Affairs vide its Gazette Notification No A-42011/112/2014-Adil dated 24.03.2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act. 2013 [herein after known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 for adjudicating penalties under the provisions of this Act.
2. Company:- WHEREAS Company M/S. MARS MERCANTILES PRIVATE LIMITED [herein after known as Company] is a registered company with this office incorporated on 11.06.1993 under the provisions of Companies Act, 1956 having its registered address at 175, KARNANNI ESTATE, 209, A J C BOSE ROAD, KOLKATA WB 700017 INDIA, as per MCA website.
3. Facts about the Case: –
1. On the basis of Inquiry carried out u/s 206(4) of the Companies Act, 2013 the following violation are pointed out in the inquiry report:
CONTRAVENTION OF SECTION 158 OF THE COMPANIES ACT, 2013 – NONDISCLOSURE OF DIN NO. IN THE FINANCIAL STATEMENTS FOR THE YEARS 2018-19 TO 2019-20:
“Every person or company, while furnishing any return. information or particulars as are required to be furnished under this Act. shall mention the Director Identification Number in such return. information or particulars in case such return, information or particulars relate to the director or contain any reference of any director. –
The Financial Statements for the financial year 2018-19 and 2019-20 do not contain the Director’s Identification Number (DIN) thereby leading to the violation of Section 158 of the Companies Act, 2013 for the said financial year.
Reply of the Company:
The subject company in its reply has stated that the DIN of the Directors who have signed the Financial Statements attached with the FORM AOC-4 has been mentioned in point no 4(c) of the form AOC-4. Mentioning DIN along with the Signature of Directors in the Financial Statements hove been missed out at the time of attaching the said statements with the Form AOC-4. It is further stated that the company had no intention of hiding the DIN and quoting the DIN below the Signature in the Financial Statement was unintentional and without any mala fide thought.
2. Section 158: Every person or company, while furnishing any return, information or porticulars as are required to be furnished under this Act, shall mention the Director Identification Number in such return, information or particulars in case such return, information or particulars relate to the director or contain any reference of the director.
Section 172: If a company is in default in complying with the requirements of this section 158, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lokh rupees in case of a company and one lakh rupees in case of an officer who is in default.
3. Accordingly, the adjudication officer has issued adjudication notice vide No. ROC/ADJ/2023/097223/1106-1109 dated 01.05.2023 (herein after referred as Adjudication Notice) under Section 454(4) read with Section 158 of the Companies Act, 2013 read with Rule 3(2) of Companies (Adjudication of Penalties). 2014 as amended in Amendment Rules, 2019, to the company and its officers in default for the violation of the provisions of the Act as mentioned in par() “1 & 2” above giving an opportunity to submit a reply as to why the penalty should not be imposed under the provisions of Section 172 of the Act against the Company and its officers in default for the above stated violations, followed by a hearing fixed on 14.07.2023 vide hearing notice No. ROC/ADJ/2023/097223/3242-3245 and further second hearing on 23.08.2023 vide hearing notice No. ROC/ADJ/2023/097223/4338. 4338A-4338C dated 18.08.2023.
4. Mr. Mahesh Pradhan, director of the company has submitted his reply vide letter dated 23’d August 2023 enclosing the copy of the Directors Report and Board Resolution passed and including all the supporting documents to consider the application for adjudication specifically stated under provisions of section 158 of the Companies Act, 2013.
5. The Authorised Representative Shri Gopal Kumar Khetan, Practicing Chartered Accountant attended the physical hearing on 23’d August 2023 and represented on behalf of the company and all its directors and appraised of that there was an inadvertent error left out to put DIN in the financial statements for the year ended 31,’ March 2019 and 310 March 2020. However. the same has been mentioned in the Directors Report. Therefore, lenient view may be taken in respect of Section 158 of the Companies Act, 2013. The matter was heard and ordered as under:
ORDER
1. The applicant company and its officers, who have defaulted the provisions of Section 158 of the Companies Act, 2013 shall be liable under Section 172 of the Companies Act, 2013.
2. In exercise of the powers conferred vide Companies (Amendment) Ordinance, 2019, the undersigned is entrusted to adjudicate penalties under section 172 of the Companies Act, 2013. After taking into account the factors mentioned herein above, I do hereby impose the penalty of Total Rs. 3,00,000 (Rupees Three Lakhs only) i.e., Rs. 1,00,000/- (Rupees One Lakh only) on the Company and Rs. 1.00,000/-(Rupees One Lakh only) on each its Director-in-default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, as per table below for violation of section 158 of the Act:
3. The noticee shall pay the said amount of penalty individually for the company and its directors (out of own pocket) by way of e-payment [available on Ministry website www.mca.gov.in] under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 days of receipt of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this Office Address.
4. Appeal against this order may be filed in writing with the Regional Director (ER), Ministry of Corporate Affairs, Kolkata located at Nizam Palace, 2nd M. S. 0. Building, 3rd Floor, 234/4, A.J.C. Bose Road, Kolkata-700020, West Bengal within a period of sixty days from the date of receipt of this order. in Form ADJ [available on Ministry website www.mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of the this order. [Section 454(5) & 454(6) of the Act read with the Companies (Adjudicating of Penalties) Rules, 2014).
5. Your attention is also invited to section 454(8)0) & (ii) of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order.
6. In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules. 2019. copy of this order is being sent to M/s MARS MERCANTILES PRIVATE LIMITED and the director in default mentioned herein above and also to Office of the Regional Director (Eastern Region) and Ministry of Corporate Affairs at New Delhi.
