Company penalised for underspending of CSR Expense [Read Order]

The Ministry of Corporate Affairs (MCA) in the matter of AECOM INDIA PRIVATE LIMITED has penalised the Company for underspending of CSR Expenses.

The company viz. AECOM INDIA PRIVATE LIMITED (hereinafter known as ‘company’) incorporated under the Companies Act, 1956 having its registered office as per MCA21 Registry at address 9th Floor, Infinity Tower – C, DLF Cyber City, DLF Phase-II, Gurgaon, Haryana, 122002, India.

Facts about the Case:

This office is in receipt of the application on 29.05.2023 (GNL 1 SRN F61320933) wherein the company, directors and KMP have admitted non-compliance with section 135(3)(o) and Section 135(5) of the Act. It is stated that the Company spent Rs.65,53,120 on account of CSR during the F.Y. 2021-22. Subsequently, the Company noticed a calculation error and as per the revised calculation, the spending requirement was Rs.71,88,446 which resulted in an underspending of Rs.6,35,326 towards its CSR obligation for F.Y. 2021-22.

That the Company came to know about the unspent amount of Rs. 6,35,326 after the expiry of the time limit of 6 months from the end of the Financial Year, provided in the law for transfer of unspent amount to the funds specified in Schedule VII.

Subsequently, the company transferred Rs.6,35,866 against an unspent amount of Rs.6,35,326 to “PM Cares Fund“, a fund specified under Schedule VII of the Companies Act 2013 on December 09, 2022.

An SCN was issued to the company vide dated 19.09.2023 in response to which the company had submitted its reply on 03.10.2023. In view of submissions made in reply, a hearing in the matter was scheduled for oral submissions on 28.12.2023. Mr. Neeraj Kumar (KMP) and Mr. Divesh Goyal (PCS) authorised representatives of the Company appeared for a hearing and submitted as under:

That in the present case the company has already rectified the default and it has on its own filed an application to adjudicate this matter. Therefore, a lenient view may be taken at the time of imposition of penalties.

Order:

The subject company does not get covered under the purview of a small company as defined u/s 2(85) of the Act. Hence, the benefit of section 446B would not be applicable to the company.

Even though the applicant has preferred the adjudication application on his own, the present law does not allow for any lenient treatment in such cases.

Now in exercise of the powers conferred on me vide Notification dated 24th March 2015 and having considered the reply submitted by the noticee (s) in response to the notice issued on 19.09.2023 and hearing held in the matter on 28.12.2023, hereby impose the penalty of Rs.1,397,718 on the company and its Board of Directors for violation of section 135 (5) of the Companies Act, 2013 r/w Rule 10 of the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The said amount of penalty shall be paid through online by using the website (Misc. head) in favor of “Pay and Accounts Officer, Ministry of Corporate Affairs, New Delhi, within 90 days of receipt of this order, and intimate this office with proof of penalty paid.

Appeal against this order may be filed with the Regional Director (NR), Ministry of Corporate Affairs, B-2 Wing, 2nd Floor, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi-110003 within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website] setting forth the grounds of appeal and shall be accompanied by a certified copy of the order. [Section 454(5) and 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].

For Official Order Download PDF Given Below: