Introduction: The Ministry of Corporate Affairs (MCA) recently imposed penalties on Rajvansh Auto Wheels Private Limited and its directors, Pradeep Garg and Praneet Garg, for non-compliance with Section 62(3) of the Companies Act, 2013. The violation pertains to the company’s failure to submit a resolution in Form MGT-14 regarding the raising of loans, leading to an adjudication order under Section 454 of the Companies Act, 2013.
Background: Rajvansh Auto Wheels Private Limited, with its registered office in Ajmer, Rajasthan, faced allegations of not filing a copy of the resolution in e-Form MGT-14 related to the raising of loans from the directors. This violation prompted the issuance of a Show Cause Notice, followed by an Adjudication Notice, setting the stage for a hearing on October 11, 2023.
Adjudication Order: The adjudication order, issued by Shri Ruvit Kumar, Registrar of Companies cum Official Liquidator, Rajasthan, Jaipur, highlighted the key provisions of the Companies Act, 2013 that the respondents failed to comply with. Section 62(3) stipulates the necessity of a special resolution passed by the company in a general meeting before raising loans that convert debentures into shares.
Penalty Imposed: The Adjudicating Officer imposed penalties in accordance with Section 450 of the Companies Act, 2013. The penalties are as follows:
- Rajvansh Auto Wheels Private Limited: Rs. 1,00,000/-
- Pradeep Garg: Rs. 25,000/-
- Praneet Garg: Rs. 25,000/-
The penalties were calculated based on the violation period, with additional penalties for continuing contravention. The total penalty amount stands at Rs. 1,50,000/-
Appeal Process: The respondents have the option to file an appeal within sixty days from the date of the order. The appeal must be submitted in e-Form ADJ to the Regional Director (NWR), Ministry of Corporate Affairs, Ahmedabad, accompanied by a certified copy of the order.
Consequences of Non-Payment: The order also warns of the consequences of non-payment. If the penalty is not paid, the company may face a fine ranging from Rs. 25,000 to Rs. 5 lakh, and the officers in default could be subject to imprisonment for up to six months or a fine ranging from Rs. 25,000 to Rs. 1 lakh, or both.
Conclusion: This adjudication order underscores the importance of adherence to regulatory provisions, emphasizing the need for companies to comply with the Companies Act, 2013. Rajvansh Auto Wheels and its directors are urged to take corrective action, either by paying the imposed penalties or by filing a timely appeal, ensuring a resolution to this regulatory matter.
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Government of India
Ministry of Corporate Affairs
Office of Registrar of Companies cum Official Liquidator,
Attached to Rajasthan High Court, Jaipur Bench at Jaipur
Corporate Bhawan, G/6-7, Residency Area, Civil Lines, Jaipur- 302001
Order for Penalty under Section 454 of the Companies Act, 2013, read with Companies (Adjudication of Penalties) Rules, 2014, and Companies (Adjudication of Penalties Amendment) Rules, 2015 for the violation of Section 62(3) of the Companies Act, 2013 in the matter of: –
01. Rajvansh Auto Wheels Private Limited
Company DOMS Compound, Jaipur Road, Ajmer, Rajasthan-305001.
02. Pradeep Garg, Director
03. Praneet Garg, Additional Director …….. Respondents
Date of Hearing — 11.10.2023
Present: –
01. Shri Ruvit kumar, ROC-Cum-OL, Rajasthan, Jaipur
02. Shri Raunak Agrawal, AROC-cum-AOL, Rajasthan, Jaipur
03.Shri Shailendra Kumar Gupta, Advocate and authorized representative of the Respondents.
ADJUDICATION ORDER
1. Appointment of Adjudicating Officer: –
Whereas the Ministry of Corporate Affairs vide its Gazette Notification No, SO 831 CE) dated 24.03.2015 appointed the Registrar of Companies/undersigned as Adjudicating Officer in exercise of the Power conferred by Section 454 of the Companies Act 2013 read with Companies (Adjudication of Penalties) Rules, 2014. The Registrar of Companies vide the Companies (Amendment) Act, 2019 is entrusted with power to adjudicate penalty as provided under Section 450 of the Companies Act, 2013 (penal provision of section 62(3) of the Companies Act, 2013).
2. Respondent Company:
Whereas Rajvansh Auto Wheels Private Limited, Company (CIN U34300RJ2012PTC040036) has its registered office at DOMS Compound, Jaipur Road, Ajmer, Rajasthan-305001.
3. Relevant Provisions of the Companies Act, 2013: –
Whereas as per provision of section 62 (3) of the companies Act, 2013 “nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the company. Provided that the terms of issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of loan by a special resolution passed by the company in general meeting.”
Whereas as per the provision of section 450 of the Companies Act, 2013 “If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.”
4. Facts of the Case:
> That this office has issued Show Cause Notice vide letter No. ROC-JP/Complaint/100082065/575-577 dated 29.05.2023 stating that the Respondent Company has not filed a copy of resolution in e-Form MGT-14 w.r.t. raising of loan from Shri Pradeep Garg amounting to Rs. 50,00,000/-and from Shri Pradeep Garg amounting to Rs. 40,00,000/-. Hence, violated the provision of section 62(3) of the Companies Act, 2013.
> In view of the above, this office has issued Adjudication Notice dated 18.08.2023 to the Respondent Company and its directors and accordingly the matter has been fixed for a hearing on 12.09,2023, which was adjourned to 11.10.2023 on the request of the Respondent Company.
5. At the time of the hearing Shri Shailendra Kumar Gupta, Advocate and authorized representative of the Respondents has appeared in the matter.
6. In view of the above facts, the undersigned has reasonable cause to believe that the provision of section 62 (3) of the Companies Act, 2013 has not been complied with by the Respondent Company and its directors and therefore liable for penal action under section 450 of the Companies Act, 2013. Accordingly, in exercise the power of 454 (3) of the Companies Act, 2013, I inclined to impose a penalty on the company and its directors in accordance with section 446B of the Companies Act, 2013, as under:-
|
Nature of default |
Violatio ns under Compa nies Act, 2013 | Name of persons on whom penalty imposed | No. of days for defa ult | Total default amount (In Rs.) |
Maximum Limit for Penalty (In Rs.) | Final Penalty Imposed (in Rs.) pursuant to section 446B of the Companies Act, 2013. |
| Non passing of Special Resoluti on before raising of loan |
Section 62(3) | Rajvansh Auto Wheels Private Limited | 1981 | 10,000+
100*1,981 2,08,100/- |
2,00,000/- | 1,00,000/- |
| Pradeep Garg | 1981 | 10,000+
100*1,981 2,08,100/- |
50,000 | 25,000/- | ||
| Praneet Garg | 1981 | 10,000+
100*1,981 2,08,100/- |
50,000 | 25,000/- | ||
| Grand Total | 1,50,000/- | |||||
| That the number of days calculated from 10.05.2018 i.e. date of raising of loan amounting to Rs. 40,00,000/- to date of hearing i.e. 11.10.2023. | ||||||
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee and penalty so imposed upon the Officers-in-default shall be paid from their personal sources/ income. It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.
7. Appeal against this order may be filed in writing with the Regional Director (NWR), Ministry of Corporate Affairs, Ahmedabad within a period of sixty days from the date of receipt of this order, in e-Form ADJ (available on Ministry website mca.gov.in setting forth the grounds of appeal and shall be accompanied by a certified copy of this order (section 454(5) & 454(6) of the Companies Act, 2013 read with Companies (Adjudicating of Penalties) Rules, 2014).
8. Attention is also invited to section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013, which state that in case of non-payment of penalty amount, the company shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to five lath rupees and officer in default shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty five thousand rupees but which may extend to one lakh rupees or both.
9. In terms of the provisions of sub-Rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to the following: –
I. Rajvansh Auto Wheels Private Limited at DOMS Compound, Jaipur Road, Ajmer, Rajasthan-305001.
II. Pradeep Garg at____
III. Praneet Garg at____
IV. Regional Director, NWR, Ahmedabad at ROC Bhavan, Opp. Rupal Park Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad, Gujarat-380 013
The adjudication notice stands disposed off with this order.
(RUVIT KUMAR)
ROC-cum-OL & Adjudicating officer,
Rajasthan, Jaipur
Signed on this 23rd of November 2023.
Place: Jaipur, Rajasthan.
File No. ROC-J PR/Complaint/1242 to 1248
Date: -24/11/2023
