MCA Imposes Penalty for Omission of DIN in Financial Statements & Directors’ Report

Ministry of Corporate Affairs issued an adjudication order against Khattu Housing Solutions Pvt. Ltd. for non-compliance with Section 158 of the Companies Act, 2013. The violation pertained to the company’s failure to mention Director Identification Numbers (DIN) in its financial statements and Directors’ Report for the fiscal year 2014-15. Despite being notified, neither the company nor its directors provided a satisfactory explanation, nor did they attend the scheduled hearing. The Registrar of Companies (ROC), West Bengal, imposed a total penalty of ₹1 lakh, split between the company and its director, Ishan Agarwal. The proceedings against the deceased director, Vishwanath Agarwal, were dropped. The company and its director must pay the penalty within 90 days, with the option to appeal the order within 60 days. Failure to comply could result in further legal action as per the Companies (Adjudication of Penalties) Rules.
Government of IndiaMinistry of Corporate AffairsOffice of the Registrar of Companies, West Bengal “Nizam Palace”, 2nd M. S. 0. Building, 2nd Floor4, Acharya J. C. Bose RoadKolkata — 700 020
No : ROC/ADJ/104794/92/2023/5558
Date: 30.09.2024
ADJUDICATION ORDER FOR PENALTY U/S 454(3) OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 AS AMENDED BY THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2019 IN MATTER OF NON-COMPLIANCE OF THE PROVISIONS OF SECTION 158 OF THE COMPANIES ACT, 2013
In respect of Company namely: KHATTU HOUSING SOLUTIONS PRIVATE LIMITED
(CIN: U70200WB2005PTC104794)
1. Appointment of Adjudicating Officer:-
Ministry of Corporate Affairs vide its Gazette Notification No A-42011/112/2014-Ad.II 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 adjudicating penalties under the provisions of this Act.
2. Company: –
WHEREAS Company KHATTU HOUSING SOLUTIONS PRIVATE LIMITED [herein after known as Company] is a registered company with this office incorporated on 18.08.2005 under the provisions of Companies Act, 1956 having its registered address at Office No. 803, 41A, A.J.0 Bose Road, Diamond Prestige, 8th Floor, Kolkata, West Bengal-700017, India as per MCA website.
3. Facts about the Case: –
1. On the basis of Inquiry carried out u/s 206(4) of the Companies Act, 2013 the following violation are pointed out in the Inquiry report:
1. CONTRAVENTION OF SECTION 158 OF THE COMPANIES ACT, 2013:
I.O.’s Observation:
As per Section 158 of the Companies Act, 2013, Every person or company, while furnishing any return, information or particulars as are required to be furnished under this Act, shall mention the Director Identification Number in such return, information or particulars in case such return, information or particulars relate to the director or contain any reference of any director.
On perusal of the financial statements for the Financial Year ended 2014-15, it is observed that the Director’s Identification Number (DIN) was not mentioned therein. Also, on perusal of the Directors’ Report for the Financial year ended 2014-15, it is observed that the Director’s Identification No. (DIN) of the directors was not mentioned therein. Therefore, there is a violation of the Provisions of Section 158 of The Companies Act 2013 for the financial year ended 2014-15.
Reply of the Company:
No relevant reply has been received from the Company and its directors.
I.O.’s Conclusion:
No relevant reply has been received from the Company and its directors; hence it is implied that they have no explanation to offer, thereby this office is of view that violation of Section 158 of The Companies Act 2013 exists.
2. Section 158: Every person or company, while furnishing any return, information or particulars as are required to be furnished under this Act, shall mention the Director Identification Number in such return, information or particulars in case such return, information or particulars relate to the director or contain any reference of the director.
Section 172: If a company is in default in complying with the requirements of this section 158, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.
3. Accordingly, the adjudication officer has issued adjudication notice vide No. ROC/ ADJ/104794/ 92/ 2023/2947-2949 dated 16.07.2024 (herein after referred as Adjudication Notice) under Section 454(4) read with Section 158 of the Companies Act, 2013 read with Rule 3(2) of Companies (Adjudication of Penalties), 2014 as amended in Amendment Rules, 2019, to the company and its Directors in default for the violation of the provisions of the Act as mentioned in para “3” above giving an opportunity to submit a reply as to why the penalty should not be imposed under the provisions of Section 172 of the Act for the above stated violations, followed by a physical hearing fixed on 09.08.2024 vide hearing notice No. ROC/ ADJ/ 104794/ 92/ 2023/ 3442,3443 dated 01.08.2024.
4. Neither the Company’s Director nor Authorized Representatives on his or Company’s behalf attended the hearing on the scheduled day i.e., on 09.08.2024. However, reply to the Hearing Notice dated 01.08.2024 has been received from the Company & Director vide letter dated 07.08.2024, the relevant portion of which is reproduced as under:
(i) That for the alleged offence for the financial year 2014-15 up to 20.12.2020 till the Companies (Amendment) Act, 2020 was not operational as nowhere the said act has been made retrospectively effective and the said amendment act was operative prospectively and as such for the alleged offence the punishment was fine only and the offence was continuing one in nature in view of the same no penalty can be imposed for the said alleged offence on the company and its directors under section 172 of the Companies Act, 2013 had become operational w.e.f 21.12.2020 so you have no power whatsoever to adjudicate under the Companies (Adjudication of Penalties) Rules, 2014 for the offence if at all committed on or before 21.12.2020.
(ii) As per section 468 of the Code of Criminal Procedure, 1973 if for any offence punishment is fine only the period of limitation to prosecute is six months. If for any offence punishment is imprisonment for a term of extended up to one year the period of limitation to prosecute is one year. Tf for any offence punishment is imprisonment for a term exceeding one year but not exceeding three years, the period of limitation to prosecute is three years. In view of the above I.0 is not entitled to prosecute the addressees of your above notice where for any offence there is punishment is only fine and/or imprisonment for one year and /or imprisonment for three years for any offence as alleged in the aforesaid notice as the same is barred under section 468 of the Code of Criminal Procedure, 1973.
5. Further, it is being informed to this office through a written response from the Director of the Company Shri Ishan Agarwal vide letter dated 31.07.2024 that Mr. Vishwanath Agarwal, who was director of the Company during F.Y. 2014-2015 has deceased on 22-10-2020. In view of the above facts, the penalty u/s 172 of The Companies Act 2013 on the said Director for the contravention of Section 158 of the Act, is considered to be dropped.
6. On relying upon the judgment dated 12.12.2022 of Hon’ble Court of Madras in B. Kannan vs the Deputy Registrar of Companies, Tamil Nadu in Crl. O.P. No. 2735 of 2017 wherein it is inter-alia stated:
“13. The Hon’ble Apex Court in the case of B. Manna vs. State of West Bengal reported in AIR 1955 SC 84, which was quoted with https://www.mhc.tn.gov.in/judis approval by the Hon’ble Apex Court in T. Barai’ s case (cited supra), held that where the fresh legislation is brought on the same subject, the line of enquiry would be not whether the new Act expressly keeps alive, old rights and liabilities but whether it manifests an intention to destroy them. The new Act in the instant case i.e., the Companies (Amendment) Act, 2019 clearly manifestly an intent to treat the violations which are only technical to be adjudicated by in-house process. Further, Section 454 of the Companies Act also makes it clear that where after adjudication and person either does not pay penalty or fails to comply with the order of adjudication, he is liable for punishment, either fine or imprisonment. Therefore, the object of the amendment Act is to give an opportunity to the person to comply with the provision and only after the order of adjudicating officer directing the compliance or his payment of penalty is violated, it would become an offence.
14. Therefore, we are of the view that the intention of the Parliament is very clear and the since of the Amendment Act 2020 mollifies the rigour of punishment the beneficial construction has to be https:/lwww.mhc.tn.gov.in/judis applied in favour of the accused in pending prosecutions and all the prosecution has to be withdrawn and transferred to the adjudicating authority appointed under Section 454 of the Companies Act for further proceedings in terms of the said provision.”
Accordingly, in view of the above facts and legal position, hearing was concluded, and order is passed as under:
ORDER
1. The Company and its Director, who have defaulted the provisions of Section 158 of the Companies Act, 2013 shall be liable under Section 172 of the Companies Act, 2013.
2. In exercise of the powers conferred vide Companies (Amendment) Ordinance, 2019, the undersigned is entrusted to adjudicate penalties under section 172 of the Companies Act, 2013. After taking into account the factors mentioned herein above, I do hereby impose the penalty of Total Rs. 1,00,000 (Rupees One Lakh only) i.e., Rs. 50,000/- (Rupees Fifty thousand only) on the Company and Rs. 50,00* (Rupees Fifty thousand only) on its One Director-in-default Mr. Ishan Agarwal and drop the adjudication proceedings against the deceased Director-in-default Mr. Vishwanath Agarwal pursuant to Rule 3(12) of Companies (Adjudication of Penalties) Rules, as per table below for violation of section 158 of the Act:

Name of the Company/ Director-in- default
Period and Amount of Default (in Rs )
Maximum Penalty imposed (in Rs.)

1. KHATTU HOUSING SOLUTIONS LIMITED PRIVATE (For the FY ended 2014-15)
50,000*1 years
= 50,000
50,000

2. ISHAN AGARWAL (Director) (For the FY ended 2014-15)
50,000*1 years
= 50,000
50,000

3. VISHWANATH AGARWAL (Director) (Deceased) (For the FY ended 2014-15)
–
NIL

Total penalty payable

1,00,000

3. The concerned noticees shall pay the said amount of penalty individually for the company and its director (out of own pocket) by way of e-payment [available on Ministry website www.rnca.gov.in] under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 days of receipt of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this Office Address.
4. Appeal against this order may be filed in writing with the Regional Director (ER), Ministry of Corporate Affairs, Kolkata located at Nizam Palace, 2nd M. S. Building, 3rd Floor, 234/4, A.J.C. Bose Road, Kolkata-700020, West Bengal within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website www.mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of the this order. [Section 454(5) & 454(6) of the Act read with the Companies (Adjudicating of Penalties) Rules, 2014].
5. Your attention is also invited to section 454(8)(i) & of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order.
6. In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to Khattu Housing Solutions Private Limited and its director in default mentioned herein above and also to Office of the Regional Director (Eastern Region) and Ministry of Corporate Affairs at New Delhi.
Date : 30th September 2024
[A. K. Sethi, ICLS]Adjudicating Officer & Registrar of Companies,West Bengal