FAILURE TO MAINTAIN REGISTER OF DEBENTURE/SECURITY HOLDERS: MCA IMPOSES Rs. 4.5 LAKH PENALTY.

INTRODUCTION

NAVCOM Industries Limited was recently hit with a hefty fine of Rs. 4.5 lakh by the Ministry of Corporate Affairs (MCA) for breaking Section 88 of the Companies Act, 2013. A December 20, 2023 adjudication order, ROCP/ADJ/order/88 /23-24/NAVCOM/2313 to 2317, describes the specifics and repercussions of the company’s inability to keep a membership register.

DETAILED ANALYSIS

  • Appointment of Adjudicating Officer:

For breaking Section 88 of the Companies Act of 2013, NAVCOM Industries Limited was recently hit with a hefty fine of Rs. 4.5 lakh by the Ministry of Corporate Affairs (MCA). The specifics and repercussions of the company’s inability to keep a register of members are outlined in the adjudication decision, ROCP/ADJ/order/88 /23-24/NAVCOM/2313 to 2317, dated December 20, 2023.

 

  1. Company Overview:

Based in Solapur, Maharashtra, NAVCOM Industries Limited is regulated by the Companies Act. It is determined that the company’s failure to keep a member register violates Section 88.


  • Facts about the case:
  • Following an investigation, it was discovered that the firm had violated Section 88(1) of the Companies Act, 2013 by neglecting to keep a record of members. 
  • There was a penalty under Section 88(5) because the corporation did not respond to directives or reminders. 
  • On July 20, 2023, an adjudication notice was sent; it was not answered, and notifications of hearings were sent again but were not delivered.


  • Relevant Provisions of the Companies Act, 2013.
  • All companies are required under Section 88(1) to keep a record of members. 
  • The company will be penalised three lakh rupees for noncompliance, and each officer who violates the rules will be fined fifty thousand rupees.

 

  1. Adjudication Order 

NAVCOM Industries Limited and its officers are penalised by the adjudicating officer for violating Section 88. The Companies (Adjudication Of Penalties) Rules, 2014 govern penalties.


  • Penalty Breakdown 

The amount of NAVCOM Industries Limited is Rs. 3,00,000.

the amounts of Pravin Surajmal Lunkad

Sachin Ashok Gaikwad.

Santosh Ganpati Jadhay are each Rs. 50,000.


  • Payment Procedure

The Ministry of Corporate Affairs webpage is where the penalty must be paid.


  • Appeal Process:

Within sixty days of obtaining the order, businesses and individuals may file an appeal by following the prescribed procedures.


  • Consequences of Non-Payment

According to Section 454(8)(ii) of the Companies Act, there may be additional repercussions for failure to make payment within the allotted time.


  • Notification and Compliance

A copy of the order is forwarded to the Ministry of Corporate Affairs, the Regional Director (Western Region), directors/officers in default, and NAVCOM INDUSTRIES LIMITED.

CONCLUSION

The fine levied against NAVCOM Industries is a stark reminder of how crucial compliance with regulations is. The Companies Act must be followed by companies and their officers, and breaking the law can have serious financial consequences. The appeals procedure offers a channel for settlement, highlighting the necessity of prompt responses and remedial measures.

G Akshay Associates