English Can Not Be Local Language Under Section 12(3)(a) of Companies Act, 2013 [Important For Filing ACTIVE INC-22A] By CS Gaurav Kumar


Dear Professional Colleagues,

Since Companies Act, 2013 came in force, MCA has been very strict in terms of compliance parameters and those companies which are not following the Act or Rules have been fined/penalized for their non-compliance including directors.

As of new compliance under ACTIVE, the Ministry of Corporate Affairs through a notification dated February 21, 2019, has introduced the Companies (Incorporation) Amendment Rules, 2019.

If we go through the new rules, all companies registered before 31st December 2017 are compulsorily required to file eForm ACTIVE (Active Company Tagging Identities and Verification) – eForm INC-22A on or before April 25, 2019.

For those companies who fail to upload e-Form INC-22A will pay a penalty of INR 10,000.

Under the list of documents and details required for eForm ACTIVE: Photo of the registered office of the Company in which one of the Directors of the Company is the present – internal and external photo is required.

It is implied that in the external photo the name and address of the office or place of the business of the company have to be painted/affixed.

Section 12 (3) (a) talks about the Display of Information Outside Offices.

Below is the Section excerpt for your Reference:

(3) Every company shall—

(a) paint or affix its name, and the address of its registered office, and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters,
and if the characters employed therefor are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages;

http://www.mca.gov.in/SearchableActs/Section12.htm

The underlined part of this requirement requires very careful interpretation.

There was a Clarification issued by Department of Company Law Administration for the Languages in general use / Section 12(3)(a) of the Companies Act, 2013.

It read as below:

The words 'language in general use' in section 147(1)(a) of the 1956 Act [corresponding to section 12(3)(a) of the 2013 Act] are synonymous with local language and English does not come in that category for any state in India.

MY TAKE ON THIS:

English as a language can not be considered as a local language as per the above clarification and therefore English is not a language of general use. Further, as per section 12(3)(a), such display of information at every office/ place has to be in a language of general use in that locality which is a local language and not in the English language.

For example, if the office/place of business falls under: 

Delhi NCR - Hindi is the Local Language
Mumbai - Marathi is the Local Language
Kolkata-  Bengali is the Local Language
Chennai- Tamil is the Local Language and so on.

If we study we will find that the term locality is not defined under the Companies Act, 2013.

To my mind, the locality has to be depending on a municipal area/gram/panchayat/village/pind etc.

Accordingly, where such office is in a locality where the general public uses either of Hindi, Bengali, Tamil, Oriya, such display of information should also be in these languages.

We should not consider any one of the official languages of India or any one of official language the state where such office is situated as this will be non-compliance as per section 12(3)(a) of the Companies Act, 2013 for such display of information.

For example Urdu is one of the official languages of India and also for the state of West Bengal; however, it is not the local language of general use in the district of Darjeeling and nearby localities. Thus, in this case, we should use the local language of Hindi or other whichever is used most in general use in Darjeeling and nearby localities.

Further, English can be used for day-to-day business affairs requirement. However, It is suggested to get the name and address in the local language as well for the compliance of section 12(3)(a) in the true spirit.

The penalty under 12(8) of Companies Act, 2013:

If any default is made in complying with the requirements of Section 12(3)(a), the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding one lakh rupees.

CRUX

One thin line which is very pertinent here is that by painting/ affixing name and address only in English will not make compliance under the Companies Act, 2013. The Company shall also additionally paint/affix the name and address in one of the local languages. You may google the name of the local language for office/place address. 

Others views are solicited. Do not consider it as my professional advice and consult your professional before acting upon.

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