During the course of Inquiry, it was observed that the e-Form PAS-3 filed for issue of 9,00,000/- worth of equity shares through private placement offer. Upon examining reply of Shri. S. Ragu, Director, it is inferred that the board meeting agenda speaks only about allotment of shares with no mention of Private Placement to M/s. Wellness Noni Limited. Minutes of general meeting for allotment of 90,000 shares by private placement was not attached. The company has admitted that no EGM was conducted for allotment of said equity shares through private placement. Hence, the provisions of Sec. 42 of the Companies Act, 2013 is violated.
Authorized Representatives stated that the Company did not intend to violate the provisions of 42 read with Sec. 62 by not conducting the EGM. It was due to (i) lack of knowledge on the above provisions; (ii) professionals whom the company relied on, did not enlighten the company on the said provisions; (iii) panic caused due to the troubles created by Shri. Shahul Hammed whose intention was to close the operations of the company; (iv) urgency required in safeguarding the interests of the employees of the company who faced the risk of losing their livelihoods due to separation of operations of the company. Further, the company has submitted an addendum to the appeal, wherein it is stated that the allotment of 90,000 Equity Shares of Rs. 10/- each made to M/ s. Wellness Noni Limited has been cancelled and an amount of Rs. 9,00,000/- has been refunded to the Company and hence prayed for lenient view.
Though there is a default committed and the allotment made has been cancelled and amount also refunded, there is a ground in interfering with the impugned adjudication order of the Registrar of Companies to the extent of reducing the quantum of penalty. Accordingly, the penalties imposed are reduced from Rs. 9,00,000/- to Rs. 50,000/- for the Company and 9,00,000/- each to Rs. 50,000/- each for Shri. Arunachalam Andimuppanar, Director; Shri. Ragu, Director; and Smt. Sadhagoban Kokila, Director of the Company. The Appellants shall pay the penalty in 15 days.
ADJ/05/RD (SR)/2022-23
BEFORE THE REGIONAL DIRECTOR
(SOUTHERN REGION)
MINISTRY OF CORPORATE AFFAIRS, CHENNAI
IN THE MATTER OF THE COMPANIES ACT, 2013
SECTION 454(7) OF COMPANIES ACT, 2013
IN THE MATTER OF M/s. HERB NUTRA LAB PRIVATE LIMITED
1. M/ s. Herb Nutra Lab Private Limited
2. Arunachalam Andimuppanar, Director of M/s. Herb Nutra Lab Private Limited
3. Ragu, Director of M/s. Herb Nutra Lab Private Limited
4. Sadhagoban Kokila, Director of M/s. Herb Nutra Lab Private Limited
…Applicants/ Appellants
Date of hearing : 24.01.2023
Present : Shri. Balu Sridhar, PCS (CP. No. 3550) and Shri. C. Krishnan, PCS (CP. No. 24015)
ORDER
This is an appeal filed under Section 454 (5) of the Companies Act, 2013 by the above Applicants in Form ADJ vide SRN: F38465050, dated 01.11.2022 against the Adjudication Order No. ROC/CHN/ Herb Nutra/ADJ Order/Sec. 42/JTA(SK)/ 2022, dated 05.09.2022 under Section 454 (3) passed by the Registrar of Companies, Chennai, Tamil Nadu for default committed under Sec. 42 (1) read with Sec. 62 of the Companies Act, 2013.
2. As per Sec. 42(1) of the Companies Act, 2013, a company may, subject to the provisions of this section, make a private placement of securities.
3. During the course of Inquiry, it was observed that the e-Form PAS-3 filed for issue of 9,00,000/- worth of equity shares through private placement offer. Upon examining reply of Shri. S. Ragu, Director, it is inferred that the board meeting agenda speaks only about allotment of shares with no mention of Private Placement to M/s. Wellness Noni Limited. Minutes of general meeting for allotment of 90,000 shares by private placement was not attached. The company has admitted that no EGM was conducted for allotment of said equity shares through private placement. Hence, the provisions of Sec. 42 of the Companies Act, 2013 is violated.
4. The Registrar of Companies, Chennai, Tamil Nadu examined the said default and passed the Adjudication Order No. ROC/CHN/Herb Nutra/ADJ Order/Sec. 42/JTA(SK)/2022, dated 05.09.2022 (impugned order) under Section 454 (3) and (4) of the Companies Act, 2013 for default in compliance with the requirements of Sec. 42 (1) read with 62 of the Companies Act, 2013 and imposed a penalty of Rs. 9,00,000/- upon the Company and Rs. 9,00,000/- each upon Shri. Arunachalam Andimuppanar, Director; Shri. Ragu, Director; and Smt. Sadhagoban Kokila, Director of the company for the above default.
5. The Appellants have contended the impugned order and pleaded that the non-compliance had occurred due to unavoidable circumstances and default was unintentional.
6. An opportunity of being heard was given to the Appellants on 24.01.2023. The Authorized Representatives have appeared for the Appellants, while reiterating the grounds taken in the appeal had stated that the Company did not intend to violate the provisions of 42 read with Sec. 62 by not conducting the EGM. It was due to (i) lack of knowledge on the above provisions; (ii) professionals whom the company relied on, did not enlighten the company on the said provisions; (iii) panic caused due to the troubles created by Shri. Shahul Hammed whose intention was to close the operations of the company; (iv) urgency required in safeguarding the interests of the employees of the company who faced the risk of losing their livelihoods due to separation of operations of the company. Further, the company has submitted an addendum to the appeal, wherein it is stated that the allotment of 90,000 Equity Shares of Rs. 10/- each made to M/ s. Wellness Noni Limited has been cancelled and an amount of Rs. 9,00,000/- has been refunded to the Company and hence prayed for lenient view.
7. Though there is a default committed and the allotment made has been cancelled and amount also refunded, there is a ground in interfering with the impugned adjudication order of the Registrar of Companies to the extent of reducing the quantum of penalty. Accordingly, the penalties imposed are reduced from Rs. 9,00,000/- to Rs. 50,000/- for the Company and 9,00,000/- each to Rs. 50,000/- each for Shri. Arunachalam Andimuppanar, Director; Shri. Ragu, Director; and Smt. Sadhagoban Kokila, Director of the Company. The Appellants shall pay the penalty in 15 days.
Dated at Chennai this the 06th day of February, 2023
(Dr. RALH)
REGIONAL DIRECTOR (SR)
