ROC-Hyderabad Order u/s 10A for Vena Energy Sustainable Power Pvt Ltd: Penalty for INC 20A Delay

ROC-Hyderabad Order u/s 10A for Vena Energy Sustainable Power Pvt Ltd: Penalty for INC 20A Delay. In this article, we will guide you through the mandatory provisions for the company under Section 10 A & 10A (2) for filing of Form INC- 20A (declaration of commencement of business) with the Registrar of Companies along with a certified copy of board resolution pursuant to section 10A (1) (a) of the Companies Act 2013 and Rule 23A of the Companies (Incorporation) Rules 2014.  Failure to comply with these requirements can result in penalties for both the company and every officer who was in default under Section 10A of the Companies Act, 2013. Therefore, please ensure that the company has filed the form to avoid any legal consequences.
Applicable Provisions: -
Section 10 A(1) of the Companies Act, 2013 states that a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and
Section 10A(2) of the Companies Act, 2013 states that  If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.
If a company undertakes activities that need registration or permission from any sectoral regulator, such as the Reserve Bank of India or the Securities Exchange Board of India etc., the company must seek such registration or approval together with the attached declaration. It is important for the company and its officials to review and get the content validation done from a practicing professional (duly verified by a company secretary or a chartered accountant or a cost accountant in practice) before filing the e-form with the Registrar of Companies.
Facts of the case: -
On April 11, 2023, the Registrar of Companies in Hyderabad passed an order under section 454 (5) of the Companies Act 2013 vide his adjudication order No. ROC (B)/Adj.order.454-10A/VESPPL/Co.No.133287/2023/151 for failing to comply with Section 10A  of the Companies Act 2013 read with the Companies (Adjudication of Penalties) Rules, 2014 in respect of M/ s. Vena Energy Sustainable Power Private Limited.
Against the order of the Registrar of Companies of Hyderabad, an appeal was filed by M/ s. Vena Energy Aura Private Limited challenging the penalty of three and a half lac rupees levied, before the Regional Director (Southeast Region) Ministry of Corporate Affairs, Hyderabad. Upon hearing the appeal, The Regional Director reviewed the case and reduced the penalty from Rs. 3,50,000 to Rs. 1,05,000. This reduction was based on the fact that the delay in getting foreign direct investment approval from the Ministry of New and Renewable Energy (MNRE) and we shall go through this case in details, in order to understand the rationale behind the reduction in penalty granted by the Regional Director.
Penalty Provision
Section 10 A of the Companies Act, 2013 states that, If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees..
Penalty Imposed by Registrar of Companies on Company and Officers in Default
The authorized representative had levied a penalty of Rs.O.50 Lakhs on the Company and Rs.1 .00 Lakhs each for 2 directors i.e., Mr. Rohit Loyalka and Mr. Ashish Tiwari and Rs.0.84 Lakhs on Mr. Geno Jose Thomas, Director and Rs.0.17 Lakhs on Mr.  Mohanram Ramakrishnan M, Director (total aggregating to Rs.3.51 Lakhs).
Appeal filed by the company
The adjudication order was passed by the Registrar of Companies, Hyderabad on 11th April 2023 on this matter. As per provisions of section 454(6), an appeal under sub-section (5) of section 454 was to be filed within a period of 60 days from the date of which the copy of the order made by the adjudicating officers is received by the aggrieved person. The company filed an appeal under Section 454 (5) of the Companies Act, 2013 in Form ADJ on 6th June 2023. On examination of the Application/Appeal it was seen that the said appeal was filed within sixty days from date of passing adjudication order by the Registrar of Companies, Hyderabad, in terms of provisions of section 454(6) of the Companies Act 2013.
Order passed by the Regional Director
Taking into consideration the facts of the appeal and submissions made by the authorised representative, penalty amount is reduced to 30% of the penalty amount.
The following table shows the reduced amount of penalty imposed by the Regional Director (South East Region).

Violation of Section
Penalty Imposed On
Penalty Imposed by ROC (?)
Revised Penalty Imposed by RD (?)

Sec. 10A of the Companies Act, 2013
Company
50,000
15,000

Director-1
1,00,000
30,000

Director-2
1,00,000
3,00,000

Director-3
84,000
25,200

Director-4
17,000
5,100

Total
 
 
1,05,300

Exemption to Startup/ Small Company/OPC under section 446B: 
As per sec. 446B of the Companies Act, 2013, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.
In this case, Section 446B does not apply, as the company does not meet the criteria.
Conclusion
As per the provisions of section 454(5) of the Companies Act 2013, an aggrieved person can appeal against the adjudication order passed by the Registrar of Companies. Such appeals are required to be made to the Regional Director having jurisdiction in the matter within a period of 60 days from the date of copy of adjudication order
In this case, the Regional Director of Hyderabad decided to reduce the penalties imposed by the Registrar of Companies to 30 % for both i.e. for the company and as well as for the director (from Rs. 3,51,000 to Rs. 1,05,300). In the appeal petition, the company and its directors could not act on time due to the delayed receipt of the FDI approval from the concerned ministry and the delay in complying with the filing of declaration of commencement of business was not attributable to the company. It was basically, the approval from the other regulator did not come on time and this was beyond the control of the director which led to the default.
Download MCA adjudication order:

In this article, we will guide you through the mandatory provisions for the company under Section 10 A & 10A (2) for filing of Form INC- 20A (declaration of commencement of business) with the Registrar of Companies along with a certified copy of board resolution pursuant to section 10A (1) (a) of the Companies Act 2013 and Rule 23A of the Companies (Incorporation) Rules 2014. Failure to comply with these requirements can result in penalties for both the company and every officer who was in default under Section 10A of the Companies Act, 2013. Therefore, please ensure that the company has filed the form to avoid any legal consequences.

Applicable Provisions: -

Section 10 A(1) of the Companies Act, 2013 states that a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and

Section 10A(2) of the Companies Act, 2013 states that If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.

If a company undertakes activities that need registration or permission from any sectoral regulator, such as the Reserve Bank of India or the Securities Exchange Board of India etc., the company must seek such registration or approval together with the attached declaration. It is important for the company and its officials to review and get the content validation done from a practicing professional (duly verified by a company secretary or a chartered accountant or a cost accountant in practice) before filing the e-form with the Registrar of Companies.

Facts of the case: -

On April 11, 2023, the Registrar of Companies in Hyderabad passed an order under section 454 (5) of the Companies Act 2013 vide his adjudication order No. ROC (B)/Adj.order.454-10A/VESPPL/Co.No.133287/2023/151 for failing to comply with Section 10A of the Companies Act 2013 read with the Companies (Adjudication of Penalties) Rules, 2014 in respect of M/ s. Vena Energy Sustainable Power Private Limited.

Against the order of the Registrar of Companies of Hyderabad, an appeal was filed by M/ s. Vena Energy Aura Private Limited challenging the penalty of three and a half lac rupees levied, before the Regional Director (Southeast Region) Ministry of Corporate Affairs, Hyderabad. Upon hearing the appeal, The Regional Director reviewed the case and reduced the penalty from Rs. 3,50,000 to Rs. 1,05,000. This reduction was based on the fact that the delay in getting foreign direct investment approval from the Ministry of New and Renewable Energy (MNRE) and we shall go through this case in details, in order to understand the rationale behind the reduction in penalty granted by the Regional Director.

Penalty Provision

Section 10 A of the Companies Act, 2013 states that, If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees..

Penalty Imposed by Registrar of Companies on Company and Officers in Default

The authorized representative had levied a penalty of Rs.O.50 Lakhs on the Company and Rs.1 .00 Lakhs each for 2 directors i.e., Mr. Rohit Loyalka and Mr. Ashish Tiwari and Rs.0.84 Lakhs on Mr. Geno Jose Thomas, Director and Rs.0.17 Lakhs on Mr. Mohanram Ramakrishnan M, Director (total aggregating to Rs.3.51 Lakhs).

Appeal filed by the company

The adjudication order was passed by the Registrar of Companies, Hyderabad on 11^th April 2023 on this matter. As per provisions of section 454(6), an appeal under sub-section (5) of section 454 was to be filed within a period of 60 days from the date of which the copy of the order made by the adjudicating officers is received by the aggrieved person. The company filed an appeal under Section 454 (5) of the Companies Act, 2013 in Form ADJ on 6^th June 2023. On examination of the Application/Appeal it was seen that the said appeal was filed within sixty days from date of passing adjudication order by the Registrar of Companies, Hyderabad, in terms of provisions of section 454(6) of the Companies Act 2013.

Order passed by the Regional Director

Taking into consideration the facts of the appeal and submissions made by the authorised representative, penalty amount is reduced to 30% of the penalty amount.

The following table shows the reduced amount of penalty imposed by the Regional Director (South East Region).

Violation of Section	Penalty Imposed On	Penalty Imposed by ROC (?)	Revised Penalty Imposed by RD (?)
Sec. 10A of the Companies Act, 2013	Company	50,000	15,000
	Director-1	1,00,000	30,000
	Director-2	1,00,000	3,00,000
	Director-3	84,000	25,200
	Director-4	17,000	5,100
Total			1,05,300

Exemption to Startup/ Small Company/OPC under section 446B:

As per sec. 446B of the Companies Act, 2013, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.

In this case, Section 446B does not apply, as the company does not meet the criteria.

Conclusion

As per the provisions of section 454(5) of the Companies Act 2013, an aggrieved person can appeal against the adjudication order passed by the Registrar of Companies. Such appeals are required to be made to the Regional Director having jurisdiction in the matter within a period of 60 days from the date of copy of adjudication order

In this case, the Regional Director of Hyderabad decided to reduce the penalties imposed by the Registrar of Companies to 30 % for both i.e. for the company and as well as for the director (from Rs. 3,51,000 to Rs. 1,05,300). In the appeal petition, the company and its directors could not act on time due to the delayed receipt of the FDI approval from the concerned ministry and the delay in complying with the filing of declaration of commencement of business was not attributable to the company. It was basically, the approval from the other regulator did not come on time and this was beyond the control of the director which led to the default.