The Ministry of Corporate Affairs (MCA) has recently imposed a penalty of ₹4 lakh under Section 454 of the Companies Act, 2013 on Diligent Pink City Center Private Limited and its directors. The penalty was enforced due to the non-passage of a resolution before raising a loan, as per the Act’s provisions.
The case stemmed from the company’s actions of raising a loan without prior approval through a special resolution. Section 62(3) of the Companies Act, 2013 mandates that any increase in subscribed capital via debentures or loans must be approved beforehand by a special resolution in a general meeting. However, the respondent company failed to adhere to this requirement, leading to the penalty imposition.
Despite being issued a Show Cause Notice and subsequent Adjudication Notice, the company’s response was deemed unsatisfactory. It was during the hearing that the company’s representative claimed that a special resolution had been passed after the fact, which was considered unacceptable as per legal standards.
The Adjudicating Officer, in this case, found sufficient grounds to impose a penalty as per the provisions of Section 450 of the Companies Act, 2013. The penalty, totaling ₹4 lakh, was deemed commensurate with the severity of the violation. Moreover, it was directed that the penalty be paid through the Ministry of Corporate Affairs portal, in line with regulatory guidelines.
*****
Government of India
Ministry of Corporate Affairs
Office of Registrar of Companies cum Official Liquidator,
Attached to Rajasthan High Court, Jaipur Bench at Jaipur
Corporate Bhawan, G/6-7, Residency Area, Civil Lines, Jaipur-302001
Order for Penalty under Section 454 of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014 and Companies (Adjudication of Penalties Amendment) Rules, 2015 for the violation of Section 6203 of Companies Act, 2013 in the matter of: –
1. Diligent Pink city Center Private Limited, Company
Exhibition Ground, EPIP, RIICO Industrial Area, Sitapura, Jaipur, Rajasthan-302022.
2. Hari Mohan Dangayach, Director
3. Ram Babu Agrawal, Director
4. Pramod Kumar Agarwal, Director
5.Pallavi Jain, Company Secretary
…. Respondents
Date of hearing – 20.03.2024
Present: –
01. Shri Ruvit Kumar, ROC-Cum-OL, Rajasthan, Jaipur
02. Shri Raunak Agrawal, AROC-cum-AOL, Rajasthan, Jaipur
03. Shri Leepak Goya!, Practicing Company Secretary and Authorized Representative of the Respondents.
ADJUDICATION ORDER
1. Appointment of Adjudicating Officer: –
WHEI,EAS the Ministry of Corporate Affairs vide its Gazette Notification No. SO 831 (E) dated )4.03.2015 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. The Registrar of Companies vide the Companies (Amendment) Act, 2019 is entrusted with power to adjudicate penalty as provided under Section 450 of Companies Act, 2013,
2. Respondent Company:
WHEREAS Diligent Pink city Center Private Limited (CIN U70101RJ2011P1C058014) is registered with this office under the provisions of Companies Act, 1956 and having its registered office at Exhibition Ground, EPIP, RIICO Industrial Area, Sitapura, Jaipur, Rajasthan- 302022.
3. Relevant provisions of the Companies Act, 2013: –
WHEREAS as per the provision of Section 62 (3) of the Companies Act, 2013 “nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the company: provided that the terms of issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of loan by a special resolution passed by the company in general meeting.”
WEHEREAS as per the provision of Section 450 of the Companies Act- 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 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.”
4. Facts of the Case:
> That it has been observed that the respondent company raised a loan on 29.06.2022 and converted the same into securities(s). However, no special resolution was passed pursuant to section 62(3) of the Companies Act, 2013 mentioning such terms & condition(s), before raising said loan. Hence, the respondent company and its Directors have violated the provision of section 62(3) of the Companies Act, 2013.
> In this regard, this office has issued Show Cause Notice vide letter No. ROCJP/SCN/Sec 62(3)/2023-24/320-324 dated 08.02.2024 to the respondents. In this regard, the respondent company has furnished its reply on 28.02.7024 to this office. The same has been examined and found not satisfactory.
> Further, this office has issued an Adjudication Notice dated 11.03.2024 to the respondents and also fixed a date of hearing in the matter on 20.03.2024.
> That at .he time of hearing on 20.03.2024, Shri Deepak Goyal, Practicing Company Secretary and authorized representative of the respondents has appeared in the matter. Shri Goyal has submitted that the respondent company vide its EoGM dated 09,03.2023 has passed such special resolution and filed the same in e-From MGT-111 vice SRN AA2744858 and default has been made good.
5. In view of the above facts, the undersigned has reasonable cause to believe that the provision of section 62(3) of the Companies Act, 2013 has not been complied with by ‘.:he respondents and therefore liable for penal action under section 450 of the Companies Act, 2013. Accordingly, in exercise the power of 454 (3) of the Companies Act, 2013, I inclined to impose a penalty on the respondents, as under:
| Nature of default | Violations under companies Act, 2013 | Name of persons on whom penalty imposed | No. of days of default | Per day penalty for default (In Rs.) | Total default amount (In Rs. | Maxim urn Limit for Penalty (In Rs.) | Final Penalty Imposed (In Rs.) |
| Non-passing of Special Resol ution before raisin g the loan | Section 62(3) of the Compa-nies 2013. | Diligent Pick city Center Private Limited | 253 | 10,000
+253*1000 |
2,63,000 | 2,00,000 | 2,00,000 |
| Shri Harimoh Danga-yach | 10,000
+253*1000 |
2,63,000 | 2,00,000 | 50,000 | |||
| Shri Ram Babu Agrwal | 10,000
+253*1000 |
2,63,000 | 2,00,000 | 50,000 | |||
| Shri Pramod Kumar Agarwal | 10,000
+253*1000 |
2,63,000 | 2,00,000 | 50,000 | |||
| Ms. Pallavi Jain | 10,000
+253*1000 |
2,63,000 | 2,00,000 | 50,000 |
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the respondents and penalty so imposed upon the Officers-in-default shall be paid from their personal sources/ income. It is further directed that penalty imposed shall be paid through He Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company ,(A judication of Penalties) (Amendment) Rules, 2019 under intimation to this office.
6. Appeal against this order may be filed in writing with the Regional Director (NWR), Ministry of Corporate Affairs, Ahmedabad within a period of sixty days from the date of receipt of this order, in e-Form ADJ (available on Ministry website www.mca.gov.in setting forth the grounds of appeal and shall be accompanied by a curtail :d copy of this order (section 454(5) & 454(6) of the Companies Act, 2013 read with Companies (Adjudicating of Penalties) Rules, 2014).
7. 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 r(i!–);es 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 both.
8. In terms of the provisions of sub-Rule (9) of Rule 3 of the Companies (/elucidation of Penalties) Rules, 2014, copy of the order is being sent to the following:
I. Diligent Pink city Center Private Limited at Exhibition Ground, EPP HICO Industrial Area, Sitapura, Jaipur, Rajasthan-302022.
II. Shri Hari Mohan Dangayach at ______.
III. Shri Ram Babu Agrawal at ______.
IV. Shri Pramod Kumar Agarwal at ______.
V. Pallavi Jain at ______.
VI. Regional Director, NWR, Ministry of Corporate Affairs, Ahmedabad .3i– ROC Bhavan, Opp. Rupal Park Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad, Gujarat-380 013.
The adjudication notice stands disposed off with this order.
(RUVIT KUMAR)
ROC-cum-OL & Adjudicating officer,
Rajasthan, Jaipur
Signed on this 15th April 2024.
Place: Jaipur, Rajasthan.
File No. ROCJP/SCN/Sec. 62(3)12023-24/682
Date: – 15/04/2024
