MCA Levies Substantial Penalties on Corporate Entity and Directors for Non-Compliance in Submitting MGT-14 Form
Background of Adjudication Proceedings
The Registrar of Companies operating from Chennai jurisdiction, functioning under the Ministry of Corporate Affairs, delivered an adjudication order in accordance with Section 454 of the Companies Act, 2013. This order addressed contraventions of Section 450 of the same statute, stemming from the entity's failure to comply with mandatory statutory filing obligations within prescribed timelines.
The adjudication proceedings were initiated following the rejection by the Ministry of Form NDH-4 on 04.07.2024. The rejection arose after authorities discovered that the corporate entity had not submitted Form MGT-14 concerning the Board resolution that approved the entity's financial statements for the accounting period ending on 31.03.2021. This filing requirement is mandated under Sections 117(3)(g) read with Section 179(3)(g) of the Companies Act, 2013.
Subsequently, the corporate entity did file the requisite Form MGT-14 on 14.06.2025; however, this submission occurred with a considerable delay spanning 1316 days from the due date. The Adjudicating Authority determined that such non-compliance attracted penal consequences under the residuary penalty provisions of the statute.
Appointment and Jurisdiction of Adjudicating Authority
The Ministry of Corporate Affairs, exercising powers vested under Section 454 of the Companies Act, 2013, read together with the Companies (Adjudication of Penalties) Rules, 2014, appointed the Registrar of Companies as the Adjudicating Officer through Gazette notification number S.O. 831(E) dated 24/03/2015. This appointment conferred authority to adjudge penalties for contraventions under various provisions of the Companies Act, 2013.
The adjudication proceedings were conducted through the e-Adjudication framework established by the Ministry to streamline penalty assessment and collection processes for corporate violations.
Entities Subject to Adjudication
The adjudication order pertained to three distinct individuals and one corporate entity:
- MULAGUMOODU VICARIATE CATHOLIC NIDHI LIMITED - The registered corporate entity subject to compliance obligations
- SAVARIMUTHU SEKHAR - Director bearing DIN 07559450
- DAVIDSON BENJAMIN - Director bearing DIN 02897454
All these parties were identified as being responsible for the compliance failure that triggered the adjudication proceedings.
Statutory Framework and Applicable Provisions
Section 450 of the Companies Act, 2013
The order invoked Section 450 of the Companies Act, 2013, which serves as the residuary penalty provision. This section establishes that when a company, its officer, or any other individual contravenes any provision of the statute or rules framed thereunder, and where no specific penalty is prescribed elsewhere in the Act, the following penal consequences apply:
- The company and every officer in default shall be liable to a penalty of ten thousand rupees
- In cases of continuing contravention, an additional penalty of one thousand rupees for each day following the first day of contravention
- The maximum penalty ceiling is two lakh rupees for companies
- The maximum penalty ceiling is fifty thousand rupees for officers in default or any other person
Section 117(3)(g) - Filing of Resolutions and Agreements
Section 117 addresses the mandatory filing of certain resolutions and agreements with the Registrar. Sub-section (3)(g) specifically requires filing of resolutions passed pursuant to sub-section (3) of Section 179.
The provision mandates that specific categories of board resolutions must be filed with the Registrar in Form MGT-14 within the prescribed timeline to maintain statutory compliance and ensure transparency in corporate governance matters.
Section 179(3)(g) - Powers of Board
Section 179 delineates the powers exercisable by the Board of Directors of a company. Sub-section (3)(g) mandates that the Board must exercise the power to approve financial statements and the Board's report through resolutions passed at formal Board meetings.
This provision ensures that critical corporate decisions, particularly those relating to financial disclosures, are taken through proper deliberation in Board meetings and are subsequently documented and filed with regulatory authorities.
Chronology of Events Leading to Adjudication
Initial Rejection of Nidhi Application
The Ministry of Corporate Affairs, through an order dated 04.07.2024, rejected Form NDH-4 that had been submitted by the company MULAGUMOODU VICARIATE CATHOLIC NIDHI LIMITED. This form, bearing SRN: R77836211 dated 26.12.2020, constitutes an application for declaration as Nidhi and updating of status by Nidhi companies.
The rejection order specifically cited the company's failure to file Form MGT-14 concerning the Board Resolution passed for approval of financial accounts as required under Section 117(3)(g) read with Section 179(3)(g) of the Companies Act, 2013, for the financial year concluding on 31.03.2021.
Delayed Compliance by the Company
Following the rejection order, authorities observed that the entity eventually filed the e-Form MGT-14 bearing SRN AB4632627 on 14.06.2025. This filing pertained to the Board Resolution passed for approval of Annual accounts for financial year 2020-21.