RoC Imposed Huge Penalty for Non-compliance of Provisions Related to Registered Office

Held by Office of Registrar of Company, Uttar Pradesh

In the matter of 

M/s CRRC INDIA PRIVATE LIMITED (No. 07/01/Adj-12/CRRC)

The Registrar of the Company imposed a penalty on a Private Limited of a Massive amount of INR 11 Lacs on account of not maintaining the registered office of the Company under Section 12(1) of the Companies Act, 2013. A Show cause notice was issued to the company, however, the same was returned with the remark “Left”. No reply was furnished against the show cause notice and the Company and its directors failed to furnish any reply against such show cause notice or present before the designated authority. 

Accordingly, the RoC imposed a penalty of INR 1,00,000/- on the company, INR 8,00,000/- on the directors, and INR 1,00,000/- on the company secretary of the company under section 12(8) of the Companies Act, 2013 for not maintaining the registered office of the company…

The Judgment is discussed below in detail:

1. Brief facts of the case:

• M/s CRRC INDIA PRIVATE LIMITED (“The Company”) is a private limited company having a registered office in Noida, Gautam Budh Nagar.
• The Directorate directed to conduct the inquiry against the company u/s 206(4) of the Companies Act, 2013.
• The inquiry officer issued a letter to seek information and documents from the company to its registered office.
• However, such a letter was returned undelivered with the remark “NO SUCH PERSON” which shows that the company is not maintaining its registered office.
• The Inquiry officer intimated such violation to the Regional Director (Northern Region), Ministry of Corporate Affairs. Accordingly, legal action was initiated against the company for violation of provisions. 
• The Company and its directors including key Managerial Personnel have failed to comply with provisions of Section 12(1) of the Companies Act, 2013 in maintaining the registered office of the company. Therefore, the penal provisions given under Section 12(8) shall apply.
• Accordingly, a show cause notice was issued to the company and its directors for not maintaining the registered office of the company. However, such notice was received undelivered with the postal mark “Left”.
• The Company and its directors failed to furnish any reply against such show cause notice or present before the designated authority.
• Accordingly, the company and its directors are liable to penalty under section 12(8) of the Companies Act, 2013.

Read Also: Compliance for companies registered under ROC

2. Relevant Legal Extract

Relevant provisions of the Companies Act, 2013 are reiterated below for ready reference:

1. Section 12(1) of the Companies Act, 2013:

“(1) A company shall, within thirty days of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it”

2. Section 12(4) of the Companies Act, 2013:

“(4) Notice of every change of the situation of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar within thirty days of the change, who shall record the same.”

3. Section 12(8) of the Companies Act, 2013:

“(8) If any default is made in complying with the requirements of this section, the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding one lakh rupees.”

3. Analysis by Hon’ble RoC

Hon’ble RoC held that:

• Neither the company nor any of its representatives presented or furnished their response against the show cause notice. This strengthened the apprehension that the company is not maintaining its registered office.
• The date of default shall be the date of issuance of show cause notice (for suo-moto inquiry), which has been received undelivered, till the date of issuance of show cause notice for adjudication.
• As per the Financial statement, the company does not fall under the category of a small company as per Section 2(58) of the Companies Act, 2013. Therefore, provisions for imposing a lesser amount of penalty under section 446B shall not apply in this case.

4. Penalty

The RoC imposed the following amount of penalty for not maintaining the registered office of the company:

1. The Company and key managerial personnel may file an appeal against the adjudication order within a period of 60 days from the date of receipt of the order in Form ADJ setting forth the grounds of appeal accompanied by a certified copy of this order.
2. Further, as per Section 454(8)(ii) of the Companies Act, 2013, If the penalty is not paid within a period of 90 days from the date of the receipt of the copy of the order, an officer in default shall be punishable with imprisonment which may extend to 6 months or fine of minimum INR 25,000 which may extend to INR 1,00,000 or both.
3. If The Company does not pay the penalty within 90 days from the date of the receipt of the copy of the order, the Company shall be punished with a fine of a minimum of INR 25,000 which may extend to INR 5,00,000.