Penalty on Directors for Non-Filing of DIR-3 KYC: ROC Kanpur Adjudication Order Explained

The Registrar of Companies, Kanpur has recently passed an adjudication order that underscores the strict approach of the Ministry of Corporate Affairs toward non-compliance with Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014 relating to DIR-3 KYC. The order, issued under Section 454 of the Companies Act, 2013, imposes the maximum permissible penalty on three directors whose Director Identification Numbers (DINs) were deactivated for failure to file DIR-3 KYC.

This write-up explains the order, the legal framework behind it, the factual background, the penalties levied, and the compliance implications for companies and their directors.

Appointment of Adjudicating Officer

The Ministry of Corporate Affairs, by Gazette notification number S.O. 831(E) dated 24/03/2015, appointed the Registrar of Companies, Kanpur as an Adjudicating Officer under Section 454 of the Companies Act, 2013. This appointment is read with the Companies (Adjudication of Penalties) Rules, 2014, which empower the Adjudicating Officer to levy monetary penalties for specific violations under the Act and the rules framed thereunder.

Accordingly, in this matter, the Registrar of Companies, Kanpur exercised these powers to adjudicate and impose penalties for breach of Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014, read with Section 450 of the Act.

Company and Individuals Covered by the Order

Details of the Company

The adjudication proceedings were conducted in the matter of PRANAM INDIA NIDHI LIMITED, a company registered with the Registrar of Companies, Kanpur under CIN U65991UP2014PLC067506. The company is incorporated under the provisions of the Companies Act, 2013/1956 and has its registered office at:

SONBARSA BAZAR P.O.SONBARSA NA GORAKHPUR GORAKHPUR UTTAR PRADESH INDIA 273002

Directors Involved

The order specifically relates to the following directors of the company:

  • Mr. Sunil Kumar Gupta, DIN 01936421
  • Mr. Awadhesh Kumar Jaiswal, DIN 00447341
  • Mr. Sunil Kumar Jaiswal, DIN 06755485

These individuals were identified as officers in default in relation to the non-filing of DIR-3 KYC, leading to deactivation of their DINs on the MCA21 portal.

Statutory Provisions Invoked

General Penalty under Section 450

The adjudication is based on Section 450 of the Companies Act, 2013, which prescribes a residuary penalty where no specific penalty is provided elsewhere in the Act. The provision states that where a company, any officer of a company, or any other person contravenes any provisions of the Act or the rules made thereunder or any conditions attached to an approval, sanction or exemption, and no specific penalty is provided, then:

the company and every officer of the company who is in default or such other person shall be liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.

In the present case, as the default related to non-compliance of Rule 12A related to DIR-3 KYC, and there is no separate specific penalty under the Act for this violation, Section 450 was invoked.

Rule 12A – DIR-3 KYC Requirement

Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014 mandates that every individual who has been allotted a DIN must submit DIR-3 KYC within the prescribed time.