The Registrar of Companies, Karnataka, issued an adjudication order on July 9, 2024, imposing penalties on Tablespace Technologies Private Limited for violations of Section 188(1) of the Companies Act, 2013. During an inquiry under Section 206, it was found that the company earned over 10% of its total turnover from related party transactions with Purpleyo Technologies Private Limited in 2017-18 and 2018-19 without obtaining shareholder approval, only passing a board resolution on March 30, 2018. The company filed an adjudication application on April 4, 2024, claiming the default was unintentional and without malafide intent. A hearing on May 21, 2024, attended by the company’s representatives, confirmed the violation. The adjudicating officer imposed a penalty of INR 5,00,000 each on directors Karan Chopra and Dipali Chopra. The company and its directors must pay the penalties within 90 days and file Form INC-28 with proof of payment. Appeals can be filed within 60 days with the Regional Director (South East Region), Hyderabad. Non-compliance will result in further penal action under Section 454(8) of the Companies Act, 2013.
Government of India
Ministry of Corporate Affairs
Registrar of Companies, Karnataka
Kendriya Sadan, 2nd Floor, ‘E’ Wing,
Koramangala, Bengaluru – 560 034
Phone: 080-25537449/25633105
E-mail ID : [email protected]
No. ROCB/Adj.Ord.454-188(1)/Tablespace/Co.No.191040/2024/1803 to 1805 Date: 09.07.2024
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITES) RULES, 2014 FOR VIOLATION OF PROVISIONS OF SECTION 188(1) OF THE COMPANIES ACT, 2013 READ WITH RULES (AS AMENDED FROM TIME TO TIME) FRAMED THEREIN BY TABLESPACE TECHNOLOGIES PRIVATE LIMITED
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter referred to as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of the Companies Act, 2013.
2. The company, Tablespace Technologies Private Limited (hereinafter referred to as Company) having ON: U74999KA2017PTC101040 was incorporated on 03.03.2017 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is situated at 46, Level 5, Prestige Trade Tower Palace Road, High Ground, Sampangi Nagar, Bangalore – 560001.
3. Whereas, during the course of inquiry under section 206 of the Act, it was noticed that the company has earned income amounting to more than 10 % of its total turnover from its related party i.e. Purpleyo Technologies Private Limited, having common directors and shareholders during the year 2017-18 and 2018-19. However, the company has only passed a board resolution on 30.03.2018 and no approval has been obtained from the shareholders via general meeting, thereby violating section 188 read with Rule 15(3) of Companies (Meeting of Board and its Powers) Rules, 2014. The company has thereafter, on 04.04.2024, filed an adjudication / compounding application submitting that this default was without any malafide intentions and is not likely to cause any prejudice to the company or its members or creditors.
4. As per section 188(1) of the Act, except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to (a) sale, purchase or supply of any goods or materials; (b) selling or otherwise disposing of, or buying, property of any kind; (c) leasing of property of any kind; (d) availing or rendering of any services; (e) appointment of any agent for purchase or sale of goods, materials, services or property; (f) such related party’s appointment to any office or place of profit in the company, its subsidiary company or associate company; and (g) underwriting the subscription of any securities or derivatives thereof, of the company, provided that no contract or arrangement, in the case of a company having a paid-up share capital of not less than such amount, or transactions exceeding such sums, as may be prescribed, shall be entered into except with the prior approval of the company by a resolution.
5. As per Rule 15(3)(a)(iii) of the Companies (Meeting of Board and its powers) Rules, 2014, for the purposes of first proviso to sub-section (1) of section 188, except with the prior approval of the company by a resolution, a company shall not enter into a transaction or transactions, where the transaction or transactions to be entered into, as contracts or arrangements with one of the criteria being leasing of property of any kind amounting to ten percent or more of the turnover of the company, as mentioned in clause (c) of sub-section (1) of section 188.
6. As per section 188(5) of the Act, any director or any other employee of a company, who had entered into or authorised the contract or arrangement in violation of the provisions of this section shall, (i) in case of listed company, be liable to a penalty of twenty-five lakh rupees; and (ii) in case of any other company, be liable to a penalty of five lakh rupees.
7. Pursuant to the above and the adjudication application filed by the company, Notice of hearing was sent on 03.05.2024 and physical hearing was held on 21.05.2024. It was attended by Mr. Sanjeev Kumar Ghai, Compliance Officer and Ms Gauri Balankhe, practising company secretary on behalf of all the applicants along with authorisations from all the directors for appearing on their behalf. They made their submissions as stated in the application and stated that the default was unintentional, and the company wishes to get it adjudicated.
8. It is seen that the company is a holding company and does not fall under the definition of a small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provisions of imposing lesser penalty as per the section 446B of the Act shall not be applicable in this case.
9. Therefore, having considered the facts and circumstances of the case and the submissions made by the company / director / key managerial personnel through their authorized representative, in view of the above said violation of the Act, in exercise of the powers vested under Section 454(3) of the Companies Act 2013, I do hereby impose penalty in the following manner on the company and the directors/ officers who were in default of the offence committed:
| S No. | Particulars of notice | Penalty as per section 188 (5) of the Act |
| 1 | Karan chopra, Director | Rs. 5,00,000 |
| 2 | Dipali chopra, Director | Rs. 5,00,000 |
10. The company and its directors / key managerial personnel are hereby directed to pay the penalty amount as tabulated above within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website mca.gov.in (Miscellaneous head) specifying the details of this Order and the noticee who is paying the penalty.
11. Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in Form ADJ setting forth the grounds of appeal and shall be accompanies by a certified copy of this Order.
12. Your attention is also invited to section 454(8) of the Companies Act, 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under 454(8)(i) and (ii) of the Companies Act, 2013 against the company and directors / key managerial personnel without further notice in the matter.
13. The company is required to serve a copy of this Order on the director(s)/ officer(s)-in-default mentioned above in terms of provisions of section 20 of the Companies Act, 2013.
( Sanjay Sood)
Registrar of Companies, Karnataka
and Adjudicating Officer
