Introduction: The Ministry of Corporate Affairs (MCA) recently imposed a significant penalty of ₹3 lakhs for the violation of the main object clause of the Memorandum of Association (MOA). This penalty, under Section 454 of the Companies Act, 2013, marks a pivotal moment in corporate governance. Let’s delve into the details of the case and understand its implications.
Detailed Analysis: The case revolves around Oliria Foods and Beverages Limited and its directors, Shri Vardhman Jain Tijaria and Shri Arihant Tijaria. The company, engaged in the foods and beverages sector, expanded its business during the COVID-19 pandemic to include products like hand sanitizers, masks, and PPE kits. However, it later ventured into trading activities not aligned with its main object clause, leading to a violation of Section 13 read with Section 10 of the Companies Act, 2013.
The penalty imposed, totaling ₹3 lakhs, reflects the seriousness of the offense. The adjudicating officer meticulously analyzed the case, considering relevant provisions of the Companies Act, 2013. Section 450 of the Act outlines penalties for contravention, emphasizing compliance and accountability.
Furthermore, the officer’s decision underscores the principle that penalties should be commensurate with the offense. By directing payment from personal sources, the order reinforces individual responsibility in corporate conduct. Additionally, the provision for appeal ensures due process and the opportunity for redressal.
Conclusion: In conclusion, the penalty imposed for the violation of the main object clause of the MOA sends a clear message about the importance of adherence to regulatory frameworks. It highlights the need for companies to align their activities with their stated objectives, promoting transparency and integrity in corporate practices. This case serves as a reminder for companies and directors to exercise diligence and prudence in their business pursuits to avoid regulatory scrutiny and penalties in the future.
*****
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
File No. ROC-JP/Adj./02/2023-24/777 Date: – 03/08/2023
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 13 read with Section 10 of the Companies Act, 2013 in the matter of: –
1. Oliria Foods and Beverages Limited, Company
2. Shri Vardhman Jain Tijaria, Managing Director
3. Shri Arihant Tijaria, Whole Time Director
……. Applicants
Date of hearing: – 19.07.2023
Present: – 1. Shri Ruvit Kumar, ROC-cum-OL and Adjudicating Officer.
2. Shri Raunak Agrawal, AROC-cum-AOL.
3. Shri Manoj Maheshwari, Practicing Company Secretary and authorized representative for the Applicants.
ORDER
1. Appointment of Adjudicating Officer: –
The Ministry of Corporate Affairs vide its Gazette Notification No. A42011/112/2014-Ad. II dated 24.03.2015 appointed the undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454 of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Applicant company: –
The applicant company namely Oliria Foods and Beverages Limited having CIN: U15490RJ2019PLC064319, (herein after referred to as “company” is a registered company with this office under the provisions of Companies Act, 2013 having its registered office situated at B A-130(H), Road No. 9-D, VKI AREA, JAIPUR, Rajasthan- 302013.
3. Facts of the case: –
That the applicants have submitted an application dated 23.06.2023 requested this office to adjudicate the offence committed under section 13 read with section 10 of the Companies Act, 2013. In the instant application, the applicant company has stated that that the applicant company is engaged in the business of foods and beverages. During the time of COVID-19, the applicant company vide a special resolution passed by the shareholders in EoGM dated 01.04.2020 altered its main object clause and also entered in the business of hand Sanitizers, Masks and PPE Kits.
Further, the applicant company vide its EoGM(s) dated 31.03.2021 & 22.07.2022 has also altered its main object and entered into the business of Foodgrain and Biodegradable products.
However, due to oversight, the applicant company has entered into the trading business of Air Purifier, Non-Woven Fabrics, Oxygen Concentrator, Oximeter, Splits, Sunglasses, UV Sterlizer, Vaccume Cleaner, Plastic Bottles, Mink Blanket, Disinfectant Sprayer under an impression that the said products are covered under the Main Object of the applicant company.
In view of the above, it is very clear that the applicant company has violated the provision of section 13 read with section 10 of the Companies Act, 2013.
That this office has examined the application and accordingly fixed a date of the hearing on 19.07.2023. The same has also been intimated to the applicant company vide this office’s letter dated07.07.2023. During the course of hearing, Shri Manoj Maheshwari, PCS and authorized representatives for the applicants has furnished a declaration dated 17.07.2023 stating that the applicant company has carried out the above business activities from 01.04.2020 to 13.07.2023.
4. Relevant Provisions of the Companies Act, 2013: –
> Section 10 (1) of the Companies Act, 2013:- Subject to the provision of this Act, the memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed by the company and by each member, and contained covenants on its and his part to observe all the provisions of the memorandum and of the articles.
> Section 13(1) of the Companies Act, 2013: – Save as provided in section 61, a company may, by a special resolution and after complying with the procedure specified in this section, alter the provisions of its memorandum.
> 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.
5. Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that the company and its officers in default are liable for penalty as prescribed under section 450 of the Companies Act, 2013 for offence committed under section 13 read with section 10(1) of the Companies Act, 2013 for 1199 days i.e. with effect from 01.04.2020 to 13.07.2023. Accordingly, I am inclined to impose a penalty as prescribed under section 450 of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are shown in the table below:
| Nature of Default | Relevant section under the Companies Act, 2013 | Name of persons on whom penalty is imposed | No. of days of default | Per day penalty for default (In Rs.) | Total default amount (In Rs.) |
Maximum Penalty (In Rs.) | Final Penalty imposed (In Rs.) |
| Alteration of memo-randum of the company |
Section 13 read with section 10 (1) |
Oliria Foods and Beverages Limited, Company |
1199 | 1,000 | 1199000 | 200000 | 200000 |
| Shri Vardhnnan Jain Tijaria, Managing Director | 1199 | 1,000 | 1199000 | 50,000 | 50,000 | ||
| Shri Aihant Tijaria, Whole Time Director | 1199 | 1,000 | 1199000 | 50,000 | 50,000 | ||
| Grand Total | 300000 | 300000 | |||||
6. I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Notice 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 Act read with Companies (Adjudication 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 lakh 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 Oliria Foods and Beverages Limited, B A-130(H), Road No. 9-D, VKI AREA, JAIPUR, Rajasthan- 302013, Shri Vardhman Jain Tijaria, Managing Director, F-32, Gjiya Marg, Banipark, Jaipur-302016, Shri Arihant Tijaria, Whole Time Director, F-32, Gjiya Marg, Banipark, Jaipur-302016 and Regional Director (NWR), Naranapura, Ahmedabad & will also be Uploaded On MCA Website.
The adjudication notice stands disposed off with this order.
(RUVIT KUMAR)
ROC-cum-OL & Adjudicating officer,
Rajasthan, Jaipur
Signed on this 3rd day of August 2023.
Place: Jaipur, Rajasthan.
