The Ministry of Corporate Affairs (MCA) recently made headlines with its decision to quash the adjudication against M/s. Varsha Ganga Metal and Minerals Private Limited. The case revolved around the non-availability of a quorum, which prevented the Annual General Meeting (AGM) from being conducted. Here’s a closer look into the matter.
Background of the Case
Varsha Ganga Metal and Minerals Pvt. Ltd. was under scrutiny for not filing its annual return for the financial years 2019-20 and 2020-21. This was seen as a non-compliance of Section 92(4) of the Companies Act, 2013. As per the Act, this non-compliance subjected the company and its defaulting officers to potential penal actions under Section 92(5).
The Company’s Defense
The company’s management sent a letter asserting their regularity in filing annual returns since its inception. They pointed out specific incidents that led to the AGM not being held. The notable reasons were the resignation of the Director, and the arrest of a shareholder in 2019 by the M.P. Police. This resulted in the non-availability of a quorum for the AGM, thereby leaving the Financial Statement un-adopted for the concerned years.
MCA’s Consideration and Decision
After hearing the company’s side, the MCA decided to grant them more time to attend a hearing. On the scheduled date, Sh. Praful Sharma attended, submitting a deposit receipt of MGT-7A. Further information revealed that the company had indeed filed its statutory documents, i.e., the Annual Return.
Given these findings, the authorized representative of the company requested that the adjudication proceedings against them be dropped. In light of the information provided and the factual position presented, the MCA decided to dispose of the adjudication proceedings.
Conclusion
The decision of the MCA demonstrates the importance of understanding the unique circumstances businesses may face. In the case of Varsha Ganga Metal, unforeseen events led to the non-conduction of the AGM, which in turn affected their compliance with the Companies Act, 2013. While compliance with regulations is paramount, it’s equally vital for regulatory bodies to consider the specific scenarios in which businesses operate. This case serves as a reminder of the nuanced nature of corporate regulations and the balance between strict compliance and understanding real-world challenges.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Office of The Registrar of Companies, Madhya Pradesh
Sanjay Complex, ‘A’ Block, 3rd Floor,
Jayendraganj, Gwalior — 474009.
E.mail: roc.gwalior@mca.gov.in
No. ROC-G/Adj. Pen./u/s. 92(4)/Varsha Ganga Metal/1900 Dated: 23 Aug, 2023
In the matter of Companies Act, 2013
And
In the matter of adjudication proceeding under sub-section (4) of Section 92 of
the Companies Act, 2013.
And
In the matter of M/s. Varsha Ganga Metal and Minerals Private Limited
(CIN-U13100MP201OPTCO24875)
Date of hearing 23rd August 2023
1. Appointment of adjudicating officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.03.2015 appointed undersigned as adjudicating officer in exercise of the powers conferred by Section 454 of the Companies Act, 2013 (hereinafter known as “Act” ) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudicating penalties under the provisions of this Act.
2. Company:
M/s. Varsha Ganga Metals and Minerals Private Limited (CIN- U13100MP201OPTCO24875) hereinafter known as company] is a registered company with this office under the provisions of Section 7 of the Companies Act, 2013 (earlier Companies Act, 1956) having its registered office situated at B-302, Kalindi Square, behind Lotus Show Room, Indore 452001, M.P. as per the MCA website.
| Sl. No. | Particulars | Details |
| 01. | Paid-up capital (F.Y. 2018-19) | 11,00,000 |
| 02. | Turnover (F.Y. 2018-19) | |
| a. Revenue from operation | 0 | |
| b. Other income | 2,47,602 | |
| 03. | Holding company | NO |
| 04. | Subsidiary company | NO |
| 05. | Whether company registered under Section 8 | NO |
| 06. | Whether company registered under any other Special Act. | NO |
3. Facts about the case:
Whereas inquiry u/s. 206(4) of the Companies Act, 2013 conducted by the ROC, Gwalior. The Directorate vide its direction dated 16.05.2023 has directed to ROC, Gwalior to take necessary action in the matter for violation of Section 92(4) of the Companies Act, 2013. During the inquiry u/s. 206(4) of the Companies act, 2013, the company has not filed its due annual return for financial year 2019-20 and 2020-21. Hence, the is non-compliance of Section 92(4) of the Companies Act, 2013 and company and every officer in default are liable for penal action under Section 92(5) of the Companies Act, 2013. Thus, it appears that the company has violated the provisions of section 92(4) of the Companies Act, 2013 which attracted penal provisions u/s. 92(5) of the Companies Act, 2013.
4. Subsequently, this office had issued show cause notice U/s. 92(4) of the Companies Act, 2013 to the company and its officers in default vide No. ROC-G/Adj.Pen./u/s. 92(4)/Varsha Ganga Metal/622 to 629 dated 13.06.2023 and the notice as issued to company was duly served.
5. Thereafter, “Notices of Inquiry” vide No. ROC-G/Adj. Pen./U/s. 12(1) Varsha Ganga Meta1/1511 to 1515 dated 14.07.2023 were issued to the company and its officers in default and notice of inquiry as issued to company was duly delivered. As per [Rule 3(3), companies (Adjudication of Penalties) Rules, 2014 and the date of hearing was fixed on 25th July, 2023 at 3.00 P.M. in the office of Registrar of Companies, Madhya Pradesh, Sanjay Complex, A-Block, 3rd Floor, Jayendraganj, Gwalior.
6. On 24.07.2023, this office has received a letter dated 24.07.2023 from the management therein they have stated that the company is in regular compliance of filing of its annual return as mandatory in pursuance of Section 92(4) since its incorporation. However due to certain reason Mr. Manoj Sharma, Director resigned on 23.06.2021 and shareholder was arrested on 01.09.2019 by M.P. Police and Mr. Praful Sharma resigned on 23.06.2021 and shareholder was arrested on 27.06.2021 by M.P. Police and the honour is acquitted to both on 17.04.2023. Since shareholders were in jail from year 2019 to 2023 the AGM of company could not be conducted due to non-availability of quorum pursuant to which the Financial Statement remain un-adopted during these years. The company is in process of preparation of Balance Sheet and relevant documents conducting its annual general meeting and filing of various forms to concerned authorities for these pending years and has requested to kindly grant addition time to complete the pending compliances.
7. On the basis request made by management of company, this office has considered their request and further time has been granted for attending the hearing on 10.08.2023. On the date of hearing Sh. Praful Sharma has attended the hearing and also submitted fee deposit receipt of MGT-7A.
8. As per information available on MCA21 data base, the company has filed its statutory documents i.e. Annual Return.
9. In the light of the above, the authorised representative of the applicants requested to drop the adjudication proceedings against the company and its directors.
10. Orders:
(i) In exercise of the powers conferred vide Companies (Amendment) Act, 2020 the undersigned is entrusted to adjudicate penalties under Section 92(5) of the Companies Act, 2013, after taking into account the factors mentioned herein above, I do hereby dispose of the adjudication proceedings against the company and its directors, keeping in view of the factual position and reporting facts that the company has complied the provisions of the Act.
(ii) Any person aggrieved by the order of adjudicating authority under Section (3) of Section 454 may prefer an appeal to the Regional Director having jurisdiction in the matter. Every appeal under sub-section (5) of Section 454 shall be filed within 60 days from the date on which the copy or order made by the adjudicating authority is received by the aggrieved person and shall be in such form manner and be accompanied by such fee as may be prescribed.
11. In terms of the provisions of sub-rule 3 of the Companies (Adjudication of Penalties) Rules, 2014 copy of the order is being sent to Varsha Ganga Metal and Minerals Private Limited, B-302, Kalindi Square, behind Lotus Show Room, Indore -452001, M.P., Sh. Praful Sharma, Managing Director, Sh. Arvind Kumar Katre, Managing Director, Regional Director, North-Western Region, Ministry of Corporate Affairs, Ahmedabad and will also be uploaded on MCA website.
The adjudication notice stand disposed off with this order.
(Mukesh ‘Kumar Soni, ICLS)
Registrar of Companies, I/C,
Madhya Pradesh, Gwalior.
Ordered reserved on 10th August, 2023.
Order pronounced on 23rd August, 2023
Place: Gwalior, Madhya Pradesh.
