Non disclosure of contracts or arrangements with related parties: MCA Imposes Penalty

This document outlines an Adjudication Order issued by the Registrar of Companies (ROC), Telangana, Hyderabad, on May 6, 2025. The order pertains to M/s. BI MINING PRIVATE LIMITED (CIN U10300TG2016PTC103924) regarding a violation of Section 134(3)(h) of the Companies Act, 2013, read with Rule 8(2) of the Companies (Accounts) Rules, 2014. This section mandates the disclosure of particulars of contracts or arrangements with related parties as referred to in Section 188(1) in the Board’s Report.

The violation was identified during an inquiry into the company’s books and accounts conducted under Section 206(4) of the Act for the financial year 2016-17. The inquiry officer observed that the company’s Board’s Report for that year stated no materially significant related party transactions under Section 188. However, the inquiry found that the company had indeed entered into a contract or arrangement with a related party (an Associate Company) for availing or rendering services during that period, which was not disclosed as required. Following this observation, a Show Cause Notice was issued to the company and its directors. The company subsequently filed an adjudication application, which was initially found to be defective but later corrected. During the adjudication hearing, the company’s authorized representative submitted that the information was inadvertently missed and there was no fraudulent intent, undertaking to comply with the order and pay the penalties imposed.

Based on the facts, circumstances, and submissions, the Adjudicating Officer concluded that the company and its officers were in default of Section 134(3)(h) and liable for penalties under Section 134(8). Accordingly, a penalty of Rs. 3,00,000 was imposed on M/s. BI MINING PRIVATE LIMITED, and penalties of Rs. 50,000 each were imposed on the two directors, Shri. Umapathy Reddy Bathina and Shri. Sudhakar Reddy Indro, totaling Rs. 4,00,000 for the violation related to the FY 2016-17. The order directs the company and officers to pay the penalty amounts online within 90 days and file Form INC-28. The order also informs them of the option to file an appeal with the Regional Director within sixty days and highlights the consequences under Section 454(8) for non-compliance with the order, which include further fines and potential imprisonment for officers in default.

Ministry of Corporate Affairs
Government of India
Website : www.mca.gov.in
OFFICE OF THE REGISTRAR OF COMPANIES, TELANGANA, HYDERABAD
2nd FLOOR, CORPORATE BHAWAN, BANDLAGUDA, NAGOLE, HYDERABAD — 500 068

F.NO.ROC/HYD/BI MINING/ADJ/S.134(3)(h)/2025p2

DATE: 06.05.2025

ADJUDICATION ORDER FOR VIOLATION UNDER SECTION 134(3)(h) OF THE  t COMPANIES ACT, 2013 r/w RULE 8(2) OF THE COMPANIES CCOUNTS) RULES 2014 IN THE MATTER OF M/S. BI MINING PRIVATE LIMIT 

1.Appointment of Adjudicating Officer: –

The Ministry of Corporate Affairs vide its Gazette Notification No. A- 4211/112/2014-_. Ad. II, dated 24.03.2015 has appointed Registrar of Companies Hyderabad 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.

1. Company: –

Whereas the company viz M/s. BI MINING PRIVATE LIMITED with CIN U10300TG2016PTC103924 (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 Plot No. 8-2-596/R, Road No. 10 Banjara Hills, Hyderabad, Telangana, India, 500034. The financial & other details of the subject company as available on MCA-21 portal is stated as under:

3. 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 a general meeting, a report by its Board of Directors, which shall include- (h) particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form.

Section 134. Financial Statement, Board’s Report, etc.:

(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.

4. Facts of the case:

An Inquiry into Books and Accounts of the company M/s. BI MINING PRIVATE LIMITED was carried out U/s 206(4) of the Companies Act, 2013 by the Office of Registrar of Companies authorized by the Central Government wherein the observations of the Inquiry Officer are as follows:

During the course of inquiry, it was observed by the Inquiry Officer that “from Boards report for the financial year 2016-17 under the head Related party transactions that during the year under the company has not made materially, significant transactions with related parties referred to section 188 of the Companies Act, 2013. But during the said period the company entered into a contract or arrangement with a related party (Associate Company) in respect of availing or rendering of any services.”

From the inquiry report it is found that there is reasonable cause to believe that the company and its officers have violated the provisions of section 134(3)(h) of the Companies Act, 2013 and liable for penal action u/s 134(8) of the Companies Act 2013. Accordingly, this office has issued Show cause Notice to the company and its directors vide Notice No. ROCH/103924(BIMPL-134(3)(h)/2023/SCN/ 1291 to 1293 dated 18.09.2023. The company vide letter dated 22.05.2024 has filed an adjudication application. However, upon examination of the said application it was found to be defective and incomplete. This office vide letter no. ROC/HYD/BIMINING/ADJ/ S.134/2024-25/1467 dated 11-09-2024 directed the company to file the fresh adjudication application with corrected details

5. Reply of the Company and its Officers in default for Adjudication Notice issued:  The company has submitted that information has been missed out inadvertently and that the company had no mollified or fraudulent intention in not disclosing the financial statements, Board Reports and related party Transactions etc. As per the directions of the office dated 11.09.2024 for the separate applications for the violation  of Sections 134(3)(g) and 134(3)(h), Shri K CH Venkat Reddy, PCS the Authorized Representative (AR) has submitted undertaking dated 16.10.2024 that the Company will comply with all necessary provisions of the adjudication and will pay all penalties as per the orders and will ensure compliance with all applicable laws and regulations. Accordingly, the adjudication application submitted on 22.05.2024 has been considered upon necessary corrections carried out by the AR.

6. Adjudication Hearing and Submission by Authorized Representative:

This office has issued a hearing notice vide letter no. ROCH/HEARING NOTICE/BIMPL/2024/962 to 965 dated 31.07.2024 to the Authorized Representative of Company, the Company and its Officers in default to appear before the Adjudicating officer on 05/08/2024. The Authorized representative Shri. K CH Venkat Reddy, PCS (M No. F7976 and COP 8998) appeared before the Adjudicating Officer and pleaded the case on behalf of Company and Directors and made submission for imposing lesser penalty.

7. Order:

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 134(8) of the Act for violation of Section 134(3)(h) of the Companies Act, 2013.

(i) Accordingly, I am inclined to impose a penalty as prescribed under Section 134(8) of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are shown in the table below:

Therefore, in view of the above said violation, in exercise of the powers vested with the undersigned under Section 454(1) & (3) of the Companies Act, 2013 the penalty imposed above on Company and its Officers in default as penalty amount for violation of Section 134(3)(h) of the Companies Act, 2013.

8. The said amount of penalty shall be paid online from own sources by using the website mca.gov.in(Misc. head) within 90 days of receipt of this order and file form INC-28 attaching copy of order and payment challan. The penalty amount imposed on the officer in default shall be paid from their personal sources / Income.

9. Whereas Appeal against this order may be filed with the Regional Director (SER), Ministry of Corporate Affairs, 3rd Floor, Corporate Bhavan, Bandlaguda, Nagole, Hyderabad, Telarigana, 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].

10. 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 subsection (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 98rupees.

(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 lakh rupees, or with both.”

Issued under my hand and seal on this the 6 of May 2025.

(PARVINDER SINGH, I.C.L.S)
REGISTRAR OF COMPANIES.
TELANGANA, HYDERABAD