NCLT Compounds CS Lapse in DIR-12 Certification with Fine of Rs 2.96 Lakh

Case Details: Jatinbhai Harishbhai Kapadia vs. Registrar of Companies - [2025] 178 taxmann.com 231 (NCLT - Allahabad)

Judiciary and Counsel Details

• Shammi Khan, Judicial Member
• Sanjeev Sharma, Technical Member
• Saumitra Chaturvedi, Adv. for the Petitioner
• Ms Rupa Sutar, Deputy RoC, Baurat Ratna Todi, ARoC, Saurabh Judwa & Ms. Vipal Solanki, Company Prosecutors for the Respondent.

Facts of the Case

In the instant case, Company J, an Indian company, received FDI from A, a Hong Kong-based company, which was entitled to nominate three directors to J’s Board. Accordingly, H, a Chinese national and director of A, was appointed as an Additional Director of J. Form DIR-12 was filed before the RoC for his appointment.
In the said Form DIR-12, H had declared that he was not required to obtain security clearance from the Ministry of Home Affairs, Government of India. However, it was found that H was a national of China, which shares a land border with India, and therefore, necessary security clearance from the Ministry of Home Affairs was required to be obtained.
It was noted that Form DIR-12 was certified by the petitioner in his capacity as a Company Secretary. Thus, there was a lapse on the part of the petitioner. However, it was also observed that the false declaration in Form DIR-12, which had been verified by the petitioner, though relating to a material particular, was not submitted knowingly or with any intention of gaining an advantage, misleading, or keeping anyone in the dark.
Since it was not filed with knowledge of being false, the provisions of Section 448 were not applicable, and consequently, Section 447 (punishment for fraud) was also not applicable.

NCLT Held

The NCLT observed that as the violation was technical and procedural in nature, did not result in any monetary loss or unlawful gain, and did not affect public interest or rights of stakeholders, the offence was compoundable under Section 441. At the same time, the Tribunal held that the petitioner, having certified Form DIR-12 as a practicing professional, ought to have exercised greater care while certifying a Form containing a false declaration.
Accordingly, NCLT held that the offence committed by the petitioner was to be compounded subject to payment of a fine of ?2.96 lakh.

List of Cases Referred To

• Viavi Solutions India (P.) Ltd. v. Registrar of Companies, NCT Delhi & Haryana [2017] 80 taxmann.com 8/141 SCL 243 (NCL-AT) (para 8).