Introduction: In a significant development, the Ministry of Corporate Affairs (MCA) has imposed penalties amounting to Rs. 3 lakhs on N.S.J.L. NIDHI LIMITED for failing to disclose interests in Form MBP-1. This action is based on Section 184(2)(b) of the Companies Act, 2013. In this article, we will provide an in-depth analysis of the case, the legal provisions governing it, and the implications of this penalty.
Detailed Analysis:
1. Appointment of Adjudicating Officer: The MCA appointed an Adjudicating Officer in compliance with Section 454(1) of the Companies Act, 2013, entrusted with the authority to adjudicate penalties, particularly Section 184(2)(b) of the Act.
2. Company Background: N.S.J.L. NIDHI LIMITED, governed by the provisions of the Companies Act, 2013, and registered in Pune, Maharashtra, is the subject of this penalty imposition.
3. Facts of the Case: a. The case originated from an inspection conducted under Section 206 of the Companies Act, 2013, carried out by officers of the Ministry of Corporate Affairs.
a. During the inspection, it was noted that every director of the company who had any direct or indirect interest in a contract or arrangement with an entity in which they were a partner, owner, or member was obligated to disclose their concern or interest during board meetings. This disclosure was to be made in writing using Form MBP-1.
b. Records, including deposit registers and bank statements, revealed that amounts were accepted from entities in which the company’s directors or their relatives had an interest, including New Shraddha Jewellers, Rajavi Jewellers, Mahadev Developers, Shubham Stone Crusher, and Kurhade Developers. Such interests had not been disclosed as required by Section 184(2)(b) of the Companies Act, 2013, and Rule 12 of Companies (Meetings of Board and its powers) Rules, 2014. This non-disclosure is punishable under Section 184(4) of the Act.
d. The company’s reply to the matter during the inspection was found unsatisfactory by the inspecting officers.
e. Subsequently, an adjudication notice was issued to the company and its officers in default, under Section 454(4) read with Section 184(2)(b) of the Companies Act, 2013, and Rule 3(2) Of Companies (Adjudication of Penalties), 2014, as amended in Amendment Rules, 2019.
f. The company responded to the adjudication notice, asserting that they had duly submitted Form MBP-1 in accordance with Section 184(2)(b) for multiple financial years. They claimed that there was no requirement to disclose interests in certain transactions.
4. Relevant provisions of the Companies Act, 2013: Section 184 of the Companies Act, 2013, deals with the disclosure of interests by directors. Directors are required to disclose their interests in any company, body corporate, firm, or entity, either directly or indirectly, in which they hold a significant shareholding or partnership. Failure to do so, as specified in Section 184(4), results in a penalty of one lakh rupees.
5. Penalty Imposition:
a. The applicant company and its officers were found to be in default of the provisions of Section 184(2)(b) for non-disclosure of interests in Form MBP-1.
b. Based on the powers conferred, the Adjudicating Officer imposed penalties on the company and its officers in default, following Rule 3(12) of Companies (Adjudication Of Penalties) Rules. The penalty amount was set at Rs. 1,00,000 for each officer.
c, The Adjudicating Officer justified the penalty, considering the nature of the failure committed by the notice(s).
d. The noticees/applicants were instructed to pay the imposed penalty through the Ministry of Corporate Affairs portal, as stipulated by Rule 3(14) of Companies (Adjudication Of Penalties) Rules, 2014.
6. Appeal Process: The order informed the company and its officers of their right to appeal under Section 454(5) of the Act. Appeals had to be filed within sixty days from the date of receiving the order.
7. Consequences of Non-Payment: The attention of the parties involved was drawn to Section 454(8)(ii) of the Act, specifying the consequences of not paying the penalty within the stipulated 90-day period from the date of receiving the order, as per Section 454(8)(i).
8. Notification to Concerned Parties: In compliance with sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules, 2014, as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, a copy of the order was dispatched to N.S.J.L. NIDHI LIMITED, along with all directors/officers in default. Additionally, the order was sent to the Office of the Regional Director (Western Region) and the Ministry of Corporate Affairs in New Delhi.
Conclusion: The penalty imposed by the Ministry of Corporate Affairs on N.S.J.L. NIDHI LIMITED emphasizes the importance of complying with statutory requirements for disclosing interests in contracts and arrangements. Directors must adhere to the provisions of Section 184(2)(b) of the Companies Act, 2013, by diligently disclosing their concerns or interests. Failure to do so has led to substantial financial repercussions in this case. The company and its officers are encouraged to promptly fulfill the payment obligations and explore the option of appeal if deemed necessary. This case underscores the significance of transparency and adherence to regulatory requirements to prevent legal and financial consequences.
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OFFICE OF THE
REGISTRAR OF COMPANIES
MAHARASHTRA, PUNE
MINISTRY OF CORPORATE AFFAIRS
GOVERNMENT OF INDIA
Order No. RoCP/ADJ/order/184(2)(b)/23-24/12/1582 Date: 11/10/2023
ADJUDICATION ORDER
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Adjudication Order of penalties in the matter N.S.J.L. NIDHI LIMITED
(U67200MH2018PLC310658) under Section 184 (2) (b) r/w Section
454(3) of the Companies Act, 2013
Please Read:
- Companis (Adjudication Of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019 (G.S.R.131(E) ).
- Provisions of Subsection (2)(b) of Section 184 of the Companies Act, 2013.
- Gazette Notification of Ministry of Corporate Affairs vide No. A42011/112/2014-Ad.II, dated 24.032015 (see SO 831(E), dated 03.2015).
In respect of:
N.S.J.L. NIDHI LIMITED (U67200MH2018PLC310658) having its registered office as per MCA21 Registry at address “SR NO-21 NEAR MSEB OFFICE, MARKAL RD ALANDI, TAL- KHED 412105, PUNE, Pune, Maharashtra, 412105, India. .
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A42011/ 112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015) appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) r/w Rule 3(1) of Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act. The undersigned vide Companies (Amendment) Act, 2019 is entrusted to adjudicate penalties under section 184 (2) (b) of the Companies Act, 2013.
2. Company:
N.S.J.L. NIDHI LIMITED having CIN U67200MH2018PLC310658 is a company governed by the provisions Act, and registered with this office having its office at SR NO-21 NEAR MSEB OFFICE,MARKAL RD ALANDI, TAL- KH ED 412105,PUNE,Pune,Maharashtra,412105,India.
3. Facts about the Case:
a. Whereas an inspection of the company under section 206 of the Companies Act, 2013 was conducted by IOs of Ministry of Corporate Affairs;
b. During the course of the Inspection the lOs observed that, “livery director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into with a firm or other entity in which, such director is a partner, owner or member, as the case may be, shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or arrangement is discussed and shall not participate in such meeting. The disclosure shall be given in writing in Form MBP- I. As per the records available and the Deposit Register and the Bank statements submitted by the company (TJS13, Alandi Devachi, A/c CD/ 1804- 0291.20100001804 and SBI A/c 00000038130185004 AlandiDevachi) show amounts are accepted from M /s New Shraddha Jewellers (NSJ), M/s Rajavi Jewellers where the Director/relative of Director are proprietor and also Mahadev Developers, Shubham Stone Crushe and Kurhade Developers to whom money has been given which ha e not disclosed by the Directors.
| Sr No. | Transaction with | Transaction type | Date | Amount |
| 1 | Rajavi Jewellers | Credit | Multiple instances | 33.85 Lakhs |
| 2 | New Shraddha Jewellers | Credit | Multiple instances | 7.76 Cr. |
Thus, the Directors have violated the provisions of Section 184(2)(b) of Companies Act, 201.3 r.w. Rule 12 of Companies (Meetings of Board and its powers) Rules, 201.4 and punishable under Section 184 (4) of the Act.
c. The matter was also taken up with the company during the course of the said inspection for which the company’s reply was not found satisfactory by the IO.
d. Accordingly, the as per the directions of the competent authority, the adjudication officer has issued adjudication notice vide ROCP/ADJ/FS/22-23/961 to 963 dated 12.07.2023 (herein after referred as Adjudication Notice) under Section 454(4) read with 184 (2) (b) of the Companies Act, 2013 read with Rule 3(2) Of Companies (Adjudication of Penalties), 2014 as amended in Amendment Rules, 2019, vid notice no. to the company and its officers in default for the violation of the provisions of the act as mentioned in para “a 85c” above;
e. A reply to the Adjudication notice has been received vide companies letter dated 25.07.2023 from the company stating that ” We have duly submitted the Disclosure of Interest in Form MBP-1 pursuant to the provisions of Section 184 (2) (b) for financial year 2018-19, 2019-20 and 2020-21 (MBP-1 enclosed as Annexure 1).; During the course of the said inspection, Form MBP-1 as mentioned above have also been submitted to your good office with our reply dated 18.08.2021; Further, in reference to the Show Cause Notice, out of the 3 Directors, only Mr. Rohit Bhamburdekar is an interested party to New Shraddha Jewellers, being the proprietorship concern of the director. Rohit Bhamburdekar is an interested party to New Shraddha Jewellers, being the proprietorship concern of the director. Mr. Rohit Bhamburdekar has disclosed his interest in Form MBP-1 for financial year 201 -19, 2019-20 and 2020-21 respectively; There exists no relationship between M/s. Rajavi Jewellers, Mahadev Developers, Shubha Stone Crusher and Kurhade Developers, hence the same is not requi ed to be disclosed in MBP-1.
4. Relevant provisions of the Companies Act, 2013:
Section (1) Every director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding, in such manner as may be prescribed.
(2) Every director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into—
(a) with a body corporate in which such director or such director in association with any other director, holds more than two per cent. shareholding of that body corporate, or is promoter, manager, Chief Executive Officer of that body corporate; or
(b) with a firm. or other entity in which, such director is a partner, owner or member, as the case may be, shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or arrangement is discussed and shall not participate in such meeting: Provided that where any director who is not so concerned or interested at the time of entering into such contract or arrangement, he shall, if he becomes concerned or interested after the contract or arrangement is entered into, disclose his concern or interest forthwith when he becomes concerned or interested or at the first meeting of the Board held after he becomes so concerned or interested.
(3) A contract or arrangement entered into by the company without disclosure under sub-section (2) or with participation by a director who is concerned or interested in any way, directly or indirectly, in the contract or arrangement, shall be voidable at the option of the company.
(4) If a director of the company contravenes the provisions of sub-section (1) or subsection (2), such director shall be liable to a penalty of one lakh rupees”.
(5) Nothing in this section— (a) shall be taken to prejudice the operation of any rule of law restricting a director of a company from having any concern or interest in any contract or arrangement with the company;
(b) shall apply to any contract or arrangement entered into or to be entered into between two companies where any of the directors of the one company or two or more of them together holds or hold not more than two per cent. of the paid-up share capital in the other company.
5. ORDER:
a. The applicant company and its officers, who have defaulted the provisions of section 184 (2) (b) of the Act for non-disclosure of Interest in form MBP-1.
b. In exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the facts and circumstances of the case, I do hereby impose the penalty on the company and its officers in default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, as per table below for violation of section 184 (2) (b) of the Act:-
| Penalty imposed on company/director(s) |
Maximum amount of penalty imposed |
| ROHIT KAILAS BHAMBURDEKAR, |
1,00,000/- |
| TEJSHREE ROHIT BHAMBURDEKAR, |
1,00,000/- |
| AMOL SURESH SHAHANE | 1,00,000/- |
c. I am of the opinion that penalty so imposed is commensurate with the aforesaid failure committed by the notice(s).
d. The Noticee(s)/applicant(s) shall pay the penalty so imposed through Ministry of Corporate Affairs portal only as per rule 3(14) of Companies (Adjudication Of Penalties) Rules, 2014.
e. Appeal against this order may be filed under section 454(5) of the Act, in writing with the Regional Director (Western Region), Ministry of Corporate Affairs100, Everest, 5th Floor, Netaji Subhash Road, Marine Drive, Mumbai-400002, 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 of the Act read with Companies (Adjudication of Penalties) Rules, 2014 as emended by Companies (Adjudication of Penalties) Amendment Rules, 2019.
f. Your’ attention is also invited to section 454(8)(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 in terms of the provisions of section 454(8)(i) of the Act.
g. 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 N.S.J.L. NIDHI LIMITED and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Western Region), and Ministry of Corporate Affairs at New Delhi.
(Mangesh Jadhav, ICLS)
Adjudicating Officer
Registrar of Companies
Maharashtra, Pune
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