ROC Chennai Levies Penalty on Company for Failure to Disclose Occupation Information in PAS-3 Filing

Background of the Adjudication Proceedings

The Registrar of Companies based in Chennai, functioning under the Ministry of Corporate Affairs, issued an adjudication order pursuant to Section 454 of the Companies Act, 2013. This order was issued for contravention of Section 450 of the Act, which arose due to non-adherence to mandatory disclosure norms prescribed under company law regulations.

The matter originated when Form NDH-4 submitted by the company was rejected on 21st May 2024. Upon examination, it was discovered that the company had omitted crucial information regarding the occupation of allottees in the schedule annexed with Form PAS-3 filed through the Ministry of Corporate Affairs portal. This omission was determined to be a breach of Rule 12(2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Initiation and Conduct of Adjudication Process

Following the identification of this statutory breach, the adjudication mechanism was set in motion. The Adjudicating Officer issued formal notices to the concerned parties, scheduling an e-hearing to provide an opportunity for the company and its officers to present their case. During the scheduled virtual hearing, the company was represented by authorized advocates who appeared before the authority and submitted their representations.

Appointment of Adjudicating Authority

The Ministry of Corporate Affairs exercised powers vested under Section 454 of the Companies Act, 2013, read with the Companies (Adjudication of Penalties) Rules, 2014, through its notification bearing number S.O. 831(E) dated 24th March 2015, designating the Registrar of Companies as the Adjudicating Officer. This appointment empowered the said authority to determine and impose penalties for violations under various provisions of the Act.

Entity Identification

The adjudication proceedings pertained to:

Company: VALAR GOKULAM NIDHI LIMITED

Individual Officer in Default: SIVAGAMI

Section 450 of the Companies Act, 2013

This section establishes the residuary penalty provision applicable when a company, its officer, or any other person breaches any provision of the Act or rules framed thereunder, including conditions, limitations, or restrictions attached to approvals, sanctions, consents, confirmations, recognitions, directions, or exemptions granted for any matter. Where no specific penalty is prescribed elsewhere in the legislation, the following consequences apply:

  • The company and every officer in default or other person becomes liable to a penalty of ₹10,000
  • In cases of continuing contravention, an additional penalty of ₹1,000 for each day following the first day of continuing breach
  • The maximum aggregate penalty is capped at ₹2,00,000 for companies and ₹50,000 for officers in default or other persons

Rule 12(2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014

This rule mandates specific disclosure requirements regarding allottees of securities. The list of allottees must contain comprehensive information including the occupation of each allottee. Non-compliance with these disclosure norms constitutes a statutory violation attracting penal consequences.

Factual Matrix and Default Details

Nature of Default Committed

The Ministry of Corporate Affairs, through its order dated 21st May 2024, rejected Form NDH-4 that had been filed by M/s. Valar Gokulam Nidhi Limited bearing Service Request Number T16397200 dated 27th August 2021. This form is the prescribed format for companies seeking declaration as Nidhi companies and for updating their status as Nidhi entities.

The rejection was premised on a critical finding: the company had failed to mention the occupation of allottees in the list attached with Form PAS-3 filed in the MCA system. This constituted a direct violation of Rule 12(2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Procedural Timeline

The adjudication proceedings followed a structured timeline:

  1. 21st May 2024: Ministry rejected Form NDH-4 and directed ROC Chennai to initiate adjudication proceedings
  2. 11th November 2025: Adjudicating Officer issued notice for e-hearing
  3. 18th November 2025: E-hearing was conducted
  4. 8th January 2026: Final adjudication order was issued

Representation During E-Hearing

The company exercised its right to be heard by authorizing three advocates—M. Ajith Kumar, M. Deepan, and A. Deepak Raj—to represent both the company and the officers in default during the e-hearing. These authorized representatives participated in the virtual proceedings and made comprehensive submissions before the adjudicating authority.

Findings and Determination

Analysis by Adjudicating Officer

After examining the facts, submissions, and applicable legal provisions, the Adjudicating Officer arrived at the following conclusions: