Adjudication order for non-compliance of section 170

In the matter of Kalinga Trexim Private Limited

v/s

Registrar of Companies – Kolkata

Facts of the case:

Inspection was carried out by the Registrar u/s 206 of Companies Act 2013 and the following violations were found-

• Company has failed to maintain its registered office address for which one of the Directors’ replied that they have received all the correspondence sent at their registered office address which is evidence of maintenance of registered office.
• This means that the company has failed to maintain the register of Directors & KMP’s and their shareholdings.
• Therefore, the company has failed to maintain this statutory register which is violation of section 170 of the act.
• And the company mentioned that they have maintained registers as applicable u/s 170 and have provided extracts and copies when called for and can also provide copies of the same if required now.

?Provision:

Section 170 – Every company shall maintain a register of Directors & KMP’s along with the details of their shareholding in Company or its holding, subsidiaries, associate companies.

Section 172 – If a company defaults in complying with section 170 then Company and every officer in default shall be liable to penalty of INR 50000 and in case of continuing default penalty of INR 500 for each day, maximum upto INR 300000 for company and upto INR 100000 for officer in default.

Adjudication proceedings:

• Adjudicating officer has issued a notice for non-compliance of section 170.
• Opportunity was given to reply as why penalty should not be imposed u/s 172.
• 1st and 2nd hearing was held on 11/12/2023 & 09/01/2024 respectively.
• The company presented that the offence was due to lack of awareness at the time of inspection and the company has taken steps to make good the default.
• And contended that the company is not in a sound position and is making losses and pleaded to drop the proceedings.

?Order passed by Adjudicating Officer (AO):

• After taking into consideration the facts and circumstances the AO imposed a penalty of INR 200000

i.e. 50000 on company and 50000 on 3 officers who were in default.

• Penalty to be paid individually (out of own pocket) by way of e-payment within 90 days of this order.

?

Refer the order passed:

https://www.mca.gov.in/bin/dms/getdocument?mds=%252B7WlWeBcVWzpgRxGz07m0A%253D%253D&type=open

This order highlights the significance of all the applicable provisions of Companies Act including section 170. Even a minor non-compliance can lead to adjudications and penalties on both company as well as its officers/directors. Companies and directors are advised to adhere to the compliances to avoid any legal consequences for themselves and the Company.?

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