Introduction: In a recent development, the Ministry of Corporate Affairs (MCA) has imposed penalties on N.S.J.L. NIDHI LIMITED for a violation of Section 189 of the Companies Act, 2013. This violation pertains to the failure of the company’s directors to maintain appropriate registers of contracts and arrangements, as mandated by the law. In this article, we will delve into the details of the case, the provisions of the Companies Act, and the consequences faced by the company and its officers.
Detailed Analysis:
1. Appointment of Adjudicating Officer: The MCA appointed an Adjudicating Officer in accordance with Section 454(1) of the Companies Act, 2013, who is entrusted with the authority to adjudicate penalties under Section 189 of the Act.
2. Company Background: N.S.J.L. NIDHI LIMITED, governed by the Companies Act, 2013, and registered in Pune, Maharashtra, is the subject of this penalty imposition.
3. Facts of the Case:
a. The case originated from an inspection conducted under Section 206 of the Companies Act, 2013, by officers of the Ministry of Corporate Affairs.
b. During this inspection, it was noted that the company had failed to maintain registers of contracts or arrangements as required by Section 189(1) of the Act. The violation pertained to contracts with New Shraddha Jewellers, where directors of the company were related. The registers did not contain the prescribed details as stipulated in Rule 16 of the Companies (Meetings of Board and its Powers) Rules, 2014.
c The violation of Section 189(1) was further associated with Rule 16 of Companies (Meetings of Board and its Powers) Rules, 2014, which specifies the details that must be included in these registers.
d. The reply provided by the company was found unsatisfactory by the Adjudicating Officer, leading to the imposition of penalties.
e. An adjudication notice was issued to the company and its officers in default, as per the directions of the competent authority, under Section 454(4) read with Section 189 of the Companies Act, 2013.
f. As of the date of the order, no reply had been received from the company.
4. Relevant provisions of the Companies Act, 2013: Section 189 of the Companies Act, 2013, mandates that every company must maintain registers containing particulars of contracts or arrangements to which Section 184 or 188 applies. These registers must conform to the details prescribed in Rule 16 of the Companies (Meetings of Board and its Powers) Rules, 2014. Non-compliance with this section leads to a penalty.
Section 189(6) stipulates that directors failing to comply with the provisions of this section and the related rules are liable for a penalty of twenty-five thousand rupees.
5. Penalty Imposition:
a. The Adjudicating Officer found the company and its officers in default to have violated Section 189(1) of the Act and Rule 16 of Companies (Meetings of Board and its Powers) Rules, 2014.
b. Accordingly, the penalty was imposed on the company and its directors, as per Rule 3(12) of Companies (Adjudication Of Penalties) Rules.
c. The penalty had to be paid through the Ministry of Corporate Affairs portal.
6. Appeal Process: The order informed the company and its officers of their right to appeal under Section 454(5) of the Act. Appeals had to be filed within sixty days from the date of receiving the order.
7. Consequences of Non-Payment: Attention was drawn to Section 454(8)(ii) of the Act, which outlines the consequences of non-payment of penalties within the prescribed time limit of 90 days from the date of receiving the order, as per Section 454(8)(i).
8. Notification to Concerned Parties: As per sub-rule (9) of Rule 13 of Companies (Adjudication of Penalties) Rules, 2014, a copy of the order was sent to all directors/officers in default of N.S.J.L. NIDHI LIMITED, as well as to the Office of the Regional Director (Western Region) and the Ministry of Corporate Affairs in New Delhi.
Conclusion: The penalty imposed by the Ministry of Corporate Affairs on N.S.J.L. NIDHI LIMITED serves as a reminder of the legal obligations that companies and their directors must adhere to under the Companies Act, 2013. Failing to maintain accurate registers of contracts and arrangements can result in significant financial repercussions, as evidenced by the penalty of twenty-five thousand rupees per director. The company and its officers must promptly comply with the penalty payment requirements and consider their right to appeal. This case underscores the importance of strict adherence to statutory regulations to avoid legal and financial consequences.
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OFFICE OF THE
REGISTRAR OF COMPANIES
MAHARASHTRA, PUNE
MINISTRY OF CORPORATE AFFAIRS
GOVERNMENT OF INDIA
RoCP/ADJ/ order/ 189/23-24/12/1591
Date 11 OCT 2023
Adjudication Order of penalties in the matter N.S.J.L. NIDHI LIMITED (U67200MH218PLC310658) under Section 189 r/w Section 454(3) of the Companies Act, 2013
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A42011/ 112/2014-Ad.11, dated 24.03.2015 (see SO 831(E), dated 24.03.2015) appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) r/w Rule 3(1) of Companies (Adjudication Of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act. The undersigned vide Companies (Amendment) Act, 2019 is entrusted to adjudicate penalties under section 189 of the Companies Act, 2013.
2. Company:
N.S.J.L. NIDHI LIMITED having CIN U67200MH2018PLC310658 is a company governed by the provisions Act, and registered with this office having its office at SR NO-21 NEAR MSEB OFFICE, MARKAL RD ALANDI, TAL- KHED 412105, PUNE, Pune,Maharashtra,412105,India.
3. Facts about the Case:
a. Whereas an inspection of the company under section 206 of the Companies Act, 2013 was conducted by IOs of Ministry of Corporate Affairs;
b. During the course of the Inspection the IOs observed that, “as per examination of records it has been observed that As per’ the aforesaid provisions, every company shall keep one or more registers giving separately the particulars of all contracts or arrangements to which subsection (2) of Section 184 or 188 applies, in such manner and containing such particulars as prescribed in Rule 16 of the Companies (Meetings of Board and its Powers) Rules, 2014. As per the financial statements of the company for the year 2020-2021 (as submitted in the reply), the Company is having trade payables to New Shraddha ,Jewellers of Rs. 7,92,989/- wherein the Directors are related. However, the details are not specified in Form MBP. 4. Further, the register of Contracts is also not having the specified details as prescribed in. Form MBP No 4 wherein the principal terms and conditions of the contracts are mentioned. Thus, Directors have violated provisions of Section 189(1) r.w. Rule 16 of Companies (Meetings of Board and its Powers) Rules, 2014 and thus Directors are liable for action under Section 189(6) of the Act.
c. In terms provisions of as per Section 189 of the Companies Act, 2013, every company shall keep one or more registers giving separately the particulars of all contracts or arrangements to which sub-section (2) of Section 184 or 188 applies, in such manner and containing such particulars as prescribed in Rule 16 of the Companies (Meetings of Board and its Powers) Rules, 2014.
d. And whereas, the reply of the company was not found satisfactory by the JO. Thus, Directors have violated provisions of Section 189(1) r.w. Rule 16 of Companies (Meetings of Board and its Powers) Rules, 2014 and thus Directors are liable for action under Section 189(6) of the Act.
e. Accordingly, the as per the directions of the competent authority, the adjudication officer has issued adjudication notice vide ROCP/ADJ/FS/22-23/968 to 970 dated 12.07.2023 (herein after referred as Adjudication Notice) under Section 454(4) read with 189 of the Companies Act, 2013 read with Rule 3(2) Of Companies (Adjudication of Penalties), 2014 as amended in Amendment Rules, 2019, vide notice no. to the company and its officers in default for the violation of the provisions of the act as mentioned in para “a to d” above;
f. The reply in the matter by the company is not received as on date.
4. Relevant provisions of the Companies Act, 2013:
As per Section 189 of the Companies Act, 2013, every company shall keep one or more registers giving separately the particulars of all contracts or arrangements to which sub-section (2) of Section 184 or 188 applies, in such manner and containing such particulars as prescribed in Rule 16 of the Companies (Meetiflgs of Board and its Powers) Rules, 2014.
As per the provisions of section 189(6) of the Companies Act, 2013, Every director who fails to comply with the provisions of this section and the rules made thereunder shall be liable to a penalty of twenty-five thousand rupees.
5. ORDER:
a. All the officers, who have defaulted the provisions of section 189 of the Act for provisions of Section 189(1) r.w. Rule 16 of Companies (Meetings of Board and its Powers) Rules, 2014 and thus Directors are liable for action under Section 189(6) of the Act.
b. In exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the facts and circumstances of the case, I do hereby impose the penalty on the company and its officers in default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, as per table below for violation of section 189 of the Act:-
|
Penalty imposed on company/director(s) |
Maximum amount of penalty imposed |
| ROHIT KAILAS BHAMBURDEKAR, | 25,000/- |
| TEJSHREE ROHIT BHAMBURDEKAR, | 25,000/- |
| AMOL SURESH SHAHANE |
25,000/- |
c. I am of the opinion that penalty so imposed is commensurate with the aforesaid failure committed by the notice(s).
d. The Noticee(s)/applicant(s) shall pay the penalty so imposed through Ministry of Corporate Affairs portal only as per rule 3(14) of Companies (Adjudication Of Penalties) Rules, 2014.
e. Appeal against this order may be filed under section 454(5) of the Act, in writing with the Regional Director (Western Region), Ministry of Corporate Affairs100, Everest, 5th Floor, Netaji Subhash Road, Marine Drive, Mumbai-400002, within a period of sixty days from the date of receipt of this order, in Form ADJ setting forth the grounds of appeal and shall be accompanied by a certified copy of this order. [Section 454 of the Act read with Companies (Adjudication of Penalties) Rules, 2014 as emended by Companies (Adjudication of Penalties) Amendment Rules, 2019.
f. Your attention is also invited to section 454(8)(ii) of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order in terms of the provisions of section 454(8)(i) of the Act.
g. In terms of the provisions of sub-rule (9) of Rule 13 of Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to all directors/officers in default of N.S.J.L. NIDHI LIMITED mentioned herein above and also to Office of the Regional Director (Western Region), and Ministry of Corporate Affairs at New Delhi.
(Mangesh Jadhav, ICLS)
Adjudicating Officer
Registrar of Companies
Maharashtra, Pune
