Penalty for Holding Multiple DINs: ROC Chandigarh Reiterates Strict Compliance under Companies Act, 2013

The Registrar of Companies, Chandigarh, has once again underscored that compliance with Director Identification Number (DIN) provisions under the Companies Act, 2013 is mandatory and not contingent on the assessee’s intention. An adjudication order has been passed under Section 454 of the Companies Act, 2013, imposing a monetary penalty for violation of Section 155 read with Section 159, where an individual was found to be holding more than one DIN, allegedly due to inadvertence during LLP incorporation.

This order is a clear reminder that even unintentional or ignorance-based defaults relating to DINs will still attract penal consequences, although such factors may be considered while determining the quantum of penalty.

Statutory Framework: DIN Compliance and Penal Consequences

The Ministry of Corporate Affairs (MCA), by issuing Gazette notification number S.O. 831(E) dated 24/03/2015, authorised the Registrar of Companies as the Adjudicating Officer under Section 454 of the Companies Act, 2013. This appointment is read with the Companies (Adjudication of Penalties) Rules, 2014, empowering the ROC to impose penalties for non-compliance with various provisions of the Act, including those relating to DIN.

Under this framework, the Adjudicating Officer is competent to:

  • Examine defaults under specified provisions of the Act
  • Quantify and levy penalties within prescribed limits
  • Issue directions for rectification of default
  • Provide an avenue for appeal to higher authorities

Relevant Provisions: Sections 152, 155, 156 and 159

The order specifically deals with violation of Section 155 of the Companies Act, 2013, which prohibits an individual from obtaining or holding more than one Director Identification Number.

The operative penal provision referred to in the order is as follows:

If any individual or director of a company makes any default in complying with any of the provisions of section 152, section 155 and section 156, such individual or director of the company shall be liable to a penalty which may extend to fifty thousand rupees and where the default is a continuing one, with a further penalty which may extend to five hundred rupees for each day after the first during which such default continues.

Accordingly:

  • Primary penalty: Up to ₹50,000 for the default
  • Continuing default penalty: Up to ₹500 per day after the first day, subject to the prescribed ceiling

The present case involves the application of this penal framework to a situation where the individual held two DINs.

Background of the Case: Multiple DINs Allotted During LLP Incorporation

Voluntary Application for Adjudication

The proceedings commenced on the basis of a suo motu application filed by the individual before the ROC, Chandigarh. The applicant approached the authorities acknowledging a violation under Section 155 and requested adjudication under Section 454.

Key factual elements as noted in the order include: