Non-Maintenance of Registered Office: Section 12 of Companies Act violated: MCA levied ₹6 Lakh Penalty

On July 12, 2024, the Registrar of Companies for Kerala and Lakshadweep issued an adjudication order against Guruvayoor Akshaya Kuries Pvt Ltd, levying a substantial penalty of ₹6 lakh. This penalty was imposed under Section 454 of the Companies Act, 2013, due to non-compliance with Section 12(1) and (4) of the same Act, which mandates the maintenance of a functional registered office.

Background

The Registrar of Companies, Ernakulam, was appointed as the Adjudicating Officer as per Notification No. S.O/831. (E) dated March 24, 2015. This appointment empowered the officer to adjudicate penalties related to non-compliance of the Companies Act within the State of Kerala and the Union Territory of Lakshadweep.

Guruvayoor Akshaya Kuries Pvt Ltd, a company registered under CIN-U65992KL1992PTC006490, was found to be non-compliant with the Act’s requirements concerning the maintenance of a registered office. The company’s registered office was supposed to be at Door No. XVIII/1412, Ashirvad Building, West Nada, Guruvayur, Thrissur, Kerala.

Facts of the Case

The Registrar’s office had issued several communications to the company regarding complaints of non-maintenance of its registered office:

• Letters dated November 24, 2020, and May 3, 2021: Both were returned with a “Door Locked” endorsement.
• Notice dated June 10, 2022: Also returned with “Door Locked.”
• Show Cause Notice dated May 7, 2024: Returned as “Not Known.”

Despite these notices, the company’s response, received on May 22, 2024, was unsatisfactory. The directors of the company claimed they were unable to maintain the office due to old age and ongoing efforts to wind up the company. However, these claims were deemed inadequate as evidence showed a continued default in maintaining the registered office.

Legal Considerations

1. Violation of Section 12(1) & (4)

Section 12(1) requires a company to maintain a registered office capable of receiving all communications. Section 12(4) mandates notifying the Registrar of any changes in the registered office within 30 days. The failure to maintain a functional office and the consistent return of communications indicated a breach of these provisions.

2. Liability for Penalty

Under Section 12(8) of the Companies Act, 2013, both the company and its officers are liable for penalties for non-compliance. Each defaulting day incurs a penalty of ₹1,000, not exceeding ₹1 lakh. The directors of the company, having failed to address the non-compliance, were held jointly and severally liable.

3. Continuing Nature of Default

The default was found to be continuing from November 24, 2020, through to the date of the adjudication order, July 12, 2024. This ongoing nature of the default necessitated a substantial penalty.

4. Quantum of Penalty

Considering the company’s failure to comply and the length of default (1326 days), the maximum penalty of ₹1 lakh was imposed on the company and each of its directors. This penalty reflects both the severity and duration of the non-compliance.

Conclusion

The adjudication order against Guruvayoor Akshaya Kuries Pvt Ltd serves as a significant reminder of the importance of adhering to regulatory requirements concerning the maintenance of a registered office. The imposition of a ₹6 lakh penalty highlights the seriousness with which the Registrar of Companies views non-compliance with the Companies Act, 2013. Companies must ensure their registered offices are functional and responsive to avoid such substantial financial penalties. For those affected, it’s essential to comply with the payment directives within 90 days and consider appealing the order if necessary.

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Ministry of Corporate Affairs
Registrar of Companies, Kerala & Lakshadweep
First Floor, Corporate Bhawan, B.M.C. Road,
Thrikkakara, Kochi — 682 021, Kerala.
roc.ernakulam@mca.gov.in

Order No. ROC-K/Guruvayoor Akshaya/ADJ-12(1)&(4)/ 1812 to 1817 Dated: 12/07/2024

BEFORE THE ADJUDICATING OFFICER

REGISTRAR OF COMPANIES KERALA AND LAKSHADWEEP

Adjudication order passed under Section 454 of the Companies Act 2013 for the violation of Section 12(1) & (4) of the said Act in the matter of

GURUVAYOOR AKSHAYA KURIES PVT LTD.

1. Appointment of Adjudicating Officer

Vide Notification bearing No. S.0/831. (E) dated 24th March 2015 the Govt. of India Ministry of Corporate Affairs has appointed the Registrar of Companies Ernakulam as Adjudicating Officer under the Companies Act, 2013 (hereafter referred as the Act) read with the Companies (Adjudication of Penalties) Rules, 2014 with respect to all companies having its registered office within the State of Kerala and Union territory of Lakshadweep Islands. I am vested with jurisdiction and empowered to adjudicate the matter in hand within the prescribed legal frame.

2. Company

Whereas Company GURUVAYOOR AKSHAYA KURIES PVT LTD, bearing CIN-U65992KL1992PTC006490 (herein after known as Company) is a registered company with this office under the provisions of the companies Act, 2013 herein after referred to as the Act having its registered office situated at Door No. XVIII/1412, Ashirvad Building, West Nada, Guruvayur, Thrissur, Kerala, 680101, India as per the MCA website.

3.1 Facts of the case:

Whereas letters dated 24.11.2020 & 03.05.2021 and notice dated 10.06.2022 were issued by this office to the aforesaid registered office address of the company by registered post in connection with complaints received against the company in Complaint ID: 100051728, which had been returned/undelivered with postal endorsement “Door locked”.

3.2 In view of the above, an adjudication notice was sent to the company and its officers vide Speed Post AD letter on 07.05.2024 giving 15 days’ time to respond. The result of the sending of the letter by post is as under:

3.3 In reply to the above show cause notice dated 07.05.2024, this office has received a letter dated 22.05.2024 from the company signed by all the above 5 directors stating that they are having registered office at the same address, no activities are done by the company, not having staff in the office and hence they are not opening the office regularly and could not accept the communication. They also stated that they are super senior citizens and due to their old age issues are unable to actively participate in the day-to-day functioning of the company and are not able to visit the company and in the process of winding up of the company.

3.4.The above reply of the company has been examined and has been found not convincing since all the above 02 letters and also the show cause notices under Section 454 dated 10.06.2022 & 07.05.2024 have been returned with the following endorsement:

4. ISSUES OF CONSIDERATION:

The issues that arise for consideration in the present case are:

a) Whether the Company has violated the provisions of section 12(1) & (4) of the Act?

b) Who are liable for penalty for the said violation?

c) Whether the default is of continuing nature or otherwise?

d) What would be the quantum of monetary penalty that can be imposed?

5. FINDINGS

On perusal of the available records and bearing in mind the facts and circumstances of the case, 1 records my findings as hereunder:

Issue 1: Whether the Company has violated the provisions of section 12(1) & (4) of the

Section 12(1) & (4) of the Act is as follows.

Section 12(1) – “A company shall, on and from the thirtieth day of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be prescribed”.

Section 12(4) – “Notice of every change of the situation of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar within thirty days of the change, who shall record the same”.

In view of the return of the postal covers dated 24.11.2020, 03.05.2021, 10.06.2022 and 07.05.2024 with the postal endorsement as ‘Door locked/Not Known and spot inspection report of the official of this office on 21.11.2023 it is clear that the company is not maintaining its registered office in the given address and has therefore failed to comply the requirements of section 12(1) & (4) of the Act.

Issue 2: Who are liable for penalty for the said violation?

Section 12(8) states that if any default is made in complying with the requirements of this Section, then the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding One Lakh rupees. The term ‘Officer who is in default has been defined in section 2(60) of the Act. All the 4 directors mentioned hereinunder are the Directors of the company during the commission of the offence and since they have not offered any defence in spite of the notice to him, the company and the said directors are liable for the default.

Issue 3: Whether the default is of continuing nature or otherwise?

The date of return of the first Notice issued by this office i.e., 24.11.2020 being the date of acknowledge is to be considered as date of commencement of default and since even the latest letter dated 07.05.2024 is returned undelivered and in the absence of any valid defence by the company or its Directors with corroborative evidence to prove their contention and in view of the fact that the said address being still shown as the registered office address in the MCA portal, it goes to show that the default is a continuing one from the period from 24.11.2020 to till date.

Issue 4: What would be the quantum of monetary penalty that can be imposed?

As per section 12(8) of the Act, the company and every officer who is in default ie., the Managing director in this case, shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding One Lakh rupees.

Further Section 446B states that ‘if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be’.

As per clause 85 of section 2 of the Companies Act, 2013, small company means a company whose paid up capital and turnover shall not exceed rupees four crore and rupees forty crore respectively. As per MCA V3 portal, paid up capital of the company is Rs.44,90,000/- and regard to turnover, since the company has not filed its Financial Statements for the immediately preceding financial year, the turnover of the company cannot be ascertained and therefore, the benefits of small company cannot be extended to this company while adjudicating penalty.

ORDER

6. Having considered the facts and circumstances of the case and after taking into account the above factors, I hereby impose the maximum penalty of Rs.1,00,000/- (Rupees One Lakh only) on the company and its Directors/officers in default of the company as per Table below under section 12(8) of the Act for violation of section 12(1) and (4) of the Act.

[*No of days have been calculated from 24.11.2020 (date of return of the first postal letter) till 12.07.2024 (date of order)]

7. The noticee shall pay the amount of penalty individually for the company and its Managing director (out of own pocket) by way of e-payment (available on Ministry website mca.gov.in) under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 (ninety) days of this order. The Challan/SRN generated e . after payment of penalty through online mode shall be forwarded to this office.

8. Appeal against this order, if aggrieved and if so advised, may be filed in writing with the Regional Director (SR), Ministry of Corporate Affairs, Chennai 600 006, within a period of 60 (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 this order {Section 454(5) & (6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014}.

9. Your attention is also invited to section 454(8) of the Act in the event of non-compliance with this order.

(V.M. PRASANTH)
(Adjudicating Officer)
Registrar of Companies
Kerala & Lakshadweep