The Order issued by the Adjudicating Officer of the Registrar of Companies, Gujarat, Dadra & Nagar Haveli, dated May 27, 2024, outlines penalties imposed on Tanman Jewels Private Limited for violating Section 102(1) of the Companies Act, 2013. The violation pertains to the failure to attach an explanatory statement with a resolution, a mandatory requirement as per the Act.
The proceedings involve Tanman Jewels Private Limited, a company registered under the Companies Act, 1956/2013 in Gujarat. The violation was discovered during an inquiry into the company’s activities, specifically in relation to Form-MGT-14 filed on September 8, 2020. It was found that the company hadn’t complied with the provision of attaching an explanatory statement along with the resolution, as required by Section 102(1) of the Companies Act, 2013.
Section 102(1) mandates that a statement containing material facts regarding each item of special business to be transacted at a general meeting must be annexed to the notice calling such a meeting. This includes information about the nature of concern or interest, financial or otherwise, of directors, managers, and key managerial personnel, among others.
The penalty for non-compliance with Section 102(1) is outlined in Section 102(5), which imposes a penalty of fifty thousand rupees or five times the benefit accruing to the defaulter, whichever is higher. In this case, the Registrar of Companies has been empowered to adjudicate penalties as per Section 454 of the Companies Act, 2013.
Despite multiple opportunities given to the company for a hearing, no representative appeared before the Adjudicating Officer. As a result, an ex-parte order was issued. The officer considered factors such as disproportionate gain or unfair advantage and the loss caused to investors due to the default. However, due to the nature of the violation, these factors couldn’t be quantified precisely.
The penalty was imposed individually on the company and its directors in default. Given that the company qualified as a small company, as per the Companies Act, 2013, a lesser penalty was applied to them. The penalty amounts were specified for each director in default, taking into account the number of days of default.
The noticee (Tanman Jewels Private Limited and its directors) were instructed to pay the penalties within ninety days of the order. Failure to comply within this period could lead to further fines or even imprisonment for the officers in default. Additionally, non-compliance with the order could result in prosecution under Section 454(8) of the Companies Act, 2013.
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BEFORE THE ADJUDICATING OFFICER
REGISTRAR OF COMPANIES, GUJARAT, DADRA & NAGAR HAVELI
Order No. ROC/Sec.102 (1) /454(4)/ TANMAN JEWELS /STA (MD) 23-24/802 to 805 Dated: 27 MAY 2024
ORDER FOR PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 FOR VIOLATION OF SECTION 102(1) OF THE COMPANIES ACT, 2013.
IN THE MATTER OF
TANMAN JEWELS PRIVATE LIMITED
(U36910GJ2009PTCO59040)
Date of hearing -26.02.2024
PRESENT:
1. Shri Keerthi Thej N. (ROC), Adjudicating Officer
2. Shri Indrajit Vania (DROC), Presenting Officer.
3. Company /Officers/Director/KMP/Authorized Representative: Absent
Appointment of Adjudication Authority: –
1. The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred under section 454 of the Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 (Notification No. GSR 254(E) dated 31.03.2014) for adjudging penalties under the provisions of Act.
Company:
1. WHEREAS, TANMAN JEWELS PRIVATE LIMITED (hereinafter referred to as “Company”) is a company registered under the provisions of the Companies Act, 1956/2013 in the State of Gujarat on 30.12.2009, having CIN: U36910G12009PTCO59040 and presently having its registered office situated 6/2020-21-22, Office No305,3rd Floor, Panchratna Apt, Bhojabhai Ni Sheri Naka, Hat Faliya, Mahidharpura, Surat, Gujarat,395003, India.”
Fact of the case:
2. it is noticed during the inquiry of the company and observed from the Form-MGT-14 filed vide SRN R54159587 on 08.09.2020 that the company has not attached an Explanatory Statement along with copy of Resolution which is a mandatory requirement as per the provisions of Section 102 (1) of the Companies act 2013. The company has not complied with the provisions of Section 102(1) of the Act.
3. —Section 102(1) “A statement setting out the following material facts concerning each item of special business to be transacted at a general meeting, shall be annexed to the notice calling such meeting, namely: –
(a) the nature of concern or interest, financial or otherwise, if any, in respect of each items of‑
(i) every director and the manager, if
(ii) every other key managerial personnel; and
(iii) relatives of the persons mentioned in sub-clauses (i) and (ii);
(b) any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decision thereon”.
4. Whereas Section 102(5) “Without prejudice to the provisions of sub-section (4), if any default is made in complying with the provisions of this section, every promoter, director, manager or other key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees or five times the amount of benefit accruing to the promoter, director, manager or other key managerial personnel or any of his relatives, whichever is higher”.
5. That, the Ministry of Corporate Affairs vide its Gazette notification No. SO 831 (E) dated 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. Thereby, the Registrar of Companies is entrusted with the power to adjudicate the penalty as provided under Section 102(1) of the Companies Act, 2013.
6. The Registrar of Companies vide the Companies (Amendment) Act, 2019 is entrusted with power to adjudicate penalty as provided under Section 102(1) of the Companies Act, 2013. The DGCoA vide letter dated 11.05.2022 has instructed that all cases filed under Companies Act, 1956 and Companies Act, 2013 can be considered under In-House Adjudication Penalty Mechanism (IAM). Pursuant to the instructions of the Ministry, issued vide letter dated 11.05.2022, further directions were given that all cases filed under CA, 1956 and CA, 2013 can be considered for adjudication process which are now decriminalized (earlier prosecutions were to be filed) by Companies Amendment Act effective from 02.11.2018 and through further Amendment in 2020 effective from 28.09.2020).
7. It is further submitted that there is a reasonable ground to believe that the company and its officers in default have violated the provisions of Section 102(1) of the Companies Act, 2013. In view of the facts narrated above, the company and its directors/ officers, in default are liable for penalty in pursuant to Section 102(5) of the Companies Act, 2013 and Rules, made thereunder. Whereas the office of the undersigned issued show cause notice under section 454 of the Companies Act, 2013 for violation of section 102(1) of the Companies Act, 2013 to the Company and its officers in default on 28.04.2023 with request to rectify the aforesaid default within 30 days of the notice. In this regard, reply was received from the company which is not satisfactory. Accordingly, the Office of the Registrar of Companies vide letter No. ROC-GJ/ADJ/Tanman/Sec.454/Sec.137/2023-24/5118 to 5120 dated 31.01.2024 has made an official communication with the above-named company and its directors and gave on opportunity of being heard on 14.02.2024. In response to the aforementioned letter dated 31.01.2024, the company vide its letter dated 13.02.2024 intimated this office that due to personal reasons they were not available on the said date. Hence, they requested to grant the date of hearing on 26.02.2024. This office has considered the request of the company and intimated through e-mail dated 19.04.2024 to company and gave on opportunity of being heard on 26.02.2024. However, no officer/representative of the company was present in the hearing on 26.02.2024.
Submission of the Presenting Officer
9. The Presenting Officer has further submitted that it is observed from the Annual Return up to 30.09.2023 the paid-up capital of the company is Rs. 10,00,000/- and Turnover is Rs. 0/-. Hence, as per the Ministry’s Notification No. G.S.R. 700(E) dated 15.09.2022, in the light of Companies (Specification of definition details) Amendment Rules, 2022 with respect to the provisions of Section 2(85) of the Companies Act, 2013, the company fall under the ambit of “small company”. Therefore, the provisions of imposing lesser penalty as per the provisions of Section 446B of the Companies Act, 2013 shall be applied to the company.
EX-PARTE ORDER:
10. While adjudging quantum of penalty under section 102 of the Companies Act, 2013, the Adjudication Officer shall have due regard to the following factors, namely:
(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
(c) The repetitive nature of default.
11. With regard to the above factors to be considered while determining the quantum of penalty, it is noted that the disproportionate gain or unfair advantage made by the notice or loss caused to the investor as a result of the delay on the part of the notice to redress the investor grievance are not available on the record. Further, it may also be added that it is difficult to quantify the unfair advantage made by the notice or the loss caused to the investors in a default of this nature.
12. The undersigned considered the submission made by Presenting Officer. Having considered the facts and circumstances of the case and after taking into account the factors above, the undersigned has reasonable cause to believe that the company and its officer(s) in default(s) have violated the provision of section 102 (1) of the Companies Act, 2013 by not attaching the Explanatory Statement along with copy of Resolution which is a mandatory requirement as per the provisions of Section 102 (1) of the C.A.2013 the hereby imposed penalty on the Company and its Officer(s) in default u/s 102 (5) of the Companies Act, 2013 as per Table below:
Default for non-attaching Explanatory statement with the Resolution passed by the company.
| Violation under Companies 102(1) Act 2013 | Company /Directors /Officer | No. of Days for default | Penalty for default under Section 102(5) of the Companies Act, 2013 (Rs.) | Penalty to be imposed for Default under Section 102 (5) of the Companies Act, 2013 (Rs.) | Maximum Limit For Penalty (Rs) | Penalty for Small company Section 446B of CA 2013 |
| Sec. 102(1) | MR RAKESH KUMAR JAIN (Director) | 304 days | 50,000 | 50,000 | 50,000 | 25,000 |
| MR. SHUBHAM JAIN (Director) | 304 days | 50,000 | 50,000 | 50,000 | 25000 | |
13. The noticee shall pay the amount of penalty individually for the company and its directors (out of own pocked) by way of form INC-28 of e-payment (available on Ministry Website www.mac.gov.in) under “Pay miscellaneous fees” category in MCA fee and payment Service within 90 (ninety) days of this order and the Challan/SRN generated after payment of penalty through online mode shall be forwarded to this office along with the copy of form No. INC- 28.
14. Appeal if any, against this order may be filed in writing with the Regional Director, Northwestern Regional, Ministry of Corporate Affairs, ROC Bhavan, Opp. Rupal Park, Nr. Ankur Bus stand, Naranpura, Ahmedabad (Gujarat) 380 013 within a period of sixty days from the date of receipt of this order, in Form ADJ setting forth the grounds of appeal and shall be accompanied by the certified copy of this order. (Section 454 of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019).
15. Please note that as per the provisions of section 454(8)(i) of the Companies Act, 2013, where company does not pay the penalty imposed by the Adjudication officer or the Regional Director within a period of Ninety days (90 days’ from the date of the receipt of the copy or order, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakhs rupees. Further as per section 454(8)(ii) of the Companies Act, 2013, where an officer of a company who is in default does not pay the penalty within a period of Ninety days (90 days) from the date of receipt of the copy of the order, such officers 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.
16. Your attention is also invited to section 454(8) of the Companies Act, 2013 in the event of non-compliance of this order which provides that in case of default in payment of penalty, prosecution will be filed u/s. 454(8)(ii) of the Companies Act, 2013 at your own costs without any further notice.
The adjudication notice stands disposed of with this order.
Registrar of Companies/
Adjudicating Officer
Gujarat, Dadra Nagar Haveli
