JOGPL Private Limited not guilty of SBO Rules Violation: MCA

The Ministry of Corporate Affairs, Uttar Pradesh, recently issued an adjudication order under Section 454 of the Companies Act, 2013, regarding JOGPL Private Limited. This order pertains to alleged violations of Section 90 of the Act concerning Significant Beneficial Owners (SBO).

JOGPL Private Limited, incorporated under the Companies Act, 1956, faced scrutiny regarding its compliance with Section 90 of the Companies Act, 2013. This section mandates the declaration of significant beneficial owners (SBOs) who hold substantial interests in the company. The Ministry of Corporate Affairs appointed the Registrar of Companies, Uttar Pradesh, as the Adjudicating Officer to assess penalties under Section 454(1) of the Act.

The case revolved around the ownership structure of JOGPL, particularly its shareholding by JE Energy B.V., Netherlands, and JE Energy Ventures Pvt. Ltd. The company argued that during the applicability period of SBO Rules from June 2018, JE Energy B.V. was under insolvency proceedings. The Amsterdam District Court’s orders placed all shares under the control of a Bankruptcy Trustee, nullifying any beneficial ownership claims by the previous shareholders.

In response to show cause notices and hearings, JOGPL provided detailed submissions supported by legal documents. These submissions highlighted the transfer of share ownership to Mr. Vivek Rattan in 2022, following approvals from the Amsterdam Court. The company demonstrated that during the SBO Rules’ applicability, it was effectively controlled by the Bankruptcy Trustee, and not by any individual or entity deemed an SBO under Indian regulations.

Based on the evidence presented and legal interpretations, the Ministry of Corporate Affairs, Uttar Pradesh, ruled in favor of JOGPL Private Limited. The adjudication order concluded that the company did not violate Section 90 of the Companies Act, 2013, nor the Companies (Significant Beneficial Owners) Rules, 2018, during the specified period.

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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES,
Uttar Pradesh
37/17, Westcott Building, The Mall,
Kanpur — 208001 (U.P.)
Phone : 0512 — 2310443/2310227

Order No. 03/10/SBO/UP/2024/JOGPL Dated: 28/06/2024

ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 FOR VIOLATION OF PROVISIONS OF SECTION 90 OF THE COMPANIES ACT, 2013.

IN THE MATTER OF JOGPL PRIVATE LIMITED

(CIN : U74899UP1992FTC047880)

Date of hearing(s): 22.05.2024

Present on behalf of Applicants: Mr. S.K. Gupta, Practicing Company Secretary (Membership Number-2589) appeared on behalf of company and the all the directors on 22.05.2024.

The Ministry of Corporate Affairs vide its gazette notification no A-42011/112/2014-Ad.II dated 24.3.2015, appointed the Registrar of Companies, Uttar Pradesh as the Adjudicating Officer in exercise of the powers conferred by Section 454(1) of the Companies Act, 2013 (hereinafter known as “the Act”) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Whereas the company viz. JOGPL PRIVATE LIMITED (hereinafter as “the reporting company’ or JOGPL) was incorporated under the provisions of the Companies Act, 1956 on 04.09.1992, and has its registered office situated at Plot No. 15, Knowledge Park II, Greater Noida, Gautam Buddha Nagar, Uttar Pradesh, 201306, India. The shareholding details of ‘the reporting company’ as per list of shareholders attached to e-form MGT-7 for FY 2022-2023 is as follows: –

However, the equity shareholding of the reporting company as on March 31, 2017 is as under:

3. That the provisions of Section 90 of the Companies Act, 2013 reads:-

Section 90:- (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 sub­section (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.

(3) The register maintained under sub-section (2) shall be open to inspection by any member of the company on payment of such fees 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 identify 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.

(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

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.

(8) On any application made under sub-section (7), the Tribunal may, after giving an opportunity of being heard to the parties concerned, make such order restricting the rights attached with the shares within a period of sixty days of receipt of application or such other period as may be prescribed.

(9) The company or the person aggrieved by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the restrictions placed under sub-section (8), within a period of one year from the date of such order:

Provided that if no such application has been filed within a period of one year from the date of the order under sub-section (8), such shares shall be transferred, without any restrictions, to the authority constituted under sub-section (5) of section 125, in such manner as may be prescribed; (9A) The Central Government may make rules for the purposes of this section.

(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 of five 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 willfully 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.

4. (i) That Section 2(27) of the Act defines ‘control’:

“control” shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner.

(ii)     That Section 2(1) of the Companies (Significant Beneficial Owners) Rules, 2018 of the Act defines ‘significant influence’ as the power to participate, directly or indirectly, in the financial and operating policy decisions of the reporting company but is not control or joint control of those policies.

5. That Rule 2(1)(h) of the Companies (Significant Beneficial Owners) Rules, 2018 of the Act defines

“Significant Beneficial Owner” in relation to a reporting company means an individual referred to in sub-section (1) of section 90, who acting alone or together, or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting company, namely: -(i) holds indirectly, or together with any direct holdings, not less than ten per cent. of the shares; (ii) holds indirectly, or together with any direct holdings, not less than ten per cent. of the voting rights in the shares; (iii) has right to receive or participate in not less than ten per cent. of the total distributable dividend, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings;(iv) has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone:

Explanation I. – For the purpose of this clause, if an individual does not hold any right or entitlement indirectly under sub-clauses (i), (ii) or (iii), he shall not be considered to be a significant beneficial owner.

Explanation II – For the purpose of this clause, an individual shall be considered to hold a right or entitlement directly in ‘the reporting company, if he satisfies any of the following criteria, namely.’

(i) the shares in ‘the reporting company’ representing such right or entitlement are held in the name of the individual;

(ii) the individual holds or acquires a beneficial interest in the share of ‘the reporting company’ under sub-section (2) of section 89 and has made a declaration in this regard to ‘the reporting company’.

Explanation III. – For the purpose of this clause, an individual shall be considered to hold a right or entitlement indirectly in ‘the reporting company, if he satisfies any of the following criteria, in respect of a member of ‘the reporting company, namely: -(i)where the member of ‘the reporting company’ is a body corporate (whether incorporated or registered in India or abroad), other than a limited liability partnership, and the individual, -(a) holds majority stake in that member; or (b) holds majority stake in the ultimate holding company (whether incorporated or registered in India or abroad) of that member.

6. On issuance of letter dated 13.02.2024 u/s 206(1) of the Act, the reporting company submitted its reply on 23.02.2024 signed by Mr. Sanjay Sethi, director of the reporting company. On examination of its response this office issued Show cause notice u/s 90 of the Act on 24.04.2024. In response, the company submitted its reply vide letter dated 08.05.2024 and 11.06.2024. All the replies so furnished by the company was examined wherein the following submissions have been made –

a) JE Energy Ventures Pvt. Ltd. (formerly known as Jubilant Energy Private Limited, India) and Jubilant Energy B.V., Netherlands were their equity shareholders holding 0.01% and 99.99% respectively on 31St March, 2017.

b) Under powers of the laws of the Netherlands, the Amsterdam District Court (“Amsterdam Court”) vide Order dated 8-Aug-2017 appointed F. Verhoeven and M.S. Breeman, Lawyers as Administrator of JE Energy B.V., Netherlands (“JEEBV”) i.e. the holding company of the Company.

c) Further, the Amsterdam Court vide its order dated 22-Sep-2017, declared JEEBV to be in a state of bankruptcy and appointed Mr. Martijn Sebastiaan Breeman as Bankruptcy Trustee (“Bankruptcy Trustee”) under Dutch Law. Further from 22-Sep-2017 the Bankruptcy Trustee had taken control of the Company and its assets, which included the 99.99% equity shares of the reporting Company.

d) All rights of all the shareholders of the reporting Company vested with the Bankruptcy Trustee.

e) The shareholders including JEEBV had neither powers or rights including voting, nor the title to these 99.99% equity shares of the reporting company.

f) Jubilant Energy Holding BV, Netherlands (“JEHBV”) which was JEEBV’s majority equity shareholder, itself was under bankruptcy and control of Bankruptcy Trustee in the same manner.

g) JE Energy Ventures Private Limited (JEEVPL), which held JEHBV’s 100% equity shares, on account of the said bankruptcy of JEHBV lost all rights and title to the 100% share capital of JEHBV as same was taken control of by the Bankruptcy Trustee, Netherlands in the same manner.

h) The supervisory judge in Amsterdam Court vide order dated 21-Jun-2021 in the Bankruptcy of JEEBV approved the sale of shares the Company held by JEEBV.

The Bankruptcy Trustee vide Letter dated 12-Jan-2022 directed the Board of Directors of JEEBV, inter-alia, to record the transfer of 14,11,91,709 equity shares (99.99% as held by the JEEBV) to a new legal owner viz. in favor Mr. Vivek Rattan (Mr. Vivek Rattan expired on September 13, 2023. Request for transmission of the estate to the legal heirs/successor is awaited).

i) The Company does not have any employee since February, 2018.

Hence, when the SBO Rules became applicable i.e. 14.06.2018 the shareholders of the Company i.e. (i) JEEBV or (ii) JEHBV or for that matter (iii) JEEVPL, none of them held any rights and title to the 100% share capital of the reporting Company as same was taken control of by the Bankruptcy Trustee in the aforesaid manner under the Amsterdam Court orders.

7. Explanation by the reporting company for no default by Company of Section 90 of the Act, read with SBO Rules:

The chronology events with respect to equity shareholding and control/significant influence are as under:

a) The equity shareholding of JOGPL Private Limited as on March 31, 2017 is as under:

b) In FY 2017-18, as per the laws of the Netherlands, the Amsterdam District court on August 8, 2017 passed the bankruptcy order for JEEBV and appointed F. Verhoeven and M.S. Breeman, Lawyers as Administrator.

c) Subsequently, as per the laws of the Netherlands, the Amsterdam District Court vide its order dated September 22, 2017, declared JE Energy B,V. to be in a state of bankruptcy and Mr. Martijn Sebastiaan Breeman was appointed as Bankruptcy Trustee of JE Energy B.V., Netherlands. As per the order, all the affairs of JE Energy V. were managed, controlled and administered by the Trustee.

d) Post the aforesaid order dated September 22, 2017 the affairs of JOGPL, being a subsidiary of JE Energy B.V., were controlled and administered by the Trustee.

e) The Rules with Reference to Section 90 of the Companies Act, 2013 read with Companies (Significant Beneficial Owners) Rules, 2018 were effective from 14th June 2018.

f) As part of the bankruptcy process of JE Energy B.V., on June 21, 2021 the supervisory judge in the Bankruptcy of JE Energy B.V. approved the sale of shares held by JE Energy B.V. its Indian subsidiary namely JOGPL Private Limited (JOGPL).

g) Pursuant to Letter dated January 12, 2022 from the Bankruptcy Trustee of JE Energy B.V. to the Board of Directors of JOGPL mandated, inter-alia, to record the transfer of 14,11,91,709 equity shares having face value of Rs. 10 each, as held by the JE Energy B.V., legal owner of aforesaid shares, in favor Mr. Vivek Rattan and to give effect to the Share Purchase Agreement for sell of shares of JOGPL to Mr. Vivek Rattan. The said letter from Trustee also instructed the erstwhile Directors to tender their resignation from the Board of JOGPL and to simultaneously appoint the persons nominated by Mr. Vivek Rattan as Directors of the Board of JOGPL.

h) Accordingly, the revised equity shareholding pattern of the reporting Company after considering the aforesaid transfer of shares on February 14, 2022 is as follows:

i) Subsequent to above, following are the parties which have the ownership and title of the 99.99% equity shares of the Company:

8. In response to the UBO Declaration to the Bank given by the reporting Company it has submitted that the reporting company is doing majority banking transactions with Axis Bank Limited and UBO declaration submitted to Axis bank and SBI Bank on January 9, 2020 and August 20, 2021 respectively, is JE Energy B.V. (under bankruptcy).

9. Adjudication of Penalty:

Section 90 of Companies Act, 2013 read with Companies (Significant Beneficial Owners) Rules, 2018 was notified and came into effect on June 14, 2018. At that point of time JE Energy B.V., Netherlands was under insolvency process and the reporting company was controlled by the Bankruptcy Trustee of JE Energy B.V.

Thereafter, as per orders passed by the Amsterdam District Court on June 21, 2021 the supervisory judge in the Bankruptcy of JE Energy B.V. approved the sale of shares held by JE Energy B.V. of its Indian subsidiary namely JOGPL i.e. the reporting company and Mr. Vivek Rattan became the ultimate individual equity shareholder thereby holding 99.99% shares in the reporting company.

Hence, Mr. Vivek Rattan (expired on 13.09.2023), as an individual held 99.99% of equity shares in the reporting company and he also exercised control and significance influence over the affairs of the Company. He also nominated his nominee directors to run the Company.

Taking in consideration the above facts based on the submissions made by the company and the documentary information and evidences filed by the reporting company in response to the SCN issued by the Registrar on various dates, accordingly the provisions of Section 90 of the Companies Act, 2013 are not attracted in light of the above facts as the majority shares are held by the individual and therefore no penalty is imposed.

(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur.

No. 03/10/SBO/UP/2024/JOGPL/1914 to 1918

Dated: 28/06/2024