ROC Imposes Rs. 16.9 Lakhs Penalty on Company and MD for Non-reporting of MSME Dues and Non-filing of e-form MSME-1

ROC Imposes Rs. 16.9 Lakhs Penalty on Company and MD for Non-reporting of MSME Dues and Non-filing of e-form MSME-1

Ministry of Corporate Affairs
Registrar of Companies, Kerala & Lakshadweep
First Floor, Corporate Bhawan , B.M.C. Road,
Thrikkakara, Kochi — 682 021, Kerala.
roc.ernakulam@mca.gov.

ROC (K)/PC-03/Blissful/01/2023

Dated: 29.12.2023

BY RPAD/EMAIL

To,

1. Blissful Garments Private Limited
   2. Sri. Sankaranarayanan Kottilingal,

Adjudication Order passed under Section 454 of the Act and Rule 3(2) of Companies (Adjudication of Penalties) Rules, 2014 for violation of Section 405(4) of Companies Act, 2013 read with Companies (Furnishing of Information About Payment to Micro and Small Enterprise Suppliers) Order 2019 – in the matter of Blissful Garments Private Limited.

1. Appointment of Adjudicating Officer

Vide Notification bearing No. S.0/831. (E) dated 24th March 2015 the Govt. of India Ministry of Corporate Affairs has appointed the Registrar of Companies Ernakulam as Adjudicating Officer under the Companies Act, 2013 (hereafter referred as the Act) read with the Companies (Adjudication of Penalties) Rules, 2014 with respect to all companies having its registered office within the State of Kerala and Union territory of Lakshadweep Islands. I am vested with jurisdiction and empowered to adjudicate the matter in hand within the prescribed legal frame.

2. Company

Whereas Company Blissful Garments Private Limited, CIN- U18209KL2016PTC045823 (herein after known as Company) is a registered company with this office under the provisions of the companies Act, 2013 herein after referred to as the Act having its registered office situated at C/O 4 S Creations, No 9/74, 9/726, Near Sinai Retreat Centre, NH966 Mundur-1, Palakkad, Kerala-678592 as per the MCA website.

3. Facts of the case:

(i) That this office received a complaint letter dated 06.04.2023 from Tulip Elastics Pvt Ltd, Noida, Uttar Pradesh, India interalia stating that the said company is registered /MSME in the business of manufacture of metallized Yarn or Gimped Yarn etc. and pursuant to an order placed by the addressee company, the said Tulip Elastics Pvt Ltd had supplied goods and had raised invoices and that the addressee company which is obligated to file MSME form No. 1 indicating the outstanding amount to the said complainant company along with the number of days of delay has not filed the same in the MCA 21 Portal. The said Complaint has been registered by this office with IDs: 100085387. Copy of the complaint has already been sent to you vide this office letters dated 19.06.2023 and 14.11.2023.

(ii) That Ministry of Micro, Small and Medium Enterprises, New Delhi vide Notification S.O. 5622(E) dated 2nd November 2018 has stated that;

‘in exercise of powers conferred by Section 9 of the Micro, Small and Medium Enterprises Development Act. the Central Government hereby directs that all companies who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty five days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of the Act, shall submit a half yearly return to the Ministry of Corporate Affairs stating the following:

(a) the amount of payments due; and

(b) the reasons of the delay’

(iii) That as per order vide notification S.0.368(E) dated 22.01.2019 issued by the Ministry of Corporate Affairs under Section 405 of the Companies Act, the addressee company is required to file MSME form No. 1 pursuant to Section 405(1) of the Companies Act, 2013 which reads as under.

(1) The Central Government may, by order, require companies generally, or any class of companies, or any company, to furnish such information or statistics with regard to their or its constitution or working, and within such time, as may be specified in the order.

(iv) On perusal of the MCA 21 Portal it was seen that the addressee company which is required to file the said e-form MSME form No. 1 in MCA 21 Portal has not filed the same till the today. The failure to file the said form is punishable as per Section 405(4) of the Companies Act, 2013 which reads as under;

(4) if any company fails to comply with an order made under sub-section (1) or sub­section (3), or furnishes any information or statistics which is incorrect or incomplete in any material respect, the company and every officer of the company who is in default shall be liable to a penalty of twenty thousand rupees and in case of continuing failure, with a further penalty of one thousand rupees for each day after the first during which such failure continues, subject to a maximum of three lakh rupees.

4.1 Therefore the addressees, (being the company and its Managing Director) were called upon to show cause vide notice dated 14.11.2023 as to why the action should not be initiated for Adjudication of penalty as prescribed under Section 405(4) of the Act, under section 454 of the Companies Act and relevant rules thereunder for non-compliance of the requirements of section 405(1) of the Act read with Companies (Furnishing of Information about Payment to Micro and Small Enterprise Suppliers) Order 2019 within 15 days from the date of receipt of this notice.

4.2 That as per the postal track both the letters have been delivered, and the company alone has vide letter dated 10.12.2023 (received on 26.12.2023) has replied to the notice admitting that the complainant was one his supplier and that they have done a business deal worth Rs.18,58,500/- during the period October 2020 to December 2020 and that have also issued a cheque worth Rs.18,56,689/- dated 23.11.2020 and that subsequently had paid Rs.1,33,875/- on 24.11.2020 and a further payment of Rs.8,50,000/- on 22.09.2021 however the complainant has initiated a proceedings before the Hon’ble Judicial Magistrate Court of Hyderabad in Case No. NACT/1534/2021 and however the company is ready to settle the due amount outside the Court if the complainant is ready to withdraw the Judicial proceedings.

4.3 However except narrating about the above details, the company has not offered any explanation as to why the said e-form has not been filed.

4.4 Therefore though there may be a Judicial proceeding, since the company has admitted that
the transaction, nothing prevented the company from filing MSME form No.1 indicating the admitted amount (as per it’s calculation) that is due to the complainant. Column No.5 of the said form provides for the reasons for delay for the payments.

4.5 Therefore in view of what is stated in column No.4.2 to 4.4 supra, it is concluded that the company and its Managing officer in default are liable for penalty as prescribed under Section 405(4) of the Act for the above said violation.

5. Since the company is a small company, the benefit of section 446B is applied and accordingly,

I hereby impose a penalty as prescribed under Sub-Section (5) of Section 92 of the Companies Act, 2013 read with section 446B, on the company and the officer in default as under:

6. I am of the opinion that penalty is commensurate with the aforesaid failure that is committed by the addressees and penalty so imposed upon the Managing Director shall be paid from his personal sources/income.
7. It is further directed that penalty imposed shall be paid within a period of 90 days from the date of receipt of this order copy as said in section 454(8) of the Act and through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.
8. Appeal against this order, if aggrieved may be filed in writing with the Regional Director (Southern Region), Ministry of Corporate Affairs, No. 26, Haddows Road, Nungambakkam Chennai 600 006, as provided in Section 454(5) & 454(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014.
9. Your attention is also invited to Section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013, which state that in case of non-payment of penalty amount, the company shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to five lakh rupees and officer in default 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 lakh rupees or with both.

(M. JAYAKU MAR)
REGISTRAR^/OF COMPANIES
KERALA

Copy to for kind information: –

The Regional Director (Southern Region),
Ministry of Corporate Affairs,
No 26, Haddows Road,
Nungambakkam Chennai 600 006,

REGISTRAR OF COMPANIES,
KERALA & LAKSHADWEEP