Delay in Transferring ₹10.24 Lakh Unspent CSR Funds: MCA Imposes Penalty of ₹20.48 Lakh on Company and ₹1.02 Lakh on Each Director [Read Order]

The Ministry of Corporate Affairs (MCA) has imposed a penalty of Rs 20,48,482 on a company and Rs 1,02,424 on each director for the delay in transferring unspent Corporate Social Responsibility (CSR) amount to a fund specified in Schedule VII to the Companies Act, 2013 within a period of six months of the expiry of the financial year in compliance with second proviso to section 135(5) of the Act.

The case arose from an application filed by the company, FS India Devco Private Limited for adjudication of penalties for default under section 135(6) read with section 135(7) of the Companies

Act, 2013.

The applicant is Nitin Grover (Director), Himanshu Jangid (Director) and the Company.

It has been observed from the records and examination of documents filed by the company that, in accordance with the provisions of Section 135(1) of the Companies Act, 2013, the company was required to undertake Corporate Social Responsibility (CSR) activities during the financial year 2022-23 as it was covered under the CSR applicability criteria.

Further, the company has not transferred the unspent corporate social responsibility (CSR) amount to a fund specified in Schedule VII to the Act, within a period of six months of the expiry of the financial year in compliance with second proviso to section 135(5) of the Companies Act, 2013.

It has also been observed that the company failed to transfer the unspent CSR amount of Rs.10,24,241/- for the financial year 2022-23 to the Schedule VII within the stipulated period i.e., on or before 30 September 2023, and the said amount was transferred on 10 March 2025.

Accordingly, it was found that the company and its officers-in-default have violated the provisions of Section 135(6) of the Companies Act, 2013, attracting penal provisions under Section 135(7) of the Act.

A show cause notice was issued and the company was directed to furnish the following certified documents along with the reply, copy of Board Resolution approving CSR spending and authorising transfer, copy of CSR Committee Report / CSR policy for FY 2022-23, copy of proof of CSR transfer made to PM CARES Fund (bank statement, transfer proof and receipts), copy of the calculation sheet of the average net profit for the three immediately preceding financial years as per Section 198 of the Companies Act, 2013 and the copy of CSR expenditure statement showing the amount required to be spent and the amount spent for FY 2022-23.

It was also observed that the company has transferred an amount to Rs. 10,24,241/- on 10/03/2025 to PM National Relief Fund.

Also it was pointed out by the company that two directors, namely, Rupa Vijay and Rajat Roy ceased to director before due date (i.e. 30.09.2023) of transferring unspent CSR amount to schedule VII and hence, they are cannot be considered as the officers-in-default for the said non-compliance.

The submission was taken into consideration while imposing penalty. And Rs 20,48,482 was imposed on the company and Rs 1,02,424 was imposed on three directors and two directors who ceased to be the directors were not imposed with the penalties.

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