Held by RoC, Tamilnadu
In the matter of
M/s. Mazhil Nidhi Limited
The MCA rejected the form NDH-4 (Form for filing application for declaration as Nidhi and for updation of Status by Nidhi) filed by M/s Mazhil Nidhi Limited (“The Company”) as the financial statement attached in form AOC-4 for the period 31.03.2019 has not been duly signed by two directors, out of which one shall be Managing Director. The RoC held the non-signing of the financial statement is a non-compliance with provisions of Section 134(1) of the Companies Act and therefore, a penalty of INR 4,50,000/- is imposed on the company and all the directors in default under Section 134(8) of Companies Act.
1. Brief facts of the case:
- M/s. Mazhil Nidhi Limited is a registered company with a registered office in Tamil Nadu.
- The MCA rejected the NDH-4 (Form for applying a declaration as Nidhi and updating the status by Nidhi) filed by the company.
- The form was rejected on the ground that the financial statement attached in form AOC-4 for the period 31.03.2019 has not been duly signed by two directors, out of which one shall be the Managing Director.
- Therefore, the company has violated Section 134(1) of the Companies Act,2013.
- Accordingly, the Adjudicating Authority issued the Adjudication Notice to the Company and its directors.
- No reply has been received from the company and its directors
2. Relevant Legal Extract
- The relevant extract of Section 134 of the Companies Act is reiterated below for ready reference:
“134. Financial Statement, Board’s Report, etc
(1) The financial statement, including the consolidated financial statement, if any, shall be
approved by the Board of Directors before they are signed on behalf of the Board by the Chairperson of the company where he is authorised by the Board or by two Directors out
of which one shall be the managing director, if any, and the Chief Executive Officer, the Chief
Financial Officer and the Company Secretary of the company, wherever they are appointed, or in the case of One Person Company, only by one director, for submission to the auditor for his report thereon.
…
(8) 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.”
3. Adjudication Order:
- No reply is received from the company or any of its directors. Therefore, as per RuIe 3(8), Companies (Adjudication of Penalties) Rules 2014, the matter is being proceeded with in the absence of such persons (ex-parte).
- Analysis of Non-compliance of section 134(1) of the Companies Act, 2013:
- Financial statements attached to Form AOC-4 for the FY ending on 31.03.2019 have not been signed by two directors, out of which one shall be the Managing Director.
- Therefore, the company has violated Section 134(1) of the Companies Act, 2013.
- Accordingly, the company and its directors shall be liable for penal action under Section 134(8) of the Companies Act, 2013.
- The company being a Nidhi company does not fall under the definition of a small company. Therefore, imposing the provision lesser penalty as per section 446(b) shall not be applicable in this case.
4. Penalty Imposed:
The RoC held that the company and its directors have violated Section 134(1) of the Companies Act,2013 for the financial year ending on 31.03.2019. Accordingly, the following penalty shall be imposed on the company and its directors:
| The person on whom the penalty is imposed | Penalty for Default | Maximum Penalty | Final Penalty Imposed |
| Company | 3,00,000 | 3,00,000 | 3,00,000 |
| Director-1 | 50,000 | 50,000 | 50,000 |
| Director-2 | 50,000 | 50,000 | 50,000 |
| Director-3 | 50,000 | 50,000 | 50,000 |
Accordingly, a penalty of Rs.3,00,000/- (Rupees Three lakhs) is imposed on the company and Rs.50,000 is imposed on each of the directors of the company for FY 2018-19. Such penalty is required to be paid within 90 days from the date of receipt of this order.
5. Option to file appeal and penalty for non-compliance
- An appeal can be filed against such an order within 60 days from the date of receipt of this order.
- Where the company fails to comply with the order made within 90 days from the date of the receipt of the order, the following fine shall be imposed:
- Company: Minimum of INR 25,000 which may extend up to INR 5,00,000.
- Officers in default: Imprisonment which may extend to 6 months six months or with a fine of a minimum of INR 25,000 which may extend to INR 1,00,000 or both
Conclusion:
Considering the quantum of penalty being imposed on the company and directors at fault for every single non-compliance, whether the same has any monetary impact or not, the companies are required to be more vigilant concerning compliances under the Companies Act. Any non-compliance or even clerical mistake may result in a huge amount of penal consequences.
