Introduction: The Ministry of Corporate Affairs (MCA) recently imposed a penalty on M/s. Daison Land and Development Private Limited for violating Section 134(3)(h) of the Companies Act, 2013. This case highlights the importance of adhering to statutory provisions and the consequences of non-compliance in corporate governance.
Detailed Analysis:
1. Nature of Violation: M/s. Daison Land and Development Pvt. Ltd. failed to comply with Section 134(3)(h) of the Companies Act, 2013, which mandates the disclosure of contracts or arrangements with related parties in the prescribed form.
2. Suo-Moto Application: The company and its directors voluntarily submitted a suo-moto application for penalty adjudication, indicating a proactive approach towards rectifying the breach.
3. Adjudication Process: An Adjudicating Officer, appointed by the MCA, conducted a hearing to allow the company to present its case and provide a reasonable opportunity to be heard before imposing any penalty.
4. Authorized Representation: Ms. M. Jayasree, a Chartered Accountant, acted as the authorized representative of the company during the hearing. The company explained that while related party transactions were not disclosed in the Board’s Report, due disclosures were made in the accompanying notes to accounts.
5. Provisions of Companies Act: Section 134(3)(h) of the Act mandates the disclosure of particulars of contracts or arrangements with related parties. Non-compliance attracts penalties under Section 134(8).
6. Penalty Imposition: Considering the circumstances and the company’s status as a small entity, the Adjudicating Officer imposed penalties totaling Rs. 2 lakhs on the company and its directors.
7. Rectification Directive: The company and its directors were directed to rectify the defect promptly upon receipt of the order.
8. Appeal Process: The order allows for an appeal to be filed within sixty days from the date of receipt, as per Section 454 of the Companies Act, 2013.
Conclusion: The penalty imposed on M/s. Daison Land and Development Pvt. Ltd. underscores the significance of accurate disclosure in corporate financial reporting. It serves as a reminder to companies to ensure strict compliance with statutory provisions and transparent reporting of related party transactions. This case highlights the regulatory oversight on corporate governance practices and emphasizes the consequences of non-compliance in the corporate sector.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES
TAMILNADU – COIMBATORE
No.7 A G T BUSINESS PARK, PHASE II, 1ST FLOOR,
PEELAMEDU, COIMBATORE – 641014
e-Mail roc.coimbatore@mca.gov.in
Order Ref: ROC/CBE/A.O./134/15364/2024 Date: 28.03.2024
Order for Penalty under Section 454 for violation of Section 134 of the Companies Act, 2013 read with the Companies (Adjudication of Penalties) Rules, 2014
IN THE MATTER OF M/s. DAISON LAND AND DEVELOPMENT PRIVATE LIMITED.
CIN: U70101TZ2009PTC015364.
Appointment of Adjudicating Officer:
1. Ministry of Corporate Affairs vide its Gazette Notification No.A-42011/112/2014-Ad.II dated 24.3.2015 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.
Company:
1. Whereas Company M/s. DAISON LAND AND DEVELOPMENT PRIVATE LIMITED (hereinafter Known as Company) is a company registered with this office under the provisions of Companies Act, 2013 having its registered address at 54, Mettupalayam Road, G N Mills Post, Coimbatore – 641 029.
Facts of the case:
2. The company and its directors have filed suo-moto application in this office on 01.11.2023 for adjudication of the penalty for violation of section 134 (3) (h) of the Companies Act, 2013.
3. The undersigned in exercise of power conferred under sub section 4 of section 454 of the Companies Act, 2013 with a view to give a reasonable opportunity of being heard before imposing any penalty, fixed the date of hearing on 20/03/2024 at 11.00 AM to adjudicate the penalty for violation of provision of section 134 (3) (h) of the Companies Act, 2013.
4. Board of Directors of the Company vide their resolution dated 31/08/2023 authorized Ms. M. Jayasree , Chartered Accountant to act as authorized representative of the company before the Registrar of Companies, Coimbatore, to carry out the formalities for the Adjudication of Penalties under Section 454 of the Companies Act, 2013.
5. During the hearing on 20/03/2024 , Ms. M. Jayasree, Chartered Accountant and authorized representative of the Respondent made submissions that the Company had reported in its Board’s Report for the Financial Year 2018-19 that the company did not enter into any contract or arrangements with the related parties due to oversight however the company had made due disclosures were made in the notes forming part of accounts vide Note No. 10.
Provisions of the Companies Act, 2013
6. Sub-Section (1) of Section 134 (3) (h) of the Act provides that particulars of contracts or arrangements with related parties referred to in subsection (1) of section 188 in the prescribed form.
7. Sub-section (8) provides that if a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.
ORDER
8. Having considered the facts and circumstances of the case and the submissions made by the authorized representative of the Respondent, being a small company the Adjudicating officer do hereby impose penalty under section 446 B of the Act on Company and its director as per Table below for violation of Section 134 (3) (h) of the Companies Act, 2013.
| S.No | Name of the Respondents | Amount(In Rupees) |
| 1. | M/s. Daison Land and Development
Private Limited. |
1,50,000 |
| 2. | Shri. Sellam Nadar Ravi | 25,000 |
| 3. | Shri. Martin Santiago | 25,000 |
| TOTAL | 2,00,000 |
9. The penalties imposed as under should be paid by the Respondents as per Law and submit the copies of Challan to this office. The company should file the INC 28 with attachment of this order and copy of aforesaid Challan.
10. The company and its directors are hereby directed to rectify the defect immediately on receipt of copy of this order.
11. The penalty imposed shall be paid through the Ministry of Corporate Affairs portal only.
12. Appeal, if any against this order may be filed in writing with the Regional Director, Southern Region, Ministry of Corporate Affairs, 5th Floor, Shastri Bhavan, 26, Haddows Road, Chennai-600 006 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 a certified copy of this order (Section 454 of the Companies Act, 2013 read with the Companies (Adjudicating Of Penalties) Rules, 2014).
13. Your attention is also invited to Section 454(8) of the Act regarding consequences of non-payment of penalty.
14. In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, a copy of this order is being sent to Company M/s. Daison Land and Development Private Limited and its directors.
And to:-
1. Regional Director, Southern Region, Ministry of Corporate Affairs, Chennai.
2. Director, Legal Section, Ministry of Corporate Affairs, 5th Floor, ‘A’ Wing, Shastri Bhawan, Dr.R.P.Road, New Delhi-110001.
3. E Governance Cell, Ministry of Corporate Affairs, Shastri Bhawan, 5th Floor, ‘A’ Wing, Dr.R.P.Road, New Delhi-110001.
Place: Coimbatore
Date: 28.03.2024
(BRIJESH K MAR KAIN), ICLS
REGISTRAR OF COMPANIES
TAMILNADU, COIMBATORE
