Delay in Furnishing Declaration by Both Registered & Beneficial Owners: Penalty Imposed

The Ministry of Corporate Affairs (MCA) imposed a ₹10 lakh penalty on Pink Square Real Estate Pvt. Ltd., including its registered owner Mukesh Gurnani and beneficial owner Gurnani Infradevelopers Pvt. Ltd., for delayed compliance with Sections 89(1) and 89(2) of the Companies Act, 2013. These sections mandate timely declarations regarding beneficial share ownership to the company and the Registrar. Both parties failed to submit the required declarations, MGT-4 and MGT-5, by the deadline of January 31, 2015, leading to penalties. The Registrar of Companies, acting under Section 454, adjudicated the case and imposed the maximum allowable fine of ₹5 lakh on each party. The delay spanned over 3,389 days, from February 1, 2015, to May 12, 2024. The penalty is to be paid via the MCA portal, with an appeal option available within 60 days. In the event of non-payment, further legal consequences may follow under Sections 454(8)(i) and 454(8)(ii).

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 89(1) and Section 89(2) of the Companies Act, 2013 Read with Rule 9 of the Companies (Management and Administration) Rules, 2014 In the Matter of Pink Square Real Estate Private Limited and In the Matter of:

01.Shri Mukesh Gurnani, Registered Owner

02.Gurnani Infradevelopers Private Limited, Beneficial Owner

…. Respondents

Date of hearing — 04.07.2024

Present: –

1. Shri Ruvit Kumar, ROC-Cum-OL, Rajasthan, Jaipur

2. Shri Raunak Agrawal, AROC-cum-AOL, Rajasthan, Jaipur

3. Shri Govind Jaiswal, Practicing Company Secretary 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 (E) 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 89(5) of the Companies Act, 2013.

2. Respondent Company:

WHERAS Pink Square Real Estate Private Limited (CIN U70101RJ2013PTC042162) is registered with this office under the provisions of Companies Act, 2013 and having its registered office at 4^th Floor, Days Hotel, Plot No 10, Airport Plaza Scheme, Behind Radisson Blu, Tonk Road, Jaipur, Rajasthan- 302018.

3. Relevant provisions of the Companies Act, 2013: –

WHEREAS as per the provision of section 89(1) of the Companies Act, 2013 “Where the name of a person is entered in the register of members of a company as the holder of shares in that company but who does not hold the beneficial interest in such shares, such person shall make a declaration within such time and in such form as may be prescribed to the company specifying the name and other particulars of the person who holds the beneficial interest in such shares.”

WHEREAS as per the provision of section 89(2) of the Companies Act, 2013 “every person who holds or acquires a beneficial interest in share of a company shall make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed.”

WHEREAS as per Rule 9(1) of the Companies (Management and Administration) Rules, 2014 “a person whose name is entered in the register of members of a company as the holder of shares in that company but who does not hold the beneficial interest in such shares (hereinafter referred to as “the Registered Owner”), shall file with the company, a declaration to that effect in Form No. MGT-4, within a period of thirty days from the date on which his name is entered in the register of members of such company:

Provided that where any change occurs in the beneficial interest in such shares, the registered owner shall, within a period of thirty days from the date of such change, make a declaration of such change to the company in Form No. MGT-4.”

WHEREAS as per Rule 9(2) of the Companies (Management and Administration) Rules, 2014 “every person holding and exempted from furnishing declaration or acquiring a beneficial interest ins hares of a company not registered in his name (hereinafter referred to as “the Beneficial Owner) shall file with the company, a declaration disclosing such interest in Form No. MGT-5, within thirty days after acquiring such beneficial interest in the shares of the company:

Provided that where any change occurs in the beneficial interest in such shares, the beneficial owner shall, within a period of thirty days from the date of such change, make a declaration of such change to the company in Form No. MGT-5.”

WHERAS as per provision of section 89(5) of the Companies Act, 2013 “if any person fails to make a declaration as required under sub-section (1) or sub-section (2) or sub-section (3), he shall be liable to a penalty of fifty 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 five lakh rupees.”

4. Facts of the Case:

• That it has been observed from the list of the shareholders of the company that the company is a Wholly Owned Subsidiary of another company namely Gurnani Infradevelopers Private Limited i.e. the Holding Company/ the Beneficial Owner. Further, in the instant case, Shri Mukesh Gurnani is the Registered Owner as he is holding share in the company on behalf of the Holding Company i.e. Gurnani Infradevelopers Private Limited.

• It has been further observed from the available records of the company that the name of Shri Mukesh Gurnani i.e. the Registered Owner was entered in the register of members on 01.01.2015 and also Gurnani Infradevelopers Private Limited i.e. the Beneficial Owner has acquired beneficial interest in the shares of the company on 01.01.2015.

Accordingly, the above Registered Owner and the Beneficial Owner were required to furnish their declaration(s) to the company on or before 31.01.2015 in Form No. MGT-4 and MGT-5 in compliance with section 89(1) and section 89(2) of the Companies Act, 2013 read with Rule 9 of the Companies (Management and Administration) Rules, 2014.

Thereafter, the company was also required to file the above declaration(s) with Registrar in e-Form MGT-6 pursuant to section 89(6) of the Companies Act, 2013 and Rule 9(3) of the Companies (Management and Administration) Rules, 2014.

• Therefore, this office has issued a Show Cause Notice dated 07.05.2024 to the company, its officer’s in default, the Registered Owner & the Beneficial Owner for the non-compliance of section 89 of the Companies Act, 2013 read with Rule 9 of the Companies (Management and Administration) Rules, 2014 and directed them to furnish their replies in the matter within 15 days from the date of notice.

In this regard, the company has furnished its reply vide letter dated 20.05.2024 stating that the company has not violated the provision of section 89 of the Companies Act, 2013.

However, it has been observed that during the course of action, the company has filed e-Form MGT-6 with Registrar vide SRN F95492930 dated 14.05.2024 in compliance of section 89(6) of the Companies Act, 2013 read with Rule 9 of the Companies (Management and Administration) Rules, 2014.

• It has been further observed from the e-Form MGT-6 filed by the company that the Registered Owner and the Beneficial Owner were required to furnish their declaration(s) to the company in Form No. MGT-4 and MGT-5 on or before 31.01.2015 in compliance of section 89(1) and section 89(2) of the Companies Act, 2013 read with Rule 9 of the Companies (Management and Administration) Rules, 2014. However, they have furnished their declaration(s) to the company on 13.05.2024 with a delay and therefore violated the provision of section 89(1) and section 89(2) of the Companies^– Act, 2013 read with Rule 9 of the Companies (Management and Administration) Rules, 2014. Hence, the reply furnished by the company is found unsatisfactory.

In view of the above, this office has issued an Adjudication Notice dated 29.05.2024 to the Registered Owner and the Beneficial Owner with copy endorsed to the company and fixed a date of hearing in the matter on 18.06.2024.

Further, at the time of hearing, Shri Govind Jaiswal, Practising Company Secretary and authorised representative of the Respondents has appeared in the matter and requested Competent Authority to adjourn the matter. The above request has been considered by the Competent Authority and accordingly, the matter was adjourned for hearing on 04.07.2024.

Further, at the time of hearing, Shri Jaiswal has appeared in the matter and

requested Competent Authority to impose a minimum penalty in the matter.

• In view of the above facts, the undersigned has reasonable cause to believe that the provision of section 89(1) and section 89(2) of the Companies Act, 2013 read with Rule 9 of the Companies (Management and Administration) Rules, 2014 have not been complied with by Respondents and therefore liable for penal action under section 89(5) of the Companies Act, 2013. Accordingly, in exercise the power of 454 (3) of the Companies Act, 2013, I am inclined to impose a penalty on the respondents, as under: –

I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Beneficial Owner and penalty so imposed upon the Registered Owner 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.

5. 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 www.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).

6. 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.

7. 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. Shri Mukesh Gurnani, Registered Owner

II. Gurnani Infradevelopers Private Limited

III. Regional Director, NWR, Ministry of Corporate Affairs, 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

File No. ROCJP/SCN/Sec 89/2024-25/ 1336

Date: 25/07/2024