JUDGMENT :

1. Rule. Rule made returnable forthwith by consent of the parties, and taken up for final hearing and disposal.

Context and Factual Background:

2. This Petition impugns an order dated October 11, 2023, by which a Learned Adjudicating Officer, exercising jurisdiction under the Companies Act, 2013 (“Companies Act”), has sought to impose a penalty aggregating to Rs. 64 lakhs against the Petitioners for alleged failure to certify annexures to sixteen returns of allotment of securities uploaded by Petitioner No. 1, N.S.J.L Nidhi Ltd. (“Company”), between February 10, 2019 and January 26, 2021.

3. The two points for determination that lie at the heart of this Petition are whether the penalty is at all attracted in the facts of the case, and if so, whether the quantum of penalty imposed is compliant with the Companies Act and is a product of appropriate and reasonable exercise of jurisdiction.

Alleged Default and Relevant Provisions:

4. The Learned Adjudicating Officer was essentially adjudicating monetary penalty under Section 39(5) of the Act. The relevant portions of Section 39 are extracted below:

“39. Allotment of securities by company.

(1) to (3) *****

(4) Whenever a company having a share capital makes any allotment of securities, it shall file with the Registrar a return of allotment in such manner as may be prescribed.

(5) In case of any default under sub-section (3) or sub-section (4), the company and its officer who is in default shall be liable to a penalty, for each default, of one thousand rupees for each day during which such default continues or one lakh rupees, whichever is less.”

[Emphasis Supplied]

5. The upshot of the aforesaid provisions is that whenever a company allots securities, Section 39(4) of the Companies Act requires it to upload a return of allotment in the manner prescribed. In the event of default under Section 39(4), the company and its “officer who is in default” are liable to a penalty for each default. The quantum of penalty is stipulated on a per-day basis capped at Rs. 1 lakh.

6. Rule 12 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 (“Allotment Rules”) is relevant for consideration of penalty under Section 39(5) in this case, are extracted below:

“12. Return of Allotment.-

(1) Whenever a company having a share capital makes any allotment of its securities, the company shall, within thirty days thereafter, file with the Registrar a return of allotment in Form PAS-3, along with the fee as specified in the Companies (Registration Offices and Fees) Rules, 2014.

(2) There shall be attached to the Form PAS-3 a list of allottees stating their names, address, occupation, if any, and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the Form PAS-3 as being complete and correct as per the records of the company.

(3) to (7) ****

[Emphasis Supplied]

7. Rule 12(1) fixes a deadline for filing of the return of allotment and the stipulated form in this regard – Form PAS-3. Rule 12(2) would indicate that along with the stipulated Form PAS-3, a list of allottees with their names, addresses, occupations and the number of securities allotted to each of the allottees is required to be annexed to the return of allotment. Specifically, such attached list is required to be certified by the signatory of the Form PAS-3, as being complete and correct as per the company’s records. Evidently, this stipulation is reiterative in nature. The very same person who signs the Form PAS-3 has to certify the completeness and correctness of the list of allottees annexed to the return of allotment.

Liability to Penalty and Quantum:

8. Therefore, for compliance with Section 39(4) of the Companies Act, a return of allotment is to be filed in the manner prescribed. The prescription of the manner is in Rule 12 of the Allotment Rules. Rule 12(2) of the Allotment Rules contains the reiterative stipulation of certification of the list of allottees by the very same person w