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Penalty u/s Section 450 or Failure to disclose properly in an audit report details of current investment by virtue of section 143 of the Companies Act, 2013
Failure to disclose in audit report details of current investments
- The name of the body corporate in whom investments have been madeindicates separately whether such bodies are (i)subsidiaries, (ii) associates, (iii) joint ventures, (iv) controlled special purpose entities
- The following details are required:-
- the nature and extent of the investment made in each such body corporate
- showing separately investments which are partly-paid
- disclose the basis of valuation of such investments as per the requirements of Schedule III of the Companies Act, 2013
Government of India Ministry Of Corporate Affairs
Office of the Registrar of Companies, Bihar-Cum-Official Liquidator, High Court, Patna 4th Floor, ‘A’ Wing, Maurya Lok Complex
Dakbunglow Road, Patna-800001 Order No. ROC/PAT/SCN/143/38519/2662 Dated: 17.02.2023
Order for penalty for violation of section 143 of the Companies Act, 2013 In the matter of
ANGEL GEMS AND JEWELLERY PRIVATE LIMITED CIN: U74999B1R2011PTC038519
Appointment of Adjudication Officer-
- The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014- Ad. II dated03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred under section 454 of the Companies Act, 2013 (herein after known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Ad.
- As per the record of MCA Portal and AOC-4 filed by the company- Angel Gems And Jewellery Private Limited, ON- U74999BR2011PTC038519, (hereinafter referred to as the company) for the financialyears ending on 31.03.2018, Anupam Sarkar (Membership no. 08028842) is the Auditor of the company.
Facts about the case:-
- As per Schedule III of the Companies Act, 2013, for the head “Current Investments” the Company should disclose in its Balance Sheet under each classification, details shall be given of all the names of the body
Under each classification, details shall be given of names of the bodies corporate [indicating separately whether such bodies are: (i) subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled special purpose entities] in whom investments have been made and the nature and extent of the investment so made in each such body corporate (showing separately investments which are partly paid). In regard to investments in the capital of partnership firms, the names of the firms (with the names of all their partners, total capital and the shares of each partner) shall be given.
The following shall also be disclosed:-
- The basis of valuation of individual investments;
- Aggregate amount of quoted investments and market value thereof;
- Aggregate amount of unquoted investments;
- Aggregate provision made for diminution in value of investments.
Upon perusal of Balance Sheet for the financial years 2017-2018, it is observed that the Company has shown an amount of Rs. 3,09,72,680 as current investment.
However, the Company has failed to disclose the details of the name of the body corporate (indicating separately whether such bodies are (i) subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled special purpose entities) in whom investments have been made and the nature and extent of the investment so made in each such body corporate (showing separately investments which are partly-paid), further it has also failed to disclose the basis of valuation of such investments as per the requirements of Schedule III of the Companies Act, 2013, thereby affecting the true & fair view of the state of affairs of the Company leading to contravention of the provisions of Section 129 read with Schedule III of the Companies Act, 2013.
However, the auditor has failed to comment on the same in the audit report for the aforesaid financial year.
That by virtue of section 143 of the Companies Act, 2013, it is the statutory duty of the Auditor to report the violations of the provisions of the Companies Act, 2013 in his Audit Report However, the auditor has failed to report the violations of the provisions of Companies Act 2013 in the said Audit Report for the FY 2017-2018; for which the Auditor, viz., for the financial year ending on 31.03.2018-Anupam Sarkar is liable for penalty u/s. 450 of the Companies Act, 2013.
- Whereas, this office has issued show cause notice for default under section 143 of the Companies Act 2013 vide this office letter no. ROC/PAT/SCN/sec.143/38519/2422 dated 04.012.23.
- However, this office has not received any reply from the above said auditor. Hence, it is concluded that the provisions of Section 143 of the Companies Act, 2013 has been contravened by the auditor and therefore he is liable for penalty u/s. 450 of the Companies Act 2013 for the Financial Year 2017-2018.
Section 450 states that- “If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be liable to a penalty of ten thousand rupees, and in 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 case of a company and fifty thousand rupees in case of an officer who is in default or any other person”.
- Further Section 446 states that “if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be”.
- As per clause 85 of section 2 of the Companies Act, 2013, small company means a company whose paid up capital and turnover shall not exceed rupees four crore and rupees forty erase respectively. As per MCA portal, paid up capital of the company- Angel Gents And Jewellery Private Limited is Rs. 9,64,000/- and the turnover of the company is Rs. 5,204,654.00 as per Financial Year 20152016. Therefore, the benefits of small company are extended to this noticee while adjudicating penalty.
- Having considered the facts and circumstances of the case and after taking into account the provisions of Rule-11 of Companies (Adjudication of Penalties) Rules, 2014 (as amended), I hereby impose a penalty of 5,000 (Five Thousand) on Shri Anupam Sarkar, Chartered Accountants- Membership no. 08028842 as perTable
Below for violation of Section 143 of the Companies Act, 2013 for the financial year 2017-2018:
|Nature of default
Section of the
to whom penalty
|No. of days in
defaults (Rs.) as
per Section 450
of the Act
|Penalty Imposed As per 446B of Act|
by the company in
|on Shri Anupam
- The noticee shall pay the amount of penalty individually by way of e-payment (available on Ministry websitemca.gov.in) under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 (ninety) days of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this office.
- Appeal against this order may be filled in writing with the Regional Director (ER), Ministry of Corporate Affairs, Kolkata, within a period of 60 (sixty) days from the date of receipt of this order, in Form ADJ (available on Ministry website mca.gov.in) setting forth the grounds of appeal and shall be accompanied by a certified copy of this order (Section 454(5) and 454(6) of the Act read with Companies (Adjudication of Penalties) Rules, 2014).
- Please note that if the noticee does not pay the penalty amount imposed herein within a period of ninety days from the date of receipt of the copy of the order, he shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lath rupees, or with both in terms of section 454 (8) (ii) of the Companies Act, 2013; apart from the liability to pay the penalty amount in compliance to this order, and for which prosecution will be filed without further notice in this regard.
I-, Chartered Accountant, 1/52, Bijaygargh, Kolkata,
Pin Code- 700032, West Bengal, India.
The Regional Direaor (ER), Ministry of Corporate Affairs,
234/4 A.J.C. Bose Road, 2M MSO Building,
20 Floor, Kolkata 700020, for information please
|(Aparajit Banta) Adjudicating Officer & Registrar of Companies-Cum- Official Liquidator, Patna|