On July 16, 2024, Kudos Finance and Investments Private Limited, along with its directors, successfully appealed a substantial penalty imposed by the Registrar of Companies (RoC), Pune. The penalty, totaling Rs. 314,700, was levied for the non-filing of Form AOC-4 NBFC for the fiscal year 2020-21. This appeal, under Section 454(5) of the Companies Act, 2013, was reviewed by the Regional Director, Western Region, Ministry of Corporate Affairs (MCA), Mumbai.
Background
Kudos Finance and Investments Private Limited faced a penalty for failing to file Form AOC-4 NBFC with the MCA, as mandated under Section 137 of the Companies Act, 2013 and Rule 12(1A) of the Companies (Accounts) Rules, 2014. The RoC Pune’s Adjudication Order dated February 9, 2024, imposed the penalty based on the company’s non-compliance.
Penalty Details:
- Nature of Default: Non-filing of Form AOC-4 NBFC for FY 2020-21
- Total Penalty: Rs. 314,700
- Breakdown: Rs. 10,000 + Rs. 100 per day of default, resulting in a cumulative penalty for the total days of default.
Grounds for Appeal
1. Applicability of Ind AS: The company argued that as per Indian Accounting Standards (Ind AS) applicability norms, Ind AS are only applicable to unlisted companies with a net worth between Rs. 250 Crores and Rs. 500 Crores. For FY 2020-21, Kudos Finance’s net worth was significantly below this threshold at INR 12,67,07,816. Therefore, they contended that Form AOC-4 NBFC was not applicable to them.
2. Violation of Provisions: The company’s representatives highlighted that the penalty was incorrectly applied as the rules concerning Ind AS and the filing requirements did not align with the company’s financial status.
3. Turnover Criteria: The company pointed out that while the RoC’s adjudication was based on turnover exceeding Rs. 100 Crores, this criterion was not a part of the applicability norms for Form AOC-4 NBFC.
Proceedings and Resolution
The appeal was reviewed by the Regional Director, who considered:
- The applicability of Ind AS to the company based on its net worth.
- The RoC’s report which confirmed that Ind AS criteria, and not turnover, should be used to determine the applicability of Form AOC-4 NBFC.
During the hearing, Anil Kumar Dhanotiya, Practicing Company Secretary representing Kudos Finance, reiterated the arguments. The ROC’s report corroborated that the penalty was imposed based on an incorrect interpretation of rules, as turnover criteria were not relevant to Form AOC-4 NBFC requirements.
Conclusion
The Regional Director’s decision to set aside the penalty was grounded in the realization that the AOC-4 NBFC filing was not applicable to Kudos Finance due to its net worth falling below the prescribed threshold for Ind AS compliance. Consequently, the penalty of Rs. 314,700 was waived.
BEFORE THE REGIONAL DIRECTOR, WESTERN REGION
MINISTRY OF CORPORATE AFFAIRS, MUMBAI
Order No. Kudos Finance/137(1)/F94308137/2023-24/5856 Dated: 16 JUL 2024
APPEAL UNDER 454(5) OF COMPANIES ACT, 2013 AGAINST ORDER PASSED FOR OFFENCES COMMITTED UNDER SECTION 137 OF THE COMPANIES ACT, 2013 READ WITH RULE 12(1A) OF THE COMPANIES (ACCOUNTS) RULES, 2014.
In the matter of KUDOS FINANCE AND INVESTMENTS PRIVATE LIMITED & ORS
| 1. | Kudos Finance and Investments Private Limited | Company |
| 2. | Pavitra Pradip Walvekar | Additional Director |
| 3. | Swati Jindal | Director |
| 4. | Naresh Vigh | Director |
| 5. | Audumbar Dattatray Raut | Director |
| 6. | Rizwan Hasan Shaikh | Additional Director |
…Appellants
Through: Anil Kumar Dhanotiya, Practicing Company Secretary.
HON’BLE REGIONAL DIRECTOR (WESTERN REGION)
ORDER
Appeal under sub-Section (5) of Section 454 of the Companies Act, 2013 (Act) r/w the Companies (Adjudication of Penalties) Rules, 2014 (Rules) has been filed by ‘Kudos Finance and Investments Private Limited’ (Company) having CAIN U65910PN2009PTC148795 and, its Officers, against Order No. RoCP/ADJ/137/23-24/KUDOS/8(ii)/B/2852 dated 09/02/2024 (ROC Order) of Registrar of Companies, Pune for violating provisions of Section 137 of the Companies Act, 2013 read with Rule 12(1A) of the Companies (Accounts) Rules, 2014.
2. The appeal lies within the jurisdiction of the Regional Director, Western Region, Ministry of Corporate Affairs, Government of India.
3. The Registrar of Companies, Pune (RoC Pune) vide Adjudication Order dated 09/02/2024 imposed penalty under Section 137(3) of the Act for not filing the AOC-4 NBFC with MCA for F.Y. 2020-21 as required under provisions of Section 137(1) read with Rule 12(1A) of the Act as under:
| Nature of
Default
|
Company / Officers to whom penalty imposed
|
No. of Days in defaults
|
Penalty for Default as per Section 137(3) of the Act
|
Total Penalty in Rs.
|
Penalty imposed (Rs) (As per maximum Penalty Prescribed |
| Non filing of Form AOC-4 NBFC with MCA for F.Y. 2020-21 | Kudos Finance and Investments Private Limited | 547 | Rs.10,000/- +Rs. 100 per day | 10,000- 100X547 64,700 | Rs. 64,700. |
| Pavitra Pradip Walvekar | 547 | 10,000- 100X547 64,700 | Rs. 50,000 | ||
| Swati Jindal | 547 | 10,000- 100X547 64,700 | Rs. 50,000 | ||
| Audumbar Dattatray Raut | 547 | 10,000- 100X547 64,700 | Rs. 50,000 | ||
| Rizwan Hasan Shaik (from date of appointment i.e. 30/04/2024 | 419 | 10,000 , 100X419 51,90 | Rs. 50,000 | ||
| Total | Rs.3,14,700/- |
No. of days have been calculated font 23/12/2021 (date of filing of Form AOC-4 for 1..1. 202021) to till date of Notice (i.e. 23/06/2023 for F.Y. 2020-21).
4. Appellants have filed Form-ADJ vide SRN F94308137 dt.05/04/ 2024. As per provisions of sub-Section (6) of Section 454, every appeal under sub-section (5) shall be filed within sixty (60) days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person. On examination of the application/appeal, it is seen that the said application/appeal has been filed within 6() days from the date of passing of the adjudication order.
5. Grounds of Appeal & Relief sought:
a) As per the rules every unlisted NBFC having net worth between 25() Crores and 500 crores; has to comply the provisions of Ind AS and file the AOC-4 NBFC with MCA. However, the company has not filed AOC-4 NBFC.
b) As per Section 137 of the Companies Act read with Rule 12(1 A) of the Companies (Accounts) Rules, 2014, every Non-Banking Financial Company (NBFC) that is required to comply with Indian Accounting Standards (Ind AS) shall file the financial statements with Registrar together with Form AOC-4 NBFC (Ind AS) and the consolidated financial statement, if any, with Form AOC-4 CFS NBFC (Ind AS). And that as per applicability norms of Indian Accounting Standards (Ind AS), From 1st April, 2019 Ind AS are only applicable to the companies that are unlisted having net worth between 25() crores and 500 crores referring to the MCA Press Release No. 11/10/2009 CI V dated 18th January, 2016. But, in their case, the Net worth of the Company for FY 2020-21 is INR 12,67,07,816 (Rupees Twelve Crores Sixty Seven Lakhs Seven Thousand Eight Hundred Sixteen) only. And hence, Ind AS is not applicable to our Company, and consequent to which, filing of Form AOC-4 NBFC does not apply to our Company. Thus, Form AOC-4 N is not filed by the Company because it is not applicable to the Company.
c) Accordingly, no penalty should be imposed under the provisions of Section 137(3) of the Act against the company and its officers in default.
6. The matter was posted for hearing as per Section 454(5) r/w Section 454(7) of the Act on 02/07/2024. Anil Kumar Dhanotiya, Practicing Company Secretary appeared on behalf of Appellants as their authorized representative. The authorized representative reiterated the submission made by the applicants in their application and stated that AOC-4 (NBFC) is not applicable to subject NBI:C as IND AS is not applicable because the net worth should be more than Rs.250 Crore in F.Y. 2020-21. He further stated that the net worth of the company was less than Rs.250 Crore.
7. ROC vide his further report dt.01 /07/2024 has stated that:
a) IND AS are only applicable to the companies that are unlisted having net worth between 250 Crores and 500 Crores referring to the MCA Press Release No.11/10/2009 CL-V dt.18/01/2016.
b) Grounds taken by company seem tenable and the relief sought for waiver of penalty levied may be considered as there is no turnover criteria mentioned in the above press release.
c) Hence, the same is not applicable to the company and the Adjudication Order was passed on the basis on the conclusion of the violation by the 10, however, the same was on the basis of turnover which is in excess of Rs.10() C:rores, however, turnover criteria is not included in the criteria for AOC-4 N131:C.
8. Taking into consideration the Adjudication Order of the Registrar of Companies, Pune; submissions made by the Appellants in their application, oral submissions of authorized representative during the hearing and further report of ROC dt.01/07/2024; the Adjudication Order dt. 09/02/2024 passed by ROC, Pune is ‘Set Aside’ and the penalty is waived off, keeping in view Rule 12 of the Companies (Accounts) Rules, 2014.
A copy of this order shall be published on the website of the Ministry of Corporate Affairs as per Rules.
Signed and sealed on 16 day of July 2024.
(SANTOSH KUMAR)
REGIONAL DIRECTOR
WESTERN REGION, MUMBAI
