Order for Penalty Under Section 454 for Violation of Section 179 of the Companies Act, 2013
Background
Martin Realty Private Limited (hereinafter known as “Company”) is a company registered with this office of Registrar of Companies, Tamil Nadu- Coimbatore, under the provisions of the Companies Act, having its registered address at 54, Mettupalayam Road, G N Mills Post, Coimbatore - 641029.
Facts of the Case
The company and its directors have filed a suo-moto application in this office on 01.11.2023 for adjudication of the penalty for violation of section 179 (3)(f) of the Companies Act, 2013.
The office of Registrar of Companies, Tamil Nadu- Coimbatore, in exercise of power conferred under sub-section 4 of section 454 of the Companies Act, 2013, with a view to give a reasonable opportunity of being heard before imposing any penalty, fixed the date of hearing on 20/03/2024 at 11:00 AM to adjudicate the penalty for violation of provision of section 179 (3)(f) of the Companies Act, 2013.
The Board of Directors of the Company, vide their resolution dated 31/08/2023, authorized Ms. M. Jayasree, Chartered Accountant, to act as the authorized representative of the company before the Registrar of Companies, Coimbatore, to carry out the formalities for the Adjudication of Penalties under Section 454 of the Companies Act, 2013.
During the hearing on 20/03/2024, Ms. M. Jayasree, Chartered Accountant and authorized representative of the Respondent, made submissions that during the Financial Year 2020-21, there was a transaction for Rs. 1,30,15,000/- related to payment made to M/s. Aadhi Builders Trichy, which was wrongly paid by the company instead of payment to be made by Mrs. M. Leema Rose. The fact was discovered by the company on 31.03.2021, and on the same day, the amount was repaid by Mrs. M. Leema Rose to the Company. However, the company did not obtain a specific Board Resolution for the above transaction as the mistake was only known on 31.03.2021 and immediate recovery action was taken.
Provisions of the Companies Act, 2013
As per sub-section (1) of Section 179 (3)(f) of the Companies Act, 2013, the Board of Directors of a company shall exercise powers on behalf of the company by means of a resolution passed at meetings of the Board to grant loans or give guarantees or provide security in respect of loans.
Further, section 450 provides that if a company or any officer of a company contravenes any of the provisions of the Act or the rules made thereunder for which no penalty or punishment is provided elsewhere in the Act, the company and every officer in default shall be liable to a penalty of ten thousand rupees, and in the case of continuing contravention, with a further penalty of one thousand rupees for each day after the first, during which the contravention continues, subject to a maximum of two lakh rupees in the case of a company and fifty thousand rupees in the case of an officer in default.
Order Passed by Adjudicating Officer
Having considered the facts and circumstances of the case and the submissions made by the authorized representative of the Respondent, being a small company, the Adjudicating Officer hereby imposes a penalty under section 446B of the Act on the Company and its directors as per the table below for the violation of Section 179 (3)(f) of the Companies Act, 2013:
| S.No | Name of the Respondents | Amount (In Rupees) |
|---|---|---|
| 1 | M/s. Martin Realty Private Limited | 1,00,000 |
| 2 | Shri. Martin Jose Daison | 25,000 |
| 3 | Shri. Arokiyam John Kennedy | 25,000 |
| 4 | Shri. Daisy Aadhav Arjuna | 25,000 |
| TOTAL | 1,75,000 | |
Source:
The complete text of the Order No. ROC/CBE/A.O./179/13718/2024 may be viewed at the link below:
