In a significant enforcement action, the Ministry of Corporate Affairs (MCA) has imposed a penalty of ₹20 lakh on Janaki Ram Steel and Power Private Limited for failing to disclose related party transactions in their Board Reports for several financial years.
Janaki Ram Steel and Power Private Limited, a registered company under the Companies Act, 2013, faced scrutiny when an inspection of their books and accounts revealed a major compliance lapse. The company had not disclosed related party transactions in the Board Reports for the financial years 2015-16 to 2019-20, despite such transactions being evident in their financial statements. This omission constituted a violation of Section 134(3)(h) of the Companies Act, 2013.
According to Section 134(3)(h), a company must attach particulars of contracts or arrangements with related parties referred to in Section 188 in the prescribed form to the statements laid before a company in a general meeting. Failure to comply with this provision results in penalties under Section 134(8), where the company can be fined up to ₹3 lakh, and each officer in default can be fined up to ₹50,000.
The inspection, authorized by the Central Government, was conducted under Section 206(5) of the Companies Act, 2013. It was discovered that the company’s Board Reports for the relevant financial years did not disclose details of related party transactions. The non-disclosure was considered a serious compliance breach, leading to the issuance of an adjudication notice to the company and its directors.
Following the notice, Pramod Singh, one of the company’s directors, submitted an adjudication application and attended the hearing. The company acknowledged the oversight but argued that the non-compliance was unintentional. However, the company’s status as a non-small entity meant that the provision for lesser penalties under Section 446(b) did not apply.
The adjudicating officer, B. Srikumar, Registrar of Companies, Chennai, concluded that the company and its directors were liable for the violations. Penalties were imposed for each financial year from 2015-16 to 2019-20, amounting to ₹3 lakh for the company and ₹50,000 for each director per year. The total penalty imposed was ₹20 lakh, emphasizing the severity of the non-disclosure.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES, TAMIL NADU, ANDAMAN & NICOBAR ISLANDS, CHENNAI
II FLOOR, C- WING, SHASTRI BHAVAN, 26, HADDOWS ROAD, NUNGAMBAKKAM, CHENNAI- 6
F.NO.ROC/CHN/ JANAKI RAM/ADJ/S.134 (3)(h)/2024 DATE: 30 APR 2024
ADJUDICATION ORDER UNDER SECTION 134 (3)(h) OF THE COMPANIES ACT, 2013 IN THE MATTER OF WS JANAKI RAM STEEL AND POWER PRIVATE LIMITED
1. Appointment of Adjudicating Officer:‑
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 has appointed Registrar of Companies, Chennai as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013) (hereinafter referred as Act or Companies Act, 2013) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company: –
Whereas the company viz M/s. JANAKI RAM STEEL AND POWER PRIVATE LIMITED with CIN: U27101TN2004PTCO52868 (herein after referred as ‘ company’ or ‘ subject company’) is a registered company with this office under the Companies Act, 2013 having its registered office as per MCA21 Registry at No.117, Sadayan Kuppam Village Road, Manali, Chennai, Tamil Nadu 600103. The financial & other details of the subject company as available on MCA-21 portal is stated as under:
| S.No. | Particulars | Details |
| 1. | Company’s Status | Active |
| 2. | Filing Status | Financial Statement: Up to 31.03.2022
Annual Return: Up to 31.03.2022. |
| 3. | Paid up Capital (as per FY 2021-22) | Rs.18,74,96,870/- |
| d Revenue from Operation | Rs.73,75,32,220/- | |
| h. Other Income | Rs.2,31,92,580/- | |
| ( Profit for the Period | Rs.4,00,01,290/- | |
| 4. | Whether it is a Holding Company | No |
| 5. | Whether it is a Subsidiary Company | No |
| 6. | Whether company registered under Section 8 of the Act? | No |
| 7. | Whether company is a small company? |
No |
| 8. | Whether company registered under any other special Act? | No |
3. Directors/ Officers during the period of violation:
| S.No. | Name of Director Default | Designation | Date of Appointment |
Date of Cessation |
| 1. | Ramchander Singh | Director | 01.04.2004 | ….. |
| 2. | Pramod Singh | Director | 01.04.2004 | ….. |
4. Section and Penal Provision as per Companies Act, 2013
Section 134. Financial Statement, Board’s Report, etc.
(3) There shall be attached to statements laid before a company in general meeting, a
(h) particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed forth;
(8) If a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.
5. Issue of Adjudication Notice:
An Inspection of Books and Accounts of the company M/s. Janaki Ram Steel and Power Private limited was carried out –Ws 206(5) of the Companies Act, 2013 by an Officer authorized by the Central Government wherein the observations of the Inspecting Officer are as follows:
During the course of Inspection, it is observed that, the Board Report for the financial years 2015-16 to 2019-20 not disclosed the details of related party transactions. However, the financial statements for the above period have revealed that the company had related party transactions. Hence, the company has violated Section 134 of the Companies Act, 2013 and the company and every Officer in default are liable for penal action under Section 134(8) of the Companies Act, 2013.
After that the Adjudicating Authority has issued Adjudication Notice to the company and its directors vide Notice No. Roc/Chn/052868/Janaki ram steel/S.134/P.20/Inspn.fol.up/2022-23 dated 01.12.2023.
6. Reply of Company and Directors for Adjudication Notice issued:
Pursuant to the Adjudication notice dated 01.12.2023, Shri. Pramod Singh one of the directors of the company has submitted Adjudication application in eform GNL -1 vide SRN: F89584031 dated 05.01.2024 and also submitted physical application in this regard.
7. Adjudication Hearing:
On receipt of the Adjudication application, the Adjudicating Authority had issued notice for hearing dated 25.01.2024 by fixing the hearing on 06.02.2024 at 11:30 AM. Pursuant to the notice dated 25.01.2024, Shri. H.P.Nitesh, Company Secretary in Practice has appeared before the Adjudicating Authority on 06.02.2024 and made submissions that in the Board’s report for the said financial years, the company has declared that related party transactions are being entered for every financial year. However, Form AOC-2 was not disclosed as per the Section 134 of the Companies Act, 2013 and the violation may be adjudicated as this non-compliance is not an intentional one.
(ii) The company is having paid up capital of Rs.18 Crores does not fall under the definition of small company as per provision of section 2(85) of the companies Act, 2013. Therefore, of imposing the provision lesser penalty as per section 446(b) shall not be applicable in this case.
8. Decision
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 directors mentioned in Para 3 have violated Section 134(3)(h) of the Companies Act, 2013 by not disclosing related party transactions in the Board’s report for the FYs 2015-16 till 2019-20 and therefore the company and its Officers in default are liable for penalty as prescribed under Section 134(8) of the Companies Act,2013.
(i) Accordingly, I am inclined to impose a penalty as prescribed under Sub-section 8 of Section 134 of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are shown in the table below:
I FY 2015-16
| S. No | Company and Officers in default | Penalty for default (Rs.) | Maximum Penalty (Rs.) | Final Penalty Imposed (Rs.) |
| 1. | M/s. Janaki Ram Steel and Power Private Limited | Rs.3,00,000/- | Rs.3,00,000/- | Rs.3,00,000/- |
| 2. | Ramchander Singh | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
| 3. | Pramod Singh | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.3,00,000/- (Rupees Three lakh) is imposed on the Company and Rs.50,000/- (Rupees Fifty Thousand) is imposed on each Officers in default. Totally Rs. 4,00,000/- (Rupees Four lakhs) as penalty amount for violation of Section134 of the Companies Act, 2013 for FY 2015-16.
II FY 2016-17
| S. No | Company and Officers in default | Penalty for default (Rs.) | Maximum Penalty (Rs.) | Final Penalty Imposed (Rs.) |
| 1. | M/s. Janaki Ram Steel and Power Private Limited | Rs.3,00,000/- | Rs.3,00,000/- | Rs.3,00,000/- |
| 2. | Ramchander Singh | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
| 3. | Pramod Singh | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.3,00,000/- (Rupees Three lakh) is imposed on the Company and Rs.50,000/- (Rupees Fifty Thousand) is imposed on each Officers in default. Totally Rs. 4,00,000/1 (Rupees Four lakhs) as penalty amount for violation of Section134 of the Companies Act, 2013 for FY 2016-17.
III. FY 2017-18
| S. No | Company and Officers in default | Penalty for default (Rs.) | Maximum Penalty (Rs.) | Final Penalty Imposed (Rs.) |
| 1. | M/s. Janaki Ram Steel and Power Private Limited | Rs.3,00,000/- | Rs.3,00,000/- | Rs.3,00,000/- |
| 2. | Ramchander Singh | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
| . | Pramod Singh | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.3,00,000/- (Rupees Three lakh) is imposed on the Company and Rs.50,000/- (Rupees Fifty Thousand) is imposed on each Officers in default. Totally Rs. 4,00,000/- (Rupees Four lakhs) as penalty amount for violation of Section134 of the Companies Act, 2013 for FY 2017-18.
IV FY 2018-19
| S. No | Company and Officers in default | Penalty for default (Rs.) | Maximum Penalty (Rs.) | Final Penalty Imposed (Rs.) |
| 1. | M/s. Janaki Ram Steel and Power Private Limited | Rs.3,00,000/- | Rs.3,00,000/- | Rs.3,00,000/- |
| 2. | Ramchander Singh | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
| 3. | Pramod Singh | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.3,00,000/- (Rupees Three lakh) is imposed on the Company and Rs.50,000/- (Rupees Fifty Thousand) is imposed on each Officers in default. Totally Rs. 4,00,000/- (Rupees Four lakhs) as penalty amount for violation of Section134 of the Companies Act, 2013 for FY 2018-19.
IV. FY 2019-20
| S. No | Company and Officers in default | Penalty for default (Rs.) | Maximum Penalty (Rs.) | Final Penalty Imposed (Rs.) |
| 1. | M/s. Janaki Ram Steel and Power Private Limited | Rs.3,00,000/- | Rs.3,00,000/- | Rs.3,00,000/- |
| 2. | Ramchander Singh | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
| 3. | Pramod Singh | Rs.50,000/- | Rs.50,000/- | Rs.50,000/- |
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.3,00,000/- (Rupees Three lakhs) is imposed on the Company and Rs.50,000/- (Rupees Fifty Thousand) is imposed on each Officers in default. Totally Rs. 4,00,000/- (Rupees Four lakhs fifty) as penalty amount for violation of Section134 of the Companies Act, 2013 for FY 2019-20.
9. The said amount of penalty shall be paid through online by using the website mca.gov.in(Misc. head) within 90 days of receipt of this order, and intimate this office with proof of penalty paid.
10. Whereas Appeal against this order-may be filed with the Regional Director (SR), Ministry of Corporate Affairs, 5th Floor, Shastri Bhavan, 26 Haddows Road, Chennai600006, Tamil Nadu within a period of sixty days from the date of receipt of this order, in 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 (Adjudicating of Penalties) Rules, 2014].
11. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order, “(8)(i) Where company fails to comply with the order made under sub‑ section (3) or sub-section (7), as the case may be within a period of ninety days from the date of the receipt of the copy of the order, 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.
(ii) Where an officer of a company or any other person who is in default fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be within a period of ninety days from the date of the receipt of the copy of the order, such officer 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
(B. SRIKUMAR, ICLS)
REGISTRAR OF COMPANIES
TAMILNADU, CHENNAI.
ADJUDICATING OFFICER
