The Adjudicating Officer, Pranay Chaturvedi, Registrar of Companies, NCT of Delhi & Haryana appointed by the Ministry of Corporate Affairs (MCA) recently imposed a penalty in total of Rs.15,40,341.6/- on Comviva Technologies Ltd. and its directors for the delay in transferring Corporate Social Responsibility (CSR) fund.
An application was received from the company admitting non-compliance of Section 135(5) of the Companies Act, 2013 wherein the actual amount to be spent by the company as part of its CSR obligations was Rs.2,88,65,811 but Comviva Technologies Ltd had spent only Rs.2,83,15,689 during the financial year 2020-21.
According to Section 135(5) of the Companies Act, 2013, it is the duty of the board of every company to ensure that the company spends at least 2% of their average net profits of the three immediately preceding financial years in pursuance of its Corporate Social Responsibility (CSR) policy.
It is further provided in the Act that if the company fails to spend such an amount, the board shall have the duty to report reasons for not spending the amount under Section 134(3)(o) of the Act and unless the amount unspent relates to any ongoing project referred to in subsection (6), such amount shall be transferred to a fund specified in Schedule VII within a period of six months of the expiry of financial year.
It is also stated in subsection (7) that in case of default in compliance with the provisions under subsection (5) or (6), the company shall be liable to a penalty of twice the amount required to be transferred to the funds mentioned in Schedule VII or to the Unspent Corporate Social Responsibility Account or one crore rupees whichever is lesser and that every officer of the company who is in default shall be liable to a penalty one-tenth of the said amount or two lakh rupees whichever is lesser.
During the end of the financial year, the company had an unspent amount of Rs.5,50,122 which was to be transferred within six months of the end of the financial year i.e 31st March 2021. The company remitted the amount on 22nd April 2021 to the PM Relief Fund. The fund bounced back into the company’s bank account on the same day due to technical error and inadvertence. This was not noticed by the directors.
However, the default was made good by the company and its officers by depositing the said amount to the PM’s National Relief Fund on 30th March 2022. The company and directors were penalized owing to the default in compliance, to be remitted within 90 days of receipt of order and to immediately rectify the default, and to intimate with proof of penalty paid.
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