ROC BENGALURU PENALIZED ALL SIX DIRECTORS OF AVK VALVES INDIA PRIVATE LIMITED ₹1,00,000 EACH (TOTAL ₹6 LAKH) FOR FAILURE TO MAINTAIN MBP‑1 AND DIR‑8 DISCLOSURES, EVEN THOUGH THE LAPSE WAS ATTRIBUTABLE TO ONE DIRECTOR.
ROC BENGALURU VS AVK VALVES INDIA PRIVATE LIMITED
FACTS OF THE CASE
During an inquiry under Section 206(4), the Practicing Company Secretary
who signed the company's MGT-8 for the year ended 31.03.2022 reported that the
company had not made available Form MBP-1 (disclosure of director's interest)
and DIR-8 (declaration of non-disqualification) for one of its directors, Mr.
Soren Kjaer — records that every company is required to maintain under Section
184.
ROC FINDINGS
Even though only one director failed to file MBP‑1/DIR‑8, ROC held
all directors responsible, since disclosures must be tabled and recorded in
board minutes.
The order highlights that disclosure obligations under Section 184 of the
Companies Act, 2013 are individual and non‑delegable, making every director personally liable.
LESSONS LEARNED
This case
underscores that ROC enforces strict liability: even a single director’s lapse
can expose the entire board. For private companies, this is a governance wake‑up call—directors cannot rely on collective responsibility or secretarial staff
alone.
IS THE BENGALURU ROC IS CORRECT IN LEVYING FINE ON ALL THE DIRECTORS
INSTEAD OF DIRECTOR WHO HAS NOT FILED MBP‑1/DIR‑8 IN ROC BENGALURU VS AVK VALVES INDIA PRIVATE LIMITED
In my view, there is a substantial legal ground to criticize the ROC
Bengaluru order, particularly if the factual position was that only one
director had failed to furnish MBP-1/DIR-8 and the other five directors had
actually furnished them.
1. SECTION 184(4) IS EXPRESSLY DIRECTOR-SPECIFIC
Section 184(1) requires “every director” to disclose his own concern or
interest. More importantly, Section 184(4) says:
“If a director … contravenes” the provision, “such director” shall be
liable to penalty.
2. ABSENCE OF RECORDS is not necessarily proof that every director
committed the contravention
“ROC CAN NEVER PENALIZE ALL DIRECTORS
ROC can penalize each director only if the evidence establishes an
individual contravention attributable to that director.
I would not regard the ₹1 lakh × 6 approach as automatically legally
correct merely because the company could not produce MBP-1/DIR-8. The decisive
question is whether the ROC established, director by director, that each of the
six directors actually contravened Section 184.
If the factual record really shows five directors had submitted
MBP-1/DIR-8 and only one had not, then the imposition of ₹1 lakh on all six is
open to serious challenge. The better legal formulation for an appeal would be
“failure to establish individual contravention and incorrect application of
Section 184(4)”, rather than merely arguing that the penalty is excessive.
I strongly recommend that Company should appeal to RD , South within 60
days against the order of order of ROC, Bengaluru
# Your
Compliance expert R V SECKAR , FCS , LLB
79047 19295,
