ROC Penalises Director for Having Duplicate DIN [Read Order]

The Registrar of Companies (ROC), which operates under the Ministry of Corporate Affairs (MCA) in India, has released an order of adjudication. It is basically a penalty order issued under Section 454 of the Companies Act 2013, read with Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, for violation of provisions of Section 155 of the Companies Act, 2013, read with Rule 11 of the Companies (Appointment of Directors) Rules, 2014. This order is focused on a person named Mr. Laxman Kranti Allagadda Kumar. He is a director of some companies and holds a DIN (Director Identification Number).

Mr. Laxman got his first DIN (00933931) on November 18, 2006. This DIN was associated with a company named Baallarra Global Education Private Limited. In the past, he was also connected with another company but is no longer a director there. Later, he applied for and was given a second DIN (10495519) on 6th February 2024. This second DIN was not connected to any company.

The issue is, according to Section 155 of the Companies Act, 2013, an individual is not allowed to have more than one DIN. Here, Mr. Laxman Kranti is accused of having two DINs, which violates the provisions of section 155 of the Act, which is punishable under section 159 of the Act. When Laxman realised his mistake, he tried fixing it by applying to surrender the second DIN through a formal process (e-form DIR-5) on July 25, 2024.

Laxman voluntarily filed a self-adjudication application on June 29, 2024, accepting this violation and seeking to resolve it. Kindly request for penalty or forgiveness. A hearing was held on September 11, 2024, where Mr. Laxman was represented by Mr. Tanniru Sriram, a practising company secretary. During this hearing, the Authorised representative of the applicants pleaded for a lesser penalty.

• According to Section 155, no one is allowed to have more than one DIN.
• According to Section 159, if someone breaks this rule, they can be fined up to Rs. 50,000 plus an additional fine of Rs. 500 for each day the violation continues. The violation in this case lasted for 170 days.

Penalty imposed:

The penalty was calculated as

• Rs. 50,000 as the initial fine for the violation
• Rs. 500 × 170 days = Rs. 85,000 for continuing the violation daily
• Total penalty = Rs. 50,000 + Rs. 85,000 = Rs. 1,35,000

Mr. Laxmanis is ordered to pay this penalty within the time period of 90 days from receiving the order. He must pay it from his own funds online through the MCA website. He also has to file a form (INC-28) after payment, attaching proof of payment and this order.

Further instructions:

• If Mr. Laxman wants to appeal this order, he can do so within 60 days by filing an appeal with the Regional Director (South East Region), Hyderabad, in a specific form (Form ADJ) explaining why he thinks the penalty should be changed.
• If he does not comply with this order, further penalties under Section 454(8) of the Companies Act will be applied, which could involve action against the company and its key officials without any further notice.