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MCA Levies ₹3.75 Lakh Penalty on Akshat Telecom for Non-Filing of CHG -1 || The Legal Time

Introduction:

In a recent development, the Ministry of Corporate Affairs (MCA) has imposed significant penalties on Akshat Telecom Private Limited and its directors for non-compliance with the Companies Act, 2013. The violation pertains to the non-filing of EForm CHG1 for the creation of secured charges, as mandated under Section 77(1) of the Companies Act, 2013.


Key Points:

1. Violation of Companies Act, 2013:


  • Section 77(1) of the Companies Act, 2013 requires every company creating a charge on its property or assets to register the particulars of the charge with the Registrar within thirty days of its creation.

  • Failure to comply with this provision attracts penalties under Section 86(1) of the Companies Act, 2013.


2. Case Background:

  • Akshat Telecom Private Limited, based in Kota, Rajasthan, failed to register charges created on its property with the Registrar despite obtaining loans from HDFC Bank Limited between the financial years 201819 and 202021.


  • The Registrar's Office issued multiple correspondences, including letters and notices, to the company regarding the violation.


3. Fact of the case:


Complaint Received: The Registrar's office received a complaint(s) from Sunita Sundardas Damani regarding Akshat Telecom Private Limited's affairs.

 

Correspondence Initiated: Letters dated 31.03.2022 and 27.04.2022 were sent to the company, followed by a reply from the company on 30.04.2022. Additional information was requested under section 206(1) of the Companies Act, 2013, on 19.07.2022, which the company furnished on 01.08.2022.

 

Violation Identified: Upon examination, the Registrar's office found that the company had violated Section 77(1) of the Companies Act, 2013, by failing to register charges with the Registrar related to loans obtained from HDFC Bank Limited during the Financial Year 2018-19 to 2020-21.

 

Show Cause Notice: A Show Cause Notice was issued to the company on 15.11.2022 regarding the violation.

 

Adjudication Process Initiated: An Adjudication Notice dated 26.07.2023 was issued to the company and its directors, setting the matter for a hearing on 11.09.2023.



4. Adjudication Process:

The matter was brought before the Registrar of Companies cum Official Liquidator, attached to the Rajasthan High Court, Jaipur Bench at Jaipur.


Despite receiving replies from some directors, none of the company's representatives appeared during the hearing held on September 11, 2023.


Upon review, it was confirmed that the company had indeed violated Section 77(1) of the Companies Act, 2013.


Nature of Default

Violations under Companies Act, 2013

Name of Persons on whom Penalty Imposed

Total Default Amount (In Rs.)

Maximum Limit for Penalty (In Rs.)

Final Penalty Imposed (In Rs.) pursuant to Section 446B of the Companies Act, 2013

Non-filing of e-Form CHG-1 for the creation of secured charge

Section 77(1)

Akshat Telecom Private Limited

5,00,000/-

5,00,000/-

2,50,000/-



Ashish Daga

50,000/-

50,000/-

25,000/-



Rajkumari Daga

50,000/-

50,000/-

25,000/-



Bansi Lal

50,000/-

50,000/-

25,000/-



Krishan Kumar Manihar

50,000/-

50,000/-

25,000/-



Sunita Sundardas Damani

50,000/-

50,000/-

25,000/-


Total




3,75,000/

It was emphasized that the penalty should be paid from personal sources/income of the officers in default and should be remitted through the Ministry of Corporate Affairs portal.


5. Appeal Process:

 Parties were informed of their right to appeal within sixty days to the Regional Director (NWR), Ministry of Corporate Affairs, Ahmedabad, accompanied by a certified copy of the order.

  

Provisions of the Companies Act, 2013, regarding fines or imprisonment for nonpayment of penalty amounts were highlighted.


Key Highlights:

 

1. Substantial Penalty: MCA imposed a hefty penalty of ₹3.75 lakhs on Akshat Telecom Private Limited and its directors for non-compliance with the Companies Act, 2013.

 

2. Failure to Register Charges: Despite taking loans from HDFC Bank Limited, the company failed to register charges on its property with the Registrar, violating Section 77(1) of the Companies Act.

 

3. Absence at Hearing: Company representatives' absence during the adjudication hearing indicates a disregard for legal proceedings, reflecting poorly on the company's commitment to regulatory compliance.

 

4. Personal Accountability: Individual directors were held personally liable for the violation, reinforcing the principle of accountability in corporate governance.

 

5. Timely Compliance Importance: The case highlights the criticality of timely compliance with statutory requirements to avoid penalties and maintain corporate integrity.

 

6. Transparency and Governance Impact: Non-compliance undermines transparency and governance standards, potentially eroding investor confidence and damaging the company's reputation.

 

7. Legal Recourse: The provision for appeal offers affected parties a route to challenge penalties and seek redressal through established legal channels.

 

8. Risk Mitigation: Companies are urged to bolster risk mitigation strategies and compliance frameworks to proactively adhere to regulatory requirements and avert financial penalties.



Conclusion:

The penalties imposed on Akshat Telecom Private Limited and its directors serve as a reminder of the legal obligations incumbent upon companies and their leadership. Adherence to regulatory requirements is essential for maintaining transparency, accountability, and trust in the corporate sector. Going forward, it is imperative for businesses to prioritize compliance efforts to avoid similar sanctions and uphold corporate governance standards.

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