During the course of Inquiry, it is observed that Company is eligible company to appoint Internal Auditor but failed to do so as per the requirement Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014. As the turnover of the Company Exceeded 200 crores during the financial year 2017-18 and company required to appoint an internal auditor to conduct internal audit of the functions and activities of the company. However, the Company has failed to appoint the Internal Auditor for the Year 2018-19 and 2019-20 as per the requirement of the provisions of Section 138 of the Companies Act, 2013. Hence, the company and its directors/ officers in defaults are liable to penalize under section 450 of the Companies Act, 2013.
However, neither the company nor KMP / Officers at the relevant time have submitted its reply in spite of reminder/written notice issued to company / Director. Hence, matter is being proceeded in the absence of reply of the company as the sufficient opportunity provided to the Company /Director and ex-parte order need to be passed as per the provisions of Section 454 of the Companies Act, 2013 read with sub-rule 11 of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014.
The Presenting Officer has submitted that during the scrutiny/Inquiry of affairs of the company, it is observed/ reported by this office to the Directorate/ Ministry that Company is eligible company to appoint Internal Auditor but failed to do so as per the requirement Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014 for the financial year 2018-19 and 2019-20. The company required to appoint an internal auditor to conduct internal audit of the functions and activities of the company. However, the Company has failed to appoint the Internal Auditor from the period from and violated the Provision of Section 138 of the Companies Act, 2013. Hence, the company and its directors/ officers in defaults are liable to penalize under section 450 of the Companies Act, 2013. Hence, this is a fit case of imposing penalty against the company and its directors/Officers as ignorance of the law is no excuse.
Having considered the facts and circumstances of the case and submissions made by Presenting Officer and after taking into accounts the facts & factors above, ROC hereby imposed a penalty on company and its directors for default of section 138 of the Companies Act, 2013 read with Rule 13 of companies (Accounts) Rules, 2014.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES,
GUJARAT, DADRA & NAGAR HAVELI
ROC Bhavan, Opp. Rupal Park.
Nr. Ankur Bus Stand, Naranpura, Ahmedabad (Gujarat) – 380013.
Tel. No.: 079-27438531, Fax : 079-27438371
Website : www.mca.gov in E-mail: roc.ahrnedabad@mca.gov.in
BEFORE THE ADJUDICATING OFFICER
REGISTRAR OF COMPANIES, GUJARAT, DADRA & NAGAR HAVELI
No. ROC-GJ/ADJ-Order/Sec. 454/ Gandhary Gems/Sec. 138 /2022-23/6937 to 54 DATED: 20 JAN 2023
ORDER FOR PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICTION OF PENALTIES) RULES, 2014 and COMPANIES (ADJUDICATION OF PENALTIES) AMENDMENT RULES, 2019 FOR DEFAULT OF SECTION 138 OF THE COMPANIES ACT, 2013
IN THE MATTER OF M/s. GANDHARV GEMS PRIVATE LIMITED
(U36912GJ2014PTC080765)
Date of hearing- 10.01.2023
PRESENT:
1. Shri R.C. Mishra (ROC), Adjudication Officer
2. Mr. Indrajit Vania (DROC), Presenting Officer
Company/ Officers/Directors/KMP/Authorized 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 as 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.
Company:
2. M/s. Gandhary Gems Private Limited (herein after referred to as “company”) is a company having its registered office at 6/1821,3rd Floor, Bhojabhai No. Tekro, Mahidher Pura, Surat, Gujarat-395003, India registered under the provisions of the Companies Act, 2013 (hereinafter referred to as “Act”) in the State of Gujarat. The CIN of the Company is U36912GJ2014PTC080765.
Facts of the case:
3. The Ministry vide /Directorate has ordered to Inquiry of the subject company u/s 206(4) of the Companies Act, 2013. During the course of Inquiry, it is observed that Company is eligible company to appoint Internal Auditor but failed to do so as per the requirement Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014. As the turnover of the Company Exceeded 200 crores during the financial year 2017-18 and company required to appoint an internal auditor to conduct internal audit of the functions and activities of the company. However, the Company has failed to appoint the Internal Auditor for the Year 2018-19 and 2019-20 as per the requirement of the provisions of Section 138 of the Companies Act, 2013. Hence, the company and its directors/ officers in defaults are liable to penalize under section 450 of the Companies Act, 2013.
4. The Ministry of Corporate Affairs vide its Gazette notification No. SO 831 (E) dated 24.03.2015 appointed the Registrar of Companies/ undersigned as Adjudicating Officer in exercise of the Power conferred by Section 454 of the Companies Act 2013 read with Companies (Adjudication of Penalties) Rules, 2014. The Registrar of Companies vide the Companies (Amendment) Act, 2019 is entrusted with power to adjudicate penalty as provided under Section 450 of the Act with effect 02.11.2018.
5. Section 138(1) of the Companies Act, 2013 provides that “Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant , or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company”.
Section 450 of the Companies Act, provides that 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 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.
Show Cause Notice, reply and personal Hearing:-
6. An Adjudication Notice vide No. ROC-GJ/ADJ/Section 454/STA (V)/2021- 22/4409 to 4415 dated 05.09.2022 were issued to the company and its officers in default for violation of section 138 of the companies act, 2013 read with rule 13 of the Companies (Accounts) Rules, 2014. The aforesaid Notice issued to the company has been received back undelivered with postal remarks “LEFT”. No reply received from the company/Directors to the aforesaid Show cause Notice.
7. Thereafter, a “written Notice” vide No. ROC-GJ/ADJ/Sec.454(3)/ Gandhary Gems/STA (V)/2022-23/5184 to 5184 dated 17.10.2022 were issued to the company and its officers in default at the relevant time as per Section 454(4) of the Companies Act, 2013 Read with Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 and a hearing was fixed for 03.11.2022. None of the representative of the company or directors have either furnished their suitable reply in stipulated time or have appeared on the date so fixed. The Notice issued to the company has been return back in this office with postal remarks “LEFT’ on 27.10.2022.
8. However, before, imposing penalty in the aforesaid matter, the onus of Adjudicating Officer to give a reasonable opportunity of being heard to company/ Officers in default in pursuant to Section 454(4) of the Companies Act, 2013 read with Rules made thereunder. Hence, 01 more opportunity provided to the company and officer in default for the relevant time vide this office Notice No. ROC-GJ/ADJ/Sec.454(3)/ Gandhary Gems/STA (V)/202223/5796 to 5804 dated 24.11.2022 and fixed a date of hearing on 20.12.2022. None of the representative of the company or directors have either furnished their suitable reply in stipulated time or have appeared on the date so fixed.
9. Thereafter, final opportunity of being heard provided to the company/ Officers in default at the relevant period vide a “written Notice” vide No. ROC-GJ/ADJ/Sec.454(3)/ Gandhary Gems/STA (V)/2022-23/6293 to 6302 dated 23.12.2022 were issued to the company and its KMP in default at the relevant time in pursuant to sub-Section 4 of Section 454 of the Companies Act, 2013 and a hearing was fixed for 10.01.2023.
10. However, neither the company nor KMP / Officers at the relevant time have submitted its reply in spite of reminder/written notice issued to company / Director. Hence, matter is being proceeded in the absence of reply of the company as the sufficient opportunity provided to the Company /Director and ex-parte order need to be passed as per the provisions of Section 454 of the Companies Act, 2013 read with sub-rule 11 of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014.
11. The Presenting Officer has submitted that during the scrutiny/Inquiry of affairs of the company, it is observed/ reported by this office to the Directorate/ Ministry that Company is eligible company to appoint Internal Auditor but failed to do so as per the requirement Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014 for the financial year 2018-19 and 2019-20. The company required to appoint an internal auditor to conduct internal audit of the functions and activities of the company. However, the Company has failed to appoint the Internal Auditor from the period from and violated the Provision of Section 138 of the Companies Act, 2013. Hence, the company and its directors/ officers in defaults are liable to penalize under section 450 of the Companies Act, 2013. Hence, this is a fit case of imposing penalty against the company and its directors/Officers as ignorance of the law is no excuse.
12. The Presenting Officer submitted that while adjudging quantum of penalty under section 450 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 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 to the investors in a default of this nature.
14. The Presenting Officer further submitted that it is observed from the last Balance Sheet as at 31.03.2020 filed on MCA21 portal, the paid-up capital of the company is Rs. 1,00,000 and Turnover is 47,42,63,160. Hence, as per section 2(85) of the Companies Act, 2013 read with 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 not fall under the ambit of “small company”. Therefore, the provisions of imposing lesser penalty as per the provisions of Section 446B of the Companies Act, 2013 do not apply to the company.
ORDER
1. Having considered the facts and circumstances of the case and submissions made by Presenting Officer and after taking into accounts the facts & factors above, I hereby imposed a penalty on company and its directors as per table below for default of sec ion 138 of the Companies Act, 2013 read with Rule 13 of companies (Accounts) Rules, 2014. I am of the opinion that penalty is commensurate with the aforesaid fail re committed by the Noticees:
Penalty on company and Officers in default:
2. The noticee shall pay the amount of penalty individually for the company and its officers 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 Company (Adjudication of Penalties) (Amendment) Rules, 2019 within 60 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 be filed in INC-28 under the MCA portal without further reference.
3. 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 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].
4. 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 & Adjudicating Officer
Ministry of Corporate Affairs,
Gujarat, Dadra & Nagar Haveli
(R. C. Mishra, ICLS)
Registrar of Companies & Adjudicating Officer
Ministry of Corporate Affairs,
Gujarat, Dadra & Nagar Haveli
Copy to:
No. ROC-GJ/ADJ-Order/Sec. 454/ Gandharv Gems/Sec. 138 /2022-23/ Dated:
Ministry of Corporate Affairs, (Through Proper Channel)
The Regional Director, (NWR), Ministry of Corporate Affairs, Ahmedabad-
380013 (for information please)
