The Ministry of Corporate Affairs ( MCA ) imposed fine on the dealer of TATA commercial Vehicles M/s Excel vehicles Private Limited and its directors with Rs. 2 crores for failing to submit the mode of payment or source of payment, information about the forfeiture/ notice of forfeiture of shares.
An inquiry under Section 206(4) of the Companies Act, 2013, conducted by the Registrar of Companies (ROC) in Gwalior, revealed non-compliance by Excel Vehicles Private Limited and its directors. The Directorate, in its direction dated July 22, 2022, instructed the ROC to take necessary action for violations of Section 42 of the Companies Act, 2013.
The company and its directors failed to provide details of the payment method or source, forfeiture of shares, and relevant account details, raising concerns that Rs. 14.99 crore in share application money for the allotments dated February 25, 2013, and December 31, 2013, was not paid or realised in the company’s account. This lack of documentary proof signifies a violation of Section 42(6) of the Companies Act.
Following this, a show-cause notice under Section 42(6) was issued to the company and its officers on March 30, 2023. The company’s response, dated April 8, 2023, claimed that the share allotments were made under the Companies Act, 1956, and thus, the provisions of the Companies Act, 2013, were not applicable retrospectively. However, the response was deemed unsatisfactory, confirming the violation of Section 42(6) and making the company and its officers liable for penal action under Section 42(10).
Subsequently, “Notices of Inquiry” were issued on April 19, 2023, with a hearing scheduled for May 3, 2023. During the hearing, representatives of the company failed to satisfactorily address the non-compliance issues. According to Section 42(6) of the Companies Act, a company must allot securities within 60 days of receiving the application money, which must be kept in a separate bank account. Failure to comply with this provision was evident in this case.
Considering the case’s facts and circumstances, it was concluded that Excel Vehicles Private Limited and its defaulting officers are liable for penalties under Section 42(10) of the Companies Act, 2013.
As per the Section 42(10), for non-compliance, the company and its promoters and directors can be fined up to the amount involved or two crore rupees, whichever is lower. Additionally, the company must refund all monies to subscribers within thirty days of the penalty order.
The Company was directed to refund all monies to the complainants along with interest of 12% per annum as per provisions of 42(6) of the Companies Act.
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