Failure to disclose investments in associate company: MCA Imposes Penalty

The Registrar of Companies, Telangana, Hyderabad, issued an adjudication order against M/s. BI MINING PRIVATE LIMITED for violating Section 134(3)(g) of the Companies Act, 2013. An inquiry revealed that the company’s Board’s report for the financial year 2016-17 failed to disclose investments in an associate company, despite stating no such transactions occurred. The company and its directors were issued a show-cause notice, and the company later submitted an adjudication application.

During the adjudication hearing, the authorized representative of the company acknowledged the inadvertent omission and submitted that there was no malafide intention and requested a lesser penalty. The Registrar of Companies, having considered the facts, imposed a penalty of Rs. 3,00,000 on the company and Rs. 50,000 each on two directors, Shri. Umapathy Reddy Bathina and Shri. Sudhakara Reddy Induru.

The order directs the company to pay the penalty online within 90 days and file form INC-28. It also informs the company and the directors of their right to appeal the order to the Regional Director (SER) within 60 days. The order further specifies the consequences of non-compliance, including potential fines and imprisonment as per Section 454(8) of the Companies Act, 2013.

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)(g)/2025/228 To 233

DATE: 06.05.2025

ADJUDICATION ORDER FOR VIOLATION UNDER SECTION 134(3)(g) OF THE COMPANIES ACT, 2013 IN THE MATTER OF M/S. BI MINING PRIVATE LIMITED

1. Appointment of Adjudicating Officer: –

The Ministry of Corporate Affairs vide its Gazette Notification No. A­42011/112/2014-Ad. II, dated 24.03.2015 has appointed Registrar of Companies, Hyderabad 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. 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- (g) particulars of loans, guarantees or investments under section 186.

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 of Particulars of Loans, Guarantees or Investments it was mentioned that the company has not granted any Loans or given any Guarantees or Made any Investments covered under the provisions of the Section 186 of the Companies Act, 2013. But during the financial year the Company has made investments for purchase of Equity shares in Associate Company M/s. BGR Mining & Infra Limited.”

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)(g) 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)(g)/2023/SCN/ 1294 to 1296 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 the information has been missed out inadvertently and the Company had no malafide or fraudulent intention in not disclosing the particulars of loans, guarantees or investments etc., and therefore, the company has violated Section 134(8) of the Companies Act, 2013. 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 Authorised 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)(g) 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)(g) 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, Telangana, 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 non- compliance 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 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 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