On August 5, 2024, the Ministry of Corporate Affairs, through the Registrar of Companies, West Bengal, issued an adjudication order imposing penalties on Pioneer Financial & Management Services Ltd. for non-compliance with Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014. The company failed to submit the ‘Reconciliation of Share Capital Audit Report’ (e-Form PAS-6) as required for unlisted public companies since September 30, 2019. Despite the company’s claim of technical default and subsequent corrective actions, penalties amounting to ₹17,88,000 were imposed on the company and its three directors. The penalties reflect violations of securities dematerialization requirements and the company’s failure to comply with the prescribed filing rules over several financial years.
GOVERNMENT OF INDIA
Ministry of Corporate Affairs
Office of the Registrar of Companies, West Bengal
2nd M. S. 0. Building, 2nd Floor
234/4, Acharya J. C. Bose Road
Kolkata — 700 020
No. ROC/ADJ/379/053871/2024/3623
Date : 05.08.2024
ADJUDICATION ORDER FOR PENALTY U/S 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 3(2) OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 AS AMENDED BY THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2019 IN MATTER OF NON-COMPLIANCE OF THE PROVISIONS OF RULE 9A OF THE COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014 OF THE COMPANIES ACT, 2013
In respect of: PIONEER FINANCIAL & MANAGEMENT SERVICES LTD,
(CIN: U67120WB1991PLC053871)
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No A-42011/112/2014-Ad.II dated 24.03.2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by Section 454(1) read with Section 454(3) of the Companies Act, 2013 [herein after known as Act] read with the Companies (Adjudication of Penalties) Rules, 2014 for adjudicating penalties under the provisions of this Act. The undersigned vide the Companies (Amendment) Ordinance, 2019 is entrusted to adjudicate penalties under provisions of the Companies Act, 2013 with effect from 02.11.2018.
2. Company: –
PIONEER FINANCIAL & MANAGEMENT SERVICES LTD. [herein after known as Company] is a registered company with this office incorporated on 16.12.1991 under the provisions of the Companies Act, 1956 having its registered office as per MCA21 Registry at address 267 Rabindra Saran!, Kolkata, West Bengal, India, 700007.
3. Facts about the Case: –
1) On the basis of Inquiry Report carried out under Section 206(4) of the Companies Act, 2013 the following instances or violations as pointed out in the Inquiry report:
I. CONTRAVENTION OF RULE 9A (ISSUE OF SECURITIES IN DEMATERIALISED FORM BY UNLISTED PUBLIC COMPANIES) OF THE COMPANIES ACT. 2013
I.O Observation:
The company, being an unlisted public company, was required to Issue securities only in dematerialised form and facilitate dematerialization of all its existing securities. However, the company has failed to file ‘Reconciliation of Share Capital Audit Report’ in e-form PAS-6 pursuant to sub-rule (8) of rule 9A Companies (Prospectus and Allotment of Securities Rules, 2014) to report the details and changes in the share capital of company on a half-yearly basis for any of the half years since half year ended 30.09.2019 with the Registrar of Companies, thereby violating the provisions of Rule 9A of the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019.
Reply from the company:
The company in its reply has stated that “It has been alleged by you in Serial No. 6 of your notice that the Company being an Unlisted Public Company was required to file e-Form PAS -6 but did not file the e-form within 60 days from the end of each half of the year with Registrar of Companies thereby leading to violation of Rule 9A of Companies (Prospectus and Allotment of Securities Rules, 2014) of the Companies Act, 2013.
Rule 9A of Companies (Prospectus and Allotment of Securities Rules, 2014) of the Companies Act, 2013 states that –
“3. Every holder of securities of an unlisted public company who intends to transfer securities on or after 2nd October 2018 shall get such securities dematerialised before the transfer.
8. Every unlisted public company governed by this rule shall submit Form PAS-6 to the Registrar with such fee as provided in Companies (Registration Offices and Fees) Rules,2014 within sixty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice.
It is to be noted that the Company has been granted International Securities Identification Number (ISIN). The Company was of the view that e-Form PAS-6 was required to be filed only during the half year when there is any transfer or subscription of securities. There were no such transfer of securities or subscription to further equity shares of the company and therefore the Company did not file e-Form PAS-6.
Necessary steps are being taken by the company to comply with Rule 9A of Companies (Prospectus and Allotment of Securities Rules, 2014) of the Companies Act, 2013. Since the default, if any, is purely technical in nature and committed out of inadvertence, and necessary steps are now being taken to rectify the same, we request you to kindly condone the lapse, if any.”
I.O Conclusion:
The company has admitted its mistake. Hence, contravention of the provisions of Rule 9A of the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019 exists.
2) Section 450 of the Companies Act 2013 provides inter alia:
“If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be 1[liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.”
3) Accordingly, the adjudication officer has issued adjudication notice vide No. ROC/ADJ/379/053871/2024/1861-1864 dated 11.06.2024 (herein after referred as Adjudication Notice) under Section 454(4) read with Rule 9A of the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019 of The Companies Act, 2013 read with Rule 3(2) of Companies (Adjudication of Penalties), 2014 as amended in Amendment Rules, 2019, to the company and its officers in default for the violation of the provisions of the Act as mentioned above giving an opportunity to submit a reply as to why the penalty should not be imposed under the provisions of Rule 9A of the said Rules, followed by a hearing fixed on 12.07.2024 vide hearing notice No. ROC/ADJ/379/053871/2024/2694-2697 dated 04.07.2024.
4) Advocate Arani Guha attended the hearing physically on 12.07.2024 as the authorized representative on behalf of Company & its directors in default for the violation of Rule 9A (Issue of securities in dematerialized form by unlisted public companies) of the Companies (Prospectus and allotment of securities) Rules, 2014 of the Companies Act, 2013. He stated that the company has made its default good by filing all E-form PAS 6 since the first half of 30.09.2019 to till date and requested to grant 15 days’ time for submission of documents in this regard. Therefore, the Authorized Representative submitted a written reply on 23.07.2024 mentioned herein as under:
(i) “The company is regular in making compliances as mentioned under the various Acts and rules of various Authority(ies). The observation reported by 1.0 in the adjudication notice letter dated 11th June 2024 with respect to failure of the company in filling of Reconciliation of Share Capital Audit Report in E-form PAS 6 on half yearly basis since first half year ending on 30.09.2019, is unintentional and inadvertent.
The company has made its default good as and when it came into the notice and has filed all E-form PAS 6 since the first half of 30.09.2019 and till date is regular in complying with the provisions.
(ii) The Annual Return filed by the company comprises all details with respect to Shareholders and that the company has filed its Annual return on timely basis, As the details were already somewhere reflected in the Annual return, therefore it can be stated that the true and fair view of the Company’s financials has not been impacted upon. Pandemic COVID 19 has impacted the business of the Company and due to which the revenue and profit has decreased continuously for last 3 years. Thus. the company does not have so much of surplus money and its directors are trying hard to regain its market and make the company most profitable to benefit its stakeholder.
In this context, it is submitted to consider the below mentioned points as well:
a. The amount of disproportionate gain or unfair advantage, whenever quantifiable, made as a result of default.
b. The amount of loss caused to an investor or group of investors as a result of the default.
c. The repetitive nature of default.
while determining the quantum of penalty, it is noted that the disproportionate gain or unfair advantage made by the company or loss caused to the investor as a result of non-filling of PAS 6 with ROC, are not available on the record. Further, it may also be added that no unfair advantage has been made by the Company or the loss caused to the investors in a default of this nature.
On the basis of above points, we humbly request your good office to levy the least penalty to enable the company to breathe and survive. The intention of the company is to run its business in a smooth manner, and you are requested to support the company in its objective.
The company and Directors also submit that no such default will ever happen again, and Directors will be full cautious of the Compliances to be made by the company.”
In view of the above, hearing was concluded, and order is passed as under:
ORDER
1. The applicant company and its directors who have defaulted in the provisions of Rule 9A of the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019 of the Companies Act, 2013 are liable for penalties under section 450 of the Companies Act, 2013.
2. In exercise of the powers conferred vide Companies (Amendment) Ordinance, 2019, the undersigned is entrusted to adjudicate penalties under section 450 of the Companies Act, 2013 with effect from 02.11.2018. I do hereby impose the penalty of Total Rs. 17,88,000/- (Rupees Seventeen Lakhs Eighty-eight Thousand only) i.e., Rs. 9,87,000/- (Rupees Nine Lakhs Eighty-Seven Thousand only) on the Company, and Rs. 2,67,000/- (Rupees Two Lakh Sixty-Seven Thousand only) on each of its 3 (Three) directors-in-default pursuant to Rule 3(12) of Companies (Adjudication of Penalties) Rules, as per table below for violation of Rule 9A of the Act:
| Name of the Company/ Directors in – default |
Nature of violation/ instances of para 3(1) |
Period and Amount of Default (in Rs.) | Total Penalty calculated u/s 450 of the Act (In Rs.) | Maximum Penalty imposed (in Rs.) |
| 1. Pioneer Financial & Management Services Ltd. (Company)
|
I. Violation of Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2019(For F.Y 2019-20 to 2022-23) |
(i) 10,000 + 1000*891 Days (for 1ST half of F.Y 2019-20 i.e. for period 01.04.19 to 30.09.19) |
9,01,000 | 2,00,000 |
| (ii) 10,000 + 1000*708 Days (for 2nd half of F.Y 2019-20 i.e. for period 01.10.19 to 31.03.20) | 7,18,000 | 2,00,000 | ||
| NO 10,000 + 1000*525 Days (for 1St half of F.Y 2020-21 i.e. for period 01.04.20 to 30.09.20) |
5,35,000 | 2,00,000 | ||
| iv) 10,000 + 1000*343 Days (for 2nd half of F.Y 2020-21 i.e. for period 01.10.20 to 31.03.21) | 3,53,000 | 2,00,000 | ||
| (v) 10,000 + 1000*160 Days (for 1St half of F.Y 2021-22 i.e. for period 01.04.21 to 30.09.21) | 1,70,000 | 1,70,000 | ||
| (vi) 10,000 + 1000*7 Days (for 2nd half of F.Y 2022-23 i.e. for period 01.10.22 to 31.03.23) | 17,000 | 17,000 | ||
| 2. SHASHI AGARWAL (Director)
|
1. Violation of Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2019 (For F.Y 2019- 20 to 2022-23)
|
(i) 10,000 + 1000*891 Days (for 1 ST half of F.Y 2019-20 i.e. for period 01.04.19 to 30.09.19) |
9,01,000 | 50,000 |
| (ii) 10,000 + 1000*708 Days (for 2nd half of F.Y 2019-20 i.e. for period 01.10.19 to 31.03.20) | 7,18,000 | 50,000
|
||
| (iii) 10,000 + 1000*525 Days (for 1st half of F.Y 2020-21 i.e. for period 01.04.20 to 30.09.20) | 5,35,000
|
50,000
|
||
| [iv) 10,000 + 1000*343 Days (for 2nd half of F.Y 2020-21 i.e. for period 01.10.20 to 31.03.21) | 3,53,000 | 50,000 | ||
| (v) 10,000 + 1000*160 Days (for 1st half of F.Y 2021-22 i.e. for period 01.04.21 to 30.09.21) | 1,70,000 | 50,000 | ||
| (vi) 10,000 + 1000*7 Days (for 2nd half of F.Y 2022-23 i.e. for period 01.10.22 to 31.03.23) |
17,000 |
17,000 |
||
| 3. MANOJ KUMAR AGARWAL (Director)
|
I. Violation of Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2019
(For F.Y 2019- 20 to 2022-23)
.
|
(i) 10,000+ 1000*891 Days (for 1ST half of F.Y 2019-20 i.e. for period 01.04.19 to 30.09.19) | 9,01,000 | 50,000 |
| (ii) 10,000 + 1000*708 Days (for 2nd half of F.Y 2019-20 i.e. for period 01.10.19 to 31.03.20) |
7,18,000
|
50,000
|
||
| (iii) 10,000 + 1000*525 Days (for 1st half of F.Y 2020-21 i.e. for period 01.04.20 to 30.09.20) | 5,35,000
|
50,000
|
||
| [iv) 10,000 + 1000*343 Days (for 2nd half of F.Y 2020-21 i.e. for period 01.10.20 to 31.03.21) | 3,53,000 | 50,000 | ||
| (v) 10,000+ 1000*160 Days (for 1st half of F.Y 2021-22 i.e. for period 01.04.21 to 30.09.21) | 1,70,000 | 50,000 | ||
| (vi) 10,000 + 1000*7 Days (for 2nd half of F.Y 2022-23 i.e. for period 01.10.22 to 31.03.23) | 17,000 | 17,000 | ||
| 4. SHASHANK MANOJ AGARWAL (Director) | I. Violation of Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2019(For F.Y 2019- 20 to 2022-23) |
(i) 10,000 + 1000*891 Days (for 1ST half of F.Y 2019-20 i.e. for period 01.04.19 to 30.09.19) |
9,01,000 | 50,000 |
| (ii) 10,000 + 1000*708 Days (for 2nd half of F.Y 2019-20 i.e. for period 01.10.19 to 31.03.20) | 7,18,000 | 50,000 | ||
| (v) 10,000 + 1000*525 Days (for 1st half of F.Y 2020-21 i.e. for period 01.04.20 to 30.09.20) | 5,35,000 | 50,000 | ||
| iv) 10,000 + 1000*343 Days (for 2nd half of F.Y 2020-21 i.e. for period 01.10.20 to 31.03.21) | 3,53,000 | 50,000 | ||
| (v) 10,000 + 1000*160 Days (for 1st half of F.Y 2021-22 i.e. for period 01.04.21 to 30.09.21) | 1,70,000 | 50,000 | ||
| (vi) 10,000 + 1000*7 Days (for 2nd half of F.Y 2022-23 i.e. for period 01.10.22 to 31.03.23) | 17,000 | 17,000 | ||
| Total penalty payable | 17,88,000 | |||
**No. of days of default are calculated from ‘due date of filing PAS 6 for the relevant financial year’ to ‘date of filing of PAS 6 by the company’. The detailed calculation Is as follows:
| SL NO. | F. Y | PERIOD | DATE OF FILING OF PAS 6 BY COMPANY | DUE DATE OF FILING PAS 6 |
**NO. OF DAYS OF DELAY IN FILING |
| (i) | F.Y 2019-20 | 01.04.19 to 30.09.19 | 09.05.2022 | 29.11.2019 | 891 |
| (ii) | 01.10.19 to 31.03.20 | 09.05.2022 | 30.05.2020 | 708 | |
| (iii) | F.Y 2020-21 | 01.04.20 to 30.09.20 | 09.05.2022 | 29.11.2020 | 525 |
| (iv) | 01.10.20 to 31.03.21 | 09.05.2022 | 30.05.2021 | 343 | |
| (v) | F.Y 2021-22 | 01.04.21 to 30.09.21 | 09.05.2022 | 29.11.2021 | 160 |
| (vi) | F.Y 2022-23 | 01.10.22 to 31.03.23 | 07.06.2023 | 30.05.2023 | 7 |
3. The concerned noticee(s) shall pay the said amount of penalty individually for the company and its directors (out of own pocket) by way of e-payment [available on Ministry website www.mca.gov.in] under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 days of receipt of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this Office Address.
4. Appeal against this order may be filed in writing with the Regional Director (ER), Ministry of Corporate Affairs, Kolkata located at Nizam Palace, 2nd M. S. Building, 3rd Floor, 234/4, A.J.C. Bose Road, Kolkata-700020, West Bengal within a period of sixty days from the date of receipt of this order, in 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 the this order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 20141.
5. Your attention is also invited to Section 454(8)(i) and (ii) of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order.
6. In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to Pioneer Financial & Management Services Ltd. and its 3 (three) directors in default mentioned herein above and also to Office of the Regional Director (Eastern Region) and Ministry of Corporate Affairs at New Delhi.
Date: 05th August 2024
[A.K. Sethi, ICLS]
Adjudicating Officer & Registrar of Companies,
West Bengal
