Adjudication order for violation of section 143 of Companies Act, 2013 in the matter of M/s. Kapil Property Developers Ltd

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F. No:9/08/ADJ/SEC.143 of 2013/ROC(TG)/RD(SER)/2022 BEFORE THE REGIONAL DIRECTOR, SOUTH EAST REGION MINISTRY OF CORPORATE AFFAIRS, HYDERABAD IN THE MATTER OF COMPANIES ACT, 2013/3718 IN THE MATTER OF KAPIL PROPERTY DEVELOPERS LIMITED

• wan M. Harish Babu, Partner, M/s. M. Harish & Associates Chartered Accountants Statutory Auditor of Ujwala Developers Private Limited Residing at - 3-1-330, Adithya, 1st Floor, Behind Civil Hospital, Karimnagar — 505 001, Telangana.

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Date of hearing: 18.03.2025

Present: CA M. Harish Babu

ORDER

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1. M. Harish Babu, Chartered Accountant, is the Statutory Auditor of the company KAPIL PROPERTY DEVELOPERS LIMITED has filed an appeal under section 454(5) of the Companies Act, 2013 in e-form ADJ vide SRN T74282781 dated 26.01.2022 against the adjudication order issued in Ref No.11 of 2021 vide letter No.2582 dated 24.11.2021 under section 454 read with section 143 of the Companies Act, 2013 passed by the Registrar of Companies, Hyderabad for default in compliance with the requirements of Section 143 (2) & 143 (11) of Companies Act 2013.

2. Registrar of Companies in his Adjudication order dt. 24.11.2021 has stated that “the subject company viz. Kapil Property Developers Limited was inspected u/s. 206(5) of the Companies Act, 2013 and it is observed that the auditor of the company, has violated the provisions of Section 143(3) of the Companies Act, 2013 by not reporting the practice of refund with interest of major portion of the advance so received and its possible violation of Section 73 of the companies Act, and Deposit Rules in his report attached to the Bal PES sheet as at 31.03.2015, 31.03.2016

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and 31.03.2017 and hence liable for penal action for the aforesaid nonreporting u/s. 143(11) of the Act read with Clause 3(v) of the Companies (Auditor’s Report) Order 2016. On the basis of the instructions from the competent authority, show cause notice for adjudication was issued vide letter no ROCH/032635 (KDPL-143)/TBR/2020/SCN/2679 dated 13.03.2020.

3. ROC has further stated that CA Mr. M. Harish Babu, Chartered Accountant of the Company attended the proceedings in person and after considering his submission, ROC has observed stated that the auditor has been found to have defaulted in complying with the above said provision resulting in non-compliance during the financial years 2015-16, 2016-17 and 20172018. Further, Registrar of Companies, Hyderabad passed an order dated 24.11.2021 by fixing a penalty of Rs. 30,000/- on the Auditor, i.e., Harish Babu (applicant).

4. In appeal, a hearing was fixed on 18.03.2025 before the Regional Director (SER), Hyderabad and Mr. Manjeet Bucha, PCS & CA M. Harish Babu, Chartered Accountant of the Company attended the hearing. The matter was heard. The applicant while stating that there is no violation of section 73 in the facts of the case, also relied on the order of the Hon'ble High Court in the Criminal Petition No. 1771 of 2021 filed by the Directors holding that there is no violation of Section 73 of the Act. The Auditor contended that as there was no violation of section 73, he was not required to qualify his report and accordingly there is no violation of Section 143 of the Act.

5. The Office of ROC has informed the undersigned that SLP has been filed before the Hon’ble Supreme Court against the order of the Hon’ble High Court. In view of the same the Applicant was directed to submit an undertaking that he will comply with the order of Adjudicating Officer as and when the SLP is decided sanding on the outcome of the SLP.

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6. Further, M. Harish Babu, Chartered Accountant Statutory Auditor of the Company has submitted undertaking vide his letter dated 07.04.2025 to comply with the orders of the Hon’ble Supreme Court of India and the orders passed by the Regional Director.

7. Since, the matter involved in the present application is Sub-Judice before the Hon’ble Supreme Court of India, the present appeal made in ADJ vide SRN 174282781 dated 26.01.2022 is hereby rejected with liberty to refile the appeal based upon the decision of the Hon’ble Supreme Court of India. Issued under my hand and seal on this the ../O4S, day of April, 2025.

ges %aT Pata ers / RICHA KUKREJA 6 Ge oa arate ferters (wa.$.31.)/ YS *e REGIONAL DIRECTOR(S.E.R.) ae gatraia /HYDERABAD Copy for information and necessary action to :

1. Registrar of Companies, Ministry of Corporate Affairs, Hyderabad, Telangana. - The ROC is directed not to take any action

against the applicant till the disposal of SLP.

2. The Joint Secretary, E-Governance Cell, Ministry of Corporate Affairs, New Delhi.

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WA PHraT/ RICHA KUKREJA alter freer (wa.S.3t.)/ REGIONAL DIRECTOR(S.E.R.) éaxrata HYDERABAD