MCA imposed Penalty of Rs.14 Lakhs for Calculation Error in CSR Expenditure:
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II,
dated 24.03.2015 (See SO 831(E), dated 24.03.2015) appointed undersigned as
Adjudicating Officer in exercise of the powers conferred by section 454(1) of the
Companies Act, 2013 (herein after known as Act) r/w Companies (Adjudication of
Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
Whereas the company viz. AECOM INDIA PRIVATE LIMITED (herein after known as
'company') incorporated under the Companies Act, 1956 having its registered office
as per MCA21 Registry at address 9th Floor, Infinity Tower - C, DLF Cyber City,
DLF Phase-II, Gurgaon,Haryana,122002, India.
Facts about the Case:
This office is in receipt of application on 29.05.2023 (GNL 1 SRN F61320933)
wherein the company, directors and KMP have admitted non-compliance of section
135(3)(o) and Section 135(5) of the Act. It is stated that the Company spent Rs.
65,53,120/- on account of CSR during the F.Y. 2021-22. Subsequently the Company
noticed a calculation error and as per the revised calculation the spending requirement
was Rs. 71,88,446/- which resulted in an underspending of Rs.6,35,326/- towards its
CSR obligation for F.Y. 2021-22.
That the Company came to know about the unspent amount of Rs. 6,35,326/-
after the expiry of time limit of 6 months from end of Financial Year, provided in the
law for transfer of unspent amount to the funds specified in Schedule VII
Subsequently, the company transferred Rs. 6,35,866 against unspent amount
of Rs. 6,35,326/- to "PM Cares Fund", a fund specified under Schedule VII of the
Companies Act 2013 on December 09, 2022
A SCN was issued to company vide dated 19.09.2023 in response to which
company had submitted its reply on 03.10.2023. In view of submissions made in reply,
a hearing in the matter was scheduled for oral submissions on 28.12.2023. Mr. Neeraj
Kumar (KMP) and Mr. Divesh Goya! (PCS) authorised representatives of the Company
appeared for hearing and submitted as under
That in the present case the company has already rectified the default and it has on
its own filed an application to adjudicate this matter. Therefore, a lenient view may
be taken at the time of imposition of penalties.
Factor considered for adjudication:
It is undeniable that at the first instance, the company and its officers had
applied for adjudication on its own, after admitting its default.
It is clear that section 135 of the Act and rules made thereunder casts an onus
on the Board to comply with the provisions. The responsibility inter alia includes that
the Board shall not only ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three
immediately preceding financial years but shall also satisfy itself regarding the
utilisation of the disbursed CSR funds. The Board here refers to all the directors of the
company, whether executive or otherwise. It is a trite principle of law that in case the
law casts an obligation upon any person/body, the liability in case of default in
complying with such obligation would also squarely lie with such person/body. The
FAQs issued by the Ministry also unequivocally point out in the same direction that —
CSR is a Board driven process. Thus, the onus of non-compliance would also lie on
the Board itself.
That as per above observations and provisions mentioned herein Mr. Neeraj
Jain, Company Secretary (applicant no.4) who did not hold Board positions would not
be liable under section 135. However, the subject company and its Board of Directors
are liable for penalties u/s 135(7) of the Act.
Adjudication of penalty
The subject company does not get covered under the purview of small company
as defined u/s 2(85) of the Act. Hence, the benefit of section 446B would not be
applicable on the company
Even though the applicant has preferred the adjudication application on his
own, the present law does not allow for any lenient treatment in such cases
Now in exercise of the powers conferred on me vide Notification dated 24th
March, 2015 and having considered the reply submitted by the noticee (s) in response
to the notice issued on 19.09.2023 and hearing held in the matter on 28.12.2023, I do
hereby impose the penalty on the company and its Board of Directors for violation of
section 135 (5) of the Companies Act, 2013 r/w Rule 10 of the Companies (Corporate
Social Responsibility Policy) Rules, 2014:
Company: 6,35,326 x 2 = 12,70,652 or 1,00,00,000 whichever is less = 12,70,652
Whole-time Director - 6,35,326/10 = 63,533 or 2,00,000 whichever is less -= 63,533
Whole-time Director - 6,35,326/10 = 63,533 or 2,00,000 whichever is less -= 63,533