The Registrar of Companies, Chennai has passed an adjudication order imposing penalties for violation of Sections 135(5) and 135(6) of the Companies Act, 2013 relating to Corporate Social Responsibility (CSR) compliance. The company crossed the statutory threshold and was required to spend 2% of its average net profits for FY 2019–20 towards CSR, amounting to ₹17.27 lakh. However, it failed both to spend the required amount and to transfer the unspent CSR amount to a Schedule VII fund within the prescribed timelines. Although the company subsequently rectified the default by transferring the entire unspent amount to the Prime Minister’s National Relief Fund before initiation of adjudication proceedings, the default itself attracted liability under Section 135(7). Accordingly, penalties were imposed on the company and its officers in default. The order reiterates that post-facto compliance does not absolve statutory liability for earlier CSR defaults.
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/01243 Dated: 20/01/2026
ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (‘THE ACT’) FOR VIOLATION OF SECTION 135(7) 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 AIRFLOA RAIL TECHNOLOGY LIMITED [herein after known as Company] bearing CIN U30204TN1998PLC041571, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at NO 9 CHELLIAMMAN KOILSTREET KEELKTTALAI CHENNAI-117 NA CHENNAI-117 TAMIL NADU INDIA 600117
Individual details:
In the matter relating to DAKSHINAMOORTHY VENKATESAN ——–
In the matter relating to DAKSHNA MOORTHY MANIKANDAN ——-
C. Provisions of the Act:
If a company is in default in complying with the provisions of sub-section (5) or sub-section (6), the company shall be liable to a penalty of twice the amount required to be transferred by the company to the Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be, or one crore rupees, whichever is less, and every officer of the company who is in default shall be liable to a penalty of one-tenth of the amount required to be transferred by the company to such Fund specified in Schedule VII, or the Unspent Corporate Social Responsibility Account, as the case may be, or two lakh rupees, whichever is less
D. Facts about the case:
1. Default committed by the officers in default/noticee – The Company M/s. AIRFLOA RAIL TECHNOLOGY LIMITED and its Managing Director has filed an e-form GNL-1 vide SRN N30641906 dated 08.05.2025 and also submitted an adjudication application under Section 454 of the Companies Act, 2013 for violation of Section 135(5) and (6) of the Companies Act, 2013- Provision of Section 135(5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years [or where the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years], in pursuance of its Corporate Social Responsibility Policy: Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities: Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount 8[and, unless the unspent amount relates to any ongoing project referred to in sub-section (6), transfer such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year].Provided also that if the company spends an amount in excess of the requirements provided under this sub-section, such company may set off such excess amount against the requirement to spend under this sub-section for such number of succeeding financial years and in such manner, as may be prescribed.] Explanation. For the purposes of this section net profit shall not include such sums as may be prescribed, and shall be calculated in accordance with the provisions of section 198.] Provision of Section135(6) Any amount remaining unspent under sub-section (5), pursuant to any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in pursuance of its Corporate Social Responsibility Policy, shall be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year. In view of aforesaid provisions, the Company was required to spend the requisite amount towards CSR during the financial year ended March 31, 2020. However, the company’s net profit as per the financial year 2018-19 is Rs. 17,72,33,097/- which is excess of the threshold limit as specified in provision of Section135 of the Companies Act, 2013. Accordingly, the Company was required to contribute at least two percent of its average net profit made during the three Immediately preceding financial years in respect of financial year 2019-20. Net Profit as per Sec 198 for the financial years 2016-17, 2017-18 and 2018-19 is Rs. 4,84,73,676/- , Rs. 3,33,94,654/- and Rs. 17,72,33,097 respectively. Average net profit as per 135(5) of the Act for FY. 2016-17 to 2018-19 is Rs. 8,63,67,142/-, CSR amount to be send for FY 2019-20 (2% of Average Net profit) is Rs. 17,27,343/- and the Unspent CSR is Rs. 17,27,343/-. In this regard, the Company inadvertently failed to comply with the provisions under Section 135 of the Companies Act, 2013, by not spending the requisite amount Rs. 17,27,343 towards CSR activities during the financial year ended March 31, 2020 , and by not transferring the unspent CS ount to a fund specified in Schedule VII of the Companies Act, 2013. This resulted in a violation of Section 135(5) & (6) of the Companies Act, 2013. Accordingly the company and its Managing Director is liable under Section 135(7) of the Companies Act, 2013. Subsequently, the default has been rectified and the requisite unspent CSR amount Rs. 17,27,343 pertaining to the defaulted financial year (2019-20) has been transferred to the Prime Ministers National Relief Fund on 16/12/2024 vide payment reference no UBINH24351250201.
2. The Adjudicating authority had issued notice for e-Adjudication on 29.08.2025. Further, the Adjudicating Authority had issued notice for e-hearing on 12.11.2025 for the hearing scheduled on 18.11.2025. On 18.11.2025, neither the Directors of the Company nor their Authorized representatives have appeared. Hence as per Rule 3(8) of Companies (Adjudication of Penalties) Rules 2014, the matter is being proceeded with in the absence of such person (ex-parte).
E. Order:
1. The Company’s net profit as per the Financial year 2018-19 is Rs.17,72,33,097/- which is excess of the threshold limit as specified in provision of Section 135 of the Companies Act, 2013. The Company became liable to spend Rs.17,27,343/-towards Corporate Social Responsibility(CSR) for the Financial Year 2019-20 in terms of Section 135(5) of the Companies Act, 2013. It is noticed that the Company has inadvertently failed to spent requisite amount Rs. 17,27,343/- towards CSR activities during the Financial year 2019-20, as mandated under Section 135(5) and also failed to transfer the unspent CSR amount to a fund specified in Schedule VII of the Companies Act, 2013 as mandated under Section135(6) of the Companies act, 2013.
Further, it is noticed that the Company voluntarily rectified the default by transferring the entire unspent CSR amount Rs. 17,27,343/- to the Prime Minister’s National Relief Fund on 16.12.2024 prior to initiation of any Adjudication proceedings. Since the Company failed to comply with the said requirement, it has thereby violated Section 135(5) and Section135 (6) of the Companies act, 2013. Accordingly, the Company and its officers in default are liable for action under Section 135(7) 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 | AIRFLOA RAIL TECHNOLOGY LIMITED having CIN as U30204TN1998P LC041571 | 1727343 | 0 | 10000000 | |
| 2 | DAKSHINAMOO RTHY VENKATESAN having DIN as 00232210 | 172734 | 0 | 200000 | |
| 3 | DAKSHNA MOORTHY MANIKANDAN having DIN as 00232275 | 172734 | 0 | 200000 |
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
