ROC levies penalty of Rs. 11.67 Lakhs for Non-Filing MSME-1 [Read Order]

The Ministry of Corporate Affairs in the matter of Samsung Research and Development Institute India-Banglore Private Limited imposed penalty of Rs. 11.67 Lakhs for Non-Filing MSME-1.

Relevant Text of the Order:

The company has filed a suo-motu adjudication application on 25.08.2023 stating that that company did not provide the complete disclosures of specific transactions in Form MSME I for the duration April 2022 to September 2022 and October 2022 to March 2023 within the prescribed time limit which was unintentional and was an oversight resulting from an internal clerical error. It is stated that this was later rectified by the company by belatedly disclosing the required details through MSME Forms I filed on 25.07.2023 for both the above mentioned durations.

As per section 405(1) of Chapter XXV of the Act, 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. Further, as per para 3 of the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019, every specified company shall file a return as per MSME Form I annexed to this Order, by 31st October for the period from April to September and by 30th April for the period from October to March.

As per section 405 (4) of the Act, if any company fails to comply with an order made under sub-section (1) or sub-section (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.

Pursuant to the adjudication application filed by the company, Notice of hearing was sent on 18.09.2023 and physical hearing was held on 27.09.2023. It was attended by Mr. Jayaram Korikkar, practising company secretary and authorised who appeared on behalf of the company and directors and made his submissions as mentioned in the adjudication application. He was directed to produce some additional documents related to the MSME dues and their repayments which were submitted on 05.10.2023.

It is seen from the MCA records that the company is a subsidiary company and hence does not fall under the definition of a small company as per the provisions of section 2(85) of the Act. Therefore, the provisions of imposing lesser penalty as per the section 4468 of the Act shall not be applicable in this case.

Therefore, having considered the facts and circumstances of the case and the submissions made by the company and directors through their authorised representatives, in view of the above said violations of section 405 of the Companies Act, 2013 read with Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019, in exercise of the powers vested under section 454(3)(a) of the Companies Act 2013, I do hereby impose penalty in the following manner on the company and the directors /officers who were in default of the offence committed:

The company and its directors / key managerial personnel are hereby directed to pay the penalty amount as tabulated above, separately for each default, within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website (Miscellaneous head) specifying the details of this Order and the noticee who is paying the penalty.

Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in Form ADJ setting forth the grounds of appeal and shall be accompanies by a certified copy of this Order.

Attention is also invited to section 454(8) of the Companies Act, 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under 454(8)(i) and (ii) of the Companies Act, 2013 against the company and directors / key managerial personnel without further notice in the matter.

The company is required to serve a copy of this Order on the director(s)/ officer(s)-in- default mentioned above in terms of provisions of section 20 of the Companies Act, 2013.

For Official Order Download the PDF Given Below: