[Opinion] Dual DIN Issue | RD Reduces ROC Penalty, Highlights Absence of Deliberate Action

Prof R Balakrishnan – [2024] 165 taxmann.com 71 (Article)

1. Background of the case

Director Identification Number (DIN) is a unique identification number, allotted by the Central Government to each of the aspiring individual who would like to be director of any company. The DIN number is allotted by the Central Government and is valid for the lifetime of the director. As per the provisions of Companies Act 2013, that an individual should have a valid DIN number for him/her to be appointed as a director in any company. The framework of the Companies Act 2013 provides certain restrictions and prohibition to obtain more than one DIN number As per the provisions of the Companies Act 2013, no person who already has a DIN number shall apply for another DIN number which means, one DIN number for each of the director.

In this case an individual named Shri. Thiyagarajan Parthasarathy, director associated with SPS Motors private Limited had obtained dual DIN in violation of the provisions of the Companies Act 2013 and he was penalized to a tune of Rs.5.04 lakh by the Registrar of Companies of Chennai. Against the order of the Registrar of Companies, the directors made an appeal to the Regional Director and the Regional Director, considering the merits of the case and the submission made by the director, reduced the penalty to Rs. 50,000/- (90% remission of the penalty levied by the Registrar of Companies). We shall go through the case in order to understand the rationale behind the reduction granted by the Regional Director.

2. Details of the director

The case is pertaining to a director named Shri. Thiyagarajan son of Shri. Parthasarashy aged 53 years having Director Identification Number 09018479 having his residence at No. 24, Old No. 33, Mettu Street, Periyakuppam, Thiruvallur in the state of Tamil Nadu. He was associated as a director with M/s SPS Motors Private Limited.

3. Facts of the case/Default committed

The Regional Director (Northern Region) had received an application via e-form DIR-5 filed by the company M/s. SPS motors Private Limited pertaining to the DIN held by one of its director named Shri. Thiyagarajan Parthasarathy. While processing the DIR-5 form – Application for surrender of Director Identification Number, pursuant to section 153 & Rule 11(f) of Companies (Appointment and Qualification of Directors) Rules, 2014, observed that the concerned director had applied for and obtained two Director Identification Numbers on the Ministry of Corporate Portal as per details given below:-

In this case the concerned director himself had admitted obtaining and possessing dual DIN and filed the surrender of the first DIN bearing no. 03191514 which was surrendered was associated with M/s. SPS Hyundai Private Limited and the second (new) DIN bearing no 09018479 was applied while incorporating M/s. SPS Motors Private Limited. The Regional Director rejected the surrender of DIN application stating that the surrender could not be allowed as per Rule 11(f) of the Companies (Appointment & Qualifications if Directors) Rules 2014 since the second DIN bearing no 09018479 was obtained in violation of section 155 of the Companies Act 2013. The Registrar of Companies, Chennai on perusal of the said default, passed the adjudication order after following the procedure of law on 10th July 2023 as per the order details stated in the subsequent paragraph.

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