RD confirms Penalty of Rs. 61,31,744 for default in not spending requisite CSR amount [Read Order]

The Regional Director in the Ministry of Corporate Affairs (MCA) in the matter of M/s. FMC Technologies India Private Limited imposed penalty of Rs. 61,31,744 for default in not spending requisite CSR amount.

The Registrar of Companies stated in his adjudication order that the applicant company was required to transfer the unspent amount of Rs.26,65,872 to the funds specified in Schedule VII of the Act within six months of the end of the financial year 2020-21, i.e., on or before 30.09.2021. However, the firm has not transferred the unspent cash to a fund designated in Schedule VII within six months after the end of the financial year, i.e., on or before 30.09.2021, in contravention of Section 135(5) of the Companies Act, 2013 and liable under Section 135(7). The company also reported that on 10.11.202, it paid an unspent amount of Rs.26,65,872 to the PM CARES Fund. The adjudication request is considered because the corporation has made good the offence by paying the unspent sum to one of the funds designated in Schedule VII of the Act.

Furthermore, Registrar of Companies has stated that after examining the submission made in the application made by the company and the facts of the case it is proved that the company and the officers of the company failed to comply with the provisions of Section 135(5) of the Act and levied a penalty of Rs.53,31,744 on the Company and Rs.2,00,000 each for 4 officers i.e., Narendra Kumar Dharmavarapu, David Macfarlane, Niranjan Desai and Housila Prasad Tiwari.

The Appellants were given the opportunity to be heard on November 20, 2023. Ms. Gautami Darvesh, Practicing Company Secretary, appeared on behalf of the appellants and reiterated the submissions made in the appeal, as well as submitting that the applicant company had no intention of failing to spend the required CSR amount and had not willfully failed to comply with the provisions of Section 135(5) of the Companies Act, 2013. When the Applicant Company learned of the default, it immediately made amends by paying the unspent CSR amount to the PM Cares Fund.

Taking the foregoing facts into account, and after speaking with the authorized representative, it is discovered that FMC Technologies Singapore and FMC Tech.Inc, USA own the whole shareholding of the company. The holding companies and the other shareholding companies are both enormous in size. Considering the size and profits made by the company, not interfering in the penalty as levied by Registrar of Companies vide adjudication order dated 14.09.2023 and Company to pay Rs.53,31,744 and for Directors i.e. David Macfarlane, Housila Prasad Tiwari, Narendra Kumar Dharmavarapu and Niranjan Desai to Rs.2,00,000 each (total aggregating to Rs. 61,31,744). The appellants are directed to comply with this order and also provisions of Section 454(8) of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014.

Accordingly, a penalty of Rs. 61,31,744 was paid by the Company and officers.

For Official Order Download PDF Given Below: