In the matter of M/s Shinago International (India) Private Limited
Summary
M/s Shinago International (India) Private Limited (“The Company”) has obtained a car loans and disclosed the same in Financial statement of FY 2017-18. However, on investigation it was found that the company failed to file the Form CHG-1 for registration of charges. As per Section 77 of Companies Act, 2013, every company is required to register charge within 30 days of its creation.
RoC, Chennai held that the Company has failed to register charge. Accordingly, RoC, Chennai levied penalty of INR 5,00,000 on the Company and INR 50,000 on the director in default.
1. Brief facts of the case
- M/s Shinago International (India) Private Limited (“The Company”) is registered with head office located in Chennai, Tamil Nadu.
- During Inspection of books of account, it was observed that the Company has obtained borrowings in the name of car loan as per Financial statement of FY 2017-18.
- If it mandatory for every company to file form CHG-01 and specify following information:
- Type of loan
- From where the loan has been obtained
- Purpose of obtaining loan
- Accordingly, the company has violated the provisions of Section 77 of the Companies Act, 2013.
- Therefore, the Company and its directors are liable to penalty under section 86 of the Companies Act.
- The Show Cause notice was issued to the company. However, the company did not furnish any response against the SCN.
2. Legal Provision
Relavant provisions of Companies Act, 2013 are reiterated below for ready reference:
a. Section-77- Duty to Register Charges, etc.
“(1) It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation:
…”
b. Section 86- 86. Punishment for contravention
“(1) If any company is in default in complying with any of the provisions of this chapter, the company shall be liable to a penalty of five lakh rupees and every officer in default of the company who is in default shall be liable to a penalty of fifty thousand rupees”
3. Time Limit for filing Form CHG-1
As per Section 77 of Companies Act, 2013, every company shall register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge with the Registrar within 30 days of its creation.
However, the Registrar may, on an application by the company, allow such registration to be made within a period of 60 days of such creation on payment of additional fees, as applicable.
4. Penalty for Non-compliance
As per Section 86 of the Companies Act, if any company defaults in complying with provisions of this chapter then the following penal provisions shall be applicable:
- On Company: INR 5,00,000
- On Every officer in default: INR 50,000
5. Decision
Hon’ble RoC, Chennai has held that the company and its managing directors are liable for penalty for non registration of Charge.
Following penalty is imposed on the company and directors under section 86(1) of Companies Act, 2013:
| Company and officer in default | Penalty |
| Company | INR 5,00,000 |
| Director in Default | INR 50,000 |
- Above mentioned amount of penalty is required to be paid within 90 days from date of receipt of order.
- Appeal against the order can be filed with Regional Director (SR), MCA within a period of 60 days from the date of receipt of order.
