COMPANY & CFO PENALISED FOR DEFECTIVE DIRECTORS’ RESPONSIBILITY STATEMENT & AS NON-COMPLIANCE. ROC, GOA Vs SHREEPATI BUILD INFRA INVESTMENT LIMITED

 COMPANY & CFO PENALISED FOR DEFECTIVE DIRECTORS’ RESPONSIBILITY STATEMENT & AS NON-COMPLIANCE.

ROC, GOA Vs SHREEPATI BUILD INFRA INVESTMENT LIMITED  

FACTS OF THE CASE

The Registrar of Companies (ROC), Goa, penalised Shreepati Build Infra Investment Limited with ₹3,00,000 and its CFO with ₹50,000 for filing a defective Directors’ Responsibility Statement and failing to comply with Accounting Standards AS‑09 and AS‑15 for FY 2021‑22. The order was passed on 13 May 2026 under Section 454 of the Companies Act, 2013.

KEY ISSUES

DEFECTIVE DIRECTORS’ RESPONSIBILITY STATEMENT (DRS): 

The statutory auditor had qualified the audit report citing deviations from AS‑09 (Revenue Recognition) and AS‑15 (Employee Benefits).

This automatically meant the DRS was defective, as directors are required to confirm compliance with accounting standards.

COMPANY’S DEFENCE: “DOUBLE JEOPARDY.”

Claimed deviations were disclosed in notes to accounts.

Argued that violations were already compounded under Section 129, so separate proceedings under Section 134 (5A) amounted to “double jeopardy.”

ROC’S RULING:

Held that violation of Section 134 (5A) is independent and distinct, relating specifically to directors’ responsibility for compliance.

Disclosure in notes or compounding under Section 129 does not absolve directors from responsibility under Section 134.

WHAT IS DOUBLE JEOPARDY?

Double jeopardy means that a person cannot be tried or punished twice for the same offence once they have already been acquitted or convicted. In India, this protection is enshrined in Article 20(2) of the Constitution and Section 300 of the Code of Criminal Procedure (CrPC).

ARTICLE 20(2), CONSTITUTION OF INDIA:

·      “No person shall be prosecuted and punished for the same offence more than once.”

·      Protects against double punishment for the same offence.

·      Applies only when there has been a conviction.

SECTION 300, CRPC (1973):

·      Extends protection to both convictions and acquittals.

·      Prevents retrial for the same offence or any other offence arising from the same facts.

·      Broader than Article 20(2).

SECTION 26, GENERAL CLAUSES ACT:

If an act constitutes an offence under two laws, prosecution may occur under either, but punishment cannot be imposed twice.

RISKS & TAKEAWAYS

INDEPENDENT LIABILITY:

Even if deviations are disclosed elsewhere, directors remain liable under Section 134.

AUDITOR QUALIFICATIONS MATTER:

Any qualification in audit reports can trigger automatic non‑compliance in the DRS.

PENALTIES:

₹3 lakh for the company and personal liability for officers (CFO) show MCA’s strict stance.

NO “DOUBLE JEOPARDY” DEFENCE:

 Different sections of the Act impose distinct obligations; compounding under one does not shield from another.

CONCLUDING REMARKS

Companies must ensure strict compliance with Accounting Standards before approving financial statements.

Directors should review audit qualifications carefully and address them proactively.

CFOs and compliance officers must verify disclosures in the Board’s Report and DRS to avoid penalties.

 

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,