The Registrar of Companies, Chennai passed an adjudication order under Section 454 of the Companies Act, 2013, imposing penalties for violation of Section 138, enforced through Section 450. Following an investigation under Section 210(1)(c), it was found that during FY 2015–16 and 2016–17 the company had a turnover exceeding ₹200 crore, making the appointment of an internal auditor mandatory under the Act and the Companies (Accounts) Rules, 2014. The investigation concluded that no internal auditor had been appointed during the relevant period, constituting a statutory breach. Although the company is presently under liquidation after completion of insolvency proceedings, liability was fastened on the officers in default. After considering replies and granting an e-hearing, the Registrar held the directors liable and imposed a penalty of ₹50,000 each, payable personally within 90 days. The order reiterates compliance obligations, payment procedures, appellate remedies, and consequences of default.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Chennai
Registrar Of Companies, Block No.6,B Wing 2nd Floor, Shastri Bhawan 26, Haddows Road, Chennai, Tamil Nadu, India,
600034
Phone: 044-28276652/28276654
E-mail: roc.chennai@mca.gov.in
Order ID: PO/ADJ/12-2025/CN/01163 Dated: 05/01/2026
ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (‘THE ACT’) FOR VIOLATION OF SECTION 450 OF THE COMPANIES ACT, 2013.
A. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette notification number S.O. 831(E) 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 adjudging penalties under the provisions of this Act.
B. Company details:
In the matter relating to SHRI VEERGANAPATHI STEELS PRIVATE LIMITED………..
Individual details:
In the matter relating to NARAYAN MAHESHWARI…………
In the matter relating to RAJSHREE MAHESWARI [herein after known as individual]………….
C. Provisions of the Act:
If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be 1[liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person]
D. Facts about the case:
1. Default committed by the officers in default/noticee – An investigation into the affairs of the company Shri. Veeraganapathi Steels Private Limited was conducted under Section 210(1)(c) of the Companies Act, 2013, by an Officer authorized by the Central Government wherein the observations of the Investigating Officer are as follows :
“As per the provisions of Section 138 of the Companies Act, 2013 read with Rule 13(c) of the Companies (Accounts) Rules, 2004, the company should appoint an internal auditor where the company is having turnover of two hundred crore rupees or more or outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year”.
“It is observed that the company is having a turnover of Rs. 2,26,31,99,469 for the financial year 2015-16 and 2016-17 and the company has not appointed an internal auditor as per the Companies (Accounts) Rules, 2014. Hence, the company has violated Section 138 of the Companies Act, 2013. Hence, the company and directors are liable for penal action under Section 450 of the Companies Act, 2013”.
It is noticed that the company is under liquidation and therefore, the Officers in default are liable under Section 450 of the Companies Act, 2013.
2. Pursuant to the observations made during the investigation conducted into the affairs of the company, the adjudicating authority has issued notice for e-adjudication on 06.03.2025. The managing directors in their reply letter dt. 20.03.2025 has stated that the Company, now under liquidation after completion of CIRP before the NCLT, states that its former directors received a show cause notice for the alleged non-appointment of internal auditors for FY 2015-16 and 2016?17. After receiving the notice, they contacted their erstwhile internal auditors and obtained available records, including the appointment and consent letters, which are enclosed. They are still awaiting copies of internal audit reports since the documents are nearly a decade old and not readily traceable. They further clarify that Section 138 of the Companies Act ceased to apply after FY 2016-17 because the Company’s turnover for that year was below 200 crore. They request withdrawal of the notice, seek a physical hearing if required due to age and health issues, and ask for copies of all documents relied upon in issuing the notice, including the investigation order, RP submissions, and investigation report. Further, the Adjudicating Authority had issued notice on 11.04.2025 for e-hearing on 15.04.2025. Mr. Shri. VINEET MUNDHARA, FCA and FCS, Chartered Accountant in Practice, Shri. JAGDISH PRASAD MUNDHARA, FCS, Company Secretary in Practice, are the authorized representatives to attend the e-hearing, on behalf of the company and its Officers in default.
E. Order:
1. It is noticed that an investigation under Section 210(1)(c) found that Shri Veerganapathi Steels Private Limited had a turnover exceeding Rs.200 crores during the Financial Year 2015-16 and 2016-17, which made the appointment of an internal auditor mandatory under Section 138 of the Companies Act, 2013 read with Rule 13(c) of the Companies (Accounts) Rules, 2014. However, the company failed to appoint an internal auditor, leading the Investigating Officer to conclude that the company violated Section 138 of the Companies Act, 2013. The authorities have therefore directed initiation of penal action, and since the company is under liquidation, the officers in default are liable for action under Section 450 of the Companies Act, 2013.
2. The details of penalty imposed on the company, officers in default and others are shown in the table below:
| (A) | Name of person on whom penalty imposed (B) | Rectification of Default required
(C) |
Penalty Amount
(D) |
Additional Penalty (E) (*Per day of continuing default i.e. date of rectification of default less order issue date) | Maximum limit for Penalty (F) |
| 1 | NARAYAN MAHESHWARI having DIN as 01538829 | 50000 | 0 | 50000 | |
| 2 | RAJSHREE MAHESWARI having DIN as 01538835 | 50000 | 0 | 50000 |
3. The notified officers in default/noticee shall rectify the default mentioned above and pay the penalty, so applicable within 90 days of receipt of the order.
4. The notified officers in default/noticee shall pay the penalty amount via ‘e-Adjudication’ facility which can be accessed through the respective login IDs on the website of Ministry of Corporate Affairs and upload the copy of paid challan / SRN of e-filing (if applicable) on the ‘e-Adjudication’ portal itself. It is also directed that the penalty so imposed upon the officers in default shall be paid from their personal sources/income.
5. Appeal against this order may be filed in writing with the Regional Director, RD Chennai within a period of sixty days from the date of receipt of this order, in Form ADJ setting for 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 (Adjudication of Penalties) Rules, 2014].
6. For penal consequences of non-payment of penalty within the prescribed time limit, please refer Section 454(8) of the Companies Act, 2013.
B SRIKUMAR,
Registrar of Companies
ROC Chennai
