ROC Chennai Penalizes Company for Non-compliant PAS-3 Allottee Details Filing

Background and Regulatory Context

The Registrar of Companies, Chennai has passed an adjudication order under Section 454 of the Companies Act, 2013, holding that KARPAGAMOORTHY BENEFIT FUND NIDHI LIMITED and two of its officers failed to comply with the disclosure requirements prescribed in Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

The non-compliance arose in connection with Form PAS-3 (return of allotment of securities) and ultimately led to the rejection of Form NDH-4, which is used for declaration and status updation as a Nidhi company.

As no specific penalty is separately provided for this default, the matter was adjudicated under the general penalty provision contained in Section 450 of the Companies Act, 2013.

Appointment of Adjudicating Officer

The Ministry of Corporate Affairs, through Gazette Notification No. S.O. 831(E) dated 24/03/2015, had already appointed the Registrar of Companies, Chennai as Adjudicating Officer in exercise of powers under Section 454 of the Companies Act, 2013, read with the Companies (Adjudication of Penalties) Rules, 2014.

This notification authorizes the Adjudicating Officer to:

  • Examine alleged violations of the provisions of the Companies Act, 2013 and its allied rules
  • Levy penalties where contraventions are established and no specific penalty is otherwise provided

The present matter was taken up under that adjudicatory power.

Company and Officer Details

Company

  • Name: KARPAGAMOORTHY BENEFIT FUND NIDHI LIMITED
  • CIN: U74990TN2010PLC076679
  • Registered Office: 141 BIG STREET NA PATTUKKOTTAI TAMIL NADU INDIA 614601

The company is registered under the Companies Act, 2013/1956 and functions as a Nidhi/benefit fund entity.

Officers Involved

The adjudication order identifies two individuals as officers in default:

  • KASIVISWANATHAN – holding DIN 08082987
  • BALASUBRAMANIAN – holding DIN 08639177

Both have been treated as officers in default for the purposes of penalty under Section 450.

General Penalty – Section 450

Section 450 of the Companies Act, 2013 applies where a company, its officers or any other person contravenes:

  • Any provision of the Companies Act, 2013
  • Any rule made thereunder
  • Any condition, limitation, or restriction attached to an approval, sanction, consent, direction, etc.,

and no separate, specific penalty is provided for that contravention elsewhere in the Act.

Under Section 450, such contravention attracts:

  • A base penalty of ₹10,000; and
  • In case of a continuing contravention, an additional penalty of ₹1,000 per day from the second day onward,
  • Subject to a cap of ₹2,00,000 for a company and ₹50,000 for each officer in default or other person.

In this case, the ROC invoked Section 450 because the lapse related to non-compliance with Rule 14(6) and no separate penalty has been specifically laid down for that rule.

Rule 14(6) – PAS-3 Allotment Return Requirements

The dispute centers on Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014. This provision governs the return of allotment where securities are issued on a private placement basis under Section 42.

Rule 14(6) mandates that:

  • A return of allotment must be filed with the Registrar within 15 days of allotment
  • The return must be in Form PAS-3
  • The prescribed filing fee under the Companies (Registration offices and Fees) Rules, 2014 must be paid
  • A complete list of all allottees must be attached, containing, inter alia: