Failure to Mention DIN on documents (Section 158): MCA Imposes Penalty

Failure to Mention DIN on documents (Section 158): MCA Imposes Penalty. Section 158 of the Companies Act, 2013 mandates that every individual who is appointed as a director of a company must provide their Director Identification Number (DIN) or any other identification number prescribed by the government while furnishing any return, information, or particulars under the Act. This provision ensures transparency and accountability in corporate governance by enabling proper identification of directors in official records. It helps in tracking the directorships held by an individual across different companies and prevents fraudulent practices, such as the use of multiple identities. Compliance with this requirement is crucial, as failure to provide a valid DIN can lead to regulatory penalties and complications in corporate filings.
Applicable Provisions
The MCA adjudication order involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (ER), Kolkata, for consideration.
Facts of the Case with ROC and RD
In Mars Mercentiles Pvt Ltd, concerned ROC had issued adjudication notice for violation of section 158 of the act dated 01.05.2023 to the company and its officers in default. That in this regard, no adequate reply to the adjudication notices as mentioned above have been received from the company and its officers in default as to why penalty shall not be imposed.
Considering the fact and circumstances of the case, Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 25/06/2024.
The authorised representative was asked to make submissions regarding any infirmity in the order of ROC. The authorised representative had submitted financial statements for 2022-23 to prove that company is a small company as per the provisions of Companies Act 2013. Thus, appellants request the concerned RD to impose the penalty after considering section 446B of the companies Act 2013.
After considering the facts, circumstances and submissions made by the company, concerned RD has revise the penalty amount as per section 446B.
Imposed Penalty
Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty as follows:

Relevant Periods

To whom penalty imposed

Default Continues

Maximum Penalty

2018-19
2019-20

On Company

50,000*2

1,00,000

On 1ST director

50,000*2

1,00,000

On 2nd director

50,000*2

1,00,000

Reduction in Penalties, If any
After considering all the facts, circumstances and all the submission made by the appellants, concerned RD impose the penalties as per section 446B of the companies Act 2013: -

Relevant Periods

To whom penalty imposed

Default Continues

Maximum Penalty

Penalty as per section 446B of the companies Act 2013

2018-19
2019-20

On Company

50,000*2

1,00,000

50,000

On 1ST director

50,000*2

1,00,000

50,000

On 2nd director

50,000*2

1,00,000

50,000

Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit. In adjudication matter of Mars Mercentiles Pvt Ltd, authorised representatives have submitted their signed and audited financial statements to claim that company is a small company as per the provisions of companies Act 2013 and after considering all the matter RD grant the benefit of Section 446B of the companies Act 2013.
CCL Observations:
From the above case, it is apparent that Mars Mercentiles Pvt Ltd failed to comply with the provisions of Section 158 of the Companies Act, 2013, leading to adjudication by the Registrar of Companies (ROC). After getting order from the concerned ROC, an appeal filled by the company to  claim the benefit of section 446B of the companies Act. After considering all the submissions made by the company RD reduce the penalty amount up o half.
Download MCA Adjudication Order

Section 158 of the Companies Act, 2013 mandates that every individual who is appointed as a director of a company must provide their Director Identification Number (DIN) or any other identification number prescribed by the government while furnishing any return, information, or particulars under the Act. This provision ensures transparency and accountability in corporate governance by enabling proper identification of directors in official records. It helps in tracking the directorships held by an individual across different companies and prevents fraudulent practices, such as the use of multiple identities. Compliance with this requirement is crucial, as failure to provide a valid DIN can lead to regulatory penalties and complications in corporate filings.

Applicable Provisions

The MCA adjudication order involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (ER), Kolkata, for consideration.

Facts of the Case with ROC and RD

In Mars Mercentiles Pvt Ltd, concerned ROC had issued adjudication notice for violation of section 158 of the act dated 01.05.2023 to the company and its officers in default. That in this regard, no adequate reply to the adjudication notices as mentioned above have been received from the company and its officers in default as to why penalty shall not be imposed.

Considering the fact and circumstances of the case, Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 25/06/2024.

The authorised representative was asked to make submissions regarding any infirmity in the order of ROC. The authorised representative had submitted financial statements for 2022-23 to prove that company is a small company as per the provisions of Companies Act 2013. Thus, appellants request the concerned RD to impose the penalty after considering section 446B of the companies Act 2013.

After considering the facts, circumstances and submissions made by the company, concerned RD has revise the penalty amount as per section 446B.

Imposed Penalty

Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty as follows:

Relevant Periods	To whom penalty imposed	Default Continues	Maximum Penalty
2018-19 2019-20	On Company	50,000*2	1,00,000
	On 1^ST director	50,000*2	1,00,000
	On 2^nd director	50,000*2	1,00,000

Reduction in Penalties, If any

After considering all the facts, circumstances and all the submission made by the appellants, concerned RD impose the penalties as per section 446B of the companies Act 2013: -

Relevant Periods	To whom penalty imposed	Default Continues	Maximum Penalty	Penalty as per section 446B of the companies Act 2013
2018-19 2019-20	On Company	50,000*2	1,00,000	50,000
	On 1^ST director	50,000*2	1,00,000	50,000
	On 2^nd director	50,000*2	1,00,000	50,000

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit. In adjudication matter of Mars Mercentiles Pvt Ltd, authorised representatives have submitted their signed and audited financial statements to claim that company is a small company as per the provisions of companies Act 2013 and after considering all the matter RD grant the benefit of Section 446B of the companies Act 2013.

CCL Observations:

From the above case, it is apparent that Mars Mercentiles Pvt Ltd failed to comply with the provisions of Section 158 of the Companies Act, 2013, leading to adjudication by the Registrar of Companies (ROC). After getting order from the concerned ROC, an appeal filled by the company to claim the benefit of section 446B of the companies Act. After considering all the submissions made by the company RD reduce the penalty amount up o half.