Director used some other's DIN as he had no DIN- MCA Levies Rs. 3.41 Lakh Penalty

Subhangini Industries Private Limited, was incorporated on June 11, 2020, under the Companies Act, 2013.

An inquiry conducted under Section 206(4) of the Act revealed a concerning violation – the appointment of Mr. Sandeep Kumar as a director on October 5, 2021, without a valid Director Identification Number (DIN).

The DIN used for his appointment, 06762192, belonged to another individual with the same name, an IAS officer from Delhi.

The discrepancy came to light when Mr. Kumar realized the mistake and applied for a new DIN, 10159546, on May 11, 2023.

However, the period between his appointment and the allotment of the new DIN constituted a breach of Section 152(3) of the Companies Act, 2013, which mandates that no person shall be appointed as a director without a valid DIN.

Recognizing the gravity of the situation, the Registrar of Companies, West Bengal, initiated adjudication proceedings against Mr. Kumar.

Multiple notices were issued, providing him with opportunities to respond and attend hearings. Despite these efforts, Mr. Kumar failed to appear or provide an adequate reply, leading to an ex-parte conclusion of the proceedings.

Consequently, the Adjudicating Officer, vested with the authority by the MCA, imposed a penalty of Rs. 3.41 lakh on Mr. Sandeep Kumar under Section 159 of the Companies Act, 2013. This penalty reflects the extent of the default, calculated from the date of his appointment as a director until the date of the new DIN allotment.

Directors and companies must meticulously verify the DINs of their directors at the time of appointment and ensure regular updates to prevent DIN deactivation. Failure to do so can result in severe penalties and legal complications, as demonstrated in this instance.

FAQs:

Q1. What was the violation committed by Mr. Sandeep Kumar? A1.Mr. Sandeep Kumar was appointed as a director of Subhangini Industries Private Limited on October 5, 2021, without possessing a valid Director Identification Number (DIN), in contravention of Section 152(3) of the Companies Act, 2013. Q2.What legal provisions were invoked in this case?

A2.The Registrar of Companies, West Bengal, initiated adjudication proceedings against Mr. Kumar under Section 454(3) of the Companies Act, 2013, read with Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, as amended by the Companies (Adjudication of Penalties) Rules, 2019.

Q3. What was the penalty imposed on Mr. Sandeep Kumar?

A3. The Adjudicating Officer imposed a penalty of Rs. 3.41 lakh on Mr. Sandeep Kumar under Section 159 of the Companies Act, 2013, for violating Section 152(3) by serving as a director without a valid DIN. Q4.How was the penalty amount calculated?

A4.The penalty amount was calculated based on the number of days Mr. Kumar served as a director without a valid DIN, from the date of his appointment (October 5, 2021) until the date of allotment of his new DIN (May 11, 2023). Q5.What are the implications of this case for directors and companies?

A5. This case emphasizes the importance of strict compliance with corporate governance norms, particularly the requirement for directors to possess a valid DIN at the time of appointment. Companies must exercise due diligence in verifying the DINs of their directors and ensuring regular updates to avoid penalties and legal complications.