Penalty for Late Transfer of Declared Dividend to Separate Bank Account: ROC Adjudication Against J PAN TUBULAR COMPONENTS LIMITED

The Registrar of Companies, Uttar Pradesh II, has imposed monetary penalties on J PAN TUBULAR COMPONENTS LIMITED and its directors for failing to transfer the declared dividend amount to a separate bank account within the statutory five-day period mandated under the Companies Act 2013. The matter was dealt with under the adjudication mechanism prescribed in Section 454 read with the Companies (Adjudication of Penalties) Rules, 2014, and penalty was levied under the residuary Section 450 owing to absence of a specific penalty provision for breach of Section 123(4).

Background and Appointment of Adjudicating Authority

Designation of Adjudicating Officer

The Ministry of Corporate Affairs, through Gazette Notification No. S.O. 698(E) dated 10/02/2026, appointed the Registrar of Companies, Uttar Pradesh II, as the Adjudicating Officer for the purposes of Section 454 of the Companies Act 2013. This appointment empowers the officer to:

  • Examine cases of non-compliance with provisions of the Act and allied rules, and
  • Levy penalties in accordance with the Companies (Adjudication of Penalties) Rules, 2014 where violations are established.

In the present matter, this authority was exercised to examine compliance with Section 123(4) regarding timely transfer of dividend to a separate bank account and to impose penalties under Section 450.

Details of the Company and Officers Involved

Corporate Entity

The adjudication pertains to J PAN TUBULAR COMPONENTS LIMITED, a company registered with the ROC Uttar Pradesh II with the following particulars:

  • CIN: U29253UP2007PLC169950
  • Registered Office Address:
    B-2/31,32 & 42, SITE-B, Surajpur Industrial Area,
    Greater Noida, Gautam Buddha Nagar,
    Uttar Pradesh, India – 201306

The company is a closely held entity, with one of its directors, Mr. Jignesh Panchal, holding more than 90% of the shareholding since incorporation, as submitted in the reply to the show cause notice.

Individuals Named in the Proceedings

The adjudication order covers both the company and its officers in default. The following directors were identified in the proceedings:

  • JIGNESH PANCHAL
  • JUGAL JIGNESH PANCHAL
  • NAVNEET BHARDWAJ
  • JUBIN JIGNESH PANCHAL

Each of these individuals has been treated as an “officer in default” for the purposes of penalty under Section 450.

Statutory Framework: Relevant Provisions of the Companies Act 2013

Dividend Transfer Requirement under Section 123(4)

Section 123(4) of the Companies Act 2013 lays down a clear requirement in relation to declared dividend, including interim dividend:

  • Once dividend is declared by the company,
  • The entire amount of the dividend must be transferred to a separate bank account within five days from the date of declaration.

This time-bound transfer obligation is intended to:

  • Safeguard the interest of shareholders,
  • Ensure segregation of dividend funds from general funds of the company, and
  • Provide transparency and traceability of dividend payments.

Penalty Provision under Section 450

In this case, contravention of Section 123(4) attracted Section 450 because there is no specific penalty clause in the Act dealing with failure to transfer dividend to a separate bank account within the prescribed time.