ROC Penalty for Non-Compliance in PAS-3: Failure to Disclose Occupation of Allottees

The Registrar of Companies, Chennai has levied penalties on Theyagarayanagar Nidhi Limited and its directors for violating disclosure requirements in Form PAS-3 due to incomplete particulars of security allottees. This adjudication order highlights the strict approach of the Ministry of Corporate Affairs (MCA) towards non-compliance with procedural requirements under the Companies (Prospectus and Allotment of Securities) Rules, 2014, even when the default arises from practical difficulties in gathering information.

This analysis recasts the order in a structured, practitioner-friendly format, focusing on the legal provisions involved, the nature of default, the defence taken by the company, and the reasoning of the Adjudicating Officer under Section 450 of the Companies Act, 2013.

Background of the Proceedings

Appointment of Adjudicating Officer

The Ministry of Corporate Affairs, by way of Gazette notification S.O. 831(E) dated 24/03/2015, appointed the Registrar of Companies, Chennai as the Adjudicating Officer under Section 454 of the Companies Act, 2013.

This appointment empowers the officer to:

  • Conduct adjudication proceedings
  • Examine instances of non-compliance under the Companies Act, 2013 and Rules
  • Impose penalties in accordance with the Companies (Adjudication of Penalties) Rules, 2014

The present matter is an adjudication under Section 454 for a default which falls within the scope of Section 450, i.e., contravention of provisions for which no specific penalty is prescribed elsewhere in the Act.

Corporate and Individual Parties Involved

The matter concerns:

  • Company: Theyagarayanagar Nidhi Limited

    • CIN: U67120TN1938PLC002917
    • Registered office: 15, RAMASWAMY STREET, T NAGAR, CHENNAI 600017, TAMIL NADU, INDIA

  • **Individuals (officers in default as identified)😗*

    • SRINIVASACHARI RANGANATHAN
    • ANNAPOORNI RAMANI
    • HARIBASHYAM THIRUMALAI MADAPOOSI
    • RAMANI MAHALINGAM
    • SEETHALAKSHMI

All of the above were treated as “officers in default” for the purpose of penalty under Section 450.

Section 450 – Residual Penalty Provision

Section 450 of the Companies Act, 2013 is a residual penalty clause. It applies where:

  • A company, its officer, or any other person:
    • Contravenes any provision of the Act, or
    • Contravenes any Rule made thereunder, or
    • Violates any condition, limitation or restriction attached to an approval, consent, sanction, direction, recognition or exemption
  • And no separate or specific penalty is provided elsewhere in the Act for that contravention

Under Section 450, the following penalty framework applies:

  • Base penalty: ₹10,000 for the company and each officer in default or person concerned
  • Continuing default: Additional ₹1,000 per day from the second day onwards,
    • Subject to a maximum of ₹2,00,000 for the company
    • And ₹50,000 for each officer in default or other person

This provision was invoked because the violation related to Rule 12(2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and there is no separate penalty clause specifically tied to this Rule.

Rule 12(2) – Mandatory Contents of PAS-3

Rule 12(2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, deals with the return of allotment. It mandates that:

“There shall be attached to the Form PAS-3 a list of allottees stating their names, address, occupation, if any, and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the Form PAS-3 as being complete and correct as per the records of the company.”

Key compliance elements:

  • A list of allottees must accompany Form PAS-3
  • The list must contain:
    • Name of each allottee
    • Address of each allottee
    • Occupation (if any) of each allottee
    • Number of securities allocated to each allottee
  • The signatory to PAS-3 must certify the list as complete and correct according to the company’s records

Failure to include any of these particulars, including occupation, renders the filing non-compliant.