OBTAINING TWO DINS BY A DIRECTOR – IS IT AN OFFENCE UNDER CA 2013 ?- IMPORTANT CASE LAWS

 

OBTAINING TWO DINS BY A DIRECTOR –

IS IT AN OFFENCE UNDER CA 2013 ?-

IMPORTANT CASE LAWS

SECTION 155 OF THE COMPANIES ACT, 2013 STATES:

“No individual, who has already been allotted a Director Identification Number under section 154, shall apply for, obtain or possess another Director Identification Number.”

SECTION 159 PROVIDES THE PENALTY FOR DEFAULT OF CERTAIN PROVISIONS (INCLUDING SECTION 155):

“Such individual or director of the company who has obtained more than one DIN shall be liable to a penalty which may extend to fifty thousand rupees and where the default is a continuing one, with a further penalty which may extend to five hundred rupees for each day after the first during which such default continues.”

WHETHER SURRENDER OF DUPLICATE IS ALLOWED?

The surrender of DIN application could not be allowed as per Rule 11(f) of the Companies (Appointment & Qualifications if Directors) Rules 2014 since the second DIN was obtained in violation of section 155 of the Companies Act 2013.

CASE LAWS ON DIRECTORS HAVING MORE THAN ONE DIN

1.RD REDUCED THE PENALY  INT THIYAGARAJAN PARTHASARATHY CASE

·      He had an earlier DIN (DIN 03191514 dated 23 Aug 2010) and later obtained a second DIN (DIN 09018479 on 4 Jan 2021) while forming another company.

·      Adjudication order imposed a penalty of Rs 5,03,500 for violation of section 155.

·      In an appeal to the Regional Director, due to absence of deliberate malicious intent, the penalty was reduced (in one commentary) to Rs 50,000.

2.MRS ANUBAMA (CHENNAI CASE)

First DIN obtained 9 Jan 2008; second DIN obtained 23 Apr 2013.

The period of violation was calculated from 1 Apr 2014 to 27 Aug 2024 (3,802 days) and a penalty of Rs 19.51 lakhs (i.e., 50,000 + 3,802×500=19,01,000) was imposed.

3.LAXMAN KRANTI ALLAGADDA KUMAR

First DIN (00933931) on 18 Nov 2006; a second DIN (10495519) on 6 Feb 2024.

Violation for 170 days; penalty of Rs 1,35,000 (50,000 + 170×500) was imposed.

4.SHASHI SINGLA (PUNJAB/CHANDIGARH)

First DIN 00599311; second DIN 10008811 on 1 July 2022.

Penalty imposed: Rs 50,000 + Rs 500×729 days = Rs 4,14,500

SIGNIFICANT TAKEAWAYS

Regulatory bodies (like the RoC / Regional Director) have initiated aggressive action: e.g., in one instance, the Central government stated action had been initiated against 469 persons for multiple DIN

In determining penalty, factors taken into account include: length of period of violation, whether the person was aware, the usage of second DIN (linked to companies), whether the person sought to voluntarily surrender, etc.

SIGNIFICANT REDUCTION IN PENALTY

 For instance, in the Thiyagarajan case the RD significantly reduced the penalty citing absence of deliberate intention

SURRENDER OF THE DUPLICATE DIN

Surrender of the unwanted/duplicate DIN is to be done via Form DIR-5. However, surrendering the second DIN will only be accepted once the violation is adjudicated.

CHECK BEFORE APPLYING FOR DIN

For compliance professionals and persons intending to be directors: it is advisable to check on the portal whether any prior DIN exists (linked to your PAN/identity) before applying for one, to avoid inadvertently obtaining a second one.

R V SECKAR FCS, LLB 79047 19295