Prof R Balakrishnan – [2024] 161 taxmann.com 624 (Article)
1. Background of the case
The Registrar of Companies of Coimbatore passed an adjudication order on 28th March 2014 in respect of M/s Arise Industries and Agency Private Limited for the violation of section 134(3)(h) of the Companies Act 2013 and penalized the company and its directors to a tune of Rs.2.25 lakh (being a small company). The gist of the case is that the company had filed its annual financial statements for the financial years 2017-18 and 2019-20 in the AOC-4 XBRL format with the Ministry of Corporate Affairs portal. While filing the financial statements, the company omitted to file the AOC-2 form which was required to be attached with the financial statements showing the particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 of the Companies Act 2013 pursuant to the provisions of section of 134 (3) (h) of the Companies Act 2013 relating to statements showing the particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 of the Companies Act 2013.
The company, realizing the default committed, filed the suo-moto adjudication application with the Registrar of Companies. The Registrar of Companies, after having given an opportunity in the interest of natural justice, to follow the legal procedure, passed the adjudication order. Let us go through this case in detail in order to understand the provisions of the Companies Act 2013 read with the relevant rules and consequences of default/non-compliance.
2. Relevant provisions of the Companies Act 2013 relating to this case
Sub-section (3)(h) of section 134 of the Companies Act 2013 provides that there shall be attached to statements laid before a company in general meeting a report by its board of directors, which shall include particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form.
3. Penal action for default/non-compliance if any
Sub-section (8) of section 134 of the Companies Act 2013 provides that 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.
4. Consequences of any default
To understand the consequences of any default while complying with section 134 (3) (h) of the Companies Act 2013 relating to statements to be laid before a company in a general meeting, the particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form. Let us go through the decided case law by the Registrar of Companies, Coimbatore of Tamil Nadu on 27th March 2024 – in the matter of M/s. M/s. Arise Industries and Agency Private Limited.
5. The relevant case law on this matter
We shall go through the adjudication order by the Registrar of Companies, Coimbatore, Tamil Nadu vide order no. ROC/CBE/A.O/134/13519/2024 dated 28th March 2024 order for penalty under section 454 of the Companies Act 2013 for violation of section 134 of the Companies Act 2013 read with Companies (Adjudication of Penalties) Rules 2014, in the matter of M/s Arise Industries and Agency Private Limited.
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