Summary: On August 23, 2024, the Ministry of Corporate Affairs issued an adjudication order under Section 90 of the Companies Act, 2013, concerning Jain Recycling Private Limited. The Registrar of Companies, Chennai, was appointed as the Adjudicating Officer to address the company’s non-compliance with significant beneficial ownership reporting requirements. Jain Recycling, with a paid-up capital exceeding Rs. 5 crores, failed to comply with Section 90, which mandates the declaration of significant beneficial ownership and maintenance of a register. Despite notices issued in February 2024 and further reminders, the company did not provide necessary information or file required forms, including BEN-1 and BEN-2, in a timely manner. An adjudication notice was issued in June 2024, and although the company eventually filed the forms, this was only after proceedings had begun. The company’s failure to issue BEN-4 notices or apply for restrictions on shares led to the adjudication order. The non-compliance with Section 90 led to an adjudication process focusing on the penalties for the violations and the company’s delayed efforts to address these issues.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES, TAMIL NADU, ANDAMAN & NICOBAR ISLANDS, CHENNAI
II FLOOR, C- WING, SHASTA’ BHAVAN, 26, HADDOWS ROAD, NUNGAMBAICKAM, CHENNAI- 6
Order No. F.NO.ROC/CHN/JAIN RECYCLINGIADJ/S.90/2024 Dated: DATE: 23 AUG 2024
ADJUDICATION ORDER UNDER SECTION 90 OF THE COMPANIES ACT, 2013
IN THE MATTER OF M S. LAIN RECYCLING PRIVATE LIMITED
1. Appointment of Adjudicating Officer:-
The 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. Jain Recycling Private Limited with CIN: U27200TN202OPTC133771 (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 Old No. 7/1, New No 20, 4th Floor, Waddels Road, Kilpauk, Chennai, Tamil Nadu, 600010. 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 Position | Financial Statement: up to 31.03.2023 Annual Return: up to 31.03.2023 |
| 3. | Paid up Capital | Rs. 5,93,95,190/- |
| Revenue from Operation (in Lakhs) | Rs. 1,22,174.72/- | |
| Other Income (in Lakhs) | Rs. 964.73/- | |
| Profit for the Period (in Lakhs) | Rs. 2831.75/- | |
| 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/KMP during the period of violation
| S. No | Name of Director | Designation | Date of Appointment | Date of Cessation |
| 1. | Mayank Pareek | Director | 10.01.2020 | 30.09.2022 |
| Managing Director |
30.09.2022 | |||
| 2. | Kamalesh Jain | Director | 10.01.2020 | ….. |
| 3. | Sanchit Jain | Whole Time Director |
11.04.2022 | 15.04.2023 |
4. Section and Penal Provision as per Companies Act, 2013
Section 90 of the Companies Act, 2013- Register of significant beneficial owners in a company:
(1) Every individual, who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than twenty-five per cent. or such other percentage as may be prescribed, in shares of a company or the right to exercise, or the actual exercising of significant influence or control as defined in clause (27) of section 2, over the company (herein referred to as “significant beneficial owner”), shall make a declaration to the company, specifying the nature of his interest and other particulars, in such manner and within such period of acquisition of the beneficial interest or rights and any change thereof as may be prescribed:
Provided that the Central Government may prescribe a class or classes of persons who shall not be required to make declaration under this sub-section.
(2) Every company shall maintain a register of the interest declared by individuals under sub-section (1) and changes therein which shall include the name of individual, his date of birth, address, details of ownership in the company and such other details as may be prescribed.
(4) Every company shall file a return of significant beneficial owners of the company and changes therein with the Registrar containing names, addresses and other details as may be prescribed within such time, in such form and manner as may be prescribed
(4A)* Every company shall take necessary steps to idendoi an individual who is a significant beneficial owner in relation to the company and require him to comply with the provisions of this section.
(5) A company shall give notice, in the prescribed manner, to any person (whether or not a member of the company) whom the company knows or has reasonable cause to believe—
(a) to be a significant beneficial owner of the company;
(b) to be having knowledge of the identity of a significant beneficial owner or another person likely to have such knowledge; or
(c) to have been a significant beneficial owner of the company at any time during the three years immediately preceding the date on which the notice is issued
and who is not registered as a significant beneficial owner with the company as required under this section.
(6) The information required by the notice under sub-section (5) shall be given by the concerned person within a period not exceeding thirty days of the date of the notice.
*Inserted by the Companies (Amendment)Act,2019 w.e.f 15.08.2019
(7) The company shall,—
(a) where that person fails to give the company the information required by the notice within the time specified therein; or
(b) where the information given is not satisfactory, apply to the Tribunal within a period of fifteen days of the expiry– of the period specified in the notice, for an order directing that the shares in question be subject to restrictions with regard to transfer of interest, suspension of all rights attached to the shares and such other matters as may be prescribed.
(10) If any person fails to make a declaration as required under sub-section (1), he shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of one thousand rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees.
(11) If a company, required to maintain register under sub-section (2) and file the information under sub-section (4) or required to take necessary steps under sub-section (4A), fails to do so or denies inspection as provided therein, the company-shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty offive hundred rupees for each day, after the first during which such failure continues, subject to a maximum of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with a further penalty of two hundred rupees for each day, after the first during which such failure continues, subject to a maximum of one lakh rupees.
(12) If any person wilfully furnishes any false or incorrect information or suppresses any material information of which he is aware in the declaration made under this section, he shall be liable to action under section 447.
‘Rule 3 of the Companies (Significant Beneficial Owners) Rules,2018 :Declaration of Significant Beneficial Ownership under Section 90 :
(1) On the date of commencement of the Companies (Significant Beneficial Owners) Amendment Rules, 2019, every individual who is a significant beneficial owner in a repotting company, shall file a declaration in Form No. BEN-1 to the reporting company within ninety days from such commencement.
(2) Every individual, who subsequently becomes a significant beneficial owner,or where his significant beneficial ownership undergoes any change shall file a declaration in Form No. BEN-1 to the reporting company, within thirty days of acquiring such significant beneficial ownership or any change therein.
‘Substituted by the Companies (Significant Beneficial Owners) Amendment Rules, 2019, w.e.f 08.02.2019
Rule 4 of the Companies (Significant Beneficial Owners) Rules,2018-Return of significant beneficial owners in shares:
Upon receipt of declaration under rule 3, the reporting company shall file a return in Form No. BEN-2 with the Registrar in respect of such declaration, within a period of thirty days from the date of receipt of such declaration by it, along with the fees as prescribed in Companies (Registration offices and fees) Rules, 2014.
Rule 7 of the Companies (Significant Beneficial Owners) Rules,2018-.Application to the Tribunal :
7. The reporting company shall apply to the Tribunal,
(i) where any person fails to give the infOrmatian required by the notice in Form No. BEN-4, within the time specified there’ll; or
(ii) where the information given is not satisfactory, in accordance with sub-section (7) of Section 90, for order directing that the shares in question be subject to restrictions, including
(a) restrictions on the transfer ofinterest attached to the shares in question;
(b) suspension of the right to receive dividend or any other distribution in relation to the shares in question;
(c) suspension of voting rights in relation to the shares in question;
(d) any other restriction on all or any of the rights attached with the shares in question
5. Facts of the Case
A notice was issued to the subject company under Section 206(1) of the Companies Act, 2013 on 07.02.2024 to ascertain compliance of Section 90 of the Companies Act,2013 and rules made thereunder. The Managing Director of the company vide letter dated 15.02.2024 informed that the company is a closely held company with individual shareholders and there is no indirect holding in the company. After that ROC Chenni had issued notice [Rs. 206(3) of the Companies Act on 27.02.2024 for broadly ascertaining the following compliances:
(i) Provide details of all the actions taken by the company to identify its significant Beneficial Powncr in terms of Section 90(4A) of the Companies Act,2013
(ii) Provide details of all the BEN-4 notices issued by the company along with a copy thereof
(iii) Provide the details of the application moved by the company to the Hon’ble NCLT in terms of Section 90(7) of the Companies Act, r/w Rule 7 of the Companies (Significant Beneficial Owners), Rules, 2018.
(iv) Furnish list of shareholders of M/s. Almas Global Opportunity Fund, M/s. KSJ Metal Impex Private Limited & M/s. KSJ Infrastructure Pvt Ltd from financial year 2018-19 to till date etc.
The list of shareholders of the company M/s. Jain Recycling Pvt Ltd as on 31.03.2023 is given below:
I. Equity shares holders:
| SI. No. | Name of shareholder | No. of share held | Face Value Rs |
Total Amount Rs. |
ok of shareholding |
| 1. | Kamlesh Jain | 1,60,000 | 10 | 1,16,00,000 | 99.90% |
| 2. | Mayank Pareek | ,160 | 10 | 11,600 | 0,10% |
| Tootal | 1,61,160 | 10 | 1,16,11,600 | 100.00% |
II. 01% Compulsory Convertible Preference Shareholders:
| Sl. No. | Name | No. of Shares Held | Face Value (Rs.) | Total Amount (Rs.) | % of Shareholding |
| 1. | Almas Global Opportunity Fund | 3,11,609 | 10 | 31,16,090 | 8.29% |
| 2. | K.S.J Metal Impex Private Limited | 34,46,750 | 10 | 3,44,67,500 | 91.71% |
| Total | 37,58,359 | 10 | 3,75,83,590 | 100.00% |
II. 0.01% Optionally Convertible Preference Shareholders:
| Sl. No. | Name | No. of Shares Held | Face Value (Rs.) | Total Amount (Rs.) | % of Shareholding |
| 1. | KSJ Infrastructure Pvt. Ltd. | 10,20,000 | 10 | 1,02,00,000 | 100% |
The company vide letter dated 23.04.2024 submitted the list of shareholders of M/s. K.S.J. Metal Impex Private Limited as given below:
| Sl.No. | Name of the shareholder | No of shares held | % of holding |
| 1. | Kamlesh Jain | 2,95,000 | 4.6% |
| 2. | Sanchit Jain | 17,15,480 | 26.96% |
| 3. | Geetha Jain | 4,25,000 | 6.68% |
| 4. | Anis Ahmed Burney | 23,39,900 | 36.77% |
| 5. | Sandeep M. Shishodia | 2,37,432 | 3.74% |
| 6. | Bon- Ion Securities Limited | 4,50,000 | 7.07% |
| 7. | Express Image Private Limited | 3,00,000 | 4.71% |
| 8. | Bonlon Industries Limited | 3,75,000 | 5.89% |
| 9. | Vinco Metals Private Limited | 2,25,000 | 3.54% |
| TOTAL | 63,62,812 | 100.00% |
The list of shareholders of M/s. KSJ Infrastructure Private Limited is as given below:
| SIN°. | Name of the shareholder | No of shares held | % of holding |
| 10. | Salpuri Dealers Private Limited | 648724 | 99.98% |
| 11. | Kamlesh Jain | 105 | 0.01% |
| 12. | Geetha Jain | 105 | 01.01% |
| TOATL | 648934 | 100.00% |
Further, submitted that M/s. jackpot Commodeal Private Limited (Transferor Company) and M/s. Salpurtri Dealers Private Limited (Transferee Company) merged by an order of Hon’ble NCLT Kolkata Bench and M/s. Salpurtri Dealers Private Limited is the holding company of M/s. KSJ Infrastructure Private Limited.
Further, the Boady Corporate M/s. Howen International Fund SPC (Formerly known as Almas Global Opportunity Fund SPC) is 100% owned by M/s. Almas Capital Limited having its registered office at No. 1201-1203, The Maze Tower, Trade Center Second, Dubai, United Arab Emirates P.O. Box: 9328, which is ultimately owned by Mr. Vishal Rana is an individual and No application was moved by the company to NCLT in terms of section 90(7) of the Companies Act, 2013 read with rules 7 of the Companies (Significant Beneficial Owners) Rules 2018.
6. Issue of Adjudication Notice:
After examination of reply of the company, the Adjudicating Authority had issued Adjudication Notice to the company and its directors vide Notice No. F.No.ROC.Chn/Jain Recycling/S.90/Inspn fol.up/2024 dt. 07.06.2024 wherein it was stated that Mr. Vishal Ran is holding Significant Beneficial Ownership in the subject company. The company has not filed BEN-2 for Mr. Vishal Rana. Further, the company has not given information regarding BEN-1 declaration or BEN-4 notices till date. The company has not taken necessary efforts to find the Significant Beneficial owners. Hence, there is a violation of provisions of Section 90 of the Companies Act, 2013.
7. Reply of Company and Directors for Adjudication Notice issued:
No reply has been received from the company and its directors.
8. Adjudication Hearing:
Since no reply has been received from the company , the Adjudicating Authority had issued notice of Hearing dated 26.06.2024 by fixing the hearing on 10.07.2024 at 01:00 PM. Pursuant to the said notice, Mr. Rangrajan, Parter of M/s. BP & Associates, Practicing Company Secretary appeared on behalf of the company and its directs before the Adjudicating Authority on 10.07.2024 and made submissions that e-form BEN-2 to be filed for Mr. Vishal Rana and the matter may be considered accordingly. Further, the company vide letter dated 02.08.2024 informed that Jain Recycling Private Limited had issued 311,609 Compulsorily Convertible Preference Shares (CCPS) to M/s. Howen Internal Fund SPC (formerly known as Almas Global Opportunity Fund SPC) in various tranches between March 2020 and August 2021. Subsequently, during February 2024 all the 3,11,609 CCPS held by M/s. Howen International Fund SPC have been acquired by Jain Resource Recycling Private Limited. The company has obtained the necessary declaration of Significant Beneficial Ownership in Form BEN-1 from M/s. Howen Internal Fund SPC and has filed the same on 02.08.2024.
(ii) The paid up capital of the company is more than Rs.5 Crores and 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. Analysis of Non- compliance of the Companies Act, 2013
It is noticed that the company has not issued BEN-4 notice to its members. The declaration by the beneficial owner, Mr. Vishal Rana who holds Significant Beneficial Ownership in shares has submitted declaration in BEN-1 on 31.07.2021 and the company filed form BEN-2 vide SRN: AA9561204 dated 02.08.2024. It was only after the initiation of the proceedings that the relevant e-forms were filed. Further, the company has not preferred to apply an application before the Tribunal, as per Section 90(7) of the Companies Act, 2013 for an order directing that the shares in question be subject to restrictions with regard to transfer of interest, suspension of all rights attached to the shares. Thereby, the company has violated Section 90(4) r/w Section 90(4a), Section 90(5) & Section 90(7) of the Companies Act,2013 and the company and Officers in default are liable for Penalty under Section 90(11) of the Companies Act,2013.
But in this case even though the company has not sent BEN-4, Mr. Vishal Rana who holds Significant Beneficial Ownership in shares, submitted declaration in BEN-1 on 31.07.2021 and the due date for submitting BEN-1 by SBO is 29.09.2021, hence SBO is complied with the Section 90 of the Companies Act,2013.
The details of BEN forms related to the company is shown in the below table:
| Date of acquiring significant Beneficial Interest or Change in SBO | Due date for issuing BEN-4 | Date of issue of BEN-4 | Due date for submission of declaration in BEN-1 | Date of Receipt of declaration in BEN-1 | Due date for filing BEN-2 | Date of filing BEN-2 |
| 31.07.2021 (as per BEN-2) |
30.08.2021 | Not issued BEN-4 |
29.09.2021 | 31.07.2021 | 30.08.2021 | 02.08.2024 *Delay of 1068 days |
9. Decision
Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that, the company has not issued BEN-4. Consequently, the company has not taken necessary action as prescribed under Section 90 (4A) r/w Section 90(7) of the Companies Act, 2013. Further, the BEN-2 filed with a delay of 1068 days i.e. From 30.08.2021 to 01.08.2024 (BEN-2 filed on 02.08.2024). Thus, the company has violated Section 90(4) r/w Section 90(4a), Section 90(5) & Section 90(7) of the Companies Act, 2013, the company and its Officers in default are liable for penalty under Section 90(11) of the Companies Act, 2013. As per Section 2(60), the KMP would get covered in Officers in default. The company had Whole- time director for the period 11.04.2022 to 15.04.2023 and a Managing Director from 30.09.2022 onwards. Therefore, the penalty imposed under Sub-Section 11 of Section 90 of the Companies Act. 2013 is as follows:
| Name of the Company and directors/ KMP | No of days delay for filing BEN- 2 | Penalty for default (Rs)
|
Penalty (Rs) | Maximum Limit for Penalty |
Penalty Imposed |
| Jain Recycling Private Limited | 1068 days from 30.08.2021 to 01.08.2024 | Rs. 1,00,000/-
+ Rs.500 |
1,00,000 + 1068 x 500 = 6,34,000 | Rs. 5,00,000/- | Rs. 5,00,000/- |
| Mayank Pareek | 1068 days from 30.08.2021 to 01.08.2024 | Rs. 25,000/- + Rs.200 for continuing default | 25,000 + 1068 x 200 = 2,38,600 | Rs. 1,00,000/- | Rs. 1,00,000/- |
| Kamesh Jain | 224 days from 30.08.2021 to 10.04.2022 | Rs. 25,000/- + Rs.200 for continuing default | 25,000 + 224 x
200 = 2,38,600
|
Rs. 1,00,000/- | Rs. 69,800/- |
| Sanchit Jain | 370 days from 11.04.2022 to 15.04.2023 | Rs.
25,000/- + Rs.200 for continuing default |
25,000 + 370 x
200 = 99,000
|
Rs. 1,00,000/- | Rs. 99,000/- |
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. 5,00,000/- (Rupees Five lakhs) is imposed on the Company and Rs. 69,800/- (Rupees Sixty nine thousand eight hundred) is imposed on the director and Rs. 1,00,000/-(Rupees One lakh) & Rs. 99,000/- (Rupees Ninety nine thousand) is imposed on Officers in default as mentioned above. Totally Rs.7,68,800/- (Rupees Seven lakhs sixty eight thousand eight hundred) as penalty amount for violation of Section 90 of the Companies Act, 2013.
10. The said amount of penalty shall be paid through online by using the website mcatgov.in(Misc. head) within 90 days of receipt of this order and intimate this office with proof of penalty paid.
11. Whereas Appeal against this order may be filed with the Regional Director (SR), Ministry of Corporate Affairs, 5th Floor, Shastri Bhavan, 26 Haddows Road, Chennai-600006, 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
12. Your attention is also invited to Section 454(8) of the Act in the event of noncompliance 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 &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 Eve thousand rupees but which may extend to five lakh rupees.
Where an officer of a company or any other person]] who is in default 916/51fails 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 lakh rupees, or with both.”
(B. SRIKUMAR, ICLS)
REGISTRAR OF COMPANIES
TAMILNADU, CHENNAI.
ADJUDICATING OFFICER
