MCA Imposes ₹20 Lakh Penalty for Section 90 Violation: Failure to File e-form BEN-2

The Ministry of Corporate Affairs (MCA) appointed Kamna Sharma as the Adjudicating Officer (AO) to oversee the adjudication of penalties under Section 454 of the Companies Act, 2013, as notified on March 24, 2015. This order addresses violations by Eider PWI Communications Limited, a company incorporated on May 9, 1996, with a paid-up capital of Rs. 20.5 crores and no turnover as per its latest financial statements.

Company Details: Eider PWI Communications Limited, registered at Eider House, Chandigarh, has a subsidiary but no holding company. It is neither a small company nor registered under any special Act.

Relevant Provisions of the Companies Act, 2013: Section 90 of the Companies Act, 2013 mandates that individuals with significant beneficial ownership (SBO) in a company must declare their interests to the company. The company must maintain a register of these interests, open to inspection by members, and file returns with the Registrar of Companies (ROC). The company must identify SBOs and notify any person it reasonably believes to be an SBO. Non-compliance attracts penalties.

Case Facts: Eider PWI Communications Limited failed to file e-form BEN-2, as required under Section 90, for declaring SBOs. Notices under Section 206(1) were sent to the company and its directors on February 21, 2024, but the response was unsatisfactory. Further investigations revealed that Eider Infotech Limited and Philippines Wireless Inc. hold the majority shares. The company’s attempts to justify the lack of information were found inadequate. The company claimed difficulty in providing details due to long-standing non-contact with Philippines Wireless Inc. and the historical nature of the records.

Findings: The records showed that Rama Sinha and A.K. Sinha are SBOs of Eider PWI Communications Limited. The failure to file the required information and maintain accurate records constituted violations of Section 90(1), 90(4), and 90(4A) of the Companies Act, 2013.

Adjudication of Penalty: Given the nature of the violations, penalties were imposed on the company and its officers as follows:

For Section 90(1) Violations:

• Rama Sinha (SBO): Rs. 2,00,000
• A.K. Sinha (SBO): Rs. 2,00,000

For Section 90(4) Violations:

• Eider PWI Communications Limited: Rs. 5,00,000
• Rama Sinha (Whole-time Director): Rs. 1,00,000
• Sanjay Sinha (CFO/KMP): Rs. 1,00,000
• Aman Sinha (Additional Director): Rs. 1,00,000

For Section 90(4A) Violations:

• Eider PWI Communications Limited: Rs. 5,00,000
• Rama Sinha (Whole-time Director): Rs. 1,00,000
• Sanjay Sinha (CFO/KMP): Rs. 1,00,000
  • Aman Sinha (Additional Director): Rs. 1,00,000

Penalty Payment and Appeal: Penalties must be paid through the MCA portal. The company and its officers have the right to appeal this order within 60 days to the Regional Director (Northern Region), Ministry of Corporate Affairs, New Delhi.

Consequences of Non-Payment: Non-payment of penalties can result in additional fines ranging from Rs. 25,000 to Rs. 5,00,000 for the company. Officers in default may face fines or imprisonment up to six months.

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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES,
PUNJAB AND CHANDIGARH,
CORPORATE BHAWAN,
PLOT NO.4-B, SECTOR 278, CHANDIGARH
PHONE NO.172-2639415,2639416

Order No. ROC-CHD/2024-25/Sec.90/18147/202 Dated: 31/05/2024

Order under Section 454 for Violation of Section 90 of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014

IN THE MATTER OF MIS EIDER PWI COMIVIUNICATIONS LIMITED
(CIN: U32201CH1996PLC018147)

1. Appointment of Adjudicating Officer

The Ministry of Corporate Affairs vide its gazette notification no S0.831(E) dated 24.3.2015, has appointed the undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Company

EIDER PWI COMMUNICATIONS LIMITED (herein after referred to as “the company’) is a company registered with this office under the Provisions of the Companies Act, 2013 (or previous Acts in force, as applicable) having its registered office situated at Eider House, SCO 914, NAC Manimajra, Chandigarh-160101.

The financial and other details of the subject company as on 31.03.2023 (latest financials filed):

3. RELEVANT PROVISIONS WHICH ARE APPLICABLE IN THE PRESENT CASE OF THE COMPANIES ACT, 2013

4. Section 90 of the Companies Act, 2013 reads as under: –

” (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 sub-section (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

(b) 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 sub­section (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 sub­section (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 wilfully 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,”

5. 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.

6. FACTS ABOUT THE CASE

On perusal of the records of the company available with this office, it has been observed that the company has not filed e-form BEN-2 pursuant to section 90 of the Companies Act, 2013 read with Rule 4 of the Companies (Significant Beneficial Owners) Rules, 2018 and Notice under section 206(1) was sent to the company and its directors on 21.02.2024 with regard to issues pertaining to compliance of section 90 of the Companies Act, 2013 read with relevant Rules thereunder. The company vide letter dated 23.02.2024 has submitted the reply which is not found satisfactory as 25% criteria for SBO was explained by the company.

Further, on perusal of shareholders list of Eider PWI Communications Limited it is found that Eider Infotech Limited and Philippines wireless Inc are two body corporates hold majority shareholding of the company. It is also pertinent to mention here that show cause notice dated 28.03.2024 was also issued to the company and its directors for violation of Section 90 of the Companies Act, 2013 and vide E-mail dated 26.04.2024 company was asked to furnish the copies of Board Resolutions passed by the company from 01.04.2018 onwards and the company vide mail/ letter dated 14.05.2024 has furnished the same. Upon examination of Board resolutions furnished by the company, it has been found that Sh Sanjay Sinha, Smt Rama Sinha & Sh A K Sinha are having control over the affairs of the company. The company has failed to furnish the details of the shareholders of the Philippines wireless Inc and has expressed inability to furnish information citing following explanations:

“Please refer to your E-Mail dated April 26, 2024 seeking information u/s 206(1) of the Companies Act 2013 to furnish the list of shareholders of M/s. Eider Infotech Limited and Philippines Wireless Inc.

2) As the records pertaining to a number of years including three covered by COVID-19 & also the concerned official/dealing of record is on leave fora week, it will require some time to check whether the detail of shareholders of the said companies are available with us or not.

3) We therefore, request you to grant one week’s time to send the information as available in record.”

2) In continuation of our earlier response letter dated 30-04-2024, we would like to submit that concerned person has not reported for duty till today. Keeping the scarcity of time for submitting reply, we have contacted him and asked for the desired information by ROC.

3) After going through the available old record no shareholders list is found of Philippines Wireless Inc. as well as Eider Infotech Limited. As the Company is not in contact with the Company Philippines Wireless Inc. for the last more than two decades & the information about their Shareholders was not required at the time of grant of Letter of Intent. Hence, it is not possible to Supply the information asked for at this stage as not available with us.

4) Further, we would also like to submit that at the time of Joint — Venture Agreement, there was no condition of such shareholders list and not asked and obtained.

5) This company was constituted as a Joint— Venture Company for operating Radio Paging Services for which Letter of Intent was granted by Deptt. of Telecom in 1996. Since the requisite Wireless Licence were not granted, there has been no Commercial Activities by this Company till date for the last more than two decades. The matter is now pending in Delhi High Court.

6) The deficiency in not being able to supply information as sought for is regretted.”

Upon examinations of the records available with MCA portal, it has been noted that Ms Rama Sinha & Mr A K Sinha are the SBO of the company which is revealed as follows:

Thus, it is evident that company has violated the provisions of Section 90(1), 90(4) & 90(4A) of the Companies Act, 2013 as explained in the table above.

Rule 3(12) of Companies (Adjudication of Penalties) Rules, 2014

While adjudging quantum of penalty, the adjudicating officer shall have due regard to the following factors, namely.-

a) size of the company

b) nature of business carried on by the company,

c) injuryto public interest,

d) nature of the default,’

e) repetition of the default,’

f) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the deflate: and

g) (the amount of loss caused to an investor or group of investors or creditors as a result of the default.

Provided that, in no case, the penalty imposed shall be less than the minimum penalty

prescribed, if any, under the relevant section of the Act.

Rule 3 (13) of Companies (Adjudication of Penalties) Rules, 2014 which read as under:

In case a fixed sum of penalty is provided for default of a provision, the adjudicating officer shall impose that fixed sum, in case of any default therein.

7. ADJUDICATION OF PENALTY:

Now in exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the facts of the case, I hereby impose the penalties on the company, promoters and directors as under for violation of section 90(4) & 90(4A) of the Companies Act, 2013.

8. It is further directed that penalty imposed shalt be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.

9. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi, 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 a certified copy of this order. [Section 454(5) & 454(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 20141.

10. Your attention is also invited to Section 454(8)(i) and 454(8)(ii) of the Companies Act,2013, which state that in case of non-payment of penalty amount ,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 and officer in default 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.

11. In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to the following as under:

a. M/s Eider PWI Communications Limited, Eider House, SCO 914, NAC Manimajra, Chandigarh-160101.

b. Rama Sinha, Whole time Director, 667, Sector-6, Panchkula-134109.

c. Sanjay Sinha, CFO/KMP, H.No.22, Sector-7, Panchkula.

d. Sh Aman Sinha, Additional Director, H.No.22, Secor-7, Panchkula-134109.

e. Sh Ajay Sinha, SBO, 667, Sector-6, Panchkula-134109.

f. Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi and this order will also be uploaded on website of Ministry of Corporate Affairs.

(Kamna Sharma)
Registrar of Companies & Adjudication Officer
Punjab & Chandigarh