Registrar of Companies (ROC) in Gujarat and Dadra & Nagar Haveli, under the Ministry of Corporate Affairs (MCA) of the Government of India, has issued an order regarding the adjudication of a penalty against a company named Jethmal Gopaldas (Textiles) Pvt Ltd. The penalty is being imposed under Section 454(3) of the Companies Act, 2013, read with Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, for a violation of Section 137 of the Companies Act, 2013, read with the rules made under it.
The case relates to the financial year 2019-20, where it was observed that Jethmal Gopaldas (Textiles) Pvt Ltd failed to attach the complete copy of the Director’s Report and Auditors Report, resulting in missing pages in the Board’s Report and Auditors Report. This violation is considered a breach of Section 134 read with Section 137 of the Companies Act, 2013. The ROC had previously reported this non-compliance to the Directorate, and a show-cause notice was issued to the company and its officers.
Despite several opportunities given to the company for hearing and providing a response, no reply was received. The company’s representative did not appear for the scheduled hearings. The Adjudicating Officer, considering the written submission received and the oral submission made by the company’s advocate, concluded that the company had indeed failed to file a complete set of Board Report and Financial Statement on the MCA21 portal. However, it was determined that the violation fell under the provisions of Section 137(1) rather than Section 134 of the Companies Act, 2013.
Based on the facts of the case, the Adjudicating Officer found reasonable cause to believe that the company and its officers had violated Section 137 of the Companies Act, 2013. Therefore, a penalty is imposed, and the company is directed to file the required documents afresh as per the procedure provided under the Companies Act, 2013, and its rules.
Section 134 and Section 137 of the Companies Act, 2013 are provisions that relate to the filing of financial statements, including the director’s report, auditor’s report, and other relevant documents by companies with the Registrar of Companies. Here is a brief explanation of these sections:
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES,
GUJARAT. DADRA & NAGAR HAVEL
ROC Bhavan, Opp. Rupal Park,
Nr. Ankur Bus Stand, Naranpura, Ahrredabad (Gujarat) – 380013.
Tel No.: 079-27438531, Fax : 079-27438371
Website : www.mca.gov.in Email: email@example.com
No. ROC-GJ/ADJ-Order/Sec. 454/ JETHMAL GOPALDAS /2022-23/1057 to 1061
DATED: 22nd May 2023
BEFORE THE ADJUDICATING OFFICER
REGISTRAR OF COMPANIES, GUJARAT, DADRA & NAGAR HAVELI
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 137 OF THE COMPANIES ACT, 2013 READ WITH RULES MADE THEREUNDER
IN THE MATTER OF M/S. JETHMAL GOPALDAS (TEXTILES) PVT LTD
Date of hearing- 27.02.2023
1. Shri R. C. Mishra (ROC), Adjudicating Officer
2. Mr. Indrajit Vania, Presenting Officer
Company/ Officers/Directors/KMP/Authorised Representative : ABSENT
Appointment of Adjudication Authority:-
1. The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.03.2015 has appointed the undersigned ads 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 Act.
2. JETHMAL GOPALDAS (TEXTILES) PVT LTD (herein after referred to as “company”) is a company presently registered under the provisions of the Companies Act, 1956/2013 in the State of Gujarat, having CIN: U17111GJ1987PTC117530 and having its registered office situated at “SY NO.25, PLOT NO. 7, SECOND FLOOR, S/313+314„VAKHARIA TEXTILE MARKET, UMARWADA, CHORYASI, SURAT, GUJARAT,395010, India”.
Fact about of the case:
3. It is observed from the financial Statement for the financial year 2019-20 filed vide SRN R92040914 in AOC-4 under the MCA21 portal that the company has failed do attach complete copy of Director’s Report as well as Auditors Report for the aforesaid financial year i.e. some of the pages are missing in Board’s report /Auditors Report for the financial year 2019-20, which laid to violation of Section 134 read with Section 137 of the Companies Act, 2018. This office vide letter N4. ROC-GJ/39/Sec. 230-232/Shree Radha Madhav /2022-23/5931 dated 02.12.2022 has reported the said non-compliance to the Directorate at para 7 of the Report sent in the matter of Composite Scheme of Arrangement in the nature of Amalgamation of Peacock Commercial Pvt Ltd and Jethmal Gopaldas (Textiles) Pvt Ltd with Shree Radha Madhav Textiles Private Limited that “SCN has been issued to the Transferor Company No. 2 /Officers in default u/s 454 of the Act for default u/s 134 of the Act read with Section 137 of the Act for failed to attach complete copy of Director’s Report as well as Auditors Report for the financial year 2019-20 filed vide SRN R92040914 in AOC-4 under the MCA21 portal”.
4. Relevant provisions of Section 137 read with Section 134 of the Companies Act, 2013 are reproduced as under:
Section 137 of the Companies Act, 2013:
(1) A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed:
(3) If a company fails to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the period specified 5[therein], tho company shall be 9[8[6[liable to a penalty]]] of 10[ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of two lakh rupees,] and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the Directors of the company, shall b4 9[6[7fshall be liable to a penalty of 11[ten thousand rupees] and in case of continuing failure, with further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of fifty thousand rupees.
Section 134 of the Companies Act, 2013:
(2) The auditors’ report shall be attached to every financial statement.
(3) A signed copy of every financial statement, including consolidated financial statemen t, if any, shall be issued, circulated or published along with a copy each of—
(a) any notes annexed to or forming part of such financial statement;
(b) the auditor’s report; and
(c) the Board’s report referred to in sub-section (3)
Show Cause Notice, reply and personal Hearing:-
5. An Adjudication Notices vide No. ROC-GUADJ-78/Section 454/ JETHMAL/STA (V)/2022-23/2832- to 3835 dated 28.11.02022 were issued to the company and its officers in default under Section 454(3) of the Companies Act, 2013 for violation f Section 134 read with Section 137 of the Companies Act, 2013 r.w. Rules made thereunder. However, no reply from the company/Directors have been received in this office in response to Notice dated 28.11.2022.
6. Thereafter, a “written Notice” even No. 13.12.2022 were issued to the company and its officers in default as per Section 454(4) of the Companies Act, 2013 and a hearing was fixed for 28.12.2022. Day before hearing 0/o ROC Ahmedabad received request through an e-mail dated 27.12.2022 from Mr. Dhiren Dave, Advocate stating that c:–1 behalf of my client M/s. Jethmal Gopaldas (Textiles) Pvt Lid, I request to adjourn the matter of hearing schedule on 28.12.2022 to any other date convenient to your esteem office preferably on 16th Jan,2023. Upon request made by Ld. Advocate, Next date of hearing fixed for 19.01.2023 and intimated to the company and Mr. Dhireo Dave, Advocate vide letter dated 04.01.2023 as well as an e-mail on the same day.
7. The company vide letter dated 13.01.2023 has admitted the default and further submitted that as per para 6 of the captioned Notice company has not attached some pages with financial statements filed with MCA for the financial year 2019-20, this is purely technical error and not intentional error or default on the part of company. The company has enclosed complete set of Director report and financial Statement for the FY 2019-20 with the aforesaid letter dated 13.01.2023 and request to re-submit the form considering it as an unintentional error. Further requested to give any other date for hearing of the matter as Authorized Representative Advocate Dhiren Dave not available due to matter of High Court of Mumbai. Accordingly one more opportunity of being heard provided to 04 company/Authorized Representative and intimated the next date of hearing fixed for 09.02.2023 vide ROC’s e-mail dated 19.01.2023. On the schedule date of hearin none of the representative of the company or directors have appeared on the dat so fixed. However, Mr. Dhiren Dave, Advocate appeared before the Adjudicatin Officer on 14.02.2023 and submitted reasonable cause for non-appearing on the date fixed for hearing on 09.02.2023 and further requested for provididg opportunity of being Heard in the matter. Therefore, Adjudicating Officer has considered his request in the best interest of ease of doing business and in the belst interest of Companies Act, 2013.
8. During the Hearing, Ld. Advocate has submitted that the alleged default regarding filing of Director’s Report and Auditors Report with AOC-4 falls under purview of Section 137 of the Act, 2013 not under Section 134(7) of the Companies Act, 2013 as this is purely technical error and not intentional error or default on the part of company. Some page in the aforesaid reports are missing does not carry material information and there is nothing to hide on the part of company. Company has duty issued , circulated or published financial statement along with Complete set oII f Auditor’s Report and Board’s report in term of Section 134(7) of the Companies Act, 2013. Ld. Advocate further requested to allow to re-submit the form considering it as an unintentional error and to produce affidavit on record that complete set Of documents duly published/circulated in term of Section 134(7) of the Companies Act, 2013. Ld. Advocate Dave is requested to adjourn the hearing to 27.02.2023, SO as to enable him to produce supporting documentary evidence in the matter after filing of complete set of financial Statement/Board’s Report/ Balance Sheet for the financial year 2019-20 under the MCA21 portal. Accordingly, Adjudicating Officer has given final opportunity in pursuant to Section 454(4) of the Companies Act, 2013 read with Rule 3(4) of Companies (Adjudication of Penalties) Rules 2014 and la hearing was fixed for 27.02.2023 in the best interest of justice.
9. On the Schedule date of hearing i.e. on 27.02.2023, none of the representative of the company or directors or representative have appeared on the date so fixed. Presenting officer submitted that Adjudicating Officer has already provided sufficient opportunity to the company/directors/representative before, imposing penalty in the aforesaid matter in pursuant to Section 454(4) of the Companies Act, 2013 read with Rules made thereunder. Hence, Adjudication proceedings may be proceeded further in pursuant to Section 454 of the Companies Act, 2013 read witd sub-Rule 11 of Rule 3 of the Companies (Adjudication of Penalties) Rules 2014, accordingly, the matter is being proceeded with in the absence of such persons.
10. Presenting Officer has submitted that after considering the written submission dated 13.01.2023 of the company and oral submission made by Ld. Advocate Mrj. Dave, it revealed that the company has failed to file complete set of Board Report and Financial Statement on the MCA21 portal as there are some pages missing. Whereas, Section 134(2) provides that the Auditor’s report shall be attached t every financial statement. And Section 134(7) provides that a signed copy of every financial statement including consolidated financial statement , if any shall be issued circulated or published along with a copy each of any notes annexed to or forming part of such financial statement; the auditor’s report and the Boards report referred to in sub-section (3). Under the above circumstance, it cannot be established that the company has violated the provisions of Section 134 of the Companies Act, 2013. However, the default of non-filing of complete set of falls under the ambit of noncompliance of provisions of Section 137(1) of the Companies Act, 2013 which intra alia provides onus on company to file copy of financial statements, including consolidated financial statement, if any along with all the documents which are required to be of attached to such financial statements under the Act.
11. The Presenting Office further submitted that the object of filing financial statement/Audit report etc. under the MCA-21 portal/public Domain is in the public interest, to enable the investors, public and whosoever interested in the company can access the fundamental information about the company. Non-filing of adequate/complete information/ documents under the MCA portal will result in denial of information to public about the company and this type of activity should be avoided. Financial Statement filed by the company available under the public domain create confusion to the public at large and onus upon the company to complied with the provisions of the Act. It revealed company/Officers have not performed their duly as prescribed under the Companies Act and such ignorance of Law should not be excused.
Under the above circumstances, the undersigned has reasonable cause to believe that the company and its officers have violated the provisions of Section 137 of the Companies Act, 2013 as noticed from the MCA21 portal record. In view the facts narrated above, the company and its directors /officers, in default are liable for penalty as per Section 137(3) of the Companies Act with direction to file afresh e-form AOC-4 /financial Statement/Audit Report for the year ended 31.03.2018 as per the procedure provided under the companies Act, 2013 and Rules, made thereunder.
12. While adjudging quantum of penalty under section 137(3) of the Act, the Adjudicating Officer shall have due regard to the following factors, namely;
a. The amount of disproportionate gain or unfair advantage, whenever quantifiable, made as a result of default.
b. The amount of loss caused to an investor or group of investors as a result of the default.
c. The repetitive nature of default.
13. The Presenting Officer further submitted that with regard to the above factors to be considered while determining the quantum of penalty, it is noted that the disproportionate gain or unfair advantage made by the noticee or loss caused to the investor as a result of the delay on the part of the notice to redress the investor grievance are not available on the record. Further, it may also be added that it is difficult to quantify the unfair advantage made by the noticee or the loss caused 10 the investors in a default of this nature.
The Presenting Officer further submitted that it is observed from the Annual Return for the F.Y. 2021-22 that the paid-up capital is Rs. 842,000 and Turnover is Rs. 1,389,001.74, and in pursuant to section 2(85) of the Companies Act, 2013 read wish Companies (Specification of definition details) Amendment Rules, 2022 notified vide Ministry’s Notification No. G.S.R. 700(E) dated 15.09.2022, the company does fall under the ambit of a “small Company”. Therefore, the provisions of imposing lesser penalty as per the provisions of Section 446B of the Companies Act, 2013 shall be applied to the company.
1. Having considered the facts and circumstances of the case and submissions made by the Presenting Officer and reply submitted by Noticees vide dated 13.01.2023 during earlier hearing and after taking into accounts the factors above, I hereby imposed a penalty on company and its directors as per table below for violation $f section 137(3) of the Companies Act, 2013. I am of the opinion that penalty is commensurate with the aforesaid failure committed by the Noticees:
|Penalty imposed on company /Director||PENALTY IN
TO SECTION 137(3) OF THE ACT (RS.)
|PENALTY TO BE IMPOSED IN PURSUANT TO SECTION 137(3) OF THE ACT READ WITH SECTION 446B OF THE ACT (RS.)|
|Non-filing complete set of Auditor Report/ Board Report for the F.Y. 2019-20 with AOC-4 filed vide SRN R92040914 under MCA21 portal||Company||10,000||5,000|
|Mr. RAJ KUMAR BAJAJ||10,000||5,000|
|Mr. GAURAV BAJAJ||10,000||5,000|
2. Company is directed to file afresh e-form AOC-4 for filing of complete set of financi41 Statement /Board Report/ Auditor’s Report etc. for the financial year 2019-20 as per the procedure provided under the companies Act, 2013 and Rules, made thereunder within 30 days from the date of receipt of this order., failing which this office shall be proceeded further the matter in pursuant to Section 454A of the Companies Act, 2013 for the nonl compliance of the aforesaid provisions of the Companies Act, 2013.
3. The noticee shall pay the amount of penalty individually for the company and its office s from their personal sources/income by way of e-payment available on Ministry website www.mca.gov.in under “Pay miscellaneous fees” category in MCA fee and payment Services under Rule 3(14) of Companies (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 filed in INC-28 under the MCA portal without further reference.
4. Appeal against this order may be filed in writing with the Regional Director, North Western Region, Ministry of Corporate Affairs, ROC BHAVAN, OPP. RUPAL PARK, NR. ANKUR BUS STAND, NARANAPURA, AHMEDABAD (GUJARAT)-380013 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 (Adjudication of Penalties) Amendment Rules, 2019].
5. 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 amount, the company shall be punishable with fine which shall not less than Twenty Five Thousand Rupees but which may extend to Five Lakhs 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 by which may extend to one Lakhs Rupees or with both.
The adjudication notice stands disposed of with this order.
(R. C. MISHRA, ICLS)
REGISTRAR OF COMPANIES &