Non-Maintenance of Register of Members: MCA Imposes Penalty

In the realm of corporate governance, adherence to statutory provisions is paramount for the smooth functioning of businesses. The Companies Act, 2013, enacted by the Government of India, lays down stringent regulations to ensure transparency and accountability in corporate affairs. One such crucial section under the Act is Section 88, which mandates the maintenance of certain registers by companies.

Background: Recently, the Office of Registrar of Companies, Tamil Nadu, Chennai, issued an adjudication order under Section 88 of the Companies Act, 2013, concerning M/s Hermes I Tickets Private Limited. The order highlighted the company’s failure to comply with the provisions regarding the maintenance of registers as prescribed under Section 88.

Key Findings: The adjudication order revealed several critical observations:

1. Appointment of Adjudicating Officer: The Ministry of Corporate Affairs appointed the Registrar of Companies, Chennai, as the Adjudicating Officer to adjudicate penalties under the Companies Act, 2013.
2. Company Details: M/s Hermes I Tickets Private Limited, a registered company under the Companies Act, 2013, failed to maintain essential registers as required by law.
3. Violation of Section 88: The company, along with its officers, was found in contravention of Section 88(1) of the Companies Act, 2013, for not maintaining the prescribed registers.
4. Adjudication Process: Despite receiving an adjudication notice and multiple opportunities to respond, neither the company nor its directors provided a satisfactory explanation for the violations.
5. Penalty Imposition: In light of the non-compliance, a penalty of Rs. 3,00,000/- was imposed on the company, while each officer in default faced a penalty of Rs. 50,000/-.

Conclusion: The adjudication order underscores the significance of adhering to statutory requirements laid down in the Companies Act, 2013. Non-compliance not only attracts penalties but also reflects poorly on the corporate governance practices of the concerned entity. It is imperative for companies to maintain meticulous records and ensure regulatory compliance to avoid legal repercussions.

Way Forward: As per the order, the company and its officers have been directed to pay the imposed penalties within 90 days and have the option to appeal against the order within 60 days. Failure to comply with the order may result in further penalties or even imprisonment, highlighting the seriousness of regulatory non-compliance.

In Summary: The adjudication order against M/s Hermes I Tickets Private Limited serves as a reminder of the legal obligations imposed on companies under the Companies Act, 2013. By upholding regulatory standards and fulfilling their statutory duties, businesses can foster trust among stakeholders and contribute to a robust corporate ecosystem.

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Government of India
Ministry of Corporate Affairs
Office of Registrar of Companies, Tamil Nadu, Andaman & Nicobar Islands, Chennai
II Floor, C-Wing, Shastri Bhavan, 26, Haddows Road, Nungambakkam, Chennai-6

Order F.NO.ROC/CHN/HERMES I/ADJ/S.88/2024 DATE: 27 MAR2024

ADJUDICATION ORDER UNDER SECTION 88 OF THE COMPANIES ACT, 2013IN THE MATTER OF M/S HERMES I TICKETS PRIVATE LIMITED

1. Appointment of Adjudicating Officer:-

The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 has appointed Registrar of Companies, Chennai as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter referred as Act or Companies Act, 2013) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Company: –

Whereas the company viz M/s. Hermes I Tickets Private Limited with CIN: U63040TN2006PTC082562 (herein after referred as ‘ company’ or ‘ subject company’) is a registered company with this office under the Companies Act, 2013 having its registered office as per MCA21 Registry at Sai Krupa Plot No. 30A (south phase) First floor SIDCO THIRU-VI-KA Industrial Estate Guindy, Chennai, Tamil Nadu 600032.

The financial & other details of the subject company as available on MCA-21 portal is stated as under:

3. Directors

4. Section and Penal Provision as per Companies Act, 2013 Section 88 of the Companies Act, 2013- Register of members etc:

1) Every company shall keep and maintain the following registers in such form and in such manner as may be prescribed, namely: –

(a) Register of member indicating separately for each class of equity and preference shares held by each member residing in or outside India;

(b) Register of debenture-holders, and

c) Register of any other security holders

(5) If a company does not maintain a register of members or debenture holders or other security holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2), the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.

5. Issue of Adjudication Notice:

Whereas, an inquiry was conducted on the affairs of the Company under Section 206(4) of the Companies Act, 2013 by an Officer authorized by the Central Government wherein the observations of the Inquiry Officer are as follows:

Inquiry Officer has directed the company to submit the following:

1. A copy of register of members with records since incorporation to till date.

2. Furnish the details of fixed assets register with details of all tangible and intangible assets since incorporation to till date.

3. Furnish the details of Register of charges. Along with the register, provide the details of all Charges, in a tabular format, since Incorporation including both satisfied and non-satisfied, along with relevant documents.

4. Furnish a copy of Register MPB-2, MPB-3 pertaining to loans and investments.

5. A copy of MPB-4 of or contracts and arrangements in which directors are interested.

6. Register of directors and KMP’s and their shareholding.

The company has not furnished any of the above said documents. Further, Inquiry officer has reported that, as the company has not furnished the details of any register, it appears that the company has not maintained the same. Hence, the company and its officers has contravened the provision of Section 88 (1) of the Companies Act, 2013 and liable for penal provisions under Section 88(5) of the Companies Act, 2013.

Accordingly, on submission of the Inquiry Report by the officer, Regional Director, Ministry of Corporate Affairs, Chennai has directed this office to initiate necessary action against the defaulters of the provisions of the Companies Act, 2013.

After this office has issued Show Cause Notice for Adjudication under Section 89 of the Companies Act vide Notice No. ROC/CHN/082562/S.88/P.22/INQUIRY FOLLOW UP/2022 dated 15.09.2023.

6. Reply of Company and Directors for Adjudication Notice issued:

No reply has been received from the company and its directors.

7. Adjudication Hearing:

Since no reply has been received from the company and its directors for the Adjudication notice, this office had issued Adjudication Hearing Notice to the subject company and Officers in default by fixing the hearing date as 13.02.2024 at 11:30 AM. Pursuant to the hearing notice Mr. M. Senthil Kumar, Chartered Accountant has appeared before the Adjudicating Authority on 13.02.2024 at 11:30 PM on behalf of the company and Vignesh Ravindran and Prabhakar Sujatha. Another director, Mr. Manoj Kumar Sahu was absent on the said date. Mr. M. Senthil Kumar, Chartered Accountant has submitted a reply letter of Mr. Vignesh Raveendran on the violations mentioned in the Notice of hearing. Further, the Adjudicating Authority has issued final notice of hearing to Mr. Manoj Kumar Sahu, D Director, on 23.02.2024 by fixing the hearing on 29.02.2024 at 12:45PM. Shri. M Rathnakumar, PCS appeared before the Adjudicating Authority on 29.02.2024 on behalf of Mr. Manoj Kumar Sahu and made submission that the violation may be adjudicated.

8. Decision

Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that (i) the company and its officers in default are liable for penalty as prescribed under Section 88(5) of the Act for non-maintenance of registers as prescribed under Section 88 of the Companies Act.

Accordingly, I am inclined to impose a penalty as prescribed under Sub-section 5 of Section 88 of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are shown in the table below:

Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.3,00,000/- (Rupees Three lakhs) is imposed on the Company and Rs.50,000/- (Rupees Fifty thousand) is imposed on each of the Officers in default. Totally Rs. 4,50,000/- (Rupees Four lakhs fifty thousand) as penalty amount for violation of Section 88 of the Companies Act, 2013.

9. The said amount of penalty shall be paid through online by using the website mca.gov.in(Misc. head) within 90 days of receipt of this order, and intimate this office with proof of penalty paid.

10. Whereas Appeal against this order may be filed with the Regional Director (SR), Ministry of Corporate Affairs, 5th Floor, Shastri Bhavan, 26 Haddows Road, Chennai-600006, Tamil Nadu within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website mca.gov.in] 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 (Adjudicating of Penalties) Rules, 2014].

11. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order, “(8)(i) Where company fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be within a period of ninety days from the date of the receipt of the copy of the order, 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.

(ii) Where an officer of a company or any other person who is in default fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be within a period of ninety days from the date of the receipt of the copy of the order, such officer 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.”

(B. SRIKUMAR, ICLS)
REGISTRAR OF COMPANIES
TAMILNADU, CHENNAI.
ADJUDICATING OFFICER