The Inspection u/s 209A of the Companies Act, 1956 of the books of accounts & other records of DDCA revealed violations of Sec. 36, 150, 166/210, 209(1), 209(3)(b), 211 read with Sch. VI, 211(3A)/(3C) read with Accounting Standard - 5, 15, 18, 19, 22, 29, Sec. 217(3), 285,299, 303, 309, and Section 314 of the Companies Act, 1956. Further, non-compliance of the provisions of Sec. 227 by the auditors has also been pointed out.

Ministry has given directions to Registrar of Companies, Delhi (ROC) to provide opportunity to file compounding applications u/s 621A of the Act failing which to proceed under that section. Further, ROC has also been directed to refer the matter relating to the Auditor to the Institute of Chartered Accountant of India.

For violation of Sec. 36, 166/210, 209(1), 211 read with Sch. VI, 211(3A)/(3C) read with Accounting Standard – 15 & 18, 285, 217(3), 303(1) & 314 the company and three members of its executive committee have submitted applications  u/s 621A of the Act for compounding of the offence.

In respect of the violations for which compounding applications have not been submitted till date, the Ministry has directed the Registrar of Companies, Delhi to provide 15 days time, failing which to launch prosecution.

In terms of the provisions of Companies Act, it is not open to the Government to forbid use of proxies where Articles of Association of a company so provide. However, the issue of large number of proxies in this Company was brought to the notice of Ministry of Youth Affairs and Sports after the inspection report was received.

This Ministry has referred the findings of the Inspection to Income Tax Department and the nominee directors of DDCA for appropriate action.

This information was given by Smt. Nirmala Sitharaman, MoS in the Ministry of Corporate Affairs in written reply to a question in the Lok Sabha today.

Compounding of corporate offences: ROC instructed to accept applications or initiate prosecution; auditor referral made for professional action. Inspection under section 209A found multiple breaches of accounting, disclosure and governance provisions and auditor reporting obligations; the Ministry instructed the Registrar of Companies to permit filing of compounding applications and to proceed with prosecution if applications are not filed within the prescribed time, referred auditor matters to the professional institute for disciplinary action, and forwarded findings to the tax authority and nominee directors for further action.