[Opinion] Company Faces Penalties for Releasing Public Advertisement without Using the Word ‘Limited’

[2023] 149 taxmann.com 318 (Article)

1. Background of the case

This is a case in which the Registrar of Companies/Adjudication Officer of Cuttack passed on adjudication order for the noncompliance/default in compliance with the requirements of section 12(3)(c) of the Companies Act, 2013 in the matter of Utkal Chamber of Commerce and Industry Ltd, Bhubaneswar. Against the order of the Registrar of Companies of Cuttack an appeal was filed by M/s. Utkal Chamber of Commerce and Industry Ltd challenging the penalty of Rs.6.84 lakhs levied, before the Regional Director (Eastern Region) Ministry of Corporate Affairs, Kolkata. Upon hearing the appeal, the Regional Director, by setting aside order, remitted back to the Registrar of Companies Odisha for taking appropriate steps for disposal of the matter at the earliest under section 454(3) of the Companies Act,2013

2. The Company

M/s. Utkal Chamber of Commerce and Industry Ltd is a company incorporated on 13th January 1964 having its registered office at N 6 IRC Villagenayapalli, Bhubaneswar-741015 in the state of Odisha. The company is having eight directors on its board. The company falls under the jurisdiction of the Registrar of Companies of Odisha and the office of the Registrar of Companies is situated at Cuttack. The company promotes trade, commerce, industry and services in order to strengthen and expand economic activity in the state.

3. Default committed by the company

One of the members of M/s. Utkal Chamber of Commerce and Industry Ltd made an allegation that “the company Utkal Chamber of Commerce and Industry Ltd along with another organization had issued a joint appeal in a full front page advertisement in the ‘Times of India’, Bhubaneswar edition on 6th September 2021. In the advertisement released, the company’s name has been given as ‘Utkal Chamber of Commerce and Industry’ without using the word ‘Limited’ in the name of the company which was the wilful violation of the Companies Act, 2013 by the directors of the M/s. Utkal Chamber of Commerce and Industry Ltd. The Registrar of Companies of Odisha after making necessary enquiry issued a show cause notice under sub rule (2) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014 to the directors of M/s. Utkal Chamber of Commerce and Industry Limited directing them to show cause as to why they could not be penalized for the violation of section 12(3) (c) of the Act 2013 committed by them.

The directors after pursuing the show cause notice and subsequently cross checking the details, the company did reply that the company’s name was indeed published without using the word “limited’. The Registrar of Companies, Cuttack after having given an opportunity for personal hearing, based on the facts and circumstances and also submissions made by the directors passed an adjudication order by levying penalty on all the directors of the company as per the details given below.

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